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"f18643": {
"value": "1. Corporate information
\nMelrose Industries PLC (\u201cthe Company\u201d) is a public company limited by shares. The Company is incorporated in the United Kingd
om under
\nthe Companies Act 2006 and registered in England and Wales. The address of the registered office is given on the back cover. The nature
\nof the Group\u2019s operations and its principal activities by operating segment are set out in note 5 and in the Divisional revie
ws on pages 14 to
\n27. The Consolidated Financial Statements of the Group for the year ended 31 December 2022 were authorised in accordance with a
\nresolution of the Directors of Melrose Industries PLC on 2 March 2023.
\nThese Financial Statements are presented in pounds Sterling which is the currency of the primary economic environment in which the
\nCompany is based. Foreign operations are included in accordance with the policies set out in note 2.
\nCorporate structure
\nDiscontinued operations and disposals
\nOn 6 July 2022, the Group completed the disposal of the Ergotron business, previously included in the Other Industrial segment. The
\nresults of Ergotron have been classified within discontinued operations for both years presented; with the Income Statement, the Statement
\nof Cash Flows and their associated notes being restated accordingly. At 30 June 2022, the Ergotron business met the criteria within IFRS
\n5: Non-current Assets Held for Sale and Discontinued Operations to be classified as an asset held for sale.
\nThe Aerospace business disposed of a non-core entity during the year, which has not been treated as a discontinued operation. Further
\ndetail is shown in note 13.
\nIn addition, discontinued operations for 2021 include the results of the Nortek Air Management, Brush and Nortek Control businesses,
\nwhich were disposed of during 2021.
\nCapital structure
\nOn 9 June 2022, the Group commenced a \u00a3500 million share buyback programme, which completed on 1 August 2022 with 318,003,512
\nshares repurchased and subsequently cancelled. Costs associated with the share buyback programme were \u00a34 million.
\nIn 2021, following the disposals of Nortek Air Management and Brush, a return of capital of \u00a3729 million, alongside a court approved capital
\nreduction of the Company\u2019s share premium account
and a 9 for 10 share consolidation took place.
\nProposed demerger
\nOn 8 September 2022, the Group announced its intention to demerge Automotive, Powder Metallurgy and Hydrogen Technology. In these
\nFinancial Statements, the businesses intended for demerger have been treated as continuing operations because at the balance sheet
\ndate there were actions, such as the formation of a board of directors and the arrangement of banking facilities, which meant that a
\ndemerger could not have taken place. The demerger was also still subject to Board approval and shareholder consent at 31 December
\n2022.
\nAcquisitions
\nOn 1 October 2022, the Aerospace segment completed the acquisition of Permanova Lasersystem AB, a leader in advanced laser
\ntechnology and cell integration, for consideration of \u00a34 million. As the acquisition is not material to the Group, limited information is
\nprovided in note 11.
\n1.1 New Standards, Amendments and Interpretations affecting amounts, presentation or disclosure reported in the current year
\nIn the current financial year, the Group has adopted the following new and revised Standards, Amendments and Interpretations. Their
\nadoption has not had a significant impact on the amounts reported in these Financial Statements:
\n\u2022
Amendments to IFRS 3: Reference to the conceptual framework
\n\u2022
Amendments to IAS 16: Property, Plant and Equipment, proceeds before intended use
\n\u2022
Amendments to IAS 37: Onerous contracts, cost of fulfilling a contract
\n\u2022
Annual Improvements to IFRS Accounting Standards: 2018-2020 cycle
\n1.2 New Standards, Amendments and Interpretations in issue but not yet effective
\nAt 31 December 2022, the following Standards, Amendments and Interpretations were in issue but not yet effective:
\n\u2022
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture
\n\u2022
Amendments to IAS 1: Classification of liabilities as current or non-current and disclosure of accounting policies
\n\u2022
Amendments to IAS 8: Definition of accounting estimates
\n\u2022
Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction
\nThe Directors do not expect that the adoption of the above Standards, Amendments and Interpretations will have a material impact on the
\nFinancial Statements of the Group in future periods. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18644": {
"value": "1. Corporate information
\nMelrose Industries PLC (\u201cthe Company\u201d) is a public company limited by shares. The Company is incorporated in the United Kingd
om under
\nthe Companies Act 2006 and registered in England and Wales. The address of the registered office is given on the back cover. The nature
\nof the Group\u2019s operations and its principal activities by operating segment are set out in note 5 and in the Divisional revie
ws on pages 14 to
\n27. The Consolidated Financial Statements of the Group for the year ended 31 December 2022 were authorised in accordance with a
\nresolution of the Directors of Melrose Industries PLC on 2 March 2023.
\nThese Financial Statements are presented in pounds Sterling which is the currency of the primary economic environment in which the
\nCompany is based. Foreign operations are included in accordance with the policies set out in note 2.
\nCorporate structure
\nDiscontinued operations and disposals
\nOn 6 July 2022, the Group completed the disposal of the Ergotron business, previously included in the Other Industrial segment. The
\nresults of Ergotron have been classified within discontinued operations for both years presented; with the Income Statement, the Statement
\nof Cash Flows and their associated notes being restated accordingly. At 30 June 2022, the Ergotron business met the criteria within IFRS
\n5: Non-current Assets Held for Sale and Discontinued Operations to be classified as an asset held for sale.
\nThe Aerospace business disposed of a non-core entity during the year, which has not been treated as a discontinued operation. Further
\ndetail is shown in note 13.
\nIn addition, discontinued operations for 2021 include the results of the Nortek Air Management, Brush and Nortek Control businesses,
\nwhich were disposed of during 2021.
\nCapital structure
\nOn 9 June 2022, the Group commenced a \u00a3500 million share buyback programme, which completed on 1 August 2022 with 318,003,512
\nshares repurchased and subsequently cancelled. Costs associated with the share buyback programme were \u00a34 million.
\nIn 2021, following the disposals of Nortek Air Management and Brush, a return of capital of \u00a3729 million, alongside a court approved capital
\nreduction of the Company\u2019s share premium account
and a 9 for 10 share consolidation took place.
\nProposed demerger
\nOn 8 September 2022, the Group announced its intention to demerge Automotive, Powder Metallurgy and Hydrogen Technology. In these
\nFinancial Statements, the businesses intended for demerger have been treated as continuing operations because at the balance sheet
\ndate there were actions, such as the formation of a board of directors and the arrangement of banking facilities, which meant that a
\ndemerger could not have taken place. The demerger was also still subject to Board approval and shareholder consent at 31 December
\n2022.
\nAcquisitions
\nOn 1 October 2022, the Aerospace segment completed the acquisition of Permanova Lasersystem AB, a leader in advanced laser
\ntechnology and cell integration, for consideration of \u00a34 million. As the acquisition is not material to the Group, limited information is
\nprovided in note 11.
\n1.1 New Standards, Amendments and Interpretations affecting amounts, presentation or disclosure reported in the current year
\nIn the current financial year, the Group has adopted the following new and revised Standards, Amendments and Interpretations. Their
\nadoption has not had a significant impact on the amounts reported in these Financial Statements:
\n\u2022
Amendments to IFRS 3: Reference to the conceptual framework
\n\u2022
Amendments to IAS 16: Property, Plant and Equipment, proceeds before intended use
\n\u2022
Amendments to IAS 37: Onerous contracts, cost of fulfilling a contract
\n\u2022
Annual Improvements to IFRS Accounting Standards: 2018-2020 cycle
\n1.2 New Standards, Amendments and Interpretations in issue but not yet effective
\nAt 31 December 2022, the following Standards, Amendments and Interpretations were in issue but not yet effective:
\n\u2022
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture
\n\u2022
Amendments to IAS 1: Classification of liabilities as current or non-current and disclosure of accounting policies
\n\u2022
Amendments to IAS 8: Definition of accounting estimates
\n\u2022
Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction
\nThe Directors do not expect that the adoption of the above Standards, Amendments and Interpretations will have a material impact on the
\nFinancial Statements of the Group in future periods.
\n2.
Summary of significant accounting policies
\nBasis of accounting
\nThe Consolidated Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006 and
\nInternational Financial Reporting Standards (\u201cIFRSs\u201d)
as issued by the IASB. The Consolidated Financial Statements have been prepared
\non an historical cost basis, except for the revaluation of certain financial instruments and investments which are recognised at fair value at
\nthe end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
\n
\n
\n
\n
2.
Summary of significant accounting policies
continued
\nAlternative Performance Measures
\nThe Group presents Alternative Performance Measures (\u201cAPMs\u201d) in addition to the statutory results of the Group. These are pre
sented in
\naccordance with the Guidelines on APMs issued by the European Securities and Markets Authority (\u201cESMA\u201d).
\nAPMs used by the Group are set out in the glossary to these Financial Statements on pages 227 to 234 and the reconciling items between
\nstatutory and adjusted results are listed below and described in more detail in note 6.
\nAdjusted revenue includes the Group\u2019s share of revenue from equity accounted investments (\u201cEAIs\u201d).
\nAdjusted profit measures exclude items which are significant in size or volatility or by nature are non-trading or non-recurring, any item
\nreleased to the Income Statement that was previously a fair value item booked on an acquisition, and include adjusted profit from EAIs.
\nOn this basis, the following are the principal items included within adjusting items impacting operating profit:
\n\u2022
Amortisation of intangible assets that are acquired in a business combination, excluding computer software and development costs;
\n\u2022
Significant restructuring project costs and other associated costs, including losses incurred following the announcement of closure for
\nidentified businesses, arising from significant strategy changes that are not considered by the Group to be part of the normal operating
\ncosts of the business;
\n\u2022
Acquisition and disposal related gains and losses;
\n\u2022
Impairment charges that are considered to be significant in nature and/or value to the trading performance of the business;
\n\u2022
Movement in derivative financial instruments not designated in hedging relationships, including revaluation of associated financial assets
\nand liabilities;
\n\u2022
Removal of adjusting items, interest and tax on equity accounted investments to reflect operating results;
\n\u2022
The charge for the Melrose equity-
settled compensation scheme, including its associated employer\u2019s tax charge
; and
\n\u2022
The net release of fair value items booked on acquisitions.
\nFurther to the adjusting items above, adjusting items impacting profit before tax include:
\n\u2022
Acceleration of unamortised debt issue costs written off as a consequence of Group refinancing;
\n\u2022
Significant settlement gains and losses associated with debt instruments including interest rate swaps following acquisition or disposal
\nrelated activity or non-trading transactions; and
\n\u2022
The fair value changes on cross-currency swaps, entered into by GKN prior to acquisition, relating to cost of hedging which are not
\ndeferred in equity.
\nIn addition to the items above, adjusting items impacting profit after tax include:
\n\u2022
The net effect on tax of significant restructuring from strategy changes that are not considered by the Group to be part of the normal
\noperating costs of the business;
\n\u2022
The net effect of significant new tax legislation; and
\n\u2022
The tax effects of adjustments to profit/(loss) before tax.
\nThe Board considers the adjusted results to be an important measure used to monitor how the businesses are performing as this provides
\na meaningful reflection of how the businesses are managed and measured on a day-to-day basis and achieves consistency and
\ncomparability between reporting periods, when all businesses are held for a complete reporting period.
\nThe adjusted measures are used to partly determine the variable element of remuneration of senior management throughout the Group
\nand are also in alignment with performance measures used by certain external stakeholders. The adjusted measures are also taken into
\naccount when valuing individual businesses as part of the \u201cBuy, Improve, Sell\u201d Group strategy model.
\nAdjusted profit is not a defined term under IFRS and may not be comparable with similarly titled profit measures reported by other
\ncompanies. It is not intended to be a substitute for, or superior to, GAAP measures. All APMs relate to the current year results and
\ncomparative periods where provided.
\nBasis of consolidation
\nThe Group\u2019s Financial Statements include the results of the parent undertaking and all of its subsidiary undertakings. In add
ition, the
\nGroup\u2019s share of the results and equity of joint ventures and associated undertakings (together \u201cequity accounted investments\u201d) are
\nincluded. The results of businesses acquired during the period are included from the effective date of acquisition and, for those sold during
\nthe period, to the effective date of disposal. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring
\nthe accounting policies used into line with those used by the Group.
\nAll intra-Group balances and transactions, including unrealised profits arising from intra-Group transactions, have been eliminated in full.
\nNon-
controlling interests in subsidiaries are identified separately from the Group\u2019s equity therein. The interest of non
-controlling
\nshareholders is initially measured at the non-
controlling interests\u2019 proportion of the share of the
fair value of the acquiree\u2019s identifiable net
\nassets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus
\nthe non-
controlling interests\u2019 share of subsequent changes in eq
uity. Total comprehensive income is attributed to non-controlling interests
\neven if this results in the non-controlling interests having a deficit balance.
\nGoing concern
\nThe Consolidated Financial Statements have been prepared on a going concern basis as the Directors consider that adequate resources exist
\nfor the Company to continue in operational existence for the foreseeable future.
\nThe Group\u2019s liquidity and funding arrangements are described in the Finance Director\u2019s Review. There is significant liquidi
ty headroom of \u00a32.6
\nbillion at 31 December 2022 and sufficient headroom throughout the going concern forecast period. Forecast covenant compliance is considered
\nfurther below.
\n\n
None of the Group\u2019s banking facilit
ies mature in the going concern period following an extension agreed during 2021. The next contractual
\nmaturity is in June 2024 and whilst changes to banking arrangements are being considered following the announced intention to demerge GKN
\nAutomotive, GKN Powder Metallurgy and GKN Hydrogen, these will only be enacted if the shareholders approve the demerger. As part of its
\npreparation for the intended demerger, the Group has agreed revised banking documentation split between the demerger businesses and
\nremaining business, which is comparable in nature with existing arrangements and would provide both businesses with sufficient liquidity albeit
\ncontingent on shareholder approval of the demerger.
\nCovenants
\nThe current facility has two financial covenants being a net debt to adjusted EBITDA covenant and an interest cover covenant, both of which are
\ntested half yearly in June and December.
\nThe financial covenants during the period of assessment for going concern are as follows:
\n31 December
\n2022
\n30 June
\n2023
\n31 December
\n2023
\nNet debt to adjusted EBITDA
3.75x
3.5x
3.5x
\nInterest cover
4.0x
4.0x
4.0x
\nTesting
\nThe Group has modelled two scenarios in its assessment of going concern. A base case and a reasonably possible sensitised case.
\nThe base case takes into account the estimated impact of a continued recovery from the COVID-19 pandemic as well as other end market and
\noperational factors, including supply chain challenges, throughout the going concern period and has been monitored against the actual results
\nand cash generation in the year.
\nThe reasonably possible sensitised case models more conservative sales assumptions for 2023 and the first half of 2024. The sensitised
\nassumptions are specific to each business taking into account their markets, but on average represents a c. 10% and c. 15% reduction to the
\nGroup\u2019s forecast revenue in each of 2023 and the first half of 2024 respectively. The sensitised revenues have had a conseque
ntial impact on
\nprofit and cash flow, along with a further downside sensitivity applied to increase working capital by approximately 2% of revenue. Given that
\nthere is liquidity headroom of \u00a32.6 billion and the Group\u2019s leverage was 1.4x, comfortably below the covenant test at 31 Dece
mber 2022, no
\nfurther sensitivity detail is provided.
\nUnder the reasonably possible sensitised case, even with significant reductions, no covenant is breached at the forecast testing dates being 30
\nJune 2023 and 31 December 2023, and the Group will not require any additional sources of finance. Testing at 30 June 2024 is also favourable,
\nassuming arrangements similar in nature with existing agreements.
\nThe Group has also considered the circumstance that the proposed demerger occurs in April 2023. Modelling of both a base case and a
\nreasonably possible sensitised case has also been prepared for the remaining Group and due to revised banking documents having been
\nformally agreed, consistent with the conclusion above, the Group will not require any additional sources of finance and no covenant is breached
\nat the forecast testing dates being 30 June 2023 and 31 December 2023.
\nBusiness combinations and goodwill
\nThe acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets
\ntransferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange
\nfor control of the acquiree. Control is achieved where the Company has the power to govern the financial and operating policies of an
\ninvestee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an
\nexpense in the Income Statement as incurred.
\nThe acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific
\nguidance is provided by IFRSs. Non-current assets and directly attributable liabilities that are classified as held for sale in accordance with
\nIFRS 5: Non-current assets held for sale and discontinued operations, are recognised and measured at fair value less costs to sell. Also,
\ndeferred tax assets and liabilities are recognised and measured in accordance with IAS 12: Income taxes, liabilities and assets related to
\nemployee benefit arrangements are recognised and measured in accordance with IAS 19 (revised): Employee benefits and liabilities or
\nequity instruments related to the replacement by the Group of an acquiree\u2019s share
-based payments awards are measured in accordance
\nwith IFRS 2: Share-based payment. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is
\nrecognised as goodwill.
\nIf the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
\nGroup reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or
\nadditional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the
\nacquisition date that, if known, would have affected the amounts recognised at that date.
\nThe measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
\ncircumstances that existed as of the acquisition date and is subject to a maximum period of one year.
\nGoodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-
\ncontrolling interest in the acquiree
and the fair value of the acquirer\u2019s previously held equity interest in the acquiree over the acquirer\u2019s
\ninterest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
\nat cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in
\ncircumstances indicate that the carrying value may be impaired.
\nIf, after reassessment, the Group\u2019s interest in the fair
value of the acquiree\u2019s identifiable net assets exceeds the sum of the consideration
\ntransferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in
\nthe acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.
\n
\n163
\n\nAs at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing
\nthe recoverable amount of the cash-generating unit to which goodwill relates. Where the recoverable amount of the cash-generating unit is
\nless than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is
\na disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on
\ndisposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the
\noperation disposed of and the operation retained.
\nEquity accounted investments
\nA joint venture is an entity which is not a subsidiary undertaking but where the interest of the Group is that of a partner in a business over
\nwhich the Group exercises joint control with its partners over the financial and operating policies. In all cases voting rights are 50% or
\nlower.
\nAssociated undertakings are entities that are neither a subsidiary nor a joint venture, but where the Group has a significant influence. The
\nresults, assets and liabilities of equity accounted investments are accounted for using the equity method of accounting. The
Group\u2019s share
\nof equity includes goodwill arising on acquisition.
\nWhen a Group entity transacts with an equity accounted investment of the Group, profits and losses resulting from the transactions with the
\nequity accounted investments are recognised in the Group\u2019s Consolidated Financial Statements only to the extent of interests
in equity
\naccounted investments that are not related to the Group.
\nRevenue
\nRevenues are recognised either at the point of transfer of control of goods and services, or recognised over time on an activity basis using
\nthe costs incurred as the measure of the activity. Costs are recognised as they are incurred.
\nThe nature of agreements into which the Group enters means that certain of the Group\u2019s arrangements with its customers have m
ultiple
\nelements that can include any combination of:
\n\u2022
Sale of products and services;
\n\u2022
Risk and revenue sharing partnerships (\u201cRRSPs\u201d);
\n\u2022
Design and build; and
\n\u2022
Construction contracts.
\nContracts are reviewed to identify each performance obligation relating to a distinct good or service and the associated consideration. The
\nGroup allocates revenue to multiple element arrangements based on the identified performance obligations within the contracts in line with
\nthe policies below. A performance obligation is identified if the customer can benefit from the good or service on its own or together with
\nother readily available resources, and it can be separately identified within the contract. This review is performed by reference to the
\nspecific contract terms.
\nSale of products and services
\nThis revenue stream accounts for the majority of Group sales. Contracts in the Automotive, Powder Metallurgy and Other Industrial
\nsegments operate almost exclusively on this basis, and it also covers a high proportion of the Aerospace segment\u2019s revenues.
\nInvoices for goods are raised and revenue is recognised when control of the goods is transferred to the customer. Dependent upon
\ncontractual terms this may be at the point of despatch, acceptance by the customer or, in Aerospace, certification by the customer. The
\nrevenue recognised is the transaction price as it is the observable selling price per product.
\nCash discounts, volume rebates and other customer incentive programmes are based on certain percentages agreed with the Group
\u2019s
\ncustomers, which are typically earned by the customer over an annual period. These are allocated to performance obligations and are
\nrecorded as a reduction in revenue at the point of sale based on the estimated future outcome. Due to the nature of these arrangements an
\nestimate is made based on historical results to date, estimated future results across the contract period and the contractual provisions of
\nthe customer agreement.
\nMany businesses in the Powder Metallurgy and Automotive segments recognise an element of revenue via a surcharge or similar raw
\nmaterial cost recovery mechanism. The surcharge is generally based on prior period movement in raw material price indices applied to
\ncurrent period deliveries.
\nRisk and revenue sharing partnerships (\u201cRRSPs\u201d)
\nThis revenue stream affects a small number of businesses, exclusively in the Aerospace segment. Revenue is recognised under RRSPs
\nfor both the sale of product as detailed above and sales of services, which are recognised by reference to the stage of completion based
\non the performance obligations in the contract. In most RRSP contracts, there are two separate phases where the Group earns revenue;
\nsale of products principally to engine manufacturers and aftermarket support.
\nThe assessment of the stage of completion is dependent on the nature of the contract and the performance obligations within it.
\nThe value of revenue is based on the standalone selling price for each element of the contract.
\nRevenue is recognised at the point control passes to the customer. For products and services, this has been identified as the point of
\ndespatch, acceptance by the customer or certification by the customer. Where the amount of revenue recognised is not yet due for
\ncollection under the terms of the contract, it will be recognised as variable consideration within the unbilled work done contract asset
\n(\u201cunbilled work done\u201d)
. Revenue is not recognised where recovery is not probable due to potential significant reversals in the future. This
\ncan be affected by assessment of future volumes including aftermarket expectations which are impacted by technology development, fuel
\nprice and competition.
\nParticipation fees are payments made to engine manufacturers and original equipment manufacturers relating to RRSPs and long-term
\nagreements. They are recognised as contract assets to the extent they can be recovered from future sales. Where participation fees have
\nbeen paid under the RRSP, the amortisation is recognised as a revenue reduction under IFRS 15, as performance obligations are satisfied.
\n
\n
\n
\n164
\nGenerally, during the design and development phase of a typical RRSP contract, the Group performs contractually agreed-upon tasks for a
\ncustomer. It is usual for the Intellectual Property Rights (\u201cIPRs\u201d)
that underpin technology advancement or know-how to remain with the
\nGroup such that the customer cannot benefit from the IPRs either on their own or together with other resources that are readily available to
\nthe customer. Where IPRs are transferred to the customer the Group has determined this is not separately identifiable from other promises
\nin the contract due to an exclusivity clause for the supply of product. Accordingly, it has been determined that the Group\u2019s
promise to
\ntransfer goods to its customer is a performance obligation that is separately identifiable and this uses development and know-how as an
\ninput.
\nDesign and build
\nThis revenue stream affects a discrete number of businesses, primarily in the Aerospace segment but also on a smaller scale in the
\nAutomotive segment. Generally, revenue is only recognised on the sale of product as detailed above, however, on occasions cash is
\nreceived in advance of work performed to compensate the Group for costs incurred in design and development activities. The Group
\nperforms an assessment of its performance obligations to understand multiple elements. Where it is determined there is only one type of
\nperformance obligation, being the delivery of product, any cash advance is factored into the revenue allocated across the deliveries
\nrequired under the contract.
\nWhere the performance obligation has not been satisfied amounts received are recognised as a contract liability. If there is more than one
\nperformance obligation, revenue is allocated to each one based on a standalone selling price for each element of the contract.
\nDue to the nature of design and build contracts, there can be signif
icant \u2018learning curves\u2019 while the Group optimises its production
\nprocesses. During the early phase of these contracts, all costs including any start-up losses are taken directly to the Income Statement, as
\nthey do not meet the criteria for fulfilment costs.
\nConstruction contracts
\nWhere multiple performance obligations are identified, revenue is recognised as each performance obligation is met. This requires an
\nassessment of total revenue to identify the allocation across the performance obligations, based on the standalone selling price for each
\nobligation.
\nIn cases where one of the following criteria is met, revenue is recognised over time:
\n\u2022
The customer simultaneously receives and consumes the benefits provided by the Group\u2019s performance;
\n\u2022
The Group\u2019s per
formance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
\n\u2022
The Group\u2019s performance does not create an asset with an alternative use to the Group and it has an enforceable right to paym
ent for
\nperformance completed to date.
\nDue to the nature of the criteria above, only certain contracts in the Group qualify for over time recognition. On this basis revenue is
\nrecognised using the input method, which uses costs incurred and the assessed margin across the contract. The input method is used to
\nmeasure progress as it best depicts the transfer of control to the customer. The margin and associated revenue are calculated based on
\nthe estimated transaction price and expected total costs, with considerations made for the associated contract risks.
\nIf any of the above criteria are not met, revenue is recognised at a point in time when control transfers to the customer which, in line with
\nthe sale of goods and services above, is the point of delivery or customer acceptance dependent on the terms of the contract.
\nUnbilled work done addresses contract matters, such as price or scope amendments, which are included based on the expected value or
\nmost likely amount. A constraint is included unless it is highly probable that the revenue will not significantly reverse in the future. This
\nconstraint is calculated based on a cautious expectation of the life of certain RRSPs. Variations in contract work, claims and incentive
\npayments are included in revenue from construction contracts based on an estimate of the expected value the Group expects to receive.
\nVariations are included when the customer has agreed to the variation or acknowledged liability for the variation in principle. Claims are
\nincluded when negotiations with the customer have reached an advanced stage such that it is virtually certain that the customer will accept
\nthe claim.
\nFinance income
\nFinance income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be
\nmeasured reliably. Finance income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
\napplicable.
\nBorrowing costs
\nBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
\ntake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
\nassets are substantially ready for their intended use or sale.
\nInvestment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
\nfrom the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the Income Statement in the period in which
\nthey are incurred.
\nIssue costs of loans
\nThe finance cost recognised in the Income Statement in respect of the issue costs of borrowings is allocated to periods over the terms of
\nthe instrument using the effective interest rate method.
\nProperty, plant and equipment
\nProperty, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
\nThe initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bring the asset into operation,
\nand any material borrowing costs on qualifying assets. Qualifying assets are defined as an asset or programme where the period of
\ncapitalisation is more than 12 months. Purchase price or construction cost is the aggregate amount paid and the fair value of any other
\nconsideration given to acquire the asset.
\n
\n165
\n\nWhere assets are in the course of construction at the balance sheet date, they are classified as capital work-in-progress. Transfers are
\nmade to other asset categories when they are available for use, at which point depreciation commences.
\nRight-of-use assets arise under IFRS 16 and are depreciated over the shorter of the estimated life and the lease term.
\nDepreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
\nFreehold land
nil
\nFreehold buildings and long leasehold property
over expected economic life not exceeding 50 years
\nShort leasehold property
over the term of the lease
\nPlant and equipment
3-15 years
\nThe estimated useful lives of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives are
\naccounted for prospectively.
\nThe carrying values of property, plant and equipment are reviewed annually for indicators of impairment, or if events or changes in
\ncircumstances indicate that the carrying value may not be recoverable. If such indication exists an impairment test is performed and, where
\nthe carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable
\namount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, estimated future
\ncash flows, considering the implications of climate change (see note 11 for further detail), are discounted to their present value using a pre-
\ntax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
\ndoes not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset
\nbelongs.
\nAn item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
\nthe continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
\nproceeds or costs and the carrying amount of the item) is included in the Income Statement in the period that the item is derecognised.
\nIntangible assets
\nIntangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
\nOn acquisition of businesses, separately identifiable intangible assets are initially recorded at their fair value at the acquisition date.
\nAccess to the use of brands and intellectual property are valued using a \u201crelief from royalty\u201d method which determines the ne
t present
\nvalue of future additional cash flows arising from the use of the intangible asset.
\nCustomer relationships and contracts are valued on the basis of the net present value of the future additional cash flows arising from
\ncustomer relationships with appropriate allowance for attrition of customers.
\nTechnology assets are valued using a replacement cost approach, or a \u201crelief from royalty\u201d method.
\nAmortisation of intangible assets is recorded in administration expenses in the Income Statement and is calculated on a straight-line basis
\nover the estimated useful lives of the asset as follows:
\nCustomer relationships and contracts
20 years or less
\nBrands and intellectual property
20 years or less
\nTechnology
20 years or less
\nComputer software
5 years or less
\nDevelopment costs
20 years or less
\nWhere computer software is not integral to an item of property, plant or equipment, its costs are capitalised and categorised as intangible
\nassets. Computer software is initially recorded at cost. Where these assets have been acquired through a business combination, this will
\nbe the fair value allocated in the acquisition accounting. Where these have been acquired other than through a business combination, the
\ninitial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
\nIntangible assets (other than computer software and development costs) are tested for impairment annually or more frequently whenever
\nevents or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses are measured on a similar
\nbasis to property, plant and equipment. Useful lives are also examined on an annual basis and adjustments, where applicable, are made
\non a prospective basis.
\nResearch and development costs
\nResearch costs are expensed as incurred.
\nCosts relating to clearly defined and identifiable development projects are capitalised when there is a technical degree of exploitation,
\nadequacy of resources and a potential market or development possibility in the undertaking that are recognisable; and where it is the
\nintention to produce, market or execute the project. A correlation must also exist between the costs incurred and future benefits and those
\ncosts can be measured reliably. Capitalised costs are expensed on a straight-line basis over their useful lives of 20 years or less. Costs not
\nmeeting such criteria are expensed as incurred.
\nInventories
\nInventories are valued at the lower of cost and net realisable value and are measured using a first in, first out or weighted average cost
\nbasis. Cost includes all direct expenditure and appropriate production overhead expenditure incurred in bringing goods to their current state
\nunder normal operating conditions. Net realisable value is based on estimated selling price less costs expected to be incurred to
\ncompletion and disposal. Provisions are made for obsolescence or other expected losses where necessary.
\n
\n
\n
\n166
\nCash and cash equivalents
\nCash and cash equivalents comprise cash in hand, balances with banks and similar institutions, and short-term deposits which are readily
\nconvertible to cash and are subject to insignificant risks of changes in value.
\nFor the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined
\nabove, net of outstanding bank overdrafts.
\nInterest-bearing loans and borrowings
\nAll loans and borrowings are initially recognised at fair value of the consideration received net of issue costs associated with the
\nborrowings.
\nAfter initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
\nmethod. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
\nGains and losses are recognised in the Income Statement when the liabilities are derecognised or impaired, as well as through the
\namortisation process.
\nGovernment refundable advances
\nGover
nment refundable advances are reported in \u201cTrade and other payables\u201d in the Balance Sheet. Refundable advances include amount
s
\nadvanced by a government, accrued interest and directly attributable costs. Refundable advances are provided to the Group to part-finance
\nexpenditures on specific development programmes. The advances are provided on a risk sharing basis, i.e. repayment levels are
\ndetermined subject to the success of the related programme. Balances are held at amortised cost and interest is calculated using the
\neffective interest rate method.
\nLeases
\nWhere a lease arrangement is identified, a liability to the lessor is included in the Balance Sheet as a lease obligation calculated at the
\npresent value of minimum lease payments. A corresponding right-of-use asset is recorded in property, plant and equipment. The discount
\nrate used to calculate the lease liability is the Group
\u2019s incremental borrowing rate, unless there is a rate implicit in the lease. The
\nincremental borrowing rate is used for the majority of leases. Incremental borrowing rates are based on the term, currency, country and
\nstart date of the lease and reflect the rate the Group would pay for a loan with similar terms and security.
\nFollowing initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. Where there is a
\nchange in future lease payments due to a rent review, change in index or rate, or a change in the Group\u2019s assessment of wheth
er it is
\nreasonably certain to exercise a purchase, extension or break option, the lease obligation is remeasured. A corresponding adjustment is
\nmade to the associated right-of-use asset.
\nRight-of-use assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
\nLease payments are apportioned between finance costs and a reduction in the lease obligation so as to reflect the interest on the
\nremaining balance of the obligation. Finance charges are recorded in the Income Statement within finance costs.
\nLeases with a term of 12 months or less and leases for low value are not recorded on the Balance Sheet and lease payments are
\nrecognised as an expense in the Income Statement on a straight-line basis over the lease term. Expenses relating to variable lease
\npayments which are not included in the lease liability, due to being based on a variable other than an index or rate, are recognised as an
\nexpense in the Income Statement.
\nFinancial instruments
\u2013
assets
\nClassification and measurement
\nAll financial assets are classified as either those which are measured at fair value, through profit or loss or Other Comprehensive Income,
\nand those measured at amortised cost.
\nFinancial assets are initially recognised at fair value. For those which are not subsequently measured at fair value through profit or loss,
\nthis includes directly attributable transaction costs. Trade and other receivables, contract assets and amounts due from equity accounted
\ninvestments are subsequently measured at amortised cost.
\nRecognition and derecognition of financial assets
\nFinancial assets are recognised in the Group\u2019s Balance Sheet when the Group becomes a party to the contractual provisions of
the
\ninstrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
\ntransfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
\nImpairment of financial assets
\nFor trade receivables and contract assets, the simplified approach permitted under IFRS 9 is applied. The simplified approach requires that
\nat the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not
\ncontain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. Cash and
\ncash equivalents and other receivables are also subject to impairment requirements.
\nInvestments
\nThe Group has investments in unlisted shares that are not traded in an active market, but are classified as financial assets, measured at
\nfair value. Fair value is determined by assessment of expected future dividends discounted to net present value. Any changes in fair value
\nare recognised in Other Comprehensive Income and accumulated in retained earnings. Dividends from investments are recognised in the
\nIncome Statement when the Group\u2019s right to receive the dividend is established.
\n
\n167
\n\n
\nTrade and other receivables
\nTrade and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. For
\ntrade receivables, the carrying amount is reduced by an allowance for expected lifetime losses. Subsequent recoveries of amounts
\npreviously written off are credited against the allowance account and changes in the carrying amount of the allowance account are
\nrecognised in the Income Statement.
\nTrade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring
\nthe expected credit losses, the Group considers all reasonable and supportable information such as the Group\u2019s past experienc
e at
\ncollecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking
\ninformation such as forecasts of future economic decisions.
\nOther receivables are also considered for impairment and if required the carrying amount is reduced by any loss arising which is recorded
\nin the Income Statement, although for the Group this is not material.
\nFinancial instruments
\u2013
liabilities
\nRecognition and derecognition of financial liabilities
\nFinancial liabilities are recognised in the Group\u2019s Ba
lance Sheet when the Group becomes a party to the contractual provisions of the
\ninstruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities
when the Group\u2019s
\nobligations are discharged, significantly modified, cancelled or they expire.
\nClassification and measurement
\nNon-derivative financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense
\nrecognised on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial
\nliability and of allocating interest expense over the relevant periods. The effective interest rate is the rate that discounts estimated future
\ncash payments throughout the expected life of the financial liability, or, where appropriate, a shorter period to the gross carrying amount of
\nthe financial liability.
\nDerivative financial instruments and hedging
\nThe Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
\nremeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement.
\nHedge accounting
\nIn order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged
\nand the hedging instrument, along with its risk management objectives and its strategy for undertaking various hedge transactions.
\nFurthermore, at the inception of the hedge and on an ongoing basis, the Group documents that the hedge will be highly effective, which is
\nwhen the hedging relationships meet all of the following hedge effectiveness requirements:
\n\u2022
there is an economic relationship between the hedged item and the hedging instrument;
\n\u2022
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
\n\u2022
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
\nhedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\nThe Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
\n(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
\ndiscontinuation is accounted for prospectively.
\nThe Group designates certain hedging instruments as either cash flow hedges or hedges of net investments in foreign operations.
\nCash flow hedge
\nDerivative financial instruments are classified as cash flow
hedges when they hedge the Group\u2019s exposure to the variability in cash flows
\nthat are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.
\nThe Group designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the
\nhedging instrument for all of its hedging relationships involving foreign exchange forward contracts.
\nThe effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive
\nIncome and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
\nAmounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income
\nStatement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer
\nexpected to occur. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-
\nfinancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
\nthe cost of the non-financial asset or non-financial liability.
\n\n
\nHedges of net investments in foreign operations
\nDerivative financial instruments are
classified as net investment hedges when they hedge the Group\u2019s net investment in foreign operations.
\nThe effective element of any foreign exchange gain or loss from revaluing the derivative at a reporting period end is recognised in the
\nStatement of Comprehensive Income. Any ineffective element is recognised immediately in the Income Statement.
\nThe Group designates only the spot rate component of cross currency swaps in net investment hedges. The changes in the fair value of
\nthe aligned forward and currency basis elements are recognised in other comprehensive income and accumulated in equity. If the hedged
\nitem is time
\u2011
period related, then the amount accumulated in equity is reclassified to profit or loss on an appropriate basis.
\nGains and losses accumulated in equity are recognised immediately in the Income Statement when the foreign operation is disposed.
\nProvisions
\nProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
\noutflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
\namount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future
\ncash flows at a rate that reflects the current market assessment of the time value of money and, where appropriate, the risks specific to the
\nliability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
\nContingent liabilities acquired in a business combination
\nContingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of
\nsubsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance
\nwith IAS 37: Provisions, contingent liabilities and contingent assets and the amount initially recognised less cumulative amount of revenue
\nrecognised in accordance with the principles of IFRS 15: Revenue from contracts with customers.
\nPensions and other retirement benefits
\nThe Group operates defined benefit pension plans and defined contribution plans, some of which require contributions to be made to
\nadministered funds separate from the Group.
\nFor the defined benefit pension and retirement benefit plans, plan assets are measured at fair value and plan liabilities are measured on an
\nactuarial basis and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent
\ncurrency and term to the plan liabilities. Any assets resulting from this calculation are limited to past service cost plus the present value of
\navailable refunds and reductions in future contributions to the plan. The present value of the defined benefit obligation, and the related
\ncurrent service cost and past service cost, are measured using the projected unit credit method.
\nThe service cost of providing pension and other retirement benefits to employees for the period is charged to the Income Statement.
\nNet interest expense on net defined benefit obligations is determined by applying discount rates used to measure defined benefit
\nobligations at the beginning of the year to net defined benefit obligations at the beginning of the year. The net interest expense is
\nrecognised within finance costs.
\nRemeasurement gains and losses comprise actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan
\nassets (excluding interest). Remeasurement gains and losses, and taxation thereon, are recognised in full in the Statement of
\nComprehensive Income in the period in which they occur and are not subsequently recycled.
\nActuarial gains and losses may result from differences between the actuarial assumptions underlying the plan obligations and actual
\nexperience during the period or changes in the actuarial assumptions used in the valuation of the plan obligations.
\nFor defined contribution plans, contributions payable are charged to the Income Statement as an operating expense when employees have
\nrendered services entitling them to the contributions.
\nForeign currencies
\nThe individual Financial Statements of each Group company are presented in the currency of the primary economic environment in which it
\noperates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and financial position of each
\nGroup company are expressed in pounds Sterling, which is the functional currency of the Company, and the presentation currency for the
\nConsolidated Financial Statements.
\nIn preparing the Financial Statements of the individual companies, transactions in currencies other than the entity\u2019s functio
nal currency
\n(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
\nmonetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
\nNon-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when
\nthe fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
\nExchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Income
\nStatement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
\nIncome Statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and
\nlosses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised
\ndirectly in equity.
\n
\n169
\n
\n
\nFor the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group\u2019s
foreign operations are translated
\nat exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
\nperiod, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are
\nused. Exchange differences arising, if any, are recognised in the Statement of Comprehensive Income and accumulated in equity
\n(attributed to non-controlling interests as appropriate). Such translation differences are recognised as income or as expenses in the period
\nin which the related operation is disposed of. Any exchange differences that have previously been attributed to non-controlling interests are
\nderecognised but they are not reclassified to the Income Statement.
\nGoodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
\ntranslated at the rate prevailing at the balance sheet date.
\nTaxation
\nThe tax expense is based on the taxable profits for the period and represents the sum of the tax paid or currently payable and deferred tax.
\nTaxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable
\nor deductible in other years and it further excludes items that are never taxable or deductible. The Group\u2019s liability for cu
rrent tax is
\ncalculated using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
\nA tax provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a
\nfuture outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
\nThe assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such
\nactivities and in certain cases based on specialist independent advice.
\nDeferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets
\nand liabilities and their carrying amounts for financial reporting purposes.
\nDeferred tax liabilities are recognised for all taxable temporary differences except:
\n\u2022
where the deferred tax liability arises on the initial recognition of goodwill or an asset or liability in a transaction that is not a business
\ncombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
where the timing of the reversal of the temporary differences associated with investments in subsidiaries and interests in equity
\naccounted investments can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
\nDeferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to
\nthe extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of
\nunused tax assets and unused tax losses can be utilised except:
\n\u2022
where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination
\nand, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
in respect of deductible temporary differences associated with investments in subsidiaries and interests in equity accounted investments,
\ndeferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable
\nfuture and taxable profit will be available against which the temporary differences can be utilised.
\nThe carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
\nthat sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
\nDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
\nliability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the relevant balance sheet date.
\nDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
\nliabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
\nand liabilities on a net basis.
\nTax relating to items recognised directly in other comprehensive income is recognised in the Statement of Comprehensive Income and not
\nin the Income Statement.
\nRevenues, expenses and assets are recognised net of the amount of sales tax except:
\n\u2022
where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales
\ntax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
\n\u2022
where receivables and payables are stated with the amount of sales tax included.
\nThe net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
\nBalance Sheet.
\nShare-based payments
\nThe Group has applied the requirements of IFRS 2: Share-based payment. The Group issues equity-settled share-based payments to
\ncertain employees. Equity-settled share-based payments are measured at fair value of the equity instrument excluding the effect of non-
\nmarket based vesting conditions at the date of grant. The fair value determined at the grant date of the equity-settled share-based
\npayments is expensed on a straight-line basis over the vesting period, bas
ed on the Group\u2019s estimate of shares that will eventually vest
\nand adjusted for the effect of non-market based vesting conditions.
\nFair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on the
\nDirectors\u2019 best estimate, for the effects of non
-transferability, exercise restrictions, and behavioural considerations.
\n
\n
\n
\n170
\nNon-current assets and disposal groups
\nNon-current assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to
\nsell. Non-current assets and businesses are classified as held for sale if their carrying amount will be recovered principally through a sale
\ntransaction rather than through continuing use. This condition is regarded as having been met only when the sale is highly probable and
\nthe asset or business is available for immediate sale in its present condition. Management must be committed to the sale which should be
\nexpected to qualify for recognition as a completed sale within one year from the date of classification.
\nGovernment grants
\nGovernment grants are not recognised in the Income Statement until there is reasonable assurance that the Group will comply with the
\nconditions attached to them and that the grants will be received. Government grants are recognised in the Income Statement on a
\nsystematic basis over the periods in which the Group recognises the related costs for which the grants are intended to compensate.
\nSpecifically, government grants where the primary condition is that the Group should purchase, construct or otherwise acquire non-current
\nassets (including property, plant and equipment) are recognised as deferred government grants in the Balance Sheet and transferred to the
\nIncome Statement on a systematic and rational basis over the useful lives of the related assets.
\nGovernment grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
\nfinancial support to the Group with no future related costs are recognised in the Income Statement in the period in which they become
\nreceivable.
\n3.
Critical accounting judgements and key sources of estimation uncertainty
\nIn the application of the Group\u2019s accounting policies, which are described in note 2, the Directors are required to make judg
ements,
\nestimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
\nestimates and associated assumptions are based on historical experiences and other factors that are considered to be relevant. Actual
\nresults may differ from these estimates.
\nThe estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
\nperiod in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision
\naffects both current and future periods.
\nCritical judgements
\nIn the course of preparing the Financial Statements, a critical judgement within the scope of paragraph 122 of IAS 1: Presentation of
\nFinancial Statements is made during the process of applying the
Group\u2019s accounting policies
.
\nAdjusting items
\nJudgements are required as to whether items are disclosed as adjusting, with consideration given to both quantitative and qualitative
\nfactors. Further information about the determination of adjusting items in the year ended 31 December 2022 is included in note 2.
\nThere are no other critical judgements other than those involving estimates, that have had a significant effect on the amounts recognised in
\nthe Financial Statements. Those involving estimates are set out below.
\nKey sources of estimation uncertainty
\nAssumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that may have a significant
\nrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
\na)
Assumptions used to determine the recoverable amount of goodwill and other assets
\nDetermining whether the goodwill of groups of cash generating units (\u201cCGUs\u201d) is impaired requires
an estimation of its recoverable amount
\nwhich is compared against the carrying value. The recoverable amount is deemed to be the higher of the value in use and fair value less
\ncosts to sell. For the year ended 31 December 2022, impairment testing has been performed for each group of CGUs using the fair value
\nless costs to sell method. The fair values of the groups of CGUs are calculated using a combination of estimated discounted cash flows
\nand EBITDA multiple valuations, as in the current economic environment it has been difficult to assess a sales value using observable
\nmarket inputs (level 1) or inputs based on market evidence (level 2) and so unobservable inputs (level 3) have been used.
\nThe Automotive and Powder Metallurgy groups of CGUs are the most sensitive to a change in estimates, depending on how their markets
\ncontinue to recover from the implications of the COVID-19 pandemic and supply chain disruption as well as how they continue to recover
\ninflation impacts on input costs. As at 31 December 2022, the carrying amount of goodwill and other intangible assets (not including
\ncomputer software and development costs) in the Automotive group of CGUs is \u00a31,938 million (31 December 2021: \u00a31,980 million) and in
\nthe Powder Metallurgy group of CGUs is \u00a31,081 million (31 December 2021: \u00a31,066 million). The sensitivity disclosures in note 11 show
\nreasonably possible changes to key assumptions and their effect on the impairment models, which could reduce headroom to nil. In order
\nfor a material impairment charge or loss on disposal to be recorded in the next year the following reasonably possible changes in key
\nassumptions would need to occur:
\n\u2022
In the Automotive groups of CGUs, terminal operating profit would need to reduce by 16% which would reduce the terminal operating
\nmargin by 1.7 percentage points.
\n\u2022
In the Powder Metallurgy groups of CGUs, terminal operating profit would need to reduce by 10% which would reduce the terminal
\noperating margin by 1.3 percentage points.
\n
\n171
\n
\n
\nb)
Assumptions used to determine the carrying amount of the Group\u2019s
net retirement benefit obligations
\nThe Group\u2019s pension plans are significant in size. The defined benefit obligations in respect of
the plans are discounted at rates set by
\nreference to market yields on high quality corporate bonds. Significant estimation is required when setting the criteria for bonds to be
\nincluded in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds to
\ninclude are the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded. In addition,
\nassumptions are made in determining mortality and inflati
on rates to be used when valuing the plan\u2019s defined benefit obligations. At 31
\nDecember 2022, the retirement benefit obligation was a net deficit of \u00a3488 million (31 December 2021: \u00a3461 million).
\nFurther details of the assumptions applied and a sensitivity analysis on the principal assumptions used to determine the defined benefit
\nliabilities of the Group\u2019s obligations are shown in note 24.
Whilst actual movements might be different to sensitivities shown, these are a
\nreasonably possible change that could occur.
\nc)
Loss-making contracts
\nLoss-making contract provisions represent the forecast unavoidable costs required to meet the obligations of long-term agreements, in
\nexcess of the contractual inflow expected to be generated in respect of these agreements. In assessing the unavoidable costs,
\nmanagement has considered the possibility that future actions could impact the profitability of the contracts. Calculation of the liability
\nincludes estimations of volumes, price and costs to be incurred over the life of the contract, which are discounted to a current value. Future
\nchanges within these estimates, or commercial progress could have a material impact on the provision in future periods. At 31 December
\n2022, the carrying value of the loss-making contract provision in the Group was \u00a3108 million (31 December 2021: \u00a3167 million). In the last
\nfour years significant progress has been made resolving commercial and operational issues within a large number of loss-making contracts
\ninherited on acquisition of GKN. The release has on average been 18% of the balance immediately before reassessment. If the Group
\nwere to achieve a similar level of success on the amount outstanding at 31 December 2022, there could be a further \u00a319 million released to
\nadjusting items in the next year.
\nd)
Estimates of future revenues and costs of long-term contractual arrangements
\nThe Group has certain large, complex contracts where significant judgements and estimates are required in order to allocate total
\nassociated consideration.
\nA key judgement is the measurement of unbilled work done, in particular relating to certain risk and revenue sharing partnerships
\n(\u201cRRSPs\u201d). A detailed review of the Group\u2019s RRSP contracts determined where terms and conditions result in
unbilled work done and this
\nis further set out in note 17. Distinguishing between a contractual right and the economic compulsion of partners with regard to the sale of
\noriginal equipment (\u201cOE\u201d) components and aftermarket activities relies on an interpretation of complex legal agreements. This
specific point
\ngoverns whether unbilled work done is recognised on the sale of OE components and this can significantly impact the level of profitability
\nfrom one period to the next. Further disclosure is set out in note 4.
\nThe forecast revenues and costs in respect of RRSP contracts are inherently imprecise and significant estimates are required to assess
\nthe pattern of future maintenance activity, the costs to be incurred and escalation of revenue and costs. The estimates take account of the
\nuncertainties, constraining the expected level of revenue as appropriate. Measurement of unbilled work done is driven by forecasting
\naftermarket revenue per delivered engine which is in turn contingent on overall programme success, levels of discounting that might be
\noffered by the engine manufacturers (the Group\u2019s customers), engineering requirem
ents needed for optimal performance of the engine and
\nthe allocation of revenue to individual units. In addition, where programmes are at an early stage the wider implications of any competing
\nengines as well as complications outside of the Group can be difficult to assess. Any of these inputs could change in the next year as
\nprogrammes evolve and due to the size and scale of these contracts, almost any modification could result in material changes in future
\nperiods.
\nThe unbilled work done contract asset calculated is the best estimate of revenue allocated to completed performance obligations using
\ninput assumptions and constraints as detailed further in note 17. As the impacted RRSP contracts mature, there are reasonably possible
\nchanges to assumptions, such as engineering requirements to support programmes and the expected life of certain engines which could
\nlead to the unbilled work done contract asset on the Balance Sheet of \u00a3450 million (31 December 2021: \u00a3305 million) increasing to
\nbetween \u00a3480 million and \u00a3500 million. This would lead to recognition of additional revenue and profit in the next year of between \u00a330
\nmillion and \u00a350 million.
\n4. Revenue
\nAn analysis of the Group\u2019s revenue is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue recognised at a point in time
\nRevenue recognised over time
\n6,613
\n924
\n5,713
\n937
\nRevenue
7,537
6,650
\n(1) Restated for discontinued operations (note 1).
\nAs set out in the accounting policies in note 2, the Group has four primary revenue streams. There is little judgement or estimation in the
\nrevenue recognition of three of these areas; (i) sale of products and services, (ii) design and build and (iii) construction contracts. However,
\nin the fourth area, as disclosed in note 3d, there is estimation involved in accounting for certain RRSP contracts, which arise exclusively in
\nthe Aerospace business. RRSP contracts generally include the sale of products and services as well as certain aspects of design and build
\narrangements. Further details are set out below.
\n
\n
\n
\n172
\nRisk and revenue sharing partnerships
\nThe Group has approximately \u00a313 billion (31 December 2021: \u00a311 billion) in respect of contractual transaction prices including a
\nconstrained estimate of unbilled work done, on four engine programmes, out of a wider population of such programmes, which has been
\nallocated to contracted performance obligations not satisfied at 31 December 2022. These performance obligations will be satisfied and
\nrevenue will be recognised over a period of up to 30 years (2021: 30 years).
\nThe amount of revenue recognised from RRSP contracts during the year was \u00a3547 million, which includes an increase in the unbilled work
\ndone contract asset of \u00a3106 million (2021: \u00a3402 million, which included an increase in the unbilled work done contract asset of \u00a355 million).
\nWithin this there is revenue from the delivery of product which is recognised at a point in time of \u00a3517 million (2021: \u00a3377 million) and
\nrevenue from provision of service which is recognised over time of \u00a330 million (2021: \u00a325 million). Due to the nature of certain of these
\nRRSP arrangements, there is an associated unbilled work done contract asset including movements during the year which is disclosed in
\nnote 17.
\nThe nature of products and services delivered in RRSP contracts varies depending on the individual terms. Typically, they include a design
\nand development phase (which has been determined not to be a distinct performance obligation and so no revenue is recognised) and two
\nother phases where the Group does have performance obligations and earns revenue:
\ni)
Sale of structural OE engine components, such as turbine cases, principally to engine manufacturers, where revenue is recognised at
\na point in time; and
\nii)
Aftermarket support which can include: sale of spare parts where revenue is recognised at a point in time and stand ready services
\nfor life of engine obligations to maintain permanent technical, and other programme related, support functions. Obligations can occur
\nat any time during the engine life and include: engineering and technical support for engine configuration changes and provision of
\naftermarket inventory support solutions.
\nRRSP revenue recognised over time
\nThe nature of these RRSP contracts on long-term engine programmes means that, as a partner, the Aerospace business can share
\nrevenue earned from maintenance, repair and overh
aul services which are provided by the engine manufacturers (the Group\u2019s customers)
\nor their sub-contractors, but not the Group. The Group has a stand ready obligation to contribute to certain of the partnerships which
\ntypically results in the provision of services such as technical and other programme support activities over the whole life of the engine.
\nThese services occur over the life of the engine and due to the nature of compensation from customer arrangements, which is often flight
\nhour based, as we
ll as costs which are less predictable, revenue is recognised over time using the engine manufacturer\u2019s actual overhaul
\ncosts as an input method. This method is considered appropriate as it best reflects the customers\u2019 receipt and consumption of
benefit from
\nthe Group\u2019s stand ready performance obligation.
\nThe total contract revenue includes amounts from: expected sales of OE engine components, expected sales of spare parts and
\naftermarket revenue per delivered engine for stand ready services for the life of engine obligations. The total contract revenue is allocated
\nto all of the performance obligations.
\nThere has been \u00a319 million (2021: \u00a324 million) of revenue recognised from changes in assumptions which will also impact the revenue
\nallocation between future years. Assumption changes were made following commercial and operational progress by engine manufacturers
\nwith their customers, providing more certainty over future volumes for the RRSP partners.
\n5.
Segment information
\nSegment information is presented in accordance with IFRS 8: Operating Segments which requires operating segments to be identified on
\nthe basis of internal reports about components of the Group that are regularly reported to the Group\u2019s Chief Operating Decisi
on Maker
\n(\u201cCODM\u201d), which has been deemed to be the Group\u2019s Board, in order to allocate resources to the segments and assess their performance.
\nFollowing the disposal of the Ergotron business during the year its results, which were previously included within the Other Industrial
\nsegment, are classified within discontinued operations and the comparative results for 2021 have been restated accordingly. In addition,
\nthe results of the Nortek Air Management, Brush and Nortek Control businesses, which were disposed of in the prior year, are also
\nclassified as discontinued operations.
\nThe operating segments are as follows:
\nAerospace
\u2013
a multi-technology global tier one supplier of both civil and defence airframes and engine structures.
\nAutomotive
\u2013
a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of
\ndriveline technologies, including electric vehicle components.
\nPowder Metallurgy
\u2013
a global leader in precision powder metal parts for the automotive and industrial sectors, as well as the production of
\npowder metal.
\nOther Industrial
\u2013
comprises the Group\u2019s
Hydrogen Technology business which was launched in the prior year.
\nIn addition, there is a central cost centre which is also reported to the Board. The central cost centre contains the Melrose Group head
\noffice costs and charges related to the divisional management long-term incentive plans.
\nReportable segment results include items directly attributable to a segment as well as those which can be allocated on a reasonable basis.
\nInter-
segment pricing is determined on an arm\u2019s length basis in a manner similar to transactions with third parties.
\nThe Group\u2019s geographical segments are determined by the location of the Group\u2019s no
n-current assets and, for revenue, the location of
\nexternal customers. Inter-segment sales are not material and have not been disclosed.
\nThe following tables present the results and certain asset and liability information regarding the Group\u2019s operating se
gments and central
\ncost centre for the year ended 31 December 2022.
\n
\n173
\n
\n
\na)
Segment revenues
\nThe Group derives its revenue from the transfer of goods and services over time and at a point in time. The Group has assessed that the
\ndisaggregation of revenue recognised from contracts with customers by operating segment is appropriate as this is the information
\nregularly reviewed by the CODM in evaluating financial performance. The Group also believes that presenting this disaggregation of
\nrevenue based on the timing of transfer of goods or services provides useful information as to the nature and timing of revenue from
\ncontracts with customers.
\nYear ended 31 December 2022
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted revenue
\nEquity accounted investments
\n2,957
\n(3)
\n4,211
\n(625)
\n1,022
\n(26)
\n1
\n\u2013
\n8,191
\n(654)
\nRevenue
2,954
3,586
996
1
7,537
\nTiming of revenue recognition
\nAt a point in time
\nOver time
\n2,030
\n924
\n3,586
\n\u2013
\n996
\n\u2013
\n1
\n\u2013
\n6,613
\n924
\nRevenue
2,954
3,586
996
1
7,537
\nYear ended 31 December 2021
\u2013
restated
\n(1)
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted revenue
\nEquity accounted investments
\n2,543
\n(5)
\n3,745
\n(581)
\n975
\n(27)
\n\u2013
\n\u2013
\n7,263
\n(613)
\nRevenue
2,538
3,164
948
\u2013
6,650
\nTiming of revenue recognition
\nAt a point in time
\nOver time
\n1,601
\n937
\n3,164
\n\u2013
\n948
\n\u2013
\n\u2013
\n\u2013
\n5,713
\n937
\nRevenue
2,538
3,164
948
\u2013
6,650
\n(1) Restated for discontinued operations (note 1).
\nb)
Segment operating profit
\nYear ended 31 December 2022
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n(1)
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted operating profit/(loss)
186
250
96
(14)
(38)
480
\nItems not included in adjusted operating profit
\n(2)
\n:
\nAmortisation of intangible assets acquired in
\nbusiness combinations
\nRestructuring costs
\nMovement in derivatives and associated
\nfinancial assets and liabilities
\nEquity accounted investments adjustments
\nImpairment of assets
\nMelrose equity-settled compensation scheme
\ncharges
\nNet release and changes in discount rates of fair
\nvalue items
\nAcquisition and disposal related gains and losses
\n(260)
\n(88)
\n21
\n\u2013
\n\u2013
\n\u2013
\n12
\n(5)
\n(147)
\n(37)
\n(7)
\n(29)
\n(20)
\n\u2013
\n5
\n(4)
\n(51)
\n(17)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n9
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n(100)
\n\u2013
\n\u2013
\n(15)
\n\u2013
\n20
\n(458)
\n(144)
\n(87)
\n(29)
\n(20)
\n(15)
\n26
\n11
\nOperating (loss)/profit
(134)
11
36
(14)
(135)
(236)
\nFinance costs
\nFinance income
\n(104)
\n33
\nLoss before tax
\nTax
\n(307)
\n84
\nLoss for the year from continuing operations
(223)
\n
\n\n
\n174
\n\nYear ended 31 December 2021
\u2013
restated
\n(3)
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n(1)
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted operating profit/(loss)
112
172
91
(7)
(51)
317
\nItems not included in adjusted operating profit
\n(2)
\n:
\nAmortisation of intangible assets acquired in
\nbusiness combinations
\nRestructuring costs
\nMovement in derivatives and associated
\nfinancial assets and liabilities
\nEquity accounted investments adjustments
\nMelrose equity-settled compensation scheme
\ncharges
\nNet release and changes in discount rates of fair
\nvalue items
\nAcquisition and disposal related gains and losses
\n(245)
\n(92)
\n4
\n\u2013
\n\u2013
\n23
\n2
\n(142)
\n(147)
\n(1)
\n(28)
\n\u2013
\n14
\n1
\n(49)
\n(18)
\n(3)
\n\u2013
\n\u2013
\n11
\n8
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(12)
\n(114)
\n\u2013
\n(19)
\n1
\n(4)
\n(436)
\n(269)
\n(114)
\n(28)
\n(19)
\n49
\n7
\nOperating (loss)/profit
(196)
(131)
40
(7)
(199)
(493)
\nFinance costs
\nFinance income
\n(169)
\n2
\nLoss before tax
\nTax
\n(660)
\n180
\nLoss for the year from continuing operations
(480)
\n(1) Corporate adjusted operating loss of \u00a338 million (2021: \u00a351 million), includes \u00a33 million (2021: \u00a317 million) of costs in respect of divisional management long-term incentive plans.
\n(2) Further details on adjusting items are discussed in note 6.
\n(3) Restated for discontinued operations (note 1).
\nc)
Segment total assets and liabilities
\nTotal assets
Total liabilities
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n6,692
\n4,711
\n1,791
\n17
\n776
\n6,267
\n4,608
\n1,669
\n14
\n847
\n2,517
\n2,033
\n421
\n5
\n1,843
\n2,231
\n2,042
\n405
\n\u2013
\n1,718
\nContinuing operations
13,987
13,405
6,819
6,396
\nDiscontinued operations
\u2013
617
\u2013
86
\nTotal
13,987
14,022
6,819
6,482
\n(1) Restated for discontinued operations (note 1).
\n
\n175
\n
\n
\nd)
Segment capital expenditure and depreciation
\nCapital expenditure
\n(1)
\nDepreciation of
\nowned assets
\n(1)
\nDepreciation of
\nleased assets
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n77
\n187
\n44
\n\u2013
\n\u2013
\n66
\n113
\n40
\n1
\n\u2013
\n123
\n184
\n53
\n\u2013
\n\u2013
\n122
\n198
\n51
\n\u2013
\n1
\n21
\n14
\n10
\n\u2013
\n1
\n24
\n15
\n9
\n\u2013
\n1
\nContinuing operations
308
220
360
372
46
49
\nDiscontinued operations
\u2013
14
1
20
1
8
\nTotal
308
234
361
392
47
57
\n(1) Including computer software and development costs. Capital expenditure excludes lease additions.
\n(2) Restated for discontinued operations (note 1).
\ne)
Geographical information
\nThe Group operates in various geographical areas around the world. The par
ent company\u2019s country of domicile is the UK and the Group\u2019s
\nrevenues and non-current assets in the rest of Europe and North America are also considered to be material.
\nThe Group\u2019s revenue from external customers and information about its segment assets (no
n-current assets excluding deferred tax assets;
\nnon-current derivative financial assets; non-current other receivables; and non-current retirement benefit surplus) by geographical location
\nare detailed below:
\nRevenue
\n(1)
\nfrom
\nexternal customers
Segment assets
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\n31 December
\n2021
\n\u00a3m
\nUK
\nRest of Europe
\nNorth America
\nOther
\n682
\n1,902
\n3,906
\n1,047
\n570
\n1,824
\n3,275
\n981
\n1,785
\n4,453
\n2,562
\n1,142
\n1,977
\n4,374
\n2,404
\n1,145
\nContinuing operations
7,537
6,650
9,942
9,900
\nDiscontinued operations
132
1,117
\u2013
534
\nTotal
7,669
7,767
9,942
10,434
\n(1) Revenue is presented by destination.
\n(2) Restated for discontinued operations (note 1).
\n6.
Reconciliation of adjusted profit measures
\nAs described in note 2, adjusted profit measures are an alternative performance measure used by the Board to monitor the operating
\nperformance of the Group.
\na)
Operating profit
\nContinuing operations
Notes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nOperating loss
(236)
(493)
\nAmortisation of intangible assets acquired in business combinations
\nRestructuring costs
\nMovement in derivatives and associated financial assets and liabilities
\nEquity accounted investments adjustments
\nImpairment of assets
\nMelrose equity-settled compensation scheme charges
\nNet release and changes in discount rates of fair value items
\nAcquisition and disposal related gains and losses
\na
\nb
\nc
\nd
\ne
\nf
\ng
\nh
\n458
\n144
\n87
\n29
\n20
\n15
\n(26)
\n(11)
\n436
\n269
\n114
\n28
\n\u2013
\n19
\n(49)
\n(7)
\nTotal adjustments to operating loss
716
810
\nAdjusted operating profit
480
317
\n(1) Restated for discontinued operations (note 1).
\n
\n
\n
\n176
\na.
The amortisation charge on intangible assets acquired in business combinations of \u00a3458 million (2021: \u00a3436 million) is excluded from
\nadjusted results due to its non-trading nature and to enable comparison with companies that grow organically. However, where
\nintangible assets are trading in nature, such as computer software and development costs, the amortisation is not excluded from
\nadjusted results.
\nb.
Restructuring and other associated costs in the year totalled \u00a3144 million (2021: \u00a3269 million), including a write down of assets in
\naffected sites of \u00a311 million (2021: \u00a3112 million). These are shown as adjusting items due to their size and non-trading nature and
\nduring the year ended 31 December 2022 these included:
\n\u2022
A charge of \u00a388 million (2021: \u00a392 million) within the Aerospace division primarily relating to the continuation of significant
\nrestructuring projects, necessary for the Aerospace business to achieve its full potential target operating margins. These included
\nfurther progress on European footprint consolidations in both the Civil and Engines businesses, which commenced in 2021 and are
\nexpected to materially conclude in 2023. In addition, further progress has been made in North America on multi-site restructuring
\nprogrammes across all three Aerospace sub-segments. There are three significant ongoing multi-year restructuring programmes,
\nimpacting multiple sites across the Aerospace division, incurring a combined charge of \u00a379 million in the year. Since commencement
\nin 2020, the cumulative charge on these three restructuring programmes at 31 December 2022 was \u00a3155 million (31 December 2021:
\n\u00a376 million, 31 December 2020: \u00a37 million). As at 31 December 2022, these projects on average are approximately 75% complete
\nand are expected to be substantially complete by the end of 2023. In addition to the remaining charges to be incurred on these
\nprojects, \u00a340 million is included in restructuring provisions at 31 December 2022 to be settled in cash in the next twelve months.
\n\u2022
A charge of \u00a337 million (2021: \u00a3147 million) within the Automotive division. These included multiple restructuring projects which
\nconcluded within the year, including two significant footprint consolidation actions in Europe, which commenced last year. In addition,
\nrestructuring costs were incurred in North America, continuing the movement of production from high to low cost countries.
\n\u2022
A charge of \u00a317 million (2021: \u00a318 million) within the Powder Metallurgy division. Multiple restructuring projects in the business
\nconcluded within the year, including the closure of a factory in Canada.
\n\u2022
A net charge of \u00a32 million (2021: \u00a312 million) within the central cost centre.
\nc.
Movements in the fair value of derivative financial instruments (primarily forward foreign currency exchange contracts where hedge
\naccounting is not applied) entered into to mitigate the potential volatility of future cash flows, on long-term foreign currency customer
\nand supplier contracts, including foreign exchange movements on the associated financial assets and liabilities are shown as an
\nadjusting item because of its volatility and size. This totalled a charge of \u00a387 million (2021: \u00a3114 million) in the year.
\nd.
The Group has a number of equity accounted investments (\u201cEAIs\u201d) in which it does not hold full control, the largest of which
is a 50%
\ninterest in Shanghai GKN HUAYU Driveline Systems Co Limited
(\u201cSDS\u201d), within the Automotive business. The EAIs
generated \u00a3654
\nmillion (2021: \u00a3613 million) of revenue in the year, which is not included in the statutory results but is shown within adjusted revenue so
\nas not to distort the operating margins reported in the businesses when the adjusted operating profit earned from these EAIs is
\nincluded.
\nIn addition, the profits and losses of EAIs, which are shown after amortisation of acquired intangible assets, interest and tax in the
\nstatutory results, are adjusted to show the adjusted operating profit consistent with the adjusted operating profits of the subsidiaries of
\nthe Group. The revenue and profit of EAIs are adjusted because they are considered to be significant in size and are important in
\nassessing the performance of the business.
\ne.
A write down of assets of \u00a320 million (2021: \u00a3nil), has been recognised as a result of exiting any direct trading links with Russian
\noperations as a result of the conflict in Ukraine. The write down of these assets are predominantly within the Automotive division and
\nare shown as an adjusting item due to their non-trading nature and size.
\nf.
The charge for the Melrose equity-settled Employee Share
Scheme, including its associated employer\u2019s tax charge, of \u00a3
15 million
\n(2021: \u00a319 million) is excluded from adjusted results due to its size and volatility. The shares that would be issued, based on the
\nScheme\u2019s current value at the end of the reporting period, are included in the calculation of the adjusted diluted earnings p
er share,
\nwhich the Board considers to be a key measure of performance.
\ng.
The net release of fair value items in the year of \u00a326 million (2021: \u00a349 million) where items have been resolved for more favourable
\namounts than first anticipated are shown as an adjusting item, avoiding positively distorting adjusted operating profit. During the year
\nthis included a net release of \u00a311 million in respect of loss-making contract provisions, where either contractual terms have been
\nrenegotiated with the relevant customer or operational efficiencies have been identified and demonstrated for a sustained period.
\nh.
An acquisition and disposal related net credit of \u00a311 million (2021: \u00a37 million) arose in the year which primarily includes the net profits
\non disposal of two disused properties, a loss on disposal of a non-core Aerospace business and the initial costs incurred in respect of
\nthe proposed demerger. These items are excluded from adjusted results due to their non-trading nature.
\n
\n177
\n
\n
\nb)
Profit before tax
\nContinuing operations
Notes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nLoss before tax
(307)
(660)
\nAdjustments to operating loss as above
\nEquity accounted investments
\u2013
interest
\nSettlement of bonds
\nFair value changes on cross-currency swaps
\nSettlement of interest rate swaps
\ni
\nj
\nk
\nl
\n716
\n2
\n(24)
\n(3)
\n\u2013
\n810
\n2
\n\u2013
\n(3)
\n45
\nTotal adjustments to loss before tax
691
854
\nAdjusted profit before tax
384
194
\n(1) Restated for discontinued operations (note 1).
\ni.
As explained in paragraph d above, the profits and losses of EAIs are shown after adjusting items, interest and tax in the statutory
\nresults. They are adjusted to show the profit before tax and the profit after tax, consistent with the subsidiaries of the Group.
\nj.
During the year, the Group undertook a tender to buy back the 2032 \u00a3300 million bond. There were \u00a3170 million of bonds repurchased,
\non which a gain of \u00a324 million was realised. This is shown as an adjusting item due to its non-trading nature.
\nk.
The fair value changes on cross-currency swaps relating to cost of hedging which are not deferred in equity, is shown as an adjusting
\nitem because of its volatility and non-trading nature.
\nl.
On disposal of Nortek Air Management and Brush in the prior year, the significant proceeds received together with expectations of debt
\nrequirements enabled the Group to settle certain interest rate swap instruments that were no longer needed. Specific recycling from the
\ncash flow hedge reserve, under IFRS 9, of \u00a345 million was accelerated and shown as an adjusting item due to its non-trading nature.
\nc)
Profit after tax
\nContinuing operations
Notes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nLoss after tax
(223)
(480)
\nAdjustments to loss before tax as above
\nTax effect of adjustments to loss before tax
\nEquity accounted investments
\u2013
tax
\nTax effect of significant legislative changes
\nTax effect of significant restructuring
\n8
\ni
\n8
\n8
\n691
\n(170)
\n(9)
\n\u2013
\n10
\n854
\n(176)
\n(9)
\n(70)
\n32
\nTotal adjustments to loss after tax
522
631
\nAdjusted profit after tax
299
151
\n(1) Restated for discontinued operations (note 1).
\n7. Expenses
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nNet operating expenses comprise:
\nSelling and distribution costs
\nAdministration expenses
\n(2)
\n(31)
\n(1,333)
\n(28)
\n(1,403)
\nTotal net operating expenses
(1,364)
(1,431)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes \u00a3687 million (2021: \u00a3782 million) of adjusting items (note 6).
\n
\n
\n
\n178
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nOperating loss is stated after charging/(crediting):
\nCost of inventories
\nAmortisation of intangible assets acquired in business combinations
\nDepreciation and impairment of property, plant and equipment
\nAmortisation and impairment of computer software and development costs
\nLease expense
\n(2)
\nStaff costs
\nResearch and development costs
\n(3)
\nProfit on disposal of property, plant and equipment
\n(4)
\nExpense of writing down inventory to net realisable value
\nReversals of previous write-downs of inventory
\nImpairment recognised on trade receivables
\nImpairment reversed on trade receivables
\n6,458
\n458
\n374
\n59
\n3
\n2,127
\n198
\n(42)
\n59
\n(55)
\n6
\n(7)
\n5,750
\n436
\n479
\n54
\n4
\n1,986
\n193
\n(3)
\n76
\n(67)
\n2
\n(3)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes costs relating to short-term leases of \u00a32 million (2021: \u00a32 million), low value leases of \u00a31 million (2021: \u00a31 million) and variable lease payments not included in lease liabilities of
\n\u00a3nil (2021: \u00a31 million).
\n(3) Includes staff costs totalling \u00a3145 million (2021: \u00a3136 million).
\n(4) Includes the profit from the disposal of a corporate property, held for sale at 30 June 2022.
\nThe analysis of auditor\u2019s remuneration is as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFees payable to the Company\u2019s auditor for the audit of the Company\u2019s annual accounts
6.8
5.9
\nFees payable to the Company\u2019s auditor and their associates for other audit services to the Group:
\nThe audit of the Company\u2019s subsidiaries
\nNon-
statutory audit of certain of the Company\u2019s businesses
\n1.1
\n1.9
\n1.0
\n3.8
\nTotal audit fees
9.8
10.7
\nAudit-related assurance services:
\nReview of the half year interim statement
\nOther assurance services
\n0.4
\n0.2
\n0.4
\n0.5
\nTotal audit-related assurance services
0.6
0.9
\nTotal audit and audit-related assurance services
10.4
11.6
\nTax services
\nReporting accountant services
\n\u2013
\n0.9
\n\u2013
\n0.1
\nTotal audit and non-audit fees
11.3
11.7
\nDetails of the Company\u2019s policy on the use of the auditors for non
-
audit services and how auditor\u2019s independence and objectivity were
\nsafeguarded are set out in the Audit Committee report on page 110 to 115. No services were provided pursuant to contingent fee
\narrangements.
\nAn analysis of staff costs and employee numbers is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nStaff costs during the year (including executive Directors)
\nWages and salaries
\n(2)
\nSocial security costs
\n(3)
\nPension costs (note 24)
\n\u2013
defined benefit plans
\n\u2013
defined contribution plans
\nShare-based compensation expense
\n(4)
\n(note 23)
\n1,746
\n287
\n9
\n69
\n16
\n1,613
\n281
\n8
\n68
\n16
\nTotal staff costs
2,127
1,986
\n(1) Restated for discontinued operations (note 1).
\n(2) Wages and salaries for discontinued operations was \u00a318 million in the period prior to disposal (2021: \u00a3216 million).
\n(3) Includes an
employer\u2019s tax
credit of \u00a31 million (2021: charge of \u00a33 million) on the change in value of the employee share plans, shown as an adjusting item (note 6).
\n(4) Shown as an adjusting item (note 6).
\n
\n179
\n
\n
\nYear ended
\n31 December
\n2022
\nNumber
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\nNumber
\nAverage monthly number of persons employed (including executive Directors)
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n14,466
\n18,520
\n5,672
\n65
\n49
\n14,316
\n19,141
\n6,080
\n23
\n50
\nContinuing operations
38,772
39,610
\nDiscontinued operations
1,187
9,048
\nTotal average number of persons employed
39,959
48,658
\n(1) Restated for discontinued operations (note 1).
\nAn analysis of finance costs and income is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
\n(3) These are shown as adjusting items (note 6).
\n8. Tax
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAnalysis of tax credit in the year:
\nCurrent tax
\nCurrent year tax charge
\nAdjustments in respect of prior years
\n73
\n(9)
\n53
\n(1)
\nTotal current tax charge
64
52
\nDeferred tax
\nOrigination and reversal of temporary differences
\nAdjustments in respect of prior years
\nTax on the change in value of derivative financial instruments
\nAdjustments to deferred tax attributable to changes in tax rates
\nNon-recognition of deferred tax
\nRecognition of previously unrecognised deferred tax assets
\n(118)
\n(20)
\n(24)
\n1
\n13
\n\u2013
\n(125)
\n(4)
\n(27)
\n(5)
\n4
\n(75)
\nTotal deferred tax credit
(148)
(232)
\nTax credit on continuing operations
(84)
(180)
\nTax charge on discontinued operations
5
61
\nTotal tax credit for the year
(79)
(119)
\nAnalysis of tax credit on continuing operations in the year:
\u00a3m
\u00a3m
\nTax charge in respect of adjusted profit before tax
\nTax credit recognised as an adjusting item
\n85
\n(169)
\n43
\n(223)
\nTax credit on continuing operations
(84)
(180)
\n(1) Restated for discontinued operations (note 1).
\n
\n
\n
\n180
\nThe tax
charge of \u00a385 million (2021: \u00a343 million) arising on adjusted profit before tax of \u00a3384 million (2021: \u00a3194 million), results in an
\neffective tax rate of 22.1% (2021: 22.2%).
\nThe \u00a3169 million (2021: \u00a3223 million) tax credit recognised as an adjusting item includes a credit of \u00a3170 million (2021: \u00a3176 million) in
\nrespect of tax credits on adjustments to loss before tax of \u00a3691 million (2021: \u00a3854 million), \u00a39 million (2021: \u00a39 million) in respect of the
\ntax on equity accounted investments, a charge of \u00a310 million (2021: \u00a332 million) in respect of internal Group restructuring and \u00a3nil (2021:
\ncredit of \u00a370 million) in respect of additional deferred tax asset recognition from legislative changes.
\nThe tax credit for the year for continuing and discontinued operations can be reconciled to the (loss)/profit before tax per the Income
\nStatement as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\n(Loss)/profit before tax:
\nContinuing operations
\nDiscontinued operations (note 13)
\n(307)
\n(59)
\n(660)
\n45
\n(366)
(615)
\nTax credit on loss before tax at the weighted average rate of 25.0% (2021: 23.0%)
\nTax effect of:
\nDisallowable expenses and other permanent differences within adjusted profit
\nDisallowable items included within adjusting items
\nTemporary differences not recognised in deferred tax
\nRecognition of previously unrecognised deferred tax assets
\nTax credits, withholding taxes and other rate differences
\nAdjustments in respect of prior years
\nTax charge classified within adjusting items
\u2013
continuing operations
\nTax charge classified within adjusting items
\u2013
discontinued operations
\nEffect of changes in tax rates
\n(91)
\n4
\n(2)
\n13
\n\u2013
\n15
\n(29)
\n10
\n\u2013
\n1
\n(141)
\n(2)
\n31
\n4
\n(75)
\n11
\n(5)
\n32
\n31
\n(5)
\nTotal tax credit for the year
(79)
(119)
\n(1) Restated for discontinued operations (note 1).
\nThe reconciliation has been performed at a blended Group tax rate of 25.0% (2021: 23.0%) which represents the weighted average of the
\ntax rates applying to profits and losses in the jurisdictions in which those results arose in the year.
\nTax (credits)/charges included in Other Comprehensive Income are as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nDeferred tax on retirement benefit obligations
\nDeferred tax on hedge relationship gains and losses
\n1
\n(5)
\n71
\n19
\nTotal (credit)/charge for the year
(4)
90
\nFranked investment income
\u2013
litigation
\nSince 2003, certain entities in the Group have been involved in litigation with HMRC in respect of various advance corporate tax payments
\nand corporate tax paid on certain foreign dividends which, in their view, were levied by HMRC in breach of the Group\u2019s
EU community law
\nrights. The continuing complexity of the case and uncertainty over the issues raised means that it is not possible to predict the final
\noutcome of the litigation with any reasonable degree of certainty.
\n9. Dividends
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nInterim dividend for the year ended 31 December 2022 of 0.825p
\nFinal dividend for the year ended 31 December 2021 of 1.0p
\nInterim dividend for the year ended 31 December 2021 of 0.75p
\nFinal dividend for the year ended 31 December 2020 of 0.75p
\n33
\n44
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n33
\n36
\n77
69
\nA second interim dividend for the year ended 31 December 2022 of 1.5p per share totalling \u00a361 million is declared by the Board. The
\nsecond interim dividend of 1.5p per share was declared by the Board on 2 March 2023 and in accordance with IAS 10: Events after the
\nreporting period, has not been included as a liability in the Consolidated Financial Statements.
\n
\n181
\n
\n
\nDuring the year, the Group undertook a \u00a3500 million share buy back programme (note 1). In the prior year, a return of capital of 15p per
\nordinary share, totalling \u00a3729 million was paid.
\n10.
Earnings per share
\nEarnings attributable to owners of the parent
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nEarnings for basis of earnings per share
\nLess: earnings from discontinued operations (note 13)
\n(308)
\n80
\n833
\n(1,317)
\nEarnings for basis of earnings per share from continuing operations
(228)
(484)
\nYear ended
\n31 December
\n2022
\nNumber
\nYear ended
\n31 December
\n2021
\nNumber
\nWeighted average number of ordinary shares for the purposes of basic earnings per share (million)
\nFurther shares for the purposes of diluted earnings per share (million)
\n4,218
\n\u2013
\n4,695
\n\u2013
\nWeighted average number of ordinary shares for the purposes of diluted earnings per share (million)
4,218
4,695
\nOn 9 June 2022, the Group commenced a \u00a3500 million share buyback programme, which completed on 1 August 2022 with 318,003,512
\nshares repurchased and subsequently cancelled.
\nEarnings per share
\nYear ended
\n31 December
\n2022
\npence
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\npence
\nBasic earnings per share
\nFrom continuing and discontinued operations
\nFrom continuing operations
\nFrom discontinued operations
\n(7.3)
\n(5.4)
\n(1.9)
\n17.7
\n(10.3)
\n28.0
\nDiluted earnings per share
\nFrom continuing and discontinued operations
\nFrom continuing operations
\nFrom discontinued operations
\n(7.3)
\n(5.4)
\n(1.9)
\n17.7
\n(10.3)
\n28.0
\nAdjusted earnings from continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAdjusted earnings for the basis of adjusted earnings per share
\n(2)
\n294
147
\nAdjusted earnings per share from continuing operations
\nYear ended
\n31 December
\n2022
\npence
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\npence
\nAdjusted basic earnings per share
\nAdjusted diluted earnings per share
\n7.0
\n7.0
\n3.1
\n3.1
\n(1) Restated for discontinued operations (note 1).
\n(2) Adjusted earnings for the year ended 31 December 2022 comprises adjusted profit after tax of \u00a3299 million (2021: \u00a3151 million) (note 6), net of an allocation to non-controlling interests of \u00a35
\nmillion (2021: \u00a34 million).
\n
\n
\n
\n182
11.
Goodwill and other intangible assets
\nGoodwill
\n\u00a3m
\nCustomer
\nrelationships
\nand contracts
\n\u00a3m
\nBrands and
\nintellectual
\nproperty
\n\u00a3m
\nOther
\n(1)
\n\u00a3m
\nComputer
\nsoftware
\n\u00a3m
\nDevelopment
\ncosts
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n4,023
\n\u2013
\n\u2013
\n(778)
\n(330)
\n(65)
\n4,916
\n\u2013
\n\u2013
\n(331)
\n(120)
\n(59)
\n776
\n\u2013
\n\u2013
\n(250)
\n(37)
\n(9)
\n1,045
\n\u2013
\n\u2013
\n(3)
\n(26)
\n(5)
\n59
\n6
\n(1)
\n(14)
\n\u2013
\n(1)
\n529
\n13
\n(3)
\n(11)
\n\u2013
\n(6)
\n11,348
\n19
\n(4)
\n(1,387)
\n(513)
\n(145)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(4)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n2,850
\n\u2013
\n1
\n\u2013
\n(455)
\n189
\n4,406
\n\u2013
\n\u2013
\n\u2013
\n(122)
\n386
\n480
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n13
\n1,011
\n\u2013
\n3
\n\u2013
\n\u2013
\n33
\n49
\n6
\n\u2013
\n(2)
\n\u2013
\n3
\n522
\n21
\n\u2013
\n(4)
\n\u2013
\n31
\n9,318
\n27
\n4
\n(6)
\n(677)
\n655
\nAt 31 December 2022
2,585
4,670
393
1,047
56
570
9,321
\nAmortisation and impairment
\nAt 1 January 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n(383)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n214
\n165
\n4
\n(1,083)
\n\u2013
\n(339)
\n\u2013
\n\u2013
\n143
\n42
\n11
\n(198)
\n\u2013
\n(30)
\n\u2013
\n\u2013
\n117
\n13
\n3
\n(306)
\n\u2013
\n(107)
\n\u2013
\n\u2013
\n3
\n26
\n1
\n(31)
\n(8)
\n\u2013
\n\u2013
\n1
\n7
\n\u2013
\n2
\n(149)
\n(46)
\n\u2013
\n(3)
\n\u2013
\n2
\n\u2013
\n1
\n(2,150)
\n(54)
\n(476)
\n(3)
\n1
\n486
\n246
\n22
\nAt 31 December 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(1,226)
\n\u2013
\n(338)
\n\u2013
\n\u2013
\n71
\n(105)
\n(95)
\n\u2013
\n(24)
\n\u2013
\n\u2013
\n35
\n(9)
\n(383)
\n\u2013
\n(104)
\n\u2013
\n\u2013
\n\u2013
\n(9)
\n(29)
\n(7)
\n\u2013
\n\u2013
\n2
\n\u2013
\n(2)
\n(195)
\n(43)
\n\u2013
\n(9)
\n4
\n\u2013
\n(9)
\n(1,928)
\n(50)
\n(466)
\n(9)
\n6
\n106
\n(134)
\nAt 31 December 2022
\u2013
(1,598)
(93)
(496)
(36)
(252)
(2,475)
\nNet book value
\nAt 31 December 2022
2,585
3,072
300
551
20
318
6,846
\nAt 31 December 2021
2,850
3,180
385
628
20
327
7,390
\n(1) Other includes technology and order backlog intangible assets recognised on acquisitions.
\n(2) Disposal of businesses in 2021 relate to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(4) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(5) Includes \u00a39 million within impairment of assets (2021: \u00a33 million within restructuring costs) shown as adjusting items (note 6).
\nThe goodwill generated as a result of major acquisitions represents the premium paid in excess of the fair value of all net assets, including
\nintangible assets, identified at the point of acquisition. The carrying value of goodwill includes a premium, paid in order to secure
\nshareholder agreement to the business combination, that is less than the value that the Directors believed could be added to the acquired
\nbusinesses through the application of their specialist turnaround experience.
\nThe goodwill arising on bolt-on acquisitions is attributable to the anticipated profitability and cash flows arising from the businesses
\nacquired, synergies as a result of the complementary nature of the business with existing Melrose businesses, the assembled workforce,
\ntechnical expertise, knowhow, market share and geographical advantages afforded to the Group.
\nThe future improvements applied to the acquired businesses, achieved through a combination of revised strategic direction, operational
\nimprovements and investment, are expected to result in improved profitability of the acquired businesses during the period of ownership
\nand are also expected to result in enhanced disposal proceeds when the acquired businesses are ultimately disposed. The combined value
\nachieved from these improvements is expected to be in excess of the value of goodwill acquired.
\nGoodwill acquired in business combinations, net of impairment, has been allocated to the businesses, each of which comprises several
\ncash-
generating units (\u201cCGUs\u201d).
\n
\n183
\n
\n
\nGoodwill
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n990
\n1,056
\n539
\n933
\n1,001
\n507
\nContinuing operations
2,585
2,441
\nDiscontinued operations
\u2013
409
\nTotal
2,585
2,850
\n(1) Restated for discontinued operations (note 1).
\nImpairment testing
\nThe Group tests goodwill annually or more frequently if there are indications that goodwill might be impaired. The date of the annual
\nimpairment test is 31 October, aligned with internal forecasting and review processes. In accordance with IAS 36: Impairment of assets, the
\nGroup assesses goodwill based on the recoverable amount, being the higher of the value in use basis and the fair value less costs to sell
\nbasis. Due to the nature of the groups of CGUs within Melrose\u2019s strategic life cycle of \u201cBuy, Improve, Sell\u201d
, the fair value less costs to sell
\nmethodology has been used as the improvement phase is ongoing.
\nFair value less costs to sell calculations have been used to determine the recoverable amount of goodwill and other relevant net assets
\nallocated to the Aerospace, Automotive and Powder Metallurgy groups of CGUs. When applying the fair value less costs to sell
\nmethodology, it has been difficult to assess a sale value using observable market inputs (level 1) or inputs based on market evidence (level
\n2) in the current environment and so unobservable inputs (level 3) have been used. A combination of discounted cash flows and EBITDA
\nmultiple valuations have been used to establish fair values for each of the groups of CGUs.
\nUnder IAS 36, the benefits from future uncommitted restructuring plans are permitted when applying the fair value less costs to sell basis,
\nto the extent that similar actions would be carried out by a market participant.
\nBased on impairment testing completed no impairment was identified in respect of any of the groups of CGUs. The COVID-19 pandemic
\nhad a significant effect on global end markets in which certain of the Group\u2019s businesses operate and whilst these markets co
ntinue to
\nrecover, there have been consequential impacts of disrupted supply chains, interest rate rises and other inflationary pressure on input
\ncosts. Implications on the levels of headroom are shown in the sensitivity analysis which has been provided in respect of reasonably
\npossible changes to key assumptions.
\nSignificant assumptions and estimates
\nThe basis of impairment tests and the key assumptions are set out in the tables below:
\nGroups of CGUs
\u2013
fair value less costs to sell
\n31 December 2022
31 December 2021
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n10.75%
\n11.25
%
\n12.0%
\n3.0%
\n3.5
%
\n3.9%
\n5
\n5
\n5
\n7.8%
\n8.8%
\n8.8%
\n3.0%
\n2.5%
\n2.5%
\n5
\n5
\n5
\nGroups of CGUs
\u2013
value in use
\n31 December 2021
\nPre-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nErgotron
%
10.1%
3.0%
3
\nRisk adjusted discount rates
\nCash flows within the Aerospace, Automotive and Powder Metallurgy groups of CGUs are discounted using a post-tax discount rate
\nspecific to each group of CGUs. Discount rates reflect the current market assessments of the time value of money and the territories in
\nwhich the group of CGUs operates. In dete
rmining the cost of equity, the Capital Asset Pricing Model (\u201cCAPM\u201d) has been used. Under
\nCAPM, the cost of equity is determined by adding a risk premium, based on an industry adjustment (\u201cBeta\u201d), to the expected re
turn of the
\nequity market above the risk-free return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all other
\nsectors and geographies on average.
\nThe cost of debt is determined using a risk-free rate based on the cost of government bonds, and an interest rate premium equivalent to a
\ncorporate bond with a similar credit rating to the Group.
\nAssumptions applied in financial forecasts
\nThe Group prepares cash flow forecasts derived from financial budgets and medium-term forecasts. Each forecast has been prepared
\nusing a cash flow period deemed most appropriate by management, considering the nature of each group of CGUs. The key assumptions
\nused in forecasting cash flows relate to future budgeted revenue and operating margins likely to be achieved and the expected rates of
\nlong-term growth by market sector. Underlying factors in determining the values assigned to each key assumption are shown below:
\n
\n
\n
\n184
\nRevenue growth and operating margins:
\nRevenue growth assumptions in the forecast period are based on financial budgets and medium-term forecasts by management, taking
\ninto account industry growth rates and ma
nagement\u2019s historical experience in the context of wider industry and economic conditions.
\nProjected sales are built up with reference to markets and product categories. They incorporate past performance, historical growth rates,
\nprojections of developments in key markets, secured orders and orders forecast to be achieved in the short to medium-term given trends in
\nthe relevant market sector. Revenue assumptions are made using external market data, where available, and also consider the recovery
\nperiod to return to pre COVID-19 levels.
\nOperating margins have been forecast based on historical levels achieved considering the likely impact of changing economic
\nenvironments and competitive landscapes on volumes and revenues and the impact of management actions on costs. Testing has been
\nperformed using the fair value less costs to sell methodology and the assumptions to derive operating margins take into account both
\nnormal cost saving activities and, where applicable, a significant contribution from planned restructuring activity to improve operational
\nefficiency and leverage scale. Forecasts for other operating costs are based on inflation forecasts and supply and demand factors, which
\ntake account of climate change implications for affected markets. Overall, climate risk exposure is considered to be relatively low across
\nthe divisions in the short and medium-term but starts to increase in the longer-term, for example through increasing likelihood of river
\nflooding risk in the UK or increasing wildfire risk in California. Impairment testing includes short to medium-term planning (five years) for
\neach of the groups of CGUs, which will address known risks from climate change and other environmental factors impacting forecast costs
\nas well as the opportunities in associated markets as they prepare for change e.g. electrification in automotive and hydrogen propulsion in
\naerospace which impact revenues.
\nAerospace
\u2013
The key drivers for growth in revenue and operating margins are global demand for commercial and military aircraft.
\nConsumer spending, passenger load factors, raw material input costs, market expectations for aircraft production requirements,
\ntechnological advancements, and other macro-economic factors influence demand for these products.
\nAutomotive
\u2013
The key drivers for growth in revenue and operating margins are global demand for a large range of cars, from smaller low-
\ncost cars to larger premium vehicles. This is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted
\nby the COVID-19 pandemic. Demand is influenced by technological advancements, particularly in electric and full hybrid vehicles, market
\nexpectations for global vehicle production requirements, fuel prices, raw material input costs and expectations of their recovery, consumer
\nspending, credit availability, and other macro-economic factors.
\nPowder Metallurgy
\u2013
The key drivers for growth in revenue and operating margins are trends in the automotive and industrial markets.
\nThis is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted by the COVID-19 pandemic. Market
\nexpectations for global light vehicle production requirements, raw material input costs and technological advancements, particularly in
\nadditive manufacturing, influence demand for these products along with other macro-economic factors.
\nLong-term growth rates:
\nLong-term growth rates are based on long-term forecasts for growth in the sectors and geography in which the groups of CGUs operate.
\nLong-term growth rates are determined using long-term growth rate forecasts that take into account the international presence and the
\nmarkets in which each business operates.
\nSensitivity analysis
\nDue to consequential impacts from the COVID-19 pandemic of disrupted supply chains, interest rate rises and other inflationary pressure
\non input costs, certain businesses are mitigating the impact of volatile customer scheduling through cost reduction and efficiency actions,
\nincluding restructuring. The Automotive and Powder Metallurgy groups of CGUs are the most affected at this point in the cycle, as they rely
\non the global automotive market.
\nAutomotive group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Automotive group of CGUs. Sensitivity analysis has been carried out and
\na reasonably possible change in the discount rate and long-term growth rate from 11.25% to 12.50% or from 3.5% to 1.8% respectively
\nwould reduce headroom to \u00a3nil. Executing restructuring plans and continuing the recovery of inflationary impacts on input costs are key to
\nmargin assumptions and a reduction in the terminal operating profit of 15% would reduce the terminal operating margin by 1.6 percentage
\npoints and would reduce headroom to \u00a3nil.
\nPowder Metallurgy group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Powder Metallurgy group of CGUs. Sensitivity analysis has been carried
\nout and a reasonably possible change in the discount rate and long-term growth rate from 12.0% to 12.5% or from 3.9% to 3.2%
\nrespectively would reduce headroom to \u00a3nil. Executing restructuring plans and optimising market penetration are key to margin
\nassumptions and a reduction in the terminal operating profit of 8% would reduce the terminal operating margin by 1.0 percentage points
\nand would reduce headroom to \u00a3nil.
\n
\n185
\n\n
\nAllocation of significant intangible assets
\nThe allocation of significant customer relationships and contracts, brands, intellectual property and technology is as follows:
\nCustomer relationships and contracts
Brands, intellectual property and technology
\nRemaining amortisation
\nperiod
Net book value
\nRemaining amortisation
\nperiod
Net book value
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n16
\n8
\n13
\n17
\n9
\n14
\n1,965
\n621
\n486
\n1,967
\n670
\n492
\n16
\n16
\n16
\n17
\n17
\n17
\n534
\n261
\n56
\n575
\n309
\n67
\nContinuing operations
3,072
3,129
851
951
\nDiscontinued operations
\u2013
51
\u2013
62
\nTotal
3,072
3,180
851
1,013
\n(1) Restated for discontinued operations (note 1).
\n12. Investments
\nInvestments, carried at fair value
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nShares
62
87
\nThe Group holds a 10% equity share in HiiROC Limited, a hydrogen technology company, and a 4% investment in PW1100G-JM Engine
\nLeasing LLC, an engine leasing business.
\nThere was a loss on remeasurement to fair value of \u00a334 million (2021: gain of \u00a343 million) and a foreign exchange translation gain of \u00a39
\nmillion (2021: \u00a3nil). A dividend of \u00a34 million (2021: \u00a317 million) was received during the year which was recorded within operating profit.
\nThese investments are classified as a level 3 fair value under the IFRS 13 fair value hierarchy. To calculate the value at 31 December
\n2022, the expected dividend flow was discounted to net present value using a discount rate of 12.75%. If the discount rate changed from
\n12.75% to 11.75% the fair value would increase by \u00a35 million.
\n13.
Discontinued operations
\nAt 30 June 2022, the Ergotron business, previously included within the Other Industrial division, met the criteria within IFRS 5: Non-current
\nAssets Held for Sale and Discontinued Operations to be classified as an asset held for sale. On 6 July 2022, the Group completed the sale
\nof the Ergotron business for cash consideration of \u00a3496 million. The costs charged to the Income Statement associated with the disposal,
\nin the year, were \u00a37 million. The loss on disposal was \u00a316 million after the recycling of cumulative translation gains of \u00a311 million.
\nA corporate property with a carrying value of \u00a310 million was classified as held for sale at 30 June 2022 and subsequently sold for cash
\nconsideration of \u00a331 million. The profit on disposal of \u00a321 million has been included within acquisition and disposal related gains and
\nlosses shown as an adjusting item (note 6).
\nDuring the year, Aerospace disposed of a non-core business. Consideration was \u00a3nil and the loss on disposal was \u00a35 million, which has
\nbeen included in acquisition and disposal related gains and losses shown as an adjusted item (note 6).
\nDiscontinued operations for 2021 include the results of the Nortek Air Management, Brush and Nortek Control businesses which were
\ndisposed during 2021.
\n
\n
\n
\n186
\nFinancial performance of discontinued operations:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue
\nOperating costs
\n(2)
\n132
\n(191)
\n1,117
\n(1,070)
\nOperating (loss)/profit
\nFinance costs
\n(59)
\n\u2013
\n47
\n(2)
\n(Loss)/profit before tax
\nTax
\n(59)
\n(5)
\n45
\n(61)
\nLoss after tax
\n(Loss)/gain on disposal of net assets of discontinued operations, net of recycled cumulative translation
\ndifferences
\n(64)
\n(16)
\n(16)
\n1,333
\n(Loss)/profit for the year from discontinued operations
(80)
1,317
\n(1) Restated for discontinued operations (note 1).
\n(2) Operating costs included an \u00a386 million charge on remeasurement to fair value less costs of disposal relating to the Ergotron business on reclassification to assets held for sale
\n(2021: \u00a385 million relating to the Nortek Control business).
\nHeld for sale
\nReclassified to
\nassets classified
\nas held for sale
Remeasured
Disposed
\nBusinesses
\ndisposed
\n\u00a3m
\u00a3m
\n\u00a3m
\u00a3m
\nGoodwill and other intangible assets
\nProperty, plant and equipment
\n(1)
\nInventories
\nTrade and other receivables
\nDerivative financial assets
\nCash and cash equivalents
\n571
\n27
\n51
\n51
\n1
\n26
\n(86)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n485
\n27
\n51
\n51
\n1
\n26
\n\u2013
\n\u2013
\n9
\n5
\n\u2013
\n6
\nTotal assets
727
(86)
641
20
\nTrade and other payables
\nLease obligations
\nProvisions
\nDerivative financial liabilities
\nCurrent and deferred tax
\n(63)
\n(7)
\n(5)
\n(1)
\n(21)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(63)
\n(7)
\n(5)
\n(1)
\n(21)
\n(4)
\n(3)
\n(18)
\n\u2013
\n10
\nTotal liabilities
(97)
\u2013
(97)
(15)
\nNet assets
630
(86)
544
5
\nMovement in the value of net assets classified as held for sale in the period prior to disposal
\n(2)
\n(18)
\nNet assets held for sale disposed
526
526
\nTotal net assets disposed
531
\nConsideration, net of costs
\n(3)
\nCumulative translation difference recycled on disposals
\n520
\n11
\nProfit on disposal of businesses and disposal groups of assets
\nAnalysed as:
\nProfit on disposal of assets classified as continuing operations
\nLoss on disposal of businesses classified as discontinued operations
\n\u2013
\n16
\n(16)
\nNet cash inflow arising on disposal of businesses and disposal groups of assets:
\nConsideration received in cash and cash equivalents, net of costs
\n(4)
\nLess: cash and cash equivalents disposed
\n519
\n(10)
\n509
\n(1) Includes \u00a310 million relating to a corporate property.
\n(2) Includes \u00a323 million of cash extracted from the business prior to disposal.
\n(3) Includes cash consideration of \u00a3496 million and \u00a37 million of related disposal costs following the disposal of Ergotron and \u00a331 million of proceeds from the sale of a corporate property.
\n(4) Includes cash consideration of \u00a3496 million and \u00a38 million of related cash disposal costs following the disposal of Ergotron and \u00a331 million of proceeds from the sale of a corporate property.
\n\n187
\n
\n14.
Property, plant and equipment
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,394
\n68
\n4
\n(12)
\n(256)
\n(24)
\n(31)
\n2,995
\n192
\n(1)
\n(42)
\n(314)
\n(13)
\n(95)
\n4,389
\n260
\n3
\n(54)
\n(570)
\n(37)
\n(126)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,143
\n38
\n1
\n\u2013
\n(19)
\n(6)
\n(49)
\n61
\n2,722
\n281
\n\u2013
\n(1)
\n(117)
\n\u2013
\n(20)
\n263
\n3,865
\n319
\n1
\n(1)
\n(136)
\n(6)
\n(69)
\n324
\nAt 31 December 2022
1,169
3,128
4,297
\nAccumulated depreciation and impairment
\nAt 1 January 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(316)
\n(69)
\n2
\n112
\n9
\n(40)
\n2
\n(940)
\n(326)
\n40
\n204
\n10
\n(69)
\n44
\n(1,256)
\n(395)
\n42
\n316
\n19
\n(109)
\n46
\nAt 31 December 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(300)
\n(59)
\n4
\n6
\n27
\n(2)
\n(6)
\n(1,037)
\n(299)
\n108
\n\u2013
\n15
\n(16)
\n(139)
\n(1,337)
\n(358)
\n112
\n6
\n42
\n(18)
\n(145)
\nAt 31 December 2022
(330)
(1,368)
(1,698)
\nNet book value
\nAt 31 December 2022
839
1,760
2,599
\nAt 31 December 2021
843
1,685
2,528
\n(1) Disposal of businesses in 2022 relates to the sale of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to a corporate property and the Ergotron business (2021: Nortek Control business) which were subsequently disposed of during the second half of the
\nyear (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(4) Includes \u00a311 million (2021: \u00a3109 million) within restructuring costs and \u00a37 million (2021: \u00a3nil) within impairment of assets both shown as adjusting items (note 6).
\nAssets under the course of construction at 31 December 2022 totalled \u00a3243 million (31 December 2021: \u00a3150 million).
\nThe basis of testing for impaired assets, which resulted in a charge totalling \u00a318 million, primarily used a fair value less costs to sell
\nmethodology which was classified as a level 3 fair value under the IFRS 13 fair value hierarchy. The largest impairment, in the Aerospace
\nsegment, at a site subject to restructuring activities, was derived by calculating the net present value from a discounted cash flow
\nassessment, using a post-tax discount rate of 10.5%. The assets were deemed to have no further recoverable value.
\n
\n
\n
\n188
Property, plant and equipment includes the net book value of right-of-use assets as follows:
\nRight-of-use asset
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\nExchange adjustments
\n381
\n31
\n4
\n(39)
\n(3)
\n(75)
\n(8)
\n(15)
\n(11)
\n67
\n14
\n(1)
\n(18)
\n\u2013
\n(3)
\n\u2013
\n\u2013
\n(11)
\n448
\n45
\n3
\n(57)
\n(3)
\n(78)
\n(8)
\n(15)
\n(22)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n265
\n19
\n1
\n\u2013
\n(31)
\n(2)
\n(1)
\n14
\n48
\n19
\n\u2013
\n(1)
\n(16)
\n(3)
\n(5)
\n4
\n313
\n38
\n1
\n(1)
\n(47)
\n(5)
\n(6)
\n18
\nAt 31 December 2022
265
46
311
\n(1) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n15.
Equity accounted investments
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAggregated amounts relating to equity accounted investments:
\nShare of current assets
\nShare of non-current assets
\nShare of current liabilities
\nShare of non-current liabilities
\n416
\n322
\n(289)
\n(14)
\n403
\n350
\n(310)
\n(14)
\nInterests in equity accounted investments
435
429
\nGroup share of results from continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue
\nOperating costs
\n654
\n(576)
\n613
\n(547)
\nAdjusted operating profit
\nAdjusting items
\nNet finance income
\n78
\n(22)
\n2
\n66
\n(21)
\n2
\nProfit before tax
\nTax
\n58
\n(9)
\n47
\n(9)
\nShare of results of equity accounted investments
49
38
\nGroup share of equity accounted investments
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nShare of results of equity accounted investments
\nAdditions
\nDividends paid to the Group
\nExchange adjustments
\n429
\n49
\n3
\n(59)
\n13
\n430
\n38
\n\u2013
\n(52)
\n13
\nAt 31 December
435
429
\n
\n189
\n
\n
\nWithin the Group\u2019s share of equity accounted investments
there is one significant joint venture, held within the Automotive segment,
\nShanghai GKN HUAYU Driveline Systems Co Limited (\u201cSDS\u201d). SDS had total sales in the year of \u00a3
1,243 million (2021: \u00a31,159 million),
\nadjusted operating profit of \u00a3142 million (2021: \u00a3116 million), adjusting items of \u00a344 million (2021: \u00a341 million), statutory operating profit of
\n\u00a398 million (2021: \u00a375 million), an interest credit of \u00a34 million (2021: \u00a34 million) and a tax charge of \u00a318 million (2021: \u00a316 million), leaving
\nretained profit of \u00a384 million (2021: \u00a363 million).
\nTotal net assets of SDS at 31 December 2022 were \u00a3786 million (31 December 2021: \u00a3790 million). These comprised non-current assets
\nof \u00a3580 million (31 December 2021: \u00a3636 million), current assets of \u00a3715 million (31 December 2021: \u00a3668 million), current liabilities of
\n\u00a3504 million (31 December 2021: \u00a3508 million) and non-current liabilities of \u00a35 million (31 December 2021: \u00a36 million). During 2022, SDS
\npaid a dividend to the Group of \u00a358 million (2021: \u00a350 million). Further information about SDS can be found in note 3 to the Melrose
\nIndustries PLC Company Financial Statements.
\n16. Inventories
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nRaw materials
\nWork in progress
\nFinished goods
\n518
\n328
\n179
\n413
\n280
\n200
\n1,025
893
\nIn 2022, the write down of inventories to net realisable value amounted to \u00a359 million (2021: \u00a393 million), of which \u00a3nil related to
\nrestructuring activities (2021: \u00a38 million) and \u00a32 million related to impairment of assets (2021: \u00a3nil) and are included within adjusting items
\n(note 6). The reversal of write downs amounted to \u00a355 million (2021: \u00a377 million). Write downs and reversals in both years relate to
\nongoing assessments of inv
entory obsolescence, excess inventory holding and inventory resale values across all of the Group\u2019s
\nbusinesses.
\nThe Directors consider that there is no material difference between the net book value of inventories and their replacement cost.
\n17.
Trade and other receivables
\nCurrent
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nTrade receivables
\nAllowance for expected credit loss
\nOther receivables
\nPrepayments
\nContract assets
\n989
\n(20)
\n286
\n36
\n135
\n847
\n(23)
\n200
\n40
\n120
\n1,426
1,184
\nTrade receivables are non interest-bearing. Credit terms offered to customers vary upon the country of operation but are generally between
\n30 and 90 days.
\nNon-current
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nOther receivables
\nContract assets
\n23
\n647
\n32
\n491
\n670
523
\nAs described in note 25, certain businesses participate in receivables working capital programmes and have the ability to choose whether
\nto receive payment earlier than the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, eligible
\nreceivables under these programmes have been factored and derecognised in line with the derecognition criteria of IFRS 9.
\n
\n
\n
\n190
\nAn
allowance has been made for expected lifetime credit losses with reference to past default experience and management\u2019s assess
ment
\nof credit worthiness over trade receivables, an analysis of which is as follows:
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder Metallurgy
\n\u00a3m
\nRestated
\n(1)
\nOther Industrial
\n\u00a3m
\nRestated
\n(1)
\nDiscontinued
\nOperations
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nIncome Statement (credit)/charge
\nUtilised
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n12
\n\u2013
\n(1)
\n(3)
\n\u2013
\n(1)
\n11
\n(1)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n5
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n13
\n4
\n(6)
\n(7)
\n(2)
\n\u2013
\n41
\n3
\n(8)
\n(10)
\n(2)
\n(1)
\nAt 31 December 2021
\nIncome Statement charge/(credit)
\nUtilised
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n7
\n1
\n(2)
\n\u2013
\n1
\n9
\n(3)
\n\u2013
\n\u2013
\n\u2013
\n5
\n1
\n\u2013
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n2
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n23
\n(1)
\n(2)
\n(2)
\n2
\nAt 31 December 2022
7
6
7
\u2013
\u2013
20
\n(1) Restated for discontinued operations (note 1).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\nThe concentration of credit risk is limited due to the large number of unrelated customers. Credit control procedures are implemented to
\nensure that sales are only made to organisations that are willing and able to pay for them. Such procedures include the establishment and
\nreview of customer credit limits and terms. The Group does not hold any collateral or any other credit enhancements over any of its trade
\nreceivables nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.
\nThe ageing of impaired trade receivables past due is as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n0
\u2013
30 days
\n31
\u2013
60 days
\n60+ days
\n4
\n\u2013
\n16
\n12
\n\u2013
\n11
\n20
23
\nIncluded in the
Group\u2019s trade receivables balance are overdue trade receivables with a gross carrying amount of \u00a3
53 million (31 December
\n2021: \u00a363 million) against which a provision of \u00a320 million (31 December 2021: \u00a323 million) is held.
\nThere are no amounts provided against balances that are not overdue as these are deemed recoverable, following an assessment for
\nimpairment in accordance with policies described in note 2.
\nThe ageing of the balance deemed recoverable of \u00a333 million (31 December 2021: \u00a340 million) is as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n0
\u2013
30 days
\n31
\u2013
60 days
\n60+ days
\n30
\n3
\n\u2013
\n27
\n11
\n2
\n33
40
\nThe Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
\n
\n191
\n
\n
\nThe Group\u2019s contract assets comprise the following:
\nParticipation
\nfees
\n\u00a3m
\nUnbilled
\nreceivables
\n\u00a3m
\nUnbilled work
\ndone
\n\u00a3m
\nOther
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nAdditions
\nUtilised
\nExchange adjustments
\n195
\n5
\n(9)
\n2
\n52
\n949
\n(941)
\n1
\n247
\n68
\n(13)
\n3
\n50
\n9
\n(6)
\n(1)
\n544
\n1,031
\n(969)
\n5
\nAt 31 December 2021
\nAdditions
\nUtilised
\nDisposal of businesses
\n(1)
\nExchange adjustments
\n193
\n2
\n(13)
\n\u2013
\n22
\n61
\n929
\n(918)
\n(3)
\n10
\n305
\n124
\n(18)
\n\u2013
\n39
\n52
\n\u2013
\n(7)
\n\u2013
\n4
\n611
\n1,055
\n(956)
\n(3)
\n75
\nAt 31 December 2022
204
79
450
49
782
\n(1) Disposal of businesses in 2022 relates to the disposal of a non-core entity.
\nAn assessment for impairment of contract assets has been performed in accordance with policies described in note 2. No such impairment
\nhas been recorded.
\nParticipation fees
\nParticipation fees are described in the accounting policies (note 2) and are considered to be a reduction in revenue for the related customer
\ncontract. Amounts are capitalised and
\u201c
amortised
\u201d
to match to the related performance obligation.
\nUnbilled receivables for over time recognition
\nUnbilled receivables for over time recognition represent work completed with associated margins where contracts contain a legal right to
\ncompensation for work completed, including a margin, and there is no alternative use for
the customer\u2019s asset.
\nUnbilled work done
\nUnbilled work done only has a material impact on one entity in the Group, exclusively relating to certain RRSP arrangements in the
\nAerospace business.
\nWhere the Group has a contractual right to aftermarket revenue, IFRS 15 requires that the total contract revenue is allocated to the
\nperformance obligations. The principal contractual term that determines the existence of unbilled work done is the absence of a termination
\nclause that the customer can unilaterally exercise and which results in future purchases being considered optional. Where there is such a
\ntermination clause and the Group commercially relies on economic compulsion of the contracting parties, the two phases of activity are
\ntreated as distinct and no unbilled work done contract asset is recognised. In the absence of such a term, there is a contractual link
\nbetween the sale of OE components and aftermarket, which results in unbilled work done, and the total contract revenue is allocated to the
\ndistinct performance obligations.
\nUnbilled work done is measured using a weighted average unit method, taking account of an estimate of stand-alone selling price for
\nindividual performance obligations and is recognised when control of the OE component passes to the customer (the engine
\nmanufacturer). Due to the long-term nature of agreements, calculation of the total programme revenues is inherently imprecise and as set
\nout in note 3d requires significant estimates, including an assessment of the aftermarket revenue per engine which reflects the pattern of
\nfuture maintenance activity and associated costs to be incurred. In order to address the future uncertainties, risk adjustments as well as
\nconstraints have been applied to the expected level of revenue as appropriate. This approach best represents the value of goods and
\nservices supplied taking account of the performance obligations, risk and overall contract revenues.
\nAs a consequence of allocating additional revenue to the sale of OE components, an unbilled work done contract asset has been
\nrecognised which will be satisfied through cash receipt during the aftermarket phase. The constraints applied to unbilled work done are
\nreassessed at each period end, and will unwind as risks reduce and when uncertainties are resolved. This is expected to lead to additional
\nrevenue recognition in future periods in relation to items sold in the current and preceding periods. Further information is shown in note 4.
\n18.
Cash and cash equivalents
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCash and cash equivalents
355
473
\nCash and cash equivalents comprises cash at bank and in hand which earns interest at floating rates based on daily bank deposit rates
\nand short-term deposits which are made for varying periods of between one day and one month. The carrying amount of these assets is
\nconsidered to be equal to their fair value.
\n
\n\n
\n192
19.
Trade and other payables
\nCurrent
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nTrade payables
\nOther payables
\nCustomer advances and contract liabilities
\nOther taxes and social security
\nGovernment refundable advances
\nFunded development costs
\nAccruals
\nDeferred government grants
\n1,257
\n375
\n281
\n73
\n7
\n57
\n279
\n18
\n1,016
\n338
\n263
\n59
\n5
\n84
\n264
\n22
\n2,347
2,051
\nAs at 31 December 2022, and as described in note 25, included within trade payables were drawings on supplier finance facilities of \u00a3200
\nmillion (31 December 2021: \u00a3102 million).
\nTrade payables are non-interest-bearing. Normal settlement terms vary by country and the average credit period taken for trade and other
\npayables is 93 days (31 December 2021: 86 days).
\nNon-current
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nOther payables
\nCustomer advances and contract liabilities
\nOther taxes and social security
\nGovernment refundable advances
\nFunded development costs
\nAccruals
\nDeferred government grants
\n19
\n213
\n3
\n52
\n89
\n29
\n26
\n12
\n185
\n6
\n50
\n88
\n27
\n22
\n431
390
\nThe Directors consider that the carrying amount of trade and other payables approximates to their fair value.
\nNon-current amounts; other payables, other taxes and social security and accruals fall due for payment within one to two years;
\ngovernment refundable advances are forecast to fall due for repayment between 2023 and 2055 and the deferred government grants will
\nbe utilised over the next five years.
\nFunded development costs
\nWhen the Group is awarded design and development work as part of a related serial production of components contract, management
\nassesses whether the two phases of work are distinct under IFRS 15: Revenue from contracts with customers.
\nWhere it is considered there is only one performance obligation under the contract, being the delivery of manufactured product, any cash
\nreceived from customers which contributes to
\u2018funding\u2019 the up
-front design and development expenditure incurred, is deferred on the
\nBalance Sheet as an obligation and released to revenue in the Income Statement based on expectations of volumes.
\nDevelopment cost funding is in the Aerospace division (\u00a3131 million) and Automotive division (\u00a315 million).
\nCustomer advances and contract liabilities include cash receipts from customers in advance of the Group completing its performance
\nobligations and are generally utilised as product is delivered. Non-current amounts in respect of customer advances and contract liabilities
\nwill be utilised as follows: one to two years \u00a365 million, two to five years \u00a350 million and over five years \u00a398 million (31 December 2021:
\none to two years \u00a322 million, two to five years \u00a362 million and over five years \u00a3101 million).
\nThe G
roup\u2019s Customer advances and contract liabilities comprise the following:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCustomer cash advances
\nMaterial rights given
\nRRSP related obligations
\n95
\n34
\n365
\n92
\n48
\n308
\n494
448
\nCustomer cash advances
\nThere are a discrete number of contracts with customers, exclusively in the Aerospace business, where commercial terms lead to customer
\nadvances relating to serial production of components. Where cash is received in advance of performance, this usually addresses non-
\nstandard commercial impacts on the Group such as long lead times on inventory.
\nCustomer cash advances received before the Group delivers product is deferred on the Balance Sheet as an obligation and released to
\nrevenue based on expectations of volumes.
\n
\n193
\n
\n
\nMaterial rights given
\nWhere the Group has agreed contracts with customers that contain any unusual pricing features, these are assessed to determine if
\nmaterial rights have been transferred to the customer. A material right could occur when there is a material step down in price or if
\ncontracts are modified with lump sum cash receipts offset by a reduction in future pricing.
\nIf a material right has transferred to the customer, any cash received in advance of the Group performing its obligations under a contract is
\ndeferred on the Balance Sheet and released to revenue in the Income Statement based on the terms of the contract.
\nMaterial rights given are exclusively in the Aerospace business.
\nRRSP related obligations
\nAs detailed in the accounting policies (note 2), significant estimates disclosure (note 3), revenue disclosures (note 4) and contract asset
\ndisclosure (note 17), the Group has certain RRSP arrangements in the Aerospace business, with more complex revenue recognition
\nconsiderations. Whilst the Group has an unbilled work done contract asset of \u00a3450 million (31 December 2021: \u00a3305 million), detailed in
\nnote 17, which represents the Group having completed certain of its performance obligations in advance of cash receipt, it also has
\ncontract liabilities.
\nThese include:
\n\u2022
C
ash received for a \u201cstand ready\u201d obligation (described in note 4) of \u00a391 million (31 December 2021: \u00a392 million) to contribut
e to
\naftermarket activities of certain RRSPs, which typically results in the provision of services such as technical and other programme
\nsupport activities over the whole life of the engine. This will be recognised over time in line with the engine manufacturer\u2019
s actual
\nmaintenance, repair and overhaul costs.
\n\u2022
A pricing rebate provision for estimated discounts provided by engine manufacturers on the sale of OE of \u00a363 million (31 December
\n2021: \u00a385 million).
\n\u2022
C
ash received to compensate where the production cost incurred on an RRSP contract is in excess of the Group\u2019s share of the
\nprogramme, totalling \u00a38 million (31 December 2021: \u00a3nil). This will be released to the Income Statement when the Group has satisfied its
\nperformance obligations.
\n\u2022
Cash received in respect of RRSP contract amendments of \u00a361 million (31 December 2021: \u00a333 million).
This will be released over the
\nlife of the contract in accordance with the original terms of the contract.
\n\u2022
A provision for engineering and warranty commitments in respect of RRSP contracts of \u00a327 million (31 December 2021: \u00a326 million).
\nThis is expected to be utilised over the warranty terms of the contracts.
\n\u2022
Other contract liabilities of \u00a3115 million (31 December 2021: \u00a372 million).
\n20.
Interest-bearing loans and borrowings
\nThis note provides information about the contractual terms of the Group\u2019s interest
-bearing loans and borrowings. Details of
the Group\u2019s
\nexposure to credit, liquidity, interest rate and foreign currency risk are included in note 25.
\nCurrent
Non-current
Total
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nFloating rate obligations
\nBank borrowings
\u2013
US Dollar loan
\nBank borrowings
\u2013
Sterling loan
\nBank borrowings
\u2013
Euro loan
\nOther loans and bank overdrafts
\n\u2013
\n\u2013
\n\u2013
\n63
\n\u2013
\n\u2013
\n\u2013
\n5
\n759
\n182
\n363
\n\u2013
\n582
\n30
\n\u2013
\n\u2013
\n759
\n182
\n363
\n63
\n582
\n30
\n\u2013
\n5
\nFixed rate obligations
\n2022 bond
\n2032 bond
\n\u2013
\n\u2013
\n450
\n\u2013
\n\u2013
\n130
\n\u2013
\n300
\n\u2013
\n130
\n450
\n300
\nUnamortised finance costs
\nNon-cash acquisition fair value adjustment
\n63
\n\u2013
\n\u2013
\n455
\n\u2013
\n7
\n1,434
\n(3)
\n2
\n912
\n(13)
\n4
\n1,497
\n(3)
\n2
\n1,367
\n(13)
\n11
\nTotal interest-bearing loans and borrowings
63
462
1,433
903
1,496
1,365
\nThe Group\u2019s committed bank funding includes a multi
-currency denominated term loan of \u00a330 million (31 December 2021: \u00a330 million) and
\nUS$788 million (31 December 2021: US$788 million) and a multi-currency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion
\nand \u20ac0.5 billion. Loans drawn under this facility are guaranteed by Melrose Industries PLC and certain of its subsidiaries, a
nd there is no
\nsecurity over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and \u00a3152 million (31 December 2021: \u00a3nil), US$130 million (31 December 2021: \u00a3nil)
\nand \u20ac410 million (31 December 2021: \u00a3nil) were
drawn on the multi-currency revolving credit facility. Applying the exchange rates at 31
\nDecember 2022, the headroom equated to \u00a32.6 billion (31 December 2021: \u00a33.0 billion). There are also a number of uncommitted
\noverdraft, guarantee and borrowing facilities made available to the Group.
\n
\n\n\n194
\nThroughout the year, the Group remained compliant with all covenants under the facilities disclosed above. A number of Group companies
\ncontinue to be guarantors under the bank facilities. Further details on covenant compliance for the year ended 31 December 2022 are
\ncontained in note 25.
\nThe bank margin on the bank facility depends on the Group leverage, and ranges from 0.75% to 2.0% for both the term loan and revolving
\ncredit facility. As at 31 December 2022, the margin was 1.2% (31 December 2021: 0.75%).
\nThe \u00a3450 million bond along with associated cross-currency swaps matured in 2022.
\nDuring the year, the Group undertook a tender to buy back the 2032 \u00a3300 million bond with \u00a3170 million repurchased and a cash outflow of
\n\u00a3148 million. The Group has \u00a3130 million of the bond remaining which matures in 2032 on its existing terms.
\nDetails of the remaining bond are in the table below:
\nMaturity date
\nNotional amount
\n\u00a3m
\nCoupon
\n% p.a.
\nMay 2032
130
4.625%
\nMaturity of financial liabilities (excluding currency contracts and lease obligations)
\nThe table below shows the maturity profile of anticipated future cash flows, including interest, on an undiscounted basis in relation to the
\nGroup\u2019s financial liabilities (other than those associated with currency risk, which are shown in note 25, and leas
e obligations which are
\nshown in note 28). The amounts shown therefore differ from the carrying value and fair value of the Group\u2019s financial liabili
ties.
\nInterest-
bearing
\nloans and
\nborrowings
\n\u00a3m
\nInterest rate
\nderivative
\nfinancial
\nliabilities
\n\u00a3m
\nOther f
inancial
\nliabilities
\n\u00a3m
\nTotal financial
\nliabilities
\n\u00a3m
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n131
\n1,358
\n18
\n160
\n(171)
\n3
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1,918
\n60
\n15
\n25
\n\u2013
\n2,052
\n1,418
\n33
\n185
\n(171)
\n31 December 2022
1,496
3
2,018
3,517
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n501
\n27
\n661
\n383
\n(207)
\n4
\n3
\n\u2013
\n\u2013
\n\u2013
\n1,623
\n45
\n15
\n29
\n\u2013
\n2,128
\n75
\n676
\n412
\n(207)
\n31 December 2021
1,365
7
1,712
3,084
\n21. Provisions
\nLoss-making
\ncontracts
\n\u00a3m
\nProperty
\nrelated costs
\n\u00a3m
\nEnvironmental
\nand litigation
\n\u00a3m
\nWarranty
\nrelated costs
\n\u00a3m
\nRestructuring
\n\u00a3m
\nOther
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2022
\nUtilised
\nCharge to operating profit
\n(1)
\nRelease to operating profit
\n(2)
\nDisposal of businesses
\n(3)
\nTransfer to held for sale
\n(4)
\nUnwind of discount
\n(5)
\nExchange adjustments
\n167
\n(40)
\n\u2013
\n(15)
\n(9)
\n\u2013
\n(3)
\n8
\n29
\n\u2013
\n2
\n\u2013
\n(5)
\n\u2013
\n\u2013
\n2
\n135
\n(16)
\n16
\n(21)
\n\u2013
\n(2)
\n\u2013
\n7
\n222
\n(29)
\n48
\n(50)
\n(2)
\n(3)
\n\u2013
\n14
\n81
\n(121)
\n130
\n(11)
\n\u2013
\n\u2013
\n\u2013
\n4
\n67
\n(2)
\n10
\n(2)
\n(2)
\n\u2013
\n1
\n1
\n701
\n(208)
\n206
\n(99)
\n(18)
\n(5)
\n(2)
\n36
\n31 December 2022
108
28
119
200
83
73
611
\nCurrent
\nNon-current
\n40
\n68
\n4
\n24
\n61
\n58
\n98
\n102
\n67
\n16
\n11
\n62
\n281
\n330
\n108
28
119
200
83
73
611
\n(1) Includes \u00a3130 million of adjusting items and \u00a376 million recognised in adjusted operating profit.
\n(2) Includes \u00a330 million of adjusting items and \u00a369 million recognised in adjusted operating profit.
\n(3) Disposal of businesses in 2022 relates to the sale of a non-core entity.
\n(4) Transfer to held for sale relates to the Ergotron business, which was subsequently disposed of during the second half of the year (note 1).
\n(5) Includes \u00a32 million within finance costs relating to the time value of money and a \u00a34 million credit relating to changes in discount rates on loss-making contract provisions recognised as fair value
\nitems on the acquisition of GKN, which has been included as an adjusting item within operating profit (note 6).
\n
\n195
\n
\n
\nLoss-making contracts
\nProvisions for loss-making contracts are considered to exist where the Group has a contract under which the unavoidable costs of meeting
\nthe obligations exceed the economic benefits expected to be received under it. This obligation has been discounted and will be utilised
\nover the period of the respective contracts, which is up to 15 years. At 31 December 2022, the loss-making contracts provision within
\nAerospace totalled \u00a362 million (31 December 2021: \u00a398 million), Automotive \u00a339 million (31 December 2021: \u00a354 million) and Powder
\nMetallurgy \u00a37 million (31 December 2021: \u00a315 million).
\nCalculation of loss-making contract provisions is based on contract documentation and delivery expectations, along with an estimate of
\ndirectly attributable costs and represent
s management\u2019s best estimate of the unavoidable costs of fulfilling the contract.
\nUtilisation during the year of \u00a340 million (2021: \u00a348 million) has benefited adjusted operating profit with \u00a323 million (2021: \u00a323 million)
\nrecognised in Aerospace, \u00a315 million (2021: \u00a321 million) recognised in Automotive, \u00a32 million (2021: \u00a34 million) recognised in Powder
\nMetallurgy. In addition, \u00a315 million (2021: \u00a322 million) has been released on a net basis with \u00a311 million (2021: \u00a322 million) shown as an
\nadjusting item, as described in note 6, as part of the release of fair value items split; \u00a34 million (2021: \u00a34 million) in Aerospace, \u00a3nil (2021:
\n\u00a38 million) in Automotive and \u00a37 million (2021: \u00a310 milion) in Powder Metallurgy.
\nProperty related costs
\nThe provision for property related costs represents dilapidation costs for ongoing leases and is expected to result in cash expenditure over
\nthe next eight years. Calculation of dilapidation obligations are based on lease agreements with landlords and external quotes, or in the
\nabsence of specific documentation, management\u2019s best estimate of the costs required to fulfil obligations
.
\nEnvironmental and litigation
\nThere are environmental provisions amounting to \u00a326 million (31 December 2021: \u00a326 million) relating to the estimated remediation costs of
\npollution, soil and groundwater contamination at certain sites and estimated future costs and settlements in relation to legal claims and
\nassociated insurance obligations amounting to \u00a393 million (31 December 2021: \u00a3109 million). Liabilities for environmental costs are recognised
\nwhen environmental assessments are probable and the associated costs can be reasonably estimated.
\nProvisions are recorded for product and general liability claims which are probable and for which the cost can be reliably estimated. These
\nliabilities include an estimate of claims incurred but not yet reported and are based on actuarial valuations using claim data. Due to their
\nnature, it is not possible to predict precisely when these provisions will be utilised.
\nThe Group has on occasion been required to take legal or other actions to defend itself against proceedings brought by other parties.
\nProvisions are made for the expected costs associated with such matters, based on past experience of similar items and other known
\nfactors, considering professional advice received. This represents management\u2019s best estimate of the likely outcome. The timi
ng of
\nutilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcome of various court proceedings and
\nnegotiations. Contractual and other provisions represent management\u2019s best estimate of the cost of settling future obligation
s and reflect
\nmanagement\u2019s assessment of the likely settlement method, which may change
over time. However, no provision is made for proceedings
\nwhich have been, or might be, brought by other parties against Group companies unless management, considering professional advice
\nreceived, assess that it is more likely than not that such proceedings may be successful.
\nWarranty related costs
\nProvisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the
\nrelevant products and subsequently updated for changes in estimates as necessary. The provision for warranty related costs represents
\nthe best estimate of the expenditure required to settle the Group\u2019s obligations, based on past experience, recent claims and
current
\nestimates of costs relating to specific claims. Warranty terms are, on average, between one and five years.
\nRestructuring
\nRestructuring provisions relate to committed costs in respect of restructuring programmes, as described in note 6, usually resulting in cash
\nspend within one year. A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring
\nand has raised a valid expectation in those affected that it will carry out the restructuring by either starting to implement the plan or by
\nannouncing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures
\narising from the restructuring, which are those amounts that are necessarily entailed by the restructuring programmes.
\nOther
\nOther provisions include long-term incentive plans for divisional senior management and the employer tax on equity-settled incentive
\nschemes which are expected to result in cash expenditure during the next four years.
\nWhere appropriate, provisions have been discounted using discount rates between 0% and 14% (31 December 2021: 0% and 11%)
\ndepending on the territory in which the provision resides and the length of its expected utilisation.
\n
\n
\n
\n196
22.
Deferred tax
\nThe following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior
\nyear.
\nDeferred tax
\nassets
Deferred tax liabilities
\nTax losses and
\nother assets
\n\u00a3m
\nAccelerated
\ncapital allowances
\nand other liabilities
\n\u00a3m
\nDeferred tax on
\nintangible assets
\n\u00a3m
\nTotal deferred
\ntax liabilities
\n\u00a3m
\nTotal net
\ndeferred tax
\n\u00a3m
\nAt 1 January 2021
\nCredit to income
\nCharge to equity
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\nMovement in set off of assets and liabilities
\n(3)
\n180
\n149
\n(90)
\n(53)
\n(6)
\n(18)
\n88
\n(167)
\n41
\n\u2013
\n\u2013
\n\u2013
\n(3)
\n2
\n(565)
\n48
\n\u2013
\n78
\n24
\n18
\n(90)
\n(732)
\n89
\n\u2013
\n78
\n24
\n15
\n(88)
\n(552)
\n238
\n(90)
\n25
\n18
\n(3)
\n\u2013
\nAt 31 December 2021
\nCredit to income
\nCredit to equity
\nDisposal of businesses
\n(1)
\nAcquisition of businesses
\n(4)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\nMovement in set off of assets and liabilities
\n(3)
\n250
\n35
\n4
\n(10)
\n\u2013
\n(9)
\n44
\n59
\n(127)
\n3
\n\u2013
\n\u2013
\n(1)
\n\u2013
\n(18)
\n(7)
\n(487)
\n111
\n\u2013
\n\u2013
\n\u2013
\n30
\n(71)
\n(52)
\n(614)
\n114
\n\u2013
\n\u2013
\n(1)
\n30
\n(89)
\n(59)
\n(364)
\n149
\n4
\n(10)
\n(1)
\n21
\n(45)
\n\u2013
\nAt 31 December 2022
373
(150)
(469)
(619)
(246)
\n(1) Disposal of businesses in 2022 relates to the sale of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities
\n(note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(3)
Set off of deferred tax assets and liabilities in accordance with IAS 12 within territories with a right of set off.
\n(4)
Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\nAs at 31 December 2022, the Group had gross unused corporate income tax losses of \u00a32,176 million (31 December 2021: \u00a31,841 million)
\navailable for offset against future profits. A deferred tax asset of \u00a3477 million (31 December 2021: \u00a3396 million) has been recognised in
\nrespect of \u00a31,938 million (31 December 2021: \u00a31,683 million) of these gross losses. The movement in deferred tax assets relating to tax
\nlosses arises primarily through the Income Statement. There is also a credit of \u00a36 million (2021: \u00a3nil) included within equity. No asset has
\nbeen recognised in respect of the remaining losses due to the divisional and geographic split of anticipated future profit streams. Most of
\nthese losses may be carried forward indefinitely subject to certain continuity of business requirements. Where losses are subject to time
\nexpiry, a deferred tax asset is recognised to the extent that sufficient future profits are anticipated to utilise these losses. Despite incurring
\ntax losses in certain territories due to the effects of COVID-19, the Group continues to recognise deferred tax assets in those territories as
\nit is confident that the global recovery, together with restructuring actions taken, will result in future taxable profits against which the
\ndeferred tax assets will be realised. In addition to the corporate income tax losses included above, a deferred tax asset of \u00a347 million (31
\nDecember 2021: \u00a350 million) has been recognised on tax credits (primarily US) and US state tax losses.
\nDeferred tax assets have also been recognised on Group retirement benefit obligations at \u00a314 million (31 December 2021: \u00a333 million) and
\non other temporary differences at \u00a3318 million (31 December 2021: \u00a3313 million). The gross deferred tax assets therefore amount to \u00a3856
\nmillion (31 December 2021: \u00a3792 million).
\nDeferred tax liabilities have been recognised on intangible assets at \u00a3923 million (31 December 2021: \u00a3993 million) and accelerated capital
\nallowances and other temporary differences at \u00a3179 million (31 December 2021: \u00a3163 million). The gross deferred tax liabilities therefore
\namount to \u00a31,102 million (31 December 2021: \u00a31,156 million).
\nThere are no material unrecognised deferred tax assets at 31 December 2022 (31 December 2021: \u00a3nil), other than the losses referred to
\nabove.
\nNo deferred tax is recognised on the unremitted earnings of overseas subsidiaries except where the distribution of such profits is planned.
\nIf these earnings were remitted in full, tax of \u00a362 million (31 December 2021: \u00a353 million) would be payable.
\n23.
Share-based payments
\n2020 Employee Share Plan
\nDuring the year, the Group recognised a charge of \u00a315 million (2021: \u00a319 million) in respect of the 2020 Employee Share Plan, inclusive of
\na \u00a31 million credit in respect of related national insurance (2021: charge of \u00a33 million), recognised in adjusting items (note 6).
\nFurther details of the 2020 Employee Share Plan are set ou
t in the Directors\u2019 Remuneration Report on page
125.
\nThe estimated value of the 2020 Employee Share Plan at 31 December 2022 if settled at that date was \u00a3nil (31 December 2021: \u00a3nil).
\nUsing a Black-Scholes option pricing model, the projected value of this plan at 31 May 2023 (being the end of the three year performance
\nperiod) is \u00a322 million (31 December 2021: \u00a351 million). The projected value is impacted by future acquisition and disposal assumptions.
\n
\n197
\n
\n
\nThe annual IFRS 2 charge in respect of the 2020 Employee Share Plan is \u00a316 million. The inputs into the Black-Scholes valuation model
\nthat were used to fair value the plan at the grant date were as follows:
\nValuation assumptions
\nWeighted average share price
\nWeighted average exercise price
\nExpected volatility
\nExpected life as at inception
\nRisk free interest
\n\u00a31.81
\n\u00a31.71
\n58%
\n2.4 years
\n0.0%
\nExpected volatility was determined by calculating the
historical volatility of the Company\u2019s share price.
\n24.
Retirement benefit obligations
\nDefined contribution plans
\nThe Group operates defined contribution plans for qualifying employees across several jurisdictions. The assets of the plans are held
\nseparately from those of the Group in funds under the control of Trustees.
\nThe total costs charged in relation to the continuing businesses during the year of \u00a369 million (2021: \u00a368 million) represent contributions
\npayable to these plans by the Group at rates specified in the rules of the plans.
\nDefined benefit plans
\nThe Group sponsors defined benefit plans for qualifying employees of certain subsidiaries. The funded defined benefit plans are
\nadministered by separate funds that are legally separated from the Group. The Trustees of the funds are required by law to act in the
\ninterest of the fund and of all relevant stakeholders in the plans. The Trustees of the pension funds are responsible for the investment
\npolicy with regard to the assets of the fund.
\nThe most significant defined benefit pension plans in the Group at 31 December 2022 were:
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nThe GKN Group Pension Schemes (Numbers 1
\u2013
4) are shown within the Aerospace and Automotive segments and the net surplus is split
\n43% and 57% respectively as at 31 December 2022. These plans are funded, closed to new members and were closed to future accrual in
\n2017. The valuation of the plans was based on a full actuarial valuation as of 5 April 2022, updated to 31 December 2022 by independent
\nactuaries.
\nGKN US Consolidated Pension Plan
\nThe GKN US Consolidated Pension Plan is a funded plan, closed to new members and closed to future accrual. The US Pension Plan
\nvaluation was based on a full actuarial valuation as of 1 January 2022, updated to 31 December 2022 by independent actuaries.
\nGKN Germany Pension Plans
\nThe GKN Germany Pension Plans provide benefits dependent on final salary and service with the Company. The plans are generally
\nunfunded and closed to new members.
\nOther plans include a number of funded and unfunded defined benefit arrangements and retiree medical insurance plans, predominantly in
\nthe US and Europe.
\nThe cost of the Group\u2019s defined benefit plans is determined in accordance with IAS 19 (revise
d): Employee benefits using the advice of
\nindependent professionally qualified actuaries on the basis of formal actuarial valuations and using the projected unit credit method. In line
\nwith normal practice, these valuations are undertaken triennially in the UK and annually in the US and Germany.
\nContributions
\nDuring the prior year, the funding target agreed on acquisition of GKN was achieved, being gilts plus 25 basis points for the GKN UK 2016
\nPension Plan and gilts plus 75 basis points for the GKN Group Pension Schemes (Numbers 1
\u2013
4). The commitments from acquisition
\nceased as a result and the Group now contributes \u00a330 million per year into the GKN Group Pension Schemes (Numbers 1
\u2013
4).
\nThe Group contributed \u00a359 million (2021: \u00a3128 million) to defined benefit pension plans and post-employment plans in the year ended 31
\nDecember 2022. The Group expects to contribute \u00a351 million in 2023.
\nActuarial assumptions
\nThe major assumptions used by the actuaries in calculating the Group\u2019s pension
liabilities are as set out below:
\nRate of increase
\nof pensions in payment
\n% per annum
\nDiscount rate
\n%
\nPrice inflation
\n(RPI/CPI)
\n%
\n31 December 2022
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nGKN US plans
\nGKN Europe plans
\n2.7
\nn/a
\n2.6
\n4.8
\n5.0
\n3.7
\n3.2/2.7
\nn/a
\n2.6/2.6
\n31 December 2021
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nGKN US plans
\nGKN Europe plans
\n2.7
\nn/a
\n2.1
\n2.0
\n2.7
\n1.1
\n3.2/2.7
\nn/a
\n2.1/2.1
\n
\n
\n
\n198
\nMortality
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nThe GKN Group Pension Schemes (Numbers 1
\u2013
4) use the SAPS \u201cS3PA\u201d base tables with
scheme-specific adjustments. The base table
\nmortality assumption for each of the UK plans reflects best estimate results from the most recent mortality experience analyses for each
\nscheme. Weighting factors vary by scheme.
\nFuture improvements for all UK plans are in line with the 2021
Continuous Mortality Investigation (\u201cCMI\u201d) core p
rojection model (SK = 7.5,
\nA = 0%) with a long-term rate of improvement of 1.25% p.a. for both males and females.
\nGKN US Consolidated Pension Plan
\nGKN US Pension and Medical Plans use base mortality tables that are adjusted for recent plan experience (equivalent to RP2006
\nprojected to 2018 using scale MP2018 with a 6.1% load). Future improvements for all US plans are in line with MP2021.
\nGKN Germany Pension Plans
\nAll German plans use the Richttafein 2018 G tables, with no adjustment.
\nThe following table shows the future life expectancy of individuals age 65 at the year end and the future life expectancy of individuals aged
\n65 in 20 years\u2019 time.
\nGKN Group
\nPension Schemes
\n(Numbers 1
\u2013
4)
\nyears
\nGKN US
\nConsolidated
\nPension Plan
\nyears
\nGKN
Germany
\nPension Plans
\nyears
\nMale today
\nFemale today
\nMale in 20 years\u2019 time
\nFemale in 20 years\u2019 time
\n21.7
\n23.6
\n22.6
\n24.8
\n19.2
\n21.1
\n20.7
\n22.6
\n20.6
\n2
4.0
\n23.
4
\n26.3
\nBalance Sheet disclosures
\nThe amounts recognised in the Consolidated Balance Sheet in respect of defined benefit plans were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPresent value of funded defined benefit obligations
\nFair value of plan assets
\n(1,931)
\n1,941
\n(2,848)
\n3,010
\nFunded status
\nPresent value of unfunded defined benefit obligations
\n10
\n(498)
\n162
\n(623)
\nNet liabilities
(488)
(461)
\nAnalysed as:
\nRetirement benefit surplus
\n(1)
\nRetirement benefit obligations
\n93
\n(581)
\n184
\n(645)
\nNet liabilities
(488)
(461)
\n(1) Retirement benefit surplus at 31 December 2021 was previously shown within other receivables.
\nThe net retirement benefit obligation in continuing businesses is attributable to Aerospace: liability of \u00a327 million (31 December 2021: asset
\nof \u00a367 million), Automotive: liability of \u00a3427 million (31 December 2021: \u00a3484 million), Powder Metallurgy: liability of \u00a334 million (31
\nDecember 2021: \u00a337 million) and Corporate: liability of \u00a3nil (31 December 2021: liability of \u00a37 million).
\nThe plan assets and liabilities at 31 December 2022 were as follows:
\nUK
\nPlans
\n(1)
\n\u00a3m
\nUS
\nPlans
\n\u00a3m
\nEuropean
\nPlans
\n\u00a3m
\nOther
\nPlans
\n\u00a3m
\nTotal
\n\u00a3m
\nPlan assets
\nPlan liabilities
\n1,779
\n(1,755)
\n120
\n(202)
\n20
\n(443)
\n22
\n(29)
\n1,941
\n(2,429)
\nNet assets/(liabilities)
24
(82)
(423)
(7)
(488)
\n(1) Includes a liability in respect of the GKN post-employment medical plans of \u00a36 million and a net surplus in respect of the GKN Group Pension Scheme (Numbers 1
\u2013
4) of \u00a330 million.
\n
\n199
\n
\n
\nThe major categories and fair values of plan assets at the end of the year for each category were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nEquities
\nGovernment bonds
\nCorporate bonds
\nProperty
\nInsurance contracts
\nMulti-strategy/Diversified growth funds
\nPrivate equity
\nOther
\n(1)
\n85
\n722
\n196
\n18
\n28
\n354
\n80
\n458
\n141
\n1,420
\n459
\n71
\n38
\n424
\n209
\n248
\nTotal
1,941
3,010
\n(1) Primarily consists of cash collateral and liability driven investments.
\nThe assets were well diversified and the majority of plan assets had quoted prices in active markets. All government bonds were issued by
\nreputable governments and were generally AA rated or higher. Interest rate and inflation rate swaps were also employed to complement
\nthe role of fixed and index-linked bond holdings for liability risk management.
\nThe Trustees continually review whether the chosen investment strategy is appropriate with a view to providing the pension benefits and to
\nensure appropriate matching of risk and return profiles. The main strategic policies included maintaining an appropriate asset mix,
\nmanaging interest rate sensitivity and maintaining an appropriate equity buffer. Investment results are regularly reviewed.
\nMovements in the present value of defined benefit obligations during the year:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nCurrent service cost
\nInterest cost on obligations
\nRemeasurement gains
\u2013
demographic
\nRemeasurement gains
\u2013
financial
\nRemeasurement losses/(gains)
\u2013
experience
\nBenefits paid out of plan assets
\nBenefits paid out of Group assets for unfunded plans
\nSettlements
\n(1)
\nDisposal of businesses
\n(2)
\nExchange adjustments
\n3,471
\n9
\n66
\n(1)
\n(1,072)
\n102
\n(134)
\n(24)
\n(44)
\n\u2013
\n56
\n4,613
\n8
\n59
\n(14)
\n(162)
\n(49)
\n(186)
\n(16)
\n(366)
\n(379)
\n(37)
\nAt 31 December
2,429
3,471
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\nThe defined benefit plan liabilities were 15% (31 December 2021: 23%) in respect of active plan participants, 25% (31 December 2021:
\n27%) in respect of deferred plan participants and 60% (31 December 2021: 50%) in respect of pensioners.
\nThe weighted average duration of the defined benefit plan liabilities at 31 December 2022 was 12.8 years (31 December 2021: 17.7
\nyears).
\nMovements in the fair value of plan assets during the year:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nInterest income on plan assets
\nReturn on plan assets, excluding interest income
\nContributions
\nBenefits paid out of plan assets
\nPlan administrative costs
\nSettlements
\n(1)
\nDisposal of businesses
\n(2)
\nExchange adjustments
\n3,010
\n61
\n(1,003)
\n35
\n(134)
\n(8)
\n(42)
\n\u2013
\n22
\n3,775
\n51
\n72
\n112
\n(186)
\n(7)
\n(372)
\n(432)
\n(3)
\nAt 31 December
1,941
3,010
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n
\n
\n
\n200
\nThe actual return on plan assets was a loss of \u00a3942 million (2021: gain of \u00a3123 million).
\nIncome Statement disclosures
\nAmounts recognised in the Consolidated Income Statement in respect of these defined benefit plans were as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nIncluded within operating loss:
\n\u2013
current service cost
\n\u2013
settlement (gains)/losses
\n(1)
\n\u2013
plan administrative costs
\n(2)
\nIncluded within net finance costs:
\n\u2013
interest cost on defined benefit obligations
\n\u2013
interest income on plan assets
\n9
\n(2)
\n8
\n66
\n(61)
\n8
\n6
\n7
\n56
\n(48)
\nDiscontinued operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nIncluded within net finance costs:
\n\u2013
interest cost on defined benefit obligations
\n\u2013
interest income on plan assets
\n\u2013
\n\u2013
\n3
\n(3)
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Includes \u00a31 million of costs relating to the buy-out of the GKN UK 2016 Pension Plan in 2021. This was treated as an adjusting item (note 6).
\nStatement of Comprehensive Income disclosures
\nAmounts recognised in the Consolidated Statement of Comprehensive Income in respect of these defined benefit plans were as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nReturn on plan assets, excluding interest income
\nRemeasurement gains arising from changes in demographic assumptions
\nRemeasurement gains arising from changes in financial assumptions
\nRemeasurement (losses)/gains arising from experience adjustments
\n(1,003)
\n1
\n1,072
\n(102)
\n72
\n14
\n162
\n49
\nNet remeasurement (loss)/gain on retirement benefit obligations
(32)
297
\nRisks and sensitivities
\nThe defined benefit plans expose the Group to actuarial risks, such as longevity risk, inflation risk, interest rate risk and market
\n(investment) risk. The Group is not exposed to any unusual, entity specific or plan specific risks.
\nA sensitivity analysis on the principal assumptions used to measure the plan liabilities at the year end was as follows:
\nChange in assumption
\nDecrease/(increase)
\nto plan liabilities
\n\u00a3m
\nIncrease/(decrease)
\nto profit before tax
\n\u00a3m
\nDiscount rate
\nInflation assumption
\n(1)
\nAssumed life expectancy at age 65 (rate of mortality)
\nIncrease by 0.5 ppts
\nDecrease by 0.5
ppts
\nIncrease by 0.5
ppts
\nDecrease by 0.5
ppts
\nIncrease by 1
year
\nDecrease by 1 year
\n142
\n(156)
\n(90)
\n91
\n(99)
\n100
\n(5)
\n5
\nn/a
\nn/a
\nn/a
\nn/a
\n(1) The inflation sensitivity encompasses the impact on pension increases, where applicable.
\nThe sensitivity analysis above was determined based on reasonably possible changes to the respective assumptions, while holding all
\nother assumptions constant. There has been no change in the methods or assumptions used in preparing the sensitivity analysis from prior
\nyears. Sensitivities are based on the relevant assumptions and membership profile as at 31 December 2022 and are applied to obligations
\nat the end of the reporting period. Whilst the analysis does not take account of the full distribution of cash flows expected, it does provide
\nan approximation to the sensitivity of assumptions shown. Extrapolation of these results beyond the sensitivity figures shown may not be
\nappropriate and the sensitivity analysis presented may not be representative of the actual change in the defined benefit obligation as it is
\nunlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
\n
\n201
\n
\n25. Financial instruments and risk management
\nThe tabl
e below sets out the Group\u2019s accounting classification of each category of financial assets and liabilities and their carryin
g values at
\n31 December 2022 and 31 December 2021:
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n\u00a3m
\nDiscontinued
\nOperations
\n\u00a3m
\nTotal
\n\u00a3m
\n31 December 2022
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n458
\n52
\n\u2013
\n12
\n\u2013
\n(59)
\n(199)
\n(758)
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n365
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n(981)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n145
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(59)
\n(168)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(5)
\n\u2013
\n\u2013
\n\u2013
\n355
\n\u2013
\n\u2013
\n61
\n\u2013
\n(1,496)
\n\u2013
\n(8)
\n(47)
\n(217)
\n(3)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n355
\n969
\n62
\n62
\n12
\n(1,496)
\n(59)
\n(366)
\n(1,959)
\n(218)
\n(3)
\n(6)
\n31 December 2021 (restated)
\n(2)
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nCross-currency swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n393
\n77
\n\u2013
\n11
\n\u2013
\n(55)
\n(203)
\n(585)
\n\u2013
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n274
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(105)
\n(798)
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n123
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(58)
\n(165)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n\u2013
\n\u2013
\n58
\n\u2013
\n(1,365)
\n\u2013
\n(9)
\n(57)
\n(113)
\n(7)
\n(69)
\n\u2013
\n\u2013
\n33
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(1)
\n(52)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n824
\n87
\n59
\n11
\n(1,365)
\n(55)
\n(376)
\n(1,657)
\n(116)
\n(7)
\n(69)
\n(6)
\n(1)
The embedded derivative is classified as a level 3 fair value under the IFRS 13 fair value hierarchy.
\n(2)
Restated for discontinued operations (note 1).
\nReconciliation of liabilities arising from financing activities
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a31,805 million at 31 December 2021 comprising; external debt of
\n\u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369 million and lease obligations of \u00a3376 million. During
\nthe year a cash outflow in those liabilities totalled \u00a3127 million as follows: net repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a375 million (note 27) and repayment of principal on lease obligations of \u00a352 million (note 28). There is also an
\nincrease to liabilities arising from financing activities relating to non-cash items totalling \u00a3121 million comprising; an increase in external
\ndebt and cross-currency swaps associated with debt of \u00a379 million due to changes in foreign exchange rates and other non-cash
\nmovements and an increase in respect of lease obligations of \u00a342 million. As at 31 December 2022, liabilities arising from financing
\nactivities, as defined by IAS 7, totalled \u00a31,799 million comprising; external debt of \u00a31,433 million (excluding \u00a363 million of bank overdrafts),
\ncross currency swaps of \u00a3nil and lease obligations of \u00a3366 million.
\n
\n\n
\n202
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a33,584 million at 31 December 2020 comprising; external debt of
\n\u00a32,940 million (excluding \u00a3151 million of bank overdrafts), cross currency swaps of \u00a389 million and lease obligations of \u00a3555 million. During
\nthe year a cash outflow in those liabilities totalled \u00a31,616 million as follows: repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a31,555 million (note 27) and repayment of principal on lease obligations of \u00a361 million (note 28). Whilst there is a
\npayment of \u00a34 million included within the financing activities section of the Consolidated Statement of Cash Flows, in respect of costs of
\nraising debt finance, this does not affect liabilities arising from financing activities. There is also a decrease to liabilities arising from
\nfinancing activities relating to non-cash items totalling \u00a3163 million comprising; a reduction in external debt and cross-currency swaps
\nassociated with debt of \u00a345 million due to changes in foreign exchange rates and other non-cash movements and a net decrease in
\nrespect of lease obligations of \u00a3118 million. As at 31 December 2021, liabilities arising from financing activities, as defined by IAS 7,
\ntotalled \u00a31,805 million comprising; external debt of \u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369
\nmillion and lease obligations of \u00a3376 million.
\nFair values
\nAs at 31 December 2022, the \u00a3130 million (31 December 2021: \u00a3300 million) bond maturing in 2032 had a carrying value of \u00a3132 million
\n(31 December 2021: \u00a3304 million) and a fair value of \u00a3110 million (31 December 2021: \u00a3321 million). At 31 December 2021, the \u00a3450
\nmillion bond which matured in 2022 had a carrying value of \u00a3457 million and a fair value of \u00a3462 million.
\nThe Directors consider that the other financial assets and liabilities have fair values not materially different to the carrying values.
\nCredit risk
\nThe Group\u2019s
principal financial assets were cash and cash equivalents, trade receivables and derivative financial assets which represented
\nthe Group\u2019s maximum exposure to credit risk in relation to financial assets.
\nThe Group\u2019s credit risk on cash and cash equivalents
and derivative financial assets was limited because the counterparties were banks
\nwith strong credit ratings assigned by international credit rating agencies. Exposure is managed on the basis of risk rating and counterparty
\nlimits. The value of credit risk in derivative assets has been modelled using publicly available inputs as part of their fair value.
\nThe Group\u2019s credit risk was therefore primarily attributable to its trade receivables. The amounts presented in the Consolida
ted Balance
\nSheet were net of allowance for expected credit loss
, estimated by the Group\u2019s management based on prior experience and their
\nassessment of the current economic environment. Note 17 provides further details regarding the recovery of trade receivables.
\nThe following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements:
\n31 December 2022
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n355
\n74
\n\u2013
\n\u2013
\n355
\n74
\n(71)
\n(62)
\n284
\n12
\nFinancial assets subject to master
\nnetting arrangements
429
\u2013
429
(133)
296
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,496)
\n(227)
\n\u2013
\n\u2013
\n(1,496)
\n(227)
\n(81)
\n214
\n(1,577)
\n(13)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,723)
\u2013
(1,723)
133
(1,590)
\n31 December 2021
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n473
\n70
\n\u2013
\n\u2013
\n473
\n70
\n(5)
\n(58)
\n468
\n12
\nFinancial assets subject to master netting
\narrangements
543
\u2013
543
(63)
480
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,365)
\n(198)
\n\u2013
\n\u2013
\n(1,365)
\n(198)
\n(127)
\n190
\n(1,492)
\n(8)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,563)
\u2013
(1,563)
63
(1,500)
\n
\n203
\n
\n
\nCapital risk
\nThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern.
\nThe capital structure of the Group as at 31 December 2022 consists of net debt, as disclosed in note 27, and equity attributable to the
\nowners of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of
\nChanges in Equity.
\nLiquidity risk management
\nOverview of banking facilities
\nThe Group\u2019s committed bank facilities include a multi
-currency denominated term loan of \u00a330 million and US$788 million and a multi-
\ncurrency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion and \u20ac0.5 billion. Loans drawn under this facil
ity are guaranteed
\nby Melrose Industries PLC and certa
in of its subsidiaries, and there is no security over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and there were drawings of US$130 million, \u00a3152 million and \u20ac410 million o
n the
\nmulti-currency revolving credit facility. Applying the exchange rates at 31 December 2022, the headroom equated to \u00a32.6 billion (31
\nDecember 2021: \u00a33.0 billion).
\nCash, deposits and marketable securities amounted to \u00a3355 million at 31 December 2022 (31 December 2021: \u00a3473 million) and are offset
\nto arrive at the Group net debt position of \u00a31,139 million (31 December 2021: \u00a3950 million). The combination of this cash and the
\nheadroom on the revolving credit facility allows the Directors to consider that the Group has sufficient access to liquidity for its current
\nneeds. The Board takes careful consideration of counterparty risk with banks when deciding where to place cash on deposit.
\nCovenants
\nThe committed bank funding has two financial covenants, being a net debt to adjusted EBITDA covenant and an interest cover covenant,
\nboth of which are normally tested half-yearly in June and December.
\nThe net debt to adjusted EBITDA covenant test level is 3.75x at 31 December 2022 and 3.5x at 30 June 2023 onwards. At 31 December
\n2022, the Group net debt leverage was 1.4x.
\nThe interest cover bank covenant test is set at 4.0x at 31 December 2022 onwards. At 31 December 2022, the Group interest cover was
\n11.6x, affording comfortable headroom.
\nBonds
\nCapital market borrowings as at 31 December 2022, inherited as part of the GKN acquisition, consist of a \u00a3130 million bond maturing May
\n2032 following the tender during the year, see note 20 for further details. The \u00a3450 million bond matured in September 2022. Details of the
\nbond outstanding at 31 December 2022 is shown in note 20.
\nWorking capital
\nThe Group has a small number of uncommitted working capital programmes that provide favourable financing terms on eligible customer
\nreceipts and competitive financing terms to suppliers on eligible supplier payments.
\nBusinesses which participate in these customer related finance programmes have the ability to choose whether to receive payment earlier
\nthan the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, the drawings on these facilities were
\n\u00a3325 million (31 December 2021: \u00a3310 million), as a result there was a net cash increase in the year of \u00a315 million (2021: reduction of \u00a34
\nmillion). At 31 December 2022, the drawings within Aerospace were \u00a3138 million (31 December 2021: \u00a3114 million), Automotive \u00a3178
\nmillion (31 December 2021: \u00a3187 million) and Powder Metallurgy \u00a39 million (31 December 2021: \u00a39 million).
\nIn addition, some suppliers have access to utilise the Group\u2019s supplier finance
programmes, which are provided by a small number of the
\nGroup\u2019s banks. There is no cost to the Group for providing these programmes to its suppliers. These arrangements do not chang
e the date
\nsuppliers are due to be paid by the Group, and therefore there i
s no additional impact on the Group\u2019s liquidity. If the Group exited these
\narrangements there could be a potential impact of up to \u00a394 million (31 December 2021: \u00a360
million) on the Group\u2019s cash flow. These
\nprogrammes allow suppliers to choose whether they want to accelerate the payment of their invoices, by the financing banks, for an
\ninterest cost which is competitive, based on the credit rating of the Group as determined by the financing banks. The amounts owed to the
\nbanks are presented in trade payables on the Balance Sheet and the cash flows are presented in cash flows from operating activities. As at
\n31 December 2022, total facilities were \u00a3328 million (31 December 2021: \u00a3321 million) with drawings of \u00a3200 million (31 December 2021:
\n\u00a3102 million). The
arrangements do not change the timing of the Group\u2019s cash outflows.
At 31 December 2022, the drawings within
\nAerospace were \u00a375 million (31 December 2021: \u00a350 million) and Automotive \u00a3125 million (31 December 2021: \u00a352 million).
\nHedge of net investments in foreign entities using loans and derivatives
\nInterest-bearing loans and borrowings together with cross-
currency swaps are designated as hedges of net investments in the Group\u2019s
\nsubsidiaries in the USA and Europe to reduce the exposure to the related foreign exchange risks.
\nThe value of these were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nLocal borrowing:
\nUS Dollar
\nEuro
\n759
\n363
\n457
\n126
\nGKN cross-currency swaps:
\nUS Dollar
\nEuro
\n\u2013
\n\u2013
\n276
\n239
\n
\n
\n
\n204
\nThe foreign exchange movement on the local borrowings, which is recorded in currency translation on net investments within Other
\nComprehensive Income, was a loss of \u00a360 million (2021: gain of \u00a313 million).
\nAt 31 December 2021, Euro borrowings included US$170 million debt that was swapped into
\u20ac150 million
using cross-currency swaps. The
\nfair value of these cross-currency swaps was a liability of \u00a31 million. The foreign exchange movement on these cross-currency swaps,
\nwhich was recorded in derivative gains/(losses) on hedge relationships within Other Comprehensive Income, was a gain of \u00a319 million
\n(2021: \u00a315 million) and net cash receipts in the year totalled \u00a318 million (2021: \u00a37 million). There were no cross-currency swaps
\noutstanding at 31 December 2022.
\nThe foreign exchange movement on the GKN cross-currency swaps, which is recorded in derivative gains/(losses) on hedge relationships,
\nwas a loss of \u00a362 million (2021: gain of \u00a312 million).
\nFinance cost risk management
\nThe bank margin on the bank facility depends on the Group leverage. Following the extension of the bank facility in December 2021, the
\nbank margin on the revolving credit facility was reduced to align to the term loan and ranges from 0.75% to 2.0%. As at 31 December 2022,
\nthe margin was 1.2% (31 December 2021: 0.75%) on both the term loan and revolving credit facility.
\nThe policy of the Board is to fix up to approximately 70% of the interest rate exposure of the Group.
\nThe interest rate swaps are designated as cash flow hedges and were highly effective throughout 2022. The fair value of the contracts as
\nat 31 December 2022, was a net liability of \u00a33 million (31 December 2021: \u00a37 million). The movement of \u00a34 million for the year ended 31
\nDecember 2022 (2021: charge of \u00a380 million) comprised of a credit of \u00a34 million (2021: \u00a319 million) booked to derivatives gains/(losses) on
\nhedge relationships in the year within Other Comprehensive Income, a \u00a3nil cash outflow (2021: \u00a347 million) from cancelling interest rate
\nswaps and a \u00a3nil (2021: \u00a314 million) reduction in the interest accrual. During the year, a balance of \u00a32 million retained in the cash flow
\nhedge reserve following the cancellation of interest rate swaps in 2021 was recycled to finance costs in the Income Statement.
\nDuring the year ended 31 December 2022, some of the critical terms of the interest rate swaps and the hedged items were not perfectly
\nmatched; however, this did not give rise to any ineffectiveness through the Income Statement in the year (2021: \u00a3nil).
\nInterest rate sensitivity analysis
\nAssuming the net debt, inclusive of interest rate swaps, held as at the balance sheet date was outstanding for the whole year, a one
\npercentage point rise in market interest rates for all currencies would decrease profit before tax by the following amounts:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nSterling
\nUS Dollar
\nEuro
\n(2)
\n(5)
\n(2)
\n\u2013
\n(2)
\n(1)
\nOn the basis of the floating-to-fixed interest rate swaps in place at the balance sheet date, a one percentage point fall in market interest
\nrates for all currencies would decrease Group equity by \u00a3nil (31 December 2021: \u00a32 million).
\nExchange rate risk management
\nThe Group trades in various countries around the world and is exposed to movements in a number of foreign currencies. The Group
\ntherefore carries exchange rate risk that can be categorised into three types, transaction, translation and disposal related risk as described
\nin the paragraphs below. The
Group\u2019s
policy is designed to protect against the majority of the cash risks but not the non-cash risks.
\nThe most common exchange rate risk is the transaction risk the Group takes when it invoices a customer or purchases from suppliers in a
\ndifferent currency to the underlying functional currency of the relevant business. The Group
\u2019s
policy is to review transactional foreign
\nexchange exposures, and place necessary hedging contracts, quarterly on a rolling basis. To the extent the cash flows associated with a
\ntransactional foreign exchange risk are committed, the Group will hedge 100% at the time the cash flow becomes committed. For forecast
\nand variable cash flows, the Group hedges a proportion of the expected cash flows, with the percentage being hedged lowering as the time
\nhorizon lengthens. Typically, in total the Group hedges around 90% of foreign exchange exposures expected over the next year, and
\napproximately 60% to 80% of exposures between one and two years. For GKN Aerospace, the Group hedges beyond two years due to the
\nlonger term nature of some of its contracts, with the percentage of expected exposure hedged reducing for each subsequent year. This
\npolicy does not eliminate the cash risk but does bring some certainty to it.
\nThe translation rate risk is the effect on the Group results in the period due to the movement of exchange rates used to translate foreign
\nresults into Sterling from one period to the next. No specific exchange instruments are used to protect against the translation risk because
\nit is a non-cash risk to the Group, until foreign currency is converted to Sterling. However, the Group utilises its multi-currency revolving
\ncredit facility and cross-currency swaps, where relevant, to maintain an appropriate mix of debt in each currency. The hedge of having debt
\ndrawn in these currencies funding the trading units with US Dollars or Euro functional currencies protects against some of the Balance
\nSheet and banking covenant translation risk.
\nLastly, exchange rate risk arises when a business that is predominantly based in a foreign currency is sold. The proceeds for those
\nbusinesses may be received in a foreign currency and therefore an exchange rate risk may arise on conversion of foreign currency
\nproceeds into Sterling, for instance to pay a Sterling dividend or Capital Return to shareholders. Protection against this risk is considered
\non a case-by-case basis and, if appropriate, hedged at the time.
\n
\n205
\n
\n
\nAs at 31 December 2022, the Group held foreign exchange forward contracts to mitigate expected exchange rate fluctuations on future
\ncash flows from sales to customers and purchases from suppliers. The fair value of all foreign exchange forward contracts across the
\nGroup was a net liability at 31 December 2022 of \u00a3156 million (31 December 2021: \u00a357 million). There were no contracts where hedge
\naccounting was applied as at 31 December 2022 (31 December 2021: fair value asset of \u00a31 million).
\nThe change in fair value of foreign exchange forward contracts recognised in derivative gains/(losses) on hedging relationships within
\nOther Comprehensive Income was \u00a3nil (2021: credit of \u00a38 million) and a credit of \u00a31 million (2021: \u00a32 million) was reclassified to the
\nIncome Statement.
\nIn respect of the cross-currency swaps designated as net investment hedges, for the year ended 31 December 2022, a credit of \u00a35 million
\n(2021: \u00a34 million) was booked through the Income Statement in finance costs, of which a credit of \u00a33 million (2021: \u00a33 million) was treated
\nas an adjusting item (note 6). The cross-currency swaps matured in the year and were designated in a net investment hedge accounting
\nrelationship against US Dollar and Euro net assets of certain subsidiaries. The hedged risk was the spot rate, which represented the
\nsignificant component of the movement and therefore was recorded in the foreign currency translation reserve (note 26).
\nThe following table shows the maturity profile of undiscounted contracted gross cash outflows of derivative financial liabilities used to
\nmanage currency risk, being both the cross-currency swaps above and foreign exchange forward contracts used to manage transaction
\nexchange rate risk:
\n0-1 year
\n\u00a3m
\n1-2 years
\n\u00a3m
\n2-5 years
\n\u00a3m
\n5+ years
\n\u00a3m
\nTotal
\n\u00a3m
\nYear ended 31 December 2022
\nForeign exchange forward contracts
855
618
834
19
2,326
\nYear ended 31 December 2021
\nForeign exchange forward contracts
\nCross-currency swaps
\n1,051
\n666
\n479
\n\u2013
\n715
\n\u2013
\n28
\n\u2013
\n2,273
\n666
\nForeign currency sensitivity analysis
\nCurrency risks are defined by IFRS 7: Financial instruments: Disclosures as the risk that the fair value or future cash flows of a financial
\nasset or liability will fluctuate because of changes in foreign exchange rates.
\nThe following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at
\nthe balance sheet date, illustrating the (decrease)/increase in Group operating profit caused by a 10% strengthening of the US Dollar and
\nEuro against Sterling compared to the year-end spot rate. The analysis assumes that all other variables, in particular other foreign currency
\nexchange rates, remain constant. The Group operates in a range of different currencies, and those with a notable impact are shown below:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(11)
\n(3)
\n2
\n7
\nThe following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance
\nsheet date, illustrating the increase/(decrease) in Group equity caused by a 10% strengthening of the US Dollar and Euro against Sterling.
\nThe analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant.
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(10)
\n(7)
\n(5)
\n(10)
\nIn addition, the change in equity due to a 10% strengthening of the US Dollar against Sterling for the translation of net investment hedging
\ninstruments would be a decrease of \u00a377 million (2021: \u00a374 million) and for the Euro, a decrease of \u00a336 million (2021: \u00a337 million).
\nHowever, there would be no overall effect on equity because there would be an offset in the currency translation of the foreign operation.
\nFair value measurements recognised in the Balance Sheet
\nForeign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates
\nmatching the maturities of the contracts.
\nInterest rate swap and cross-currency swap contracts are measured using yield curves derived from quoted interest and foreign exchange
\nrates.
\n
\n\n
\n206
\nHedge accounted derivatives
\nThe following table sets out details of the Group\u2019s material hedging instruments where hedge accounting is applied at the
balance sheet
\ndate:
\nAverage fixed rate
Notional principal
\nFair value of assets/
\n(liabilities)
\nHedging Instruments
\n31 December
\n2022
\n%
\n31 December
\n2021
\n%
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPay fixed, receive floating interest rate swaps
\nWithin one year
\nIn one to two years
\n2.24%
\n\u2013
\n2.24%
\n2.24%
\n260
\n\u2013
\n246
\n246
\n(3)
\n\u2013
\n\u2013
\n(7)
\nTotal
(3)
(7)
\nPay fixed, receive fixed cross-currency swaps
\nWithin one year
\nIn one to two years
\n\u2013
\n\u2013
\n4.85%
\n\u2013
\n\u2013
\n\u2013
\n515
\n\u2013
\n\u2013
\n\u2013
\n(68)
\n\u2013
\nTotal
\u2013
(68)
\nThe Group is exposed to the following interest rate benchmarks within its hedge accounting relationships, which are subject to interest rate
\nbenchmark reform: USD LIBOR, EURIBOR (\u201cIBORs\u201d). The hedged items are US Dollar and Euro floating rate d
ebt.
\nThe Group has closely monitored the market and the output from various industry working groups managing the transition to new
\nbenchmark interest rates. This includes announcements made by LIBOR regulators (including the Financial Conduct Authority (\u201cFCA\u201d) and
\nthe US Commodity Trading Futures Commission) regarding the transition away from LIBOR to the Sterling Overnight Indexed Average
\nRate (\u201cSONIA\u201d), Secured Overnight Financing Rate (\u201cSOFR\u201d) and Euro Short
-
Term Rate (\u201cESTR\u201d) respectively.
\nIn response to the announcements, the Group has Sterling borrowings under SONIA and US Dollar borrowings continuing under USD
\nLIBOR with the option to switch to SOFR on or prior to discontinuation in June 2023. The Group expects to continue using EURIBOR for
\nEuro borrowings going forward.
\nBelow are the details of the hedging instruments and hedged items in scope of the IFRS 9 amendments due to interest rate benchmark
\nreform by hedge type. The terms of hedged items listed match those of the corresponding hedging instruments.
\nHedge type
Instrument type
Maturing
Notional
Hedged item
\nCash flow
\nhedges
\nInterest rate swaps, pay US Dollar fixed
\nannually, receive 1 month US Dollar LIBOR
January 2023
$315 million
\nUS Dollar floating rate
\ndebt linked to US LIBOR
\nInterest rate 0% caps, pay Euro fixed annually,
\nreceive 1 month EURIBOR
January 2023
\u20ac220 million
\nEuro floating rate debt
\nlinked to EURIBOR
\nThe Group will continue to apply the amendments to IFRS 9 until the uncertainty arising from the interest rate benchmark reforms with
\nrespect to the timing and the amount of the underlying cash flows that the Group is exposed to ends. The Group has assumed that this
\nuncertainty will not end until the Group\u2019s contracts that reference IBORs are amended to specify the date on which the intere
st rate
\nbenchmark will be replaced, the cash flows of the alternative benchmark rate and the relevant spread adjustment. This will, in part, be
\ndependent
on the introduction of fallback clauses which have yet to be added to the Group\u2019s contracts and the negotiation with lenders.
\nDerivative and financial assets and liabilities are presented within the Balance Sheet as:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nNon-current assets
\nCurrent assets
\nCurrent liabilities
\nNon-current liabilities
\n36
\n38
\n(86)
\n(141)
\n47
\n23
\n(119)
\n(79)
\nThe change in fair value of interest rate swaps is discussed in the Finance Risk Management section
of the Finance Director\u2019s Review.
\nAll hedging instruments are booked in the Balance Sheet as derivative financial assets or derivative financial liabilities.
\nThe fair value of derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability,
\neither directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within Level 2 of the fair value
\nhierarchy set out in IFRS 13: Fair value meas
urement. The Group\u2019s policy is to recognise transfers into and out of the different fair value
\nhierarchy levels at the date the event or change in circumstances that caused the transfer to occur. There have been no transfers between
\nlevels in the year.
\n
\n207
\n\n
\nThe following table sets out details of the Group\u2019s material hedged items at the balance sheet date where hedge accounting is
applied:
\nChange in fair value for
\ncalculating ineffectiveness
\nBalance in translation
\nand hedging reserve
\nfor continuing hedges
\nBalance in translation
\nand hedging reserve
\nfor discontinued hedges
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n202
1
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nHedged items
\nFloating rate borrowings
\u2013
interest risk
\nNet assets of designated investments
\n(4)
\n\u2013
\n(66)
\n6
\n\u2013
\n\u2013
\n4
\n53
\n\u2013
\n116
\n2
\n\u2013
\nThere is no balance held in cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied. During
\n2020, at the request of one of its financial counterparties, the Group novated one of its interest rate swaps to another of its financial
\ncounterparties, which had the initial effect of leaving a \u00a39 million debit in the translation and hedging reserve for the discontinued hedge,
\nreducing to \u00a3nil by 31 December 2022 (31 December 2021: \u00a32 million).
\n26.
Issued share capital and reserves
\nShare Capital
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAllotted, called-up and fully paid
\n4,054,425,961 (31 December 2021: 4,372,429,473) Ordinary Shares of 160/21 pence each
\n(1)
\n309
333
\n309
333
\n(1) During the year, a share buyback programme occurred where 318,003,512 shares were repurchased and subsequently cancelled (note 1).
\nThe rights associated with
each class of share are described in the Directors\u2019 Report.
\nMerger reserve and Other reserves
\nThe Merger reserve represents the excess of fair value over nominal value of shares issued in consideration for the acquisition of
\nsubsidiaries. Other reserves comprise accumulated adjustments in respect of Group reconstructions.
\nTranslation and hedging reserve
\nIn order to provide useful information about the Group\u2019s hedging arrangements, the translation reserve and hedging reserve
are combined.
\nIncluding the different components of hedging in one place enables a clearer explanation of the three components of hedging. These
\ncomponents are disaggregated below with movements within Other Comprehensive Income during the year shown below and further
\nexplanation provided in note 25.
\n
\n
\n
\n208
\nCost of hedge
\nreserve
\n\u00a3m
\nCash flow
\nhedge reserve
\n\u00a3m
\nForeign
\ncurrency
\ntranslation
\nreserve
\n\u00a3m
\nTranslation
\nand hedging
\nreserve
\n\u00a3m
\nAt 1 January 2021
(8)
(63)
41
(30)
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n27
\n(19)
\n46
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n\u2013
\n\u2013
\n115
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n27
\n(19)
\n159
\nAt 31 December 2021
(10)
(9)
95
76
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nAssociated deferred tax
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n4
\n(1)
\n6
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n\u2013
\n\u2013
\n(25)
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n4
\n(1)
\n(9)
\nAt 31 December 2022
\u2013
\u2013
638
638
\nThe cash flow hedge reserve represents the cumulative fair value gains and losses on derivatives for which cash flow hedge accounting
\nhas been applied. Movements and balances on derivatives designated in net investment hedges are shown as part of the foreign currency
\ntranslation reserve.
\nThe foreign currency translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other
\nthan Sterling, together with gains and losses on the translation of liabilities and cumulative fair value gains and losses on derivatives that
\nhedge the Company\u2019s net investment in foreign subsidiaries.
\nAmounts reclassified to the Income Statement during the year includes a credit of \u00a311 million (2021: charge of \u00a3113 million) following the
\ndisposal of businesses.
\n
\n209
\n
\n27.
Cash flow statement
\nNotes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nReconciliation of operating loss to net cash from operating activities generated by
\ncontinuing operations
\nOperating loss
\nAdjusting items
6
\n(236)
\n716
\n(493)
\n810
\nAdjusted operating profit
\nAdjustments for:
\nDepreciation of property, plant and equipment
\nAmortisation of computer software and development costs
\nShare of adjusted operating profit of equity accounted investments
\nRestructuring costs paid and movements in provisions
\nDefined benefit pension contributions paid
\n(2)
\nChange in inventories
\nChange in receivables
\nChange in payables
\nTax paid
\nInterest paid on loans and borrowings
\nInterest paid on lease obligations
\nAcquisition and disposal costs
\n6
\n15
\n480
\n356
\n50
\n(78)
\n(195)
\n(59)
\n(119)
\n(268)
\n209
\n(80)
\n(87)
\n(12)
\n(10)
\n317
\n370
\n51
\n(66)
\n(233)
\n(88)
\n(14)
\n89
\n\u2013
\n(57)
\n(128)
\n(14)
\n(5)
\nNet cash from operating activities
187
222
\n(1)
Restated for discontinued operations (note 1).
\n(2)
The year ended 31 December 2021 includes \u00a334 million paid to the GKN UK Pension Schemes following the disposal of Nortek Air Management, satisfying the funding commitment made
\non the acquisition of GKN.
\nReconciliation of cash and cash equivalents, net of bank overdrafts
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCash and cash equivalents per Balance Sheet
\nBank overdrafts included within current interest-bearing loans and borrowings (note 20)
\n355
\n(63)
\n473
\n(5)
\nCash and cash equivalents, net of bank overdrafts per Statement of Cash Flows
292
468
\nCash flow information relating to discontinued operations is as follows:
\nCash flow from discontinued operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nNet cash from discontinued operations
\nDefined benefit pension contributions paid
\nInterest paid on lease obligations
\nTax paid
\n26
\n\u2013
\n\u2013
\n(9)
\n133
\n(40)
\n(2)
\n(50)
\nNet cash from operating activities from discontinued operations
\n(2)
\n17
41
\nPurchase of property, plant and equipment
\nProceeds from disposal of property, plant and equipment
\nPurchase of computer software and capitalised development costs
\n(1)
\n\u2013
\n\u2013
\n(14)
\n2
\n(1)
\nNet cash used in investing activities from discontinued operations
(1)
(13)
\nRepayment of principal under lease obligations
(1)
(8)
\nNet cash used in financing activities from discontinued operations
(1)
(8)
\n(1) Restated for discontinued operations (note 1).
\n(2) The year ended 31 December 2021 includes tax paid in the year of \u00a332 million following the extraction of Ergotron and Nortek Control from the Nortek tax group prior to the disposal of Nortek Air
\nManagement and specific defined benefit pension contributions of \u00a339 million paid on disposal of Nortek Air Management and Brush.
\nNet debt reconciliation
\nNet debt consists of interest-bearing loans and borrowings (excluding any acquisition related fair value adjustments), cross-currency swaps
\nand cash and cash equivalents. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged
\nby cross-currency swaps.
\n
\n\n
\n210
Net debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure
\nis the aggregate of interest-bearing loans and borrowings (current and non-current) and cash and cash equivalents. A reconciliation from
\nthe most directly comparable IFRS measure to net debt, used as a basis for banking covenant calculations, is given below:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nInterest-bearing loans and borrowings
\u2013
due within one year
\nInterest-bearing loans and borrowings
\u2013
due after one year
\n(63)
\n(1,433)
\n(462)
\n(903)
\nExternal debt
\nLess:
\nCash and cash equivalents
\n(1,496)
\n355
\n(1,365)
\n473
\n(1,141)
(892)
\nAdjustments:
\nImpact of cross-currency swaps
\nNon-cash acquisition fair value adjustments
\n\u2013
\n2
\n(69)
\n11
\nNet debt
(1,139)
(950)
\nThe table below shows the key components of the movement in net debt:
\nAt
\n31 December
\n2021
\n\u00a3m
\nCash flow
\n\u00a3m
\nAcquisitions
\nand disposals
\n\u00a3m
\nOther non-cash
\nmovements
\n\u00a3m
\nEffect of foreign
\nexchange
\n\u00a3m
\nAt
\n31 December
\n2022
\n\u00a3m
\nExternal debt (excluding bank overdrafts)
\nCross-currency swaps
\nNon-cash acquisition fair value adjustments
\n(1,360)
\n(69)
\n11
\n(34)
\n109
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n21
\n3
\n(9)
\n(60)
\n(43)
\n\u2013
\n(1,433)
\n\u2013
\n2
\n(1,418)
75
\u2013
15
(103)
(1,431)
\nCash and cash equivalents, net of bank
\noverdrafts
468
(664)
461
\u2013
27
292
\nNet debt
(950)
(589)
461
15
(76)
(1,139)
\n28.
Commitments
\nAmounts payable under lease obligations:
\nMinimum lease payments
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAmounts payable:
\nWithin one year
\nAfter one year but within five years
\nOver five years
\nLess: future finance charges
\n69
\n166
\n209
\n(78)
\n64
\n166
\n206
\n(60)
\nPresent value of lease obligations
366
376
\nAnalysed as:
\nAmounts due for settlement within one year
\nAmounts due for settlement after one year
\n60
\n306
\n57
\n319
\nPresent value of lease obligations
366
376
\nIt is the Group\u2019s policy to lease certain of its property, plant and equipment. The average lease term is 10 years. Interest
rates are fixed at
\nthe contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
\nThe Group\u2019s obligations under lease arrangements are secured by the lessors\u2019 rights over the leased assets.
\nCertain leases within the Group contain extension or termination options to allow for flexibility within these lease agreements. Where these
\noptions are not reasonably certain to be exercised, they are not included in the lease obligation. The value of these associated
\nundiscounted cash flows is \u00a3171 million (31 December 2021: \u00a3242 million).
\n
\n211
\n
\nThe table below shows the key components in the movement in lease obligations.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nAdditions
\nInterest charge
\nReassessment of lease obligation
\nPayment of principal
\nPayment of interest
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n376
\n38
\n9
\n(1)
\n(52)
\n(12)
\n(5)
\n(3)
\n(7)
\n23
\n555
\n45
\n16
\n3
\n(61)
\n(16)
\n(3)
\n(138)
\n(13)
\n(12)
\nAt 31 December
366
376
\n(1) Disposal of businesses in 2022 relates to the disposal of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\nCapital commitments
\nAt 31 December 2022, there were commitments of \u00a3127 million (31 December 2021: \u00a3115 million) relating to the acquisition of new plant
\nand machinery.
\n29.
Related parties
\nTransactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
\ndisclosed in this note.
Sales to and purchases from Group companies are priced on an arm\u2019s length basis and generally are settled on 30
\nday terms.
\nIn the ordinary course of business, sales and purchases of goods take place between subsidiaries and equity accounted investment
\nco
mpanies priced on an arm\u2019s length basis. Sales by subsidiaries to equity accounted investments in the year ended 31 December
2022
\ntotalled \u00a317 million (2021: \u00a321 million). Purchases by subsidiaries from equity accounted investments in the year ended 31 December 2022
\ntotalled \u00a38 million (2021: \u00a310 million). At 31 December 2022, amounts receivable from equity accounted investments totalled \u00a33 million (31
\nDecember 2021: \u00a32 million) and amounts payable to equity accounted investments totalled \u00a32 million (31 December 2021: \u00a32 million).
\nRemuneration of key management personnel
\nThe remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the
\ncategories specified in IAS 24: Related party disclosures. Further information about the remuneration of individual Directors is provided
\nin the audited part of the Directors\u2019 Remuneration Report on pages
122 and 131.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nShort-term employee benefits
\nShare-based payments
\n5
\n10
\n5
\n10
\n15
15
\n30.
Contingent liabilities
\nAs a result of acquisitions made by the Group, certain contingent legal and warranty liabilities have been identified as part of the fair value
\nreview of these acquisition balance sheets. Whilst it is difficult to reasonably estimate the timing and ultimate outcome of these claims, the
\nDirectors\u2019 best estimate has been included in the Balance Sheet where they existed at the time of acquisition and hence were
recognised
\nin accordance with IFRS 3: Business combinations. Where a provision has been recognised, information regarding the different categories
\nof such liabilities and the amount and timing of outflows is included within note 21.
\nGiven the nature of the Gro
up\u2019s business many of the Group\u2019s products have a large installed base, and any recalls or reworks related to
\nsuch products could be particularly costly. The costs of product recalls or reworks are not always covered by insurance. Recalls or reworks
\nmay ha
ve a material adverse effect on the Group\u2019s financial condition, results of operations and cash flows.
\nThe Group has contingent liabilities representing guarantees and contract bonds given in the ordinary course of business on behalf of
\ntrading subsidiaries. No losses are anticipated to arise on these contingent liabilities. The Group does not have any other significant
\ncontingent liabilities.
\n
\n
\n
\n212
31.
Post balance sheet events
\nSince the balance sheet date,
the Board has approved the demerger of the Automotive, Powder Metallurgy and Hydrogen businesses (\u201cthe
\nDemerger\u201d). Whilst the Demerger remains subject to shareholder consent, the costs and expenses that are directly attributable
to the
\nDemerger are estimated to amount to \u00a370 million. Approximately 75% of this is contingent on the Demerger taking place.
\nOn 9 February 2023, the Trustees of GKN Group Pension Scheme 4 (
\u201c
the Scheme
\u201d
), sponsored by the Aerospace division, signed a
\ncontract to fully secure benefits for all members of the Scheme for a cash settlement of approximately \u00a345 million. At 31 December 2022,
\nthe Scheme had total liabilities of \u00a3433 million (31 December 2021: \u00a3628 million) and an accounting surplus of \u00a352 million (31 December
\n2021: \u00a387 million). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18649": {
"value": "Melrose Industries PLC",
"dimensions": {
"concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18650": {
"value": "public company limited ",
"dimensions": {
"concept": "ifrs-full:LegalFormOfEntity",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18651": {
"value": "United Kingd om",
"dimensions": {
"concept": "ifrs-full:CountryOfIncorporation",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18652": {
"value": "United Kingd om",
"dimensions": {
"concept": "ifrs-full:DomicileOfEntity",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18657": {
"value": "England and Wales",
"dimensions": {
"concept": "ifrs-full:PrincipalPlaceOfBusiness",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18661": {
"value": "2022-12-31",
"dimensions": {
"concept": "ifrs-full:DateOfEndOfReportingPeriod2013",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18666": {
"value": "Discontinued operations and disposals
\nOn 6 July 2022, the Group completed the disposal of the Ergotron business, previously included in the Other Industrial segment. The
\nresults of Ergotron have been classified within discontinued operations for both years presented; with the Income Statement, the Statement
\nof Cash Flows and their associated notes being restated accordingly. At 30 June 2022, the Ergotron business met the criteria within IFRS
\n5: Non-current Assets Held for Sale and Discontinued Operations to be classified as an asset held for sale.
\nThe Aerospace business disposed of a non-core entity during the year, which has not been treated as a discontinued operation. Further
\ndetail is shown in note 13.
\nIn addition, discontinued operations for 2021 include the results of the Nortek Air Management, Brush and Nortek Control businesses,
\nwhich were disposed of during 2021.
13.
Discontinued operations
\nAt 30 June 2022, the Ergotron business, previously included within the Other Industrial division, met the criteria within IFRS 5: Non-current
\nAssets Held for Sale and Discontinued Operations to be classified as an asset held for sale. On 6 July 2022, the Group completed the sale
\nof the Ergotron business for cash consideration of \u00a3496 million. The costs charged to the Income Statement associated with the disposal,
\nin the year, were \u00a37 million. The loss on disposal was \u00a316 million after the recycling of cumulative translation gains of \u00a311 million.
\nA corporate property with a carrying value of \u00a310 million was classified as held for sale at 30 June 2022 and subsequently sold for cash
\nconsideration of \u00a331 million. The profit on disposal of \u00a321 million has been included within acquisition and disposal related gains and
\nlosses shown as an adjusting item (note 6).
\nDuring the year, Aerospace disposed of a non-core business. Consideration was \u00a3nil and the loss on disposal was \u00a35 million, which has
\nbeen included in acquisition and disposal related gains and losses shown as an adjusted item (note 6).
\nDiscontinued operations for 2021 include the results of the Nortek Air Management, Brush and Nortek Control businesses which were
\ndisposed during 2021.
Financial performance of discontinued operations:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue
\nOperating costs
\n(2)
\n132
\n(191)
\n1,117
\n(1,070)
\nOperating (loss)/profit
\nFinance costs
\n(59)
\n\u2013
\n47
\n(2)
\n(Loss)/profit before tax
\nTax
\n(59)
\n(5)
\n45
\n(61)
\nLoss after tax
\n(Loss)/gain on disposal of net assets of discontinued operations, net of recycled cumulative translation
\ndifferences
\n(64)
\n(16)
\n(16)
\n1,333
\n(Loss)/profit for the year from discontinued operations
(80)
1,317
\n(1) Restated for discontinued operations (note 1).
\n(2) Operating costs included an \u00a386 million charge on remeasurement to fair value less costs of disposal relating to the Ergotron business on reclassification to assets held for sale
\n(2021: \u00a385 million relating to the Nortek Control business).
\nHeld for sale
\nReclassified to
\nassets classified
\nas held for sale
Remeasured
Disposed
\nBusinesses
\ndisposed
\n\u00a3m
\u00a3m
\n\u00a3m
\u00a3m
\nGoodwill and other intangible assets
\nProperty, plant and equipment
\n(1)
\nInventories
\nTrade and other receivables
\nDerivative financial assets
\nCash and cash equivalents
\n571
\n27
\n51
\n51
\n1
\n26
\n(86)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n485
\n27
\n51
\n51
\n1
\n26
\n\u2013
\n\u2013
\n9
\n5
\n\u2013
\n6
\nTotal assets
727
(86)
641
20
\nTrade and other payables
\nLease obligations
\nProvisions
\nDerivative financial liabilities
\nCurrent and deferred tax
\n(63)
\n(7)
\n(5)
\n(1)
\n(21)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(63)
\n(7)
\n(5)
\n(1)
\n(21)
\n(4)
\n(3)
\n(18)
\n\u2013
\n10
\nTotal liabilities
(97)
\u2013
(97)
(15)
\nNet assets
630
(86)
544
5
\nMovement in the value of net assets classified as held for sale in the period prior to disposal
\n(2)
\n(18)
\nNet assets held for sale disposed
526
526
\nTotal net assets disposed
531
\nConsideration, net of costs
\n(3)
\nCumulative translation difference recycled on disposals
\n520
\n11
\nProfit on disposal of businesses and disposal groups of assets
\nAnalysed as:
\nProfit on disposal of assets classified as continuing operations
\nLoss on disposal of businesses classified as discontinued operations
\n\u2013
\n16
\n(16)
\nNet cash inflow arising on disposal of businesses and disposal groups of assets:
\nConsideration received in cash and cash equivalents, net of costs
\n(4)
\nLess: cash and cash equivalents disposed
\n519
\n(10)
\n509
\n(1) Includes \u00a310 million relating to a corporate property.
\n(2) Includes \u00a323 million of cash extracted from the business prior to disposal.
\n(3) Includes cash consideration of \u00a3496 million and \u00a37 million of related disposal costs following the disposal of Ergotron and \u00a331 million of proceeds from the sale of a corporate property.
\n(4) Includes cash consideration of \u00a3496 million and \u00a38 million of related cash disposal costs following the disposal of Ergotron and \u00a331 million of proceeds from the sale of a corporate property.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18678": {
"value": "On 9 June 2022, the Group commenced a \u00a3500 million share buyback programme, which completed on 1 August 2022 with 318,003,512 shares repurchased and subsequently cancelled. Costs associated with the share buyback programme were \u00a34 million.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18691": {
"value": "Acquisitions On 1 October 2022, the Aerospace segment completed the acquisition of Permanova Lasersystem AB, a leader in advanced laser
\ntechnology and cell integration, for consideration of \u00a34 million. As the acquisition is not material to the Group, limited information is
\nprovided in note 11.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18698": {
"value": "1.1 New Standards, Amendments and Interpretations affecting amounts, presentation or disclosure reported in the current year In the current financial year, the Group has adopted the following new and revised Standards, Amendments and Interpretations. Their
\nadoption has not had a significant impact on the amounts reported in these Financial Statements:
\n\u2022
Amendments to IFRS 3: Reference to the conceptual framework
\n\u2022
Amendments to IAS 16: Property, Plant and Equipment, proceeds before intended use
\n\u2022
Amendments to IAS 37: Onerous contracts, cost of fulfilling a contract
\n\u2022
Annual Improvements to IFRS Accounting Standards: 2018-2020 cycle
\n1.2 New Standards, Amendments and Interpretations in issue but not yet effective
\nAt 31 December 2022, the following Standards, Amendments and Interpretations were in issue but not yet effective:
\n\u2022
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture
\n\u2022
Amendments to IAS 1: Classification of liabilities as current or non-current and disclosure of accounting policies
\n\u2022
Amendments to IAS 8: Definition of accounting estimates
\n\u2022
Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction
\nThe Directors do not expect that the adoption of the above Standards, Amendments and Interpretations will have a material impact on the
Financial Statements of the Group in future periods.",
"dimensions": {
"concept": "ifrs-full:StatementOfIFRSCompliance",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18725": {
"value": "2. Summary of significant accounting policies
\nBasis of accounting
\nThe Consolidated Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006 and
\nInternational Financial Reporting Standards (\u201cIFRSs\u201d)
as issued by the IASB. The Consolidated Financial Statements have been prepared
\non an historical cost basis, except for the revaluation of certain financial instruments and investments which are recognised at fair value at
\nthe end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
\n
\n
\n
\n
2.
Summary of significant accounting policies
continued
\nAlternative Performance Measures
\nThe Group presents Alternative Performance Measures (\u201cAPMs\u201d) in addition to the statutory results of the Group. These are pre
sented in
\naccordance with the Guidelines on APMs issued by the European Securities and Markets Authority (\u201cESMA\u201d).
\nAPMs used by the Group are set out in the glossary to these Financial Statements on pages 227 to 234 and the reconciling items between
\nstatutory and adjusted results are listed below and described in more detail in note 6.
\nAdjusted revenue includes the Group\u2019s share of revenue from equity accounted investments (\u201cEAIs\u201d).
\nAdjusted profit measures exclude items which are significant in size or volatility or by nature are non-trading or non-recurring, any item
\nreleased to the Income Statement that was previously a fair value item booked on an acquisition, and include adjusted profit from EAIs.
\nOn this basis, the following are the principal items included within adjusting items impacting operating profit:
\n\u2022
Amortisation of intangible assets that are acquired in a business combination, excluding computer software and development costs;
\n\u2022
Significant restructuring project costs and other associated costs, including losses incurred following the announcement of closure for
\nidentified businesses, arising from significant strategy changes that are not considered by the Group to be part of the normal operating
\ncosts of the business;
\n\u2022
Acquisition and disposal related gains and losses;
\n\u2022
Impairment charges that are considered to be significant in nature and/or value to the trading performance of the business;
\n\u2022
Movement in derivative financial instruments not designated in hedging relationships, including revaluation of associated financial assets
\nand liabilities;
\n\u2022
Removal of adjusting items, interest and tax on equity accounted investments to reflect operating results;
\n\u2022
The charge for the Melrose equity-
settled compensation scheme, including its associated employer\u2019s tax charge
; and
\n\u2022
The net release of fair value items booked on acquisitions.
\nFurther to the adjusting items above, adjusting items impacting profit before tax include:
\n\u2022
Acceleration of unamortised debt issue costs written off as a consequence of Group refinancing;
\n\u2022
Significant settlement gains and losses associated with debt instruments including interest rate swaps following acquisition or disposal
\nrelated activity or non-trading transactions; and
\n\u2022
The fair value changes on cross-currency swaps, entered into by GKN prior to acquisition, relating to cost of hedging which are not
\ndeferred in equity.
\nIn addition to the items above, adjusting items impacting profit after tax include:
\n\u2022
The net effect on tax of significant restructuring from strategy changes that are not considered by the Group to be part of the normal
\noperating costs of the business;
\n\u2022
The net effect of significant new tax legislation; and
\n\u2022
The tax effects of adjustments to profit/(loss) before tax.
\nThe Board considers the adjusted results to be an important measure used to monitor how the businesses are performing as this provides
\na meaningful reflection of how the businesses are managed and measured on a day-to-day basis and achieves consistency and
\ncomparability between reporting periods, when all businesses are held for a complete reporting period.
\nThe adjusted measures are used to partly determine the variable element of remuneration of senior management throughout the Group
\nand are also in alignment with performance measures used by certain external stakeholders. The adjusted measures are also taken into
\naccount when valuing individual businesses as part of the \u201cBuy, Improve, Sell\u201d Group strategy model.
\nAdjusted profit is not a defined term under IFRS and may not be comparable with similarly titled profit measures reported by other
\ncompanies. It is not intended to be a substitute for, or superior to, GAAP measures. All APMs relate to the current year results and
\ncomparative periods where provided.
\nBasis of consolidation
\nThe Group\u2019s Financial Statements include the results of the parent undertaking and all of its subsidiary undertakings. In add
ition, the
\nGroup\u2019s share of the results and equity of joint ventures and associated undertakings (together \u201cequity accounted investments\u201d) are
\nincluded. The results of businesses acquired during the period are included from the effective date of acquisition and, for those sold during
\nthe period, to the effective date of disposal. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring
\nthe accounting policies used into line with those used by the Group.
\nAll intra-Group balances and transactions, including unrealised profits arising from intra-Group transactions, have been eliminated in full.
\nNon-
controlling interests in subsidiaries are identified separately from the Group\u2019s equity therein. The interest of non
-controlling
\nshareholders is initially measured at the non-
controlling interests\u2019 proportion of the share of the
fair value of the acquiree\u2019s identifiable net
\nassets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus
\nthe non-
controlling interests\u2019 share of subsequent changes in eq
uity. Total comprehensive income is attributed to non-controlling interests
\neven if this results in the non-controlling interests having a deficit balance.
\nGoing concern
\nThe Consolidated Financial Statements have been prepared on a going concern basis as the Directors consider that adequate resources exist
\nfor the Company to continue in operational existence for the foreseeable future.
\nThe Group\u2019s liquidity and funding arrangements are described in the Finance Director\u2019s Review. There is significant liquidi
ty headroom of \u00a32.6
\nbillion at 31 December 2022 and sufficient headroom throughout the going concern forecast period. Forecast covenant compliance is considered
\nfurther below.
\n\n\n
\nNone of the Group\u2019s banking facilit
ies mature in the going concern period following an extension agreed during 2021. The next contractual
\nmaturity is in June 2024 and whilst changes to banking arrangements are being considered following the announced intention to demerge GKN
\nAutomotive, GKN Powder Metallurgy and GKN Hydrogen, these will only be enacted if the shareholders approve the demerger. As part of its
\npreparation for the intended demerger, the Group has agreed revised banking documentation split between the demerger businesses and
\nremaining business, which is comparable in nature with existing arrangements and would provide both businesses with sufficient liquidity albeit
\ncontingent on shareholder approval of the demerger.
\nCovenants
\nThe current facility has two financial covenants being a net debt to adjusted EBITDA covenant and an interest cover covenant, both of which are
\ntested half yearly in June and December.
\nThe financial covenants during the period of assessment for going concern are as follows:
\n31 December
\n2022
\n30 June
\n2023
\n31 December
\n2023
\nNet debt to adjusted EBITDA
3.75x
3.5x
3.5x
\nInterest cover
4.0x
4.0x
4.0x
\nTesting
\nThe Group has modelled two scenarios in its assessment of going concern. A base case and a reasonably possible sensitised case.
\nThe base case takes into account the estimated impact of a continued recovery from the COVID-19 pandemic as well as other end market and
\noperational factors, including supply chain challenges, throughout the going concern period and has been monitored against the actual results
\nand cash generation in the year.
\nThe reasonably possible sensitised case models more conservative sales assumptions for 2023 and the first half of 2024. The sensitised
\nassumptions are specific to each business taking into account their markets, but on average represents a c. 10% and c. 15% reduction to the
\nGroup\u2019s forecast revenue in each of 2023 and the first half of 2024 respectively. The sensitised revenues have had a conseque
ntial impact on
\nprofit and cash flow, along with a further downside sensitivity applied to increase working capital by approximately 2% of revenue. Given that
\nthere is liquidity headroom of \u00a32.6 billion and the Group\u2019s leverage was 1.4x, comfortably below the covenant test at 31 Dece
mber 2022, no
\nfurther sensitivity detail is provided.
\nUnder the reasonably possible sensitised case, even with significant reductions, no covenant is breached at the forecast testing dates being 30
\nJune 2023 and 31 December 2023, and the Group will not require any additional sources of finance. Testing at 30 June 2024 is also favourable,
\nassuming arrangements similar in nature with existing agreements.
\nThe Group has also considered the circumstance that the proposed demerger occurs in April 2023. Modelling of both a base case and a
\nreasonably possible sensitised case has also been prepared for the remaining Group and due to revised banking documents having been
\nformally agreed, consistent with the conclusion above, the Group will not require any additional sources of finance and no covenant is breached
\nat the forecast testing dates being 30 June 2023 and 31 December 2023.
\nBusiness combinations and goodwill
\nThe acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets
\ntransferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange
\nfor control of the acquiree. Control is achieved where the Company has the power to govern the financial and operating policies of an
\ninvestee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an
\nexpense in the Income Statement as incurred.
\nThe acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific
\nguidance is provided by IFRSs. Non-current assets and directly attributable liabilities that are classified as held for sale in accordance with
\nIFRS 5: Non-current assets held for sale and discontinued operations, are recognised and measured at fair value less costs to sell. Also,
\ndeferred tax assets and liabilities are recognised and measured in accordance with IAS 12: Income taxes, liabilities and assets related to
\nemployee benefit arrangements are recognised and measured in accordance with IAS 19 (revised): Employee benefits and liabilities or
\nequity instruments related to the replacement by the Group of an acquiree\u2019s share
-based payments awards are measured in accordance
\nwith IFRS 2: Share-based payment. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is
\nrecognised as goodwill.
\nIf the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
\nGroup reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or
\nadditional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the
\nacquisition date that, if known, would have affected the amounts recognised at that date.
\nThe measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
\ncircumstances that existed as of the acquisition date and is subject to a maximum period of one year.
\nGoodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-
\ncontrolling interest in the acquiree
and the fair value of the acquirer\u2019s previously held equity interest in the acquiree over the acquirer\u2019s
\ninterest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
\nat cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in
\ncircumstances indicate that the carrying value may be impaired.
\nIf, after reassessment, the Group\u2019s interest in the fair
value of the acquiree\u2019s identifiable net assets exceeds the sum of the consideration
\ntransferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in
\nthe acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.
\n
\n163
\n\n\nAs at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing
\nthe recoverable amount of the cash-generating unit to which goodwill relates. Where the recoverable amount of the cash-generating unit is
\nless than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is
\na disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on
\ndisposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the
\noperation disposed of and the operation retained.
\nEquity accounted investments
\nA joint venture is an entity which is not a subsidiary undertaking but where the interest of the Group is that of a partner in a business over
\nwhich the Group exercises joint control with its partners over the financial and operating policies. In all cases voting rights are 50% or
\nlower.
\nAssociated undertakings are entities that are neither a subsidiary nor a joint venture, but where the Group has a significant influence. The
\nresults, assets and liabilities of equity accounted investments are accounted for using the equity method of accounting. The
Group\u2019s share
\nof equity includes goodwill arising on acquisition.
\nWhen a Group entity transacts with an equity accounted investment of the Group, profits and losses resulting from the transactions with the
\nequity accounted investments are recognised in the Group\u2019s Consolidated Financial Statements only to the extent of interests
in equity
\naccounted investments that are not related to the Group.
\nRevenue
\nRevenues are recognised either at the point of transfer of control of goods and services, or recognised over time on an activity basis using
\nthe costs incurred as the measure of the activity. Costs are recognised as they are incurred.
\nThe nature of agreements into which the Group enters means that certain of the Group\u2019s arrangements with its customers have m
ultiple
\nelements that can include any combination of:
\n\u2022
Sale of products and services;
\n\u2022
Risk and revenue sharing partnerships (\u201cRRSPs\u201d);
\n\u2022
Design and build; and
\n\u2022
Construction contracts.
\nContracts are reviewed to identify each performance obligation relating to a distinct good or service and the associated consideration. The
\nGroup allocates revenue to multiple element arrangements based on the identified performance obligations within the contracts in line with
\nthe policies below. A performance obligation is identified if the customer can benefit from the good or service on its own or together with
\nother readily available resources, and it can be separately identified within the contract. This review is performed by reference to the
\nspecific contract terms.
\nSale of products and services
\nThis revenue stream accounts for the majority of Group sales. Contracts in the Automotive, Powder Metallurgy and Other Industrial
\nsegments operate almost exclusively on this basis, and it also covers a high proportion of the Aerospace segment\u2019s revenues.
\nInvoices for goods are raised and revenue is recognised when control of the goods is transferred to the customer. Dependent upon
\ncontractual terms this may be at the point of despatch, acceptance by the customer or, in Aerospace, certification by the customer. The
\nrevenue recognised is the transaction price as it is the observable selling price per product.
\nCash discounts, volume rebates and other customer incentive programmes are based on certain percentages agreed with the Group
\u2019s
\ncustomers, which are typically earned by the customer over an annual period. These are allocated to performance obligations and are
\nrecorded as a reduction in revenue at the point of sale based on the estimated future outcome. Due to the nature of these arrangements an
\nestimate is made based on historical results to date, estimated future results across the contract period and the contractual provisions of
\nthe customer agreement.
\nMany businesses in the Powder Metallurgy and Automotive segments recognise an element of revenue via a surcharge or similar raw
\nmaterial cost recovery mechanism. The surcharge is generally based on prior period movement in raw material price indices applied to
\ncurrent period deliveries.
\nRisk and revenue sharing partnerships (\u201cRRSPs\u201d)
\nThis revenue stream affects a small number of businesses, exclusively in the Aerospace segment. Revenue is recognised under RRSPs
\nfor both the sale of product as detailed above and sales of services, which are recognised by reference to the stage of completion based
\non the performance obligations in the contract. In most RRSP contracts, there are two separate phases where the Group earns revenue;
\nsale of products principally to engine manufacturers and aftermarket support.
\nThe assessment of the stage of completion is dependent on the nature of the contract and the performance obligations within it.
\nThe value of revenue is based on the standalone selling price for each element of the contract.
\nRevenue is recognised at the point control passes to the customer. For products and services, this has been identified as the point of
\ndespatch, acceptance by the customer or certification by the customer. Where the amount of revenue recognised is not yet due for
\ncollection under the terms of the contract, it will be recognised as variable consideration within the unbilled work done contract asset
\n(\u201cunbilled work done\u201d)
. Revenue is not recognised where recovery is not probable due to potential significant reversals in the future. This
\ncan be affected by assessment of future volumes including aftermarket expectations which are impacted by technology development, fuel
\nprice and competition.
\nParticipation fees are payments made to engine manufacturers and original equipment manufacturers relating to RRSPs and long-term
\nagreements. They are recognised as contract assets to the extent they can be recovered from future sales. Where participation fees have
\nbeen paid under the RRSP, the amortisation is recognised as a revenue reduction under IFRS 15, as performance obligations are satisfied.
\n
\n
\n
\n164
\nGenerally, during the design and development phase of a typical RRSP contract, the Group performs contractually agreed-upon tasks for a
\ncustomer. It is usual for the Intellectual Property Rights (\u201cIPRs\u201d)
that underpin technology advancement or know-how to remain with the
\nGroup such that the customer cannot benefit from the IPRs either on their own or together with other resources that are readily available to
\nthe customer. Where IPRs are transferred to the customer the Group has determined this is not separately identifiable from other promises
\nin the contract due to an exclusivity clause for the supply of product. Accordingly, it has been determined that the Group\u2019s
promise to
\ntransfer goods to its customer is a performance obligation that is separately identifiable and this uses development and know-how as an
\ninput.
\nDesign and build
\nThis revenue stream affects a discrete number of businesses, primarily in the Aerospace segment but also on a smaller scale in the
\nAutomotive segment. Generally, revenue is only recognised on the sale of product as detailed above, however, on occasions cash is
\nreceived in advance of work performed to compensate the Group for costs incurred in design and development activities. The Group
\nperforms an assessment of its performance obligations to understand multiple elements. Where it is determined there is only one type of
\nperformance obligation, being the delivery of product, any cash advance is factored into the revenue allocated across the deliveries
\nrequired under the contract.
\nWhere the performance obligation has not been satisfied amounts received are recognised as a contract liability. If there is more than one
\nperformance obligation, revenue is allocated to each one based on a standalone selling price for each element of the contract.
\nDue to the nature of design and build contracts, there can be signif
icant \u2018learning curves\u2019 while the Group optimises its production
\nprocesses. During the early phase of these contracts, all costs including any start-up losses are taken directly to the Income Statement, as
\nthey do not meet the criteria for fulfilment costs.
\nConstruction contracts
\nWhere multiple performance obligations are identified, revenue is recognised as each performance obligation is met. This requires an
\nassessment of total revenue to identify the allocation across the performance obligations, based on the standalone selling price for each
\nobligation.
\nIn cases where one of the following criteria is met, revenue is recognised over time:
\n\u2022
The customer simultaneously receives and consumes the benefits provided by the Group\u2019s performance;
\n\u2022
The Group\u2019s per
formance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
\n\u2022
The Group\u2019s performance does not create an asset with an alternative use to the Group and it has an enforceable right to paym
ent for
\nperformance completed to date.
\nDue to the nature of the criteria above, only certain contracts in the Group qualify for over time recognition. On this basis revenue is
\nrecognised using the input method, which uses costs incurred and the assessed margin across the contract. The input method is used to
\nmeasure progress as it best depicts the transfer of control to the customer. The margin and associated revenue are calculated based on
\nthe estimated transaction price and expected total costs, with considerations made for the associated contract risks.
\nIf any of the above criteria are not met, revenue is recognised at a point in time when control transfers to the customer which, in line with
\nthe sale of goods and services above, is the point of delivery or customer acceptance dependent on the terms of the contract.
\nUnbilled work done addresses contract matters, such as price or scope amendments, which are included based on the expected value or
\nmost likely amount. A constraint is included unless it is highly probable that the revenue will not significantly reverse in the future. This
\nconstraint is calculated based on a cautious expectation of the life of certain RRSPs. Variations in contract work, claims and incentive
\npayments are included in revenue from construction contracts based on an estimate of the expected value the Group expects to receive.
\nVariations are included when the customer has agreed to the variation or acknowledged liability for the variation in principle. Claims are
\nincluded when negotiations with the customer have reached an advanced stage such that it is virtually certain that the customer will accept
\nthe claim.
\nFinance income
\nFinance income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be
\nmeasured reliably. Finance income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
\napplicable.
\nBorrowing costs
\nBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
\ntake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
\nassets are substantially ready for their intended use or sale.
\nInvestment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
\nfrom the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the Income Statement in the period in which
\nthey are incurred.
\nIssue costs of loans
\nThe finance cost recognised in the Income Statement in respect of the issue costs of borrowings is allocated to periods over the terms of
\nthe instrument using the effective interest rate method.
\nProperty, plant and equipment
\nProperty, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
\nThe initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bring the asset into operation,
\nand any material borrowing costs on qualifying assets. Qualifying assets are defined as an asset or programme where the period of
\ncapitalisation is more than 12 months. Purchase price or construction cost is the aggregate amount paid and the fair value of any other
\nconsideration given to acquire the asset.
\n
\n165
\n\n\nWhere assets are in the course of construction at the balance sheet date, they are classified as capital work-in-progress. Transfers are
\nmade to other asset categories when they are available for use, at which point depreciation commences.
\nRight-of-use assets arise under IFRS 16 and are depreciated over the shorter of the estimated life and the lease term.
\nDepreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
\nFreehold land
nil
\nFreehold buildings and long leasehold property
over expected economic life not exceeding 50 years
\nShort leasehold property
over the term of the lease
\nPlant and equipment
3-15 years
\nThe estimated useful lives of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives are
\naccounted for prospectively.
\nThe carrying values of property, plant and equipment are reviewed annually for indicators of impairment, or if events or changes in
\ncircumstances indicate that the carrying value may not be recoverable. If such indication exists an impairment test is performed and, where
\nthe carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable
\namount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, estimated future
\ncash flows, considering the implications of climate change (see note 11 for further detail), are discounted to their present value using a pre-
\ntax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
\ndoes not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset
\nbelongs.
\nAn item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
\nthe continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
\nproceeds or costs and the carrying amount of the item) is included in the Income Statement in the period that the item is derecognised.
\nIntangible assets
\nIntangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
\nOn acquisition of businesses, separately identifiable intangible assets are initially recorded at their fair value at the acquisition date.
\nAccess to the use of brands and intellectual property are valued using a \u201crelief from royalty\u201d method which determines the ne
t present
\nvalue of future additional cash flows arising from the use of the intangible asset.
\nCustomer relationships and contracts are valued on the basis of the net present value of the future additional cash flows arising from
\ncustomer relationships with appropriate allowance for attrition of customers.
\nTechnology assets are valued using a replacement cost approach, or a \u201crelief from royalty\u201d method.
\nAmortisation of intangible assets is recorded in administration expenses in the Income Statement and is calculated on a straight-line basis
\nover the estimated useful lives of the asset as follows:
\nCustomer relationships and contracts
20 years or less
\nBrands and intellectual property
20 years or less
\nTechnology
20 years or less
\nComputer software
5 years or less
\nDevelopment costs
20 years or less
\nWhere computer software is not integral to an item of property, plant or equipment, its costs are capitalised and categorised as intangible
\nassets. Computer software is initially recorded at cost. Where these assets have been acquired through a business combination, this will
\nbe the fair value allocated in the acquisition accounting. Where these have been acquired other than through a business combination, the
\ninitial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
\nIntangible assets (other than computer software and development costs) are tested for impairment annually or more frequently whenever
\nevents or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses are measured on a similar
\nbasis to property, plant and equipment. Useful lives are also examined on an annual basis and adjustments, where applicable, are made
\non a prospective basis.
\nResearch and development costs
\nResearch costs are expensed as incurred.
\nCosts relating to clearly defined and identifiable development projects are capitalised when there is a technical degree of exploitation,
\nadequacy of resources and a potential market or development possibility in the undertaking that are recognisable; and where it is the
\nintention to produce, market or execute the project. A correlation must also exist between the costs incurred and future benefits and those
\ncosts can be measured reliably. Capitalised costs are expensed on a straight-line basis over their useful lives of 20 years or less. Costs not
\nmeeting such criteria are expensed as incurred.
\nInventories
\nInventories are valued at the lower of cost and net realisable value and are measured using a first in, first out or weighted average cost
\nbasis. Cost includes all direct expenditure and appropriate production overhead expenditure incurred in bringing goods to their current state
\nunder normal operating conditions. Net realisable value is based on estimated selling price less costs expected to be incurred to
\ncompletion and disposal. Provisions are made for obsolescence or other expected losses where necessary.
\n
\n
\n
\n166
\nCash and cash equivalents
\nCash and cash equivalents comprise cash in hand, balances with banks and similar institutions, and short-term deposits which are readily
\nconvertible to cash and are subject to insignificant risks of changes in value.
\nFor the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined
\nabove, net of outstanding bank overdrafts.
\nInterest-bearing loans and borrowings
\nAll loans and borrowings are initially recognised at fair value of the consideration received net of issue costs associated with the
\nborrowings.
\nAfter initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
\nmethod. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
\nGains and losses are recognised in the Income Statement when the liabilities are derecognised or impaired, as well as through the
\namortisation process.
\nGovernment refundable advances
\nGover
nment refundable advances are reported in \u201cTrade and other payables\u201d in the Balance Sheet. Refundable advances include amount
s
\nadvanced by a government, accrued interest and directly attributable costs. Refundable advances are provided to the Group to part-finance
\nexpenditures on specific development programmes. The advances are provided on a risk sharing basis, i.e. repayment levels are
\ndetermined subject to the success of the related programme. Balances are held at amortised cost and interest is calculated using the
\neffective interest rate method.
\nLeases
\nWhere a lease arrangement is identified, a liability to the lessor is included in the Balance Sheet as a lease obligation calculated at the
\npresent value of minimum lease payments. A corresponding right-of-use asset is recorded in property, plant and equipment. The discount
\nrate used to calculate the lease liability is the Group
\u2019s incremental borrowing rate, unless there is a rate implicit in the lease. The
\nincremental borrowing rate is used for the majority of leases. Incremental borrowing rates are based on the term, currency, country and
\nstart date of the lease and reflect the rate the Group would pay for a loan with similar terms and security.
\nFollowing initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. Where there is a
\nchange in future lease payments due to a rent review, change in index or rate, or a change in the Group\u2019s assessment of wheth
er it is
\nreasonably certain to exercise a purchase, extension or break option, the lease obligation is remeasured. A corresponding adjustment is
\nmade to the associated right-of-use asset.
\nRight-of-use assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
\nLease payments are apportioned between finance costs and a reduction in the lease obligation so as to reflect the interest on the
\nremaining balance of the obligation. Finance charges are recorded in the Income Statement within finance costs.
\nLeases with a term of 12 months or less and leases for low value are not recorded on the Balance Sheet and lease payments are
\nrecognised as an expense in the Income Statement on a straight-line basis over the lease term. Expenses relating to variable lease
\npayments which are not included in the lease liability, due to being based on a variable other than an index or rate, are recognised as an
\nexpense in the Income Statement.
\nFinancial instruments
\u2013
assets
\nClassification and measurement
\nAll financial assets are classified as either those which are measured at fair value, through profit or loss or Other Comprehensive Income,
\nand those measured at amortised cost.
\nFinancial assets are initially recognised at fair value. For those which are not subsequently measured at fair value through profit or loss,
\nthis includes directly attributable transaction costs. Trade and other receivables, contract assets and amounts due from equity accounted
\ninvestments are subsequently measured at amortised cost.
\nRecognition and derecognition of financial assets
\nFinancial assets are recognised in the Group\u2019s Balance Sheet when the Group becomes a party to the contractual provisions of
the
\ninstrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
\ntransfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
\nImpairment of financial assets
\nFor trade receivables and contract assets, the simplified approach permitted under IFRS 9 is applied. The simplified approach requires that
\nat the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not
\ncontain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. Cash and
\ncash equivalents and other receivables are also subject to impairment requirements.
\nInvestments
\nThe Group has investments in unlisted shares that are not traded in an active market, but are classified as financial assets, measured at
\nfair value. Fair value is determined by assessment of expected future dividends discounted to net present value. Any changes in fair value
\nare recognised in Other Comprehensive Income and accumulated in retained earnings. Dividends from investments are recognised in the
\nIncome Statement when the Group\u2019s right to receive the dividend is established.
\n
\n167
\n\n
\nTrade and other receivables
\nTrade and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. For
\ntrade receivables, the carrying amount is reduced by an allowance for expected lifetime losses. Subsequent recoveries of amounts
\npreviously written off are credited against the allowance account and changes in the carrying amount of the allowance account are
\nrecognised in the Income Statement.
\nTrade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring
\nthe expected credit losses, the Group considers all reasonable and supportable information such as the Group\u2019s past experienc
e at
\ncollecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking
\ninformation such as forecasts of future economic decisions.
\nOther receivables are also considered for impairment and if required the carrying amount is reduced by any loss arising which is recorded
\nin the Income Statement, although for the Group this is not material.
\nFinancial instruments
\u2013
liabilities
\nRecognition and derecognition of financial liabilities
\nFinancial liabilities are recognised in the Group\u2019s Ba
lance Sheet when the Group becomes a party to the contractual provisions of the
\ninstruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities
when the Group\u2019s
\nobligations are discharged, significantly modified, cancelled or they expire.
\nClassification and measurement
\nNon-derivative financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense
\nrecognised on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial
\nliability and of allocating interest expense over the relevant periods. The effective interest rate is the rate that discounts estimated future
\ncash payments throughout the expected life of the financial liability, or, where appropriate, a shorter period to the gross carrying amount of
\nthe financial liability.
\nDerivative financial instruments and hedging
\nThe Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
\nremeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement.
\nHedge accounting
\nIn order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged
\nand the hedging instrument, along with its risk management objectives and its strategy for undertaking various hedge transactions.
\nFurthermore, at the inception of the hedge and on an ongoing basis, the Group documents that the hedge will be highly effective, which is
\nwhen the hedging relationships meet all of the following hedge effectiveness requirements:
\n\u2022
there is an economic relationship between the hedged item and the hedging instrument;
\n\u2022
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
\n\u2022
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
\nhedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\nThe Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
\n(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
\ndiscontinuation is accounted for prospectively.
\nThe Group designates certain hedging instruments as either cash flow hedges or hedges of net investments in foreign operations.
\nCash flow hedge
\nDerivative financial instruments are classified as cash flow
hedges when they hedge the Group\u2019s exposure to the variability in cash flows
\nthat are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.
\nThe Group designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the
\nhedging instrument for all of its hedging relationships involving foreign exchange forward contracts.
\nThe effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive
\nIncome and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
\nAmounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income
\nStatement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer
\nexpected to occur. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-
\nfinancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
\nthe cost of the non-financial asset or non-financial liability.
\n\n\n
\nHedges of net investments in foreign operations
\nDerivative financial instruments are
classified as net investment hedges when they hedge the Group\u2019s net investment in foreign operations.
\nThe effective element of any foreign exchange gain or loss from revaluing the derivative at a reporting period end is recognised in the
\nStatement of Comprehensive Income. Any ineffective element is recognised immediately in the Income Statement.
\nThe Group designates only the spot rate component of cross currency swaps in net investment hedges. The changes in the fair value of
\nthe aligned forward and currency basis elements are recognised in other comprehensive income and accumulated in equity. If the hedged
\nitem is time
\u2011
period related, then the amount accumulated in equity is reclassified to profit or loss on an appropriate basis.
\nGains and losses accumulated in equity are recognised immediately in the Income Statement when the foreign operation is disposed.
\nProvisions
\nProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
\noutflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
\namount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future
\ncash flows at a rate that reflects the current market assessment of the time value of money and, where appropriate, the risks specific to the
\nliability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
\nContingent liabilities acquired in a business combination
\nContingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of
\nsubsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance
\nwith IAS 37: Provisions, contingent liabilities and contingent assets and the amount initially recognised less cumulative amount of revenue
\nrecognised in accordance with the principles of IFRS 15: Revenue from contracts with customers.
\nPensions and other retirement benefits
\nThe Group operates defined benefit pension plans and defined contribution plans, some of which require contributions to be made to
\nadministered funds separate from the Group.
\nFor the defined benefit pension and retirement benefit plans, plan assets are measured at fair value and plan liabilities are measured on an
\nactuarial basis and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent
\ncurrency and term to the plan liabilities. Any assets resulting from this calculation are limited to past service cost plus the present value of
\navailable refunds and reductions in future contributions to the plan. The present value of the defined benefit obligation, and the related
\ncurrent service cost and past service cost, are measured using the projected unit credit method.
\nThe service cost of providing pension and other retirement benefits to employees for the period is charged to the Income Statement.
\nNet interest expense on net defined benefit obligations is determined by applying discount rates used to measure defined benefit
\nobligations at the beginning of the year to net defined benefit obligations at the beginning of the year. The net interest expense is
\nrecognised within finance costs.
\nRemeasurement gains and losses comprise actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan
\nassets (excluding interest). Remeasurement gains and losses, and taxation thereon, are recognised in full in the Statement of
\nComprehensive Income in the period in which they occur and are not subsequently recycled.
\nActuarial gains and losses may result from differences between the actuarial assumptions underlying the plan obligations and actual
\nexperience during the period or changes in the actuarial assumptions used in the valuation of the plan obligations.
\nFor defined contribution plans, contributions payable are charged to the Income Statement as an operating expense when employees have
\nrendered services entitling them to the contributions.
\nForeign currencies
\nThe individual Financial Statements of each Group company are presented in the currency of the primary economic environment in which it
\noperates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and financial position of each
\nGroup company are expressed in pounds Sterling, which is the functional currency of the Company, and the presentation currency for the
\nConsolidated Financial Statements.
\nIn preparing the Financial Statements of the individual companies, transactions in currencies other than the entity\u2019s functio
nal currency
\n(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
\nmonetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
\nNon-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when
\nthe fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
\nExchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Income
\nStatement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
\nIncome Statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and
\nlosses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised
\ndirectly in equity.
\n
\n169
\n
\n
\nFor the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group\u2019s
foreign operations are translated
\nat exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
\nperiod, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are
\nused. Exchange differences arising, if any, are recognised in the Statement of Comprehensive Income and accumulated in equity
\n(attributed to non-controlling interests as appropriate). Such translation differences are recognised as income or as expenses in the period
\nin which the related operation is disposed of. Any exchange differences that have previously been attributed to non-controlling interests are
\nderecognised but they are not reclassified to the Income Statement.
\nGoodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
\ntranslated at the rate prevailing at the balance sheet date.
\nTaxation
\nThe tax expense is based on the taxable profits for the period and represents the sum of the tax paid or currently payable and deferred tax.
\nTaxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable
\nor deductible in other years and it further excludes items that are never taxable or deductible. The Group\u2019s liability for cu
rrent tax is
\ncalculated using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
\nA tax provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a
\nfuture outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
\nThe assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such
\nactivities and in certain cases based on specialist independent advice.
\nDeferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets
\nand liabilities and their carrying amounts for financial reporting purposes.
\nDeferred tax liabilities are recognised for all taxable temporary differences except:
\n\u2022
where the deferred tax liability arises on the initial recognition of goodwill or an asset or liability in a transaction that is not a business
\ncombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
where the timing of the reversal of the temporary differences associated with investments in subsidiaries and interests in equity
\naccounted investments can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
\nDeferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to
\nthe extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of
\nunused tax assets and unused tax losses can be utilised except:
\n\u2022
where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination
\nand, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
in respect of deductible temporary differences associated with investments in subsidiaries and interests in equity accounted investments,
\ndeferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable
\nfuture and taxable profit will be available against which the temporary differences can be utilised.
\nThe carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
\nthat sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
\nDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
\nliability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the relevant balance sheet date.
\nDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
\nliabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
\nand liabilities on a net basis.
\nTax relating to items recognised directly in other comprehensive income is recognised in the Statement of Comprehensive Income and not
\nin the Income Statement.
\nRevenues, expenses and assets are recognised net of the amount of sales tax except:
\n\u2022
where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales
\ntax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
\n\u2022
where receivables and payables are stated with the amount of sales tax included.
\nThe net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
\nBalance Sheet.
\nShare-based payments
\nThe Group has applied the requirements of IFRS 2: Share-based payment. The Group issues equity-settled share-based payments to
\ncertain employees. Equity-settled share-based payments are measured at fair value of the equity instrument excluding the effect of non-
\nmarket based vesting conditions at the date of grant. The fair value determined at the grant date of the equity-settled share-based
\npayments is expensed on a straight-line basis over the vesting period, bas
ed on the Group\u2019s estimate of shares that will eventually vest
\nand adjusted for the effect of non-market based vesting conditions.
\nFair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on the
\nDirectors\u2019 best estimate, for the effects of non
-transferability, exercise restrictions, and behavioural considerations.
\n
\n
\n
\n170
\nNon-current assets and disposal groups
\nNon-current assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to
\nsell. Non-current assets and businesses are classified as held for sale if their carrying amount will be recovered principally through a sale
\ntransaction rather than through continuing use. This condition is regarded as having been met only when the sale is highly probable and
\nthe asset or business is available for immediate sale in its present condition. Management must be committed to the sale which should be
\nexpected to qualify for recognition as a completed sale within one year from the date of classification.
\nGovernment grants
\nGovernment grants are not recognised in the Income Statement until there is reasonable assurance that the Group will comply with the
\nconditions attached to them and that the grants will be received. Government grants are recognised in the Income Statement on a
\nsystematic basis over the periods in which the Group recognises the related costs for which the grants are intended to compensate.
\nSpecifically, government grants where the primary condition is that the Group should purchase, construct or otherwise acquire non-current
\nassets (including property, plant and equipment) are recognised as deferred government grants in the Balance Sheet and transferred to the
\nIncome Statement on a systematic and rational basis over the useful lives of the related assets.
\nGovernment grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
\nfinancial support to the Group with no future related costs are recognised in the Income Statement in the period in which they become
\nreceivable.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18729": {
"value": "Basis of accounting The Consolidated Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006 and
\nInternational Financial Reporting Standards (\u201cIFRSs\u201d)
as issued by the IASB. The Consolidated Financial Statements have been prepared
\non an historical cost basis, except for the revaluation of certain financial instruments and investments which are recognised at fair value at
\nthe end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for assets.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18819": {
"value": "Basis of consolidation The Group\u2019s Financial Statements include the results of the parent undertaking and all of its subsidiary undertakings. In add
ition, the
\nGroup\u2019s share of the results and equity of joint ventures and associated undertakings (together \u201cequity accounted investments\u201d) are
\nincluded. The results of businesses acquired during the period are included from the effective date of acquisition and, for those sold during
\nthe period, to the effective date of disposal. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring
\nthe accounting policies used into line with those used by the Group.
\nAll intra-Group balances and transactions, including unrealised profits arising from intra-Group transactions, have been eliminated in full.
\nNon-
controlling interests in subsidiaries are identified separately from the Group\u2019s equity therein. The interest of non
-controlling
\nshareholders is initially measured at the non-
controlling interests\u2019 proportion of the share of the
fair value of the acquiree\u2019s identifiable net
\nassets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus
\nthe non-
controlling interests\u2019 share of subsequent changes in eq
uity. Total comprehensive income is attributed to non-controlling interests
\neven if this results in the non-controlling interests having a deficit balance. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18841": {
"value": "Going concern The Consolidated Financial Statements have been prepared on a going concern basis as the Directors consider that adequate resources exist
\nfor the Company to continue in operational existence for the foreseeable future.
\nThe Group\u2019s liquidity and funding arrangements are described in the Finance Director\u2019s Review. There is significant liquidi
ty headroom of \u00a32.6
\nbillion at 31 December 2022 and sufficient headroom throughout the going concern forecast period. Forecast covenant compliance is considered
\nfurther below.
\n\n
\nNone of the Group\u2019s banking facilit
ies mature in the going concern period following an extension agreed during 2021. The next contractual
\nmaturity is in June 2024 and whilst changes to banking arrangements are being considered following the announced intention to demerge GKN
\nAutomotive, GKN Powder Metallurgy and GKN Hydrogen, these will only be enacted if the shareholders approve the demerger. As part of its
\npreparation for the intended demerger, the Group has agreed revised banking documentation split between the demerger businesses and
\nremaining business, which is comparable in nature with existing arrangements and would provide both businesses with sufficient liquidity albeit
\ncontingent on shareholder approval of the demerger. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoingConcernExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18929": {
"value": "Business combinations and goodwill The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets
\ntransferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange
\nfor control of the acquiree. Control is achieved where the Company has the power to govern the financial and operating policies of an
\ninvestee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an
\nexpense in the Income Statement as incurred.
\nThe acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific
\nguidance is provided by IFRSs. Non-current assets and directly attributable liabilities that are classified as held for sale in accordance with
\nIFRS 5: Non-current assets held for sale and discontinued operations, are recognised and measured at fair value less costs to sell. Also,
\ndeferred tax assets and liabilities are recognised and measured in accordance with IAS 12: Income taxes, liabilities and assets related to
\nemployee benefit arrangements are recognised and measured in accordance with IAS 19 (revised): Employee benefits and liabilities or
\nequity instruments related to the replacement by the Group of an acquiree\u2019s share
-based payments awards are measured in accordance
\nwith IFRS 2: Share-based payment. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is
\nrecognised as goodwill.
\nIf the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
\nGroup reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or
\nadditional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the
\nacquisition date that, if known, would have affected the amounts recognised at that date.
\nThe measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
\ncircumstances that existed as of the acquisition date and is subject to a maximum period of one year.
\nGoodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-
\ncontrolling interest in the acquiree
and the fair value of the acquirer\u2019s previously held equity interest in the acquiree over the acquirer\u2019s
\ninterest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
\nat cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in
\ncircumstances indicate that the carrying value may be impaired.
\nIf, after reassessment, the Group\u2019s interest in the fair
value of the acquiree\u2019s identifiable net assets exceeds the sum of the consideration
\ntransferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in
\nthe acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.
\n
\n163
\n\n\nAs at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing
\nthe recoverable amount of the cash-generating unit to which goodwill relates. Where the recoverable amount of the cash-generating unit is
\nless than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is
\na disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on
\ndisposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the
\noperation disposed of and the operation retained. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18930": {
"value": "Business combinations and goodwill The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets
\ntransferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange
\nfor control of the acquiree. Control is achieved where the Company has the power to govern the financial and operating policies of an
\ninvestee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an
\nexpense in the Income Statement as incurred.
\nThe acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific
\nguidance is provided by IFRSs. Non-current assets and directly attributable liabilities that are classified as held for sale in accordance with
\nIFRS 5: Non-current assets held for sale and discontinued operations, are recognised and measured at fair value less costs to sell. Also,
\ndeferred tax assets and liabilities are recognised and measured in accordance with IAS 12: Income taxes, liabilities and assets related to
\nemployee benefit arrangements are recognised and measured in accordance with IAS 19 (revised): Employee benefits and liabilities or
\nequity instruments related to the replacement by the Group of an acquiree\u2019s share
-based payments awards are measured in accordance
\nwith IFRS 2: Share-based payment. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is
\nrecognised as goodwill.
\nIf the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
\nGroup reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or
\nadditional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the
\nacquisition date that, if known, would have affected the amounts recognised at that date.
\nThe measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
\ncircumstances that existed as of the acquisition date and is subject to a maximum period of one year.
\nGoodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-
\ncontrolling interest in the acquiree
and the fair value of the acquirer\u2019s previously held equity interest in the acquiree over the acquirer\u2019s
\ninterest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
\nat cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in
\ncircumstances indicate that the carrying value may be impaired.
\nIf, after reassessment, the Group\u2019s interest in the fair
value of the acquiree\u2019s identifiable net assets exceeds the sum of the consideration
\ntransferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in
\nthe acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.
\n
\n163
\n\n\nAs at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing
\nthe recoverable amount of the cash-generating unit to which goodwill relates. Where the recoverable amount of the cash-generating unit is
\nless than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is
\na disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on
\ndisposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the
\noperation disposed of and the operation retained.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f18931": {
"value": "Business combinations and goodwill The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the fair value of assets
\ntransferred, the liabilities incurred or assumed at the date of exchange of control and equity instruments issued by the Group in exchange
\nfor control of the acquiree. Control is achieved where the Company has the power to govern the financial and operating policies of an
\ninvestee entity so as to obtain benefits from its activities. Costs directly attributable to business combinations are recognised as an
\nexpense in the Income Statement as incurred.
\nThe acquired identifiable assets and liabilities are measured at their fair value at the date of acquisition except those where specific
\nguidance is provided by IFRSs. Non-current assets and directly attributable liabilities that are classified as held for sale in accordance with
\nIFRS 5: Non-current assets held for sale and discontinued operations, are recognised and measured at fair value less costs to sell. Also,
\ndeferred tax assets and liabilities are recognised and measured in accordance with IAS 12: Income taxes, liabilities and assets related to
\nemployee benefit arrangements are recognised and measured in accordance with IAS 19 (revised): Employee benefits and liabilities or
\nequity instruments related to the replacement by the Group of an acquiree\u2019s share
-based payments awards are measured in accordance
\nwith IFRS 2: Share-based payment. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is
\nrecognised as goodwill.
\nIf the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
\nGroup reports provisional amounts where appropriate. Those provisional amounts are adjusted during the measurement period, or
\nadditional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the
\nacquisition date that, if known, would have affected the amounts recognised at that date.
\nThe measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
\ncircumstances that existed as of the acquisition date and is subject to a maximum period of one year.
\nGoodwill on acquisition is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-
\ncontrolling interest in the acquiree
and the fair value of the acquirer\u2019s previously held equity interest in the acquiree over the acquirer\u2019s
\ninterest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
\nat cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in
\ncircumstances indicate that the carrying value may be impaired.
\nIf, after reassessment, the Group\u2019s interest in the fair
value of the acquiree\u2019s identifiable net assets exceeds the sum of the consideration
\ntransferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer\u2019s previously held equity interest in
\nthe acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.
\n
\n163
\n\n\nAs at the acquisition date, any goodwill acquired is allocated to the cash-generating units acquired. Impairment is determined by assessing
\nthe recoverable amount of the cash-generating unit to which goodwill relates. Where the recoverable amount of the cash-generating unit is
\nless than the carrying amount, an impairment loss is recognised in the Income Statement and is not subsequently reversed. When there is
\na disposal of a cash-generating unit, goodwill relating to the operation disposed of is taken into account in determining the gain or loss on
\ndisposal of that operation. The amount of goodwill allocated to a partial disposal is measured on the basis of the relative values of the
\noperation disposed of and the operation retained.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19010": {
"value": "Equity accounted investments A joint venture is an entity which is not a subsidiary undertaking but where the interest of the Group is that of a partner in a business over
\nwhich the Group exercises joint control with its partners over the financial and operating policies. In all cases voting rights are 50% or
\nlower.
\nAssociated undertakings are entities that are neither a subsidiary nor a joint venture, but where the Group has a significant influence. The
\nresults, assets and liabilities of equity accounted investments are accounted for using the equity method of accounting. The
Group\u2019s share
\nof equity includes goodwill arising on acquisition.
\nWhen a Group entity transacts with an equity accounted investment of the Group, profits and losses resulting from the transactions with the
\nequity accounted investments are recognised in the Group\u2019s Consolidated Financial Statements only to the extent of interests
in equity
\naccounted investments that are not related to the Group.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19011": {
"value": "Equity accounted investments A joint venture is an entity which is not a subsidiary undertaking but where the interest of the Group is that of a partner in a business over
\nwhich the Group exercises joint control with its partners over the financial and operating policies. In all cases voting rights are 50% or
\nlower.
\nAssociated undertakings are entities that are neither a subsidiary nor a joint venture, but where the Group has a significant influence. The
\nresults, assets and liabilities of equity accounted investments are accounted for using the equity method of accounting. The
Group\u2019s share
\nof equity includes goodwill arising on acquisition.
\nWhen a Group entity transacts with an equity accounted investment of the Group, profits and losses resulting from the transactions with the
\nequity accounted investments are recognised in the Group\u2019s Consolidated Financial Statements only to the extent of interests
in equity
\naccounted investments that are not related to the Group.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19028": {
"value": "Revenue Revenues are recognised either at the point of transfer of control of goods and services, or recognised over time on an activity basis using
\nthe costs incurred as the measure of the activity. Costs are recognised as they are incurred.
\nThe nature of agreements into which the Group enters means that certain of the Group\u2019s arrangements with its customers have m
ultiple
\nelements that can include any combination of:
\n\u2022
Sale of products and services;
\n\u2022
Risk and revenue sharing partnerships (\u201cRRSPs\u201d);
\n\u2022
Design and build; and
\n\u2022
Construction contracts.
\nContracts are reviewed to identify each performance obligation relating to a distinct good or service and the associated consideration. The
\nGroup allocates revenue to multiple element arrangements based on the identified performance obligations within the contracts in line with
\nthe policies below. A performance obligation is identified if the customer can benefit from the good or service on its own or together with
\nother readily available resources, and it can be separately identified within the contract. This review is performed by reference to the
\nspecific contract terms. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19159": {
"value": "Finance income Finance income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be
\nmeasured reliably. Finance income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
\napplicable. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19166": {
"value": "Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
\ntake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
\nassets are substantially ready for their intended use or sale.
\nInvestment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
\nfrom the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the Income Statement in the period in which
\nthey are incurred.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19179": {
"value": "Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
\nThe initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bring the asset into operation,
\nand any material borrowing costs on qualifying assets. Qualifying assets are defined as an asset or programme where the period of
\ncapitalisation is more than 12 months. Purchase price or construction cost is the aggregate amount paid and the fair value of any other
\nconsideration given to acquire the asset.
\n
\n165
\n\n\nWhere assets are in the course of construction at the balance sheet date, they are classified as capital work-in-progress. Transfers are
\nmade to other asset categories when they are available for use, at which point depreciation commences.
\nRight-of-use assets arise under IFRS 16 and are depreciated over the shorter of the estimated life and the lease term.
\nDepreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
\nFreehold land
nil
\nFreehold buildings and long leasehold property
over expected economic life not exceeding 50 years
\nShort leasehold property
over the term of the lease
\nPlant and equipment
3-15 years
\nThe estimated useful lives of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives are
\naccounted for prospectively.
\nThe carrying values of property, plant and equipment are reviewed annually for indicators of impairment, or if events or changes in
\ncircumstances indicate that the carrying value may not be recoverable. If such indication exists an impairment test is performed and, where
\nthe carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. The recoverable
\namount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, estimated future
\ncash flows, considering the implications of climate change (see note 11 for further detail), are discounted to their present value using a pre-
\ntax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
\ndoes not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset
\nbelongs.
\nAn item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
\nthe continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
\nproceeds or costs and the carrying amount of the item) is included in the Income Statement in the period that the item is derecognised. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19220": {
"value": "Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Freehold land
nil
\nFreehold buildings and long leasehold property
over expected economic life not exceeding 50 years
\nShort leasehold property
over the term of the lease
\nPlant and equipment
3-15 years",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19246": {
"value": "Intangible assets Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.
\nOn acquisition of businesses, separately identifiable intangible assets are initially recorded at their fair value at the acquisition date.
\nAccess to the use of brands and intellectual property are valued using a \u201crelief from royalty\u201d method which determines the ne
t present
\nvalue of future additional cash flows arising from the use of the intangible asset.
\nCustomer relationships and contracts are valued on the basis of the net present value of the future additional cash flows arising from
\ncustomer relationships with appropriate allowance for attrition of customers.
\nTechnology assets are valued using a replacement cost approach, or a \u201crelief from royalty\u201d method.
\nAmortisation of intangible assets is recorded in administration expenses in the Income Statement and is calculated on a straight-line basis
\nover the estimated useful lives of the asset as follows:
\nCustomer relationships and contracts
20 years or less
\nBrands and intellectual property
20 years or less
\nTechnology
20 years or less
\nComputer software
5 years or less
\nDevelopment costs
20 years or less
\nWhere computer software is not integral to an item of property, plant or equipment, its costs are capitalised and categorised as intangible
\nassets. Computer software is initially recorded at cost. Where these assets have been acquired through a business combination, this will
\nbe the fair value allocated in the acquisition accounting. Where these have been acquired other than through a business combination, the
\ninitial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
\nIntangible assets (other than computer software and development costs) are tested for impairment annually or more frequently whenever
\nevents or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses are measured on a similar
\nbasis to property, plant and equipment. Useful lives are also examined on an annual basis and adjustments, where applicable, are made
\non a prospective basis.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19278": {
"value": "Research and development costs Research costs are expensed as incurred.
\nCosts relating to clearly defined and identifiable development projects are capitalised when there is a technical degree of exploitation,
\nadequacy of resources and a potential market or development possibility in the undertaking that are recognisable; and where it is the
\nintention to produce, market or execute the project. A correlation must also exist between the costs incurred and future benefits and those
\ncosts can be measured reliably. Capitalised costs are expensed on a straight-line basis over their useful lives of 20 years or less. Costs not
\nmeeting such criteria are expensed as incurred. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19288": {
"value": "Inventories Inventories are valued at the lower of cost and net realisable value and are measured using a first in, first out or weighted average cost
\nbasis. Cost includes all direct expenditure and appropriate production overhead expenditure incurred in bringing goods to their current state
\nunder normal operating conditions. Net realisable value is based on estimated selling price less costs expected to be incurred to
\ncompletion and disposal. Provisions are made for obsolescence or other expected losses where necessary. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19324": {
"value": "Cash and cash equivalents Cash and cash equivalents comprise cash in hand, balances with banks and similar institutions, and short-term deposits which are readily
\nconvertible to cash and are subject to insignificant risks of changes in value.
\nFor the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined
\nabove, net of outstanding bank overdrafts.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19332": {
"value": "Interest-bearing loans and borrowings All loans and borrowings are initially recognised at fair value of the consideration received net of issue costs associated with the
\nborrowings.
\nAfter initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
\nmethod. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
\nGains and losses are recognised in the Income Statement when the liabilities are derecognised or impaired, as well as through the
\namortisation process.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19333": {
"value": "Interest-bearing loans and borrowings All loans and borrowings are initially recognised at fair value of the consideration received net of issue costs associated with the
\nborrowings.
\nAfter initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
\nmethod. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
\nGains and losses are recognised in the Income Statement when the liabilities are derecognised or impaired, as well as through the
\namortisation process. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19344": {
"value": "Government refundable advances
\nGover
nment refundable advances are reported in \u201cTrade and other payables\u201d in the Balance Sheet. Refundable advances include amount
s
\nadvanced by a government, accrued interest and directly attributable costs. Refundable advances are provided to the Group to part-finance
\nexpenditures on specific development programmes. The advances are provided on a risk sharing basis, i.e. repayment levels are
\ndetermined subject to the success of the related programme. Balances are held at amortised cost and interest is calculated using the
\neffective interest rate method.
Government grants
\nGovernment grants are not recognised in the Income Statement until there is reasonable assurance that the Group will comply with the
\nconditions attached to them and that the grants will be received. Government grants are recognised in the Income Statement on a
\nsystematic basis over the periods in which the Group recognises the related costs for which the grants are intended to compensate.
\nSpecifically, government grants where the primary condition is that the Group should purchase, construct or otherwise acquire non-current
\nassets (including property, plant and equipment) are recognised as deferred government grants in the Balance Sheet and transferred to the
\nIncome Statement on a systematic and rational basis over the useful lives of the related assets.
\nGovernment grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
\nfinancial support to the Group with no future related costs are recognised in the Income Statement in the period in which they become
\nreceivable.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19354": {
"value": "Leases Where a lease arrangement is identified, a liability to the lessor is included in the Balance Sheet as a lease obligation calculated at the
\npresent value of minimum lease payments. A corresponding right-of-use asset is recorded in property, plant and equipment. The discount
\nrate used to calculate the lease liability is the Group
\u2019s incremental borrowing rate, unless there is a rate implicit in the lease. The
\nincremental borrowing rate is used for the majority of leases. Incremental borrowing rates are based on the term, currency, country and
\nstart date of the lease and reflect the rate the Group would pay for a loan with similar terms and security.
\nFollowing initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. Where there is a
\nchange in future lease payments due to a rent review, change in index or rate, or a change in the Group\u2019s assessment of wheth
er it is
\nreasonably certain to exercise a purchase, extension or break option, the lease obligation is remeasured. A corresponding adjustment is
\nmade to the associated right-of-use asset.
\nRight-of-use assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
\nLease payments are apportioned between finance costs and a reduction in the lease obligation so as to reflect the interest on the
\nremaining balance of the obligation. Finance charges are recorded in the Income Statement within finance costs.
\nLeases with a term of 12 months or less and leases for low value are not recorded on the Balance Sheet and lease payments are
\nrecognised as an expense in the Income Statement on a straight-line basis over the lease term. Expenses relating to variable lease
\npayments which are not included in the lease liability, due to being based on a variable other than an index or rate, are recognised as an
\nexpense in the Income Statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19376": {
"value": "Financial instruments \u2013
assets
\nClassification and measurement
\nAll financial assets are classified as either those which are measured at fair value, through profit or loss or Other Comprehensive Income,
\nand those measured at amortised cost.
\nFinancial assets are initially recognised at fair value. For those which are not subsequently measured at fair value through profit or loss,
\nthis includes directly attributable transaction costs. Trade and other receivables, contract assets and amounts due from equity accounted
\ninvestments are subsequently measured at amortised cost.
\nRecognition and derecognition of financial assets
\nFinancial assets are recognised in the Group\u2019s Balance Sheet when the Group becomes a party to the contractual provisions of
the
\ninstrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
\ntransfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
\nImpairment of financial assets
\nFor trade receivables and contract assets, the simplified approach permitted under IFRS 9 is applied. The simplified approach requires that
\nat the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not
\ncontain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. Cash and
\ncash equivalents and other receivables are also subject to impairment requirements.
\nInvestments
\nThe Group has investments in unlisted shares that are not traded in an active market, but are classified as financial assets, measured at
\nfair value. Fair value is determined by assessment of expected future dividends discounted to net present value. Any changes in fair value
\nare recognised in Other Comprehensive Income and accumulated in retained earnings. Dividends from investments are recognised in the
\nIncome Statement when the Group\u2019s right to receive the dividend is established.
\n
\n167
\n\n
\nTrade and other receivables
\nTrade and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. For
\ntrade receivables, the carrying amount is reduced by an allowance for expected lifetime losses. Subsequent recoveries of amounts
\npreviously written off are credited against the allowance account and changes in the carrying amount of the allowance account are
\nrecognised in the Income Statement.
\nTrade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring
\nthe expected credit losses, the Group considers all reasonable and supportable information such as the Group\u2019s past experienc
e at
\ncollecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking
\ninformation such as forecasts of future economic decisions.
\nOther receivables are also considered for impairment and if required the carrying amount is reduced by any loss arising which is recorded
\nin the Income Statement, although for the Group this is not material.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19377": {
"value": "Financial instruments \u2013
assets
\nClassification and measurement
\nAll financial assets are classified as either those which are measured at fair value, through profit or loss or Other Comprehensive Income,
\nand those measured at amortised cost.
\nFinancial assets are initially recognised at fair value. For those which are not subsequently measured at fair value through profit or loss,
\nthis includes directly attributable transaction costs. Trade and other receivables, contract assets and amounts due from equity accounted
\ninvestments are subsequently measured at amortised cost.
\nRecognition and derecognition of financial assets
\nFinancial assets are recognised in the Group\u2019s Balance Sheet when the Group becomes a party to the contractual provisions of
the
\ninstrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
\ntransfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
\nImpairment of financial assets
\nFor trade receivables and contract assets, the simplified approach permitted under IFRS 9 is applied. The simplified approach requires that
\nat the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not
\ncontain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. Cash and
\ncash equivalents and other receivables are also subject to impairment requirements.
\nInvestments
\nThe Group has investments in unlisted shares that are not traded in an active market, but are classified as financial assets, measured at
\nfair value. Fair value is determined by assessment of expected future dividends discounted to net present value. Any changes in fair value
\nare recognised in Other Comprehensive Income and accumulated in retained earnings. Dividends from investments are recognised in the
\nIncome Statement when the Group\u2019s right to receive the dividend is established.
\n
\n167
\n\n
\nTrade and other receivables
\nTrade and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. For
\ntrade receivables, the carrying amount is reduced by an allowance for expected lifetime losses. Subsequent recoveries of amounts
\npreviously written off are credited against the allowance account and changes in the carrying amount of the allowance account are
\nrecognised in the Income Statement.
\nTrade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring
\nthe expected credit losses, the Group considers all reasonable and supportable information such as the Group\u2019s past experienc
e at
\ncollecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking
\ninformation such as forecasts of future economic decisions.
\nOther receivables are also considered for impairment and if required the carrying amount is reduced by any loss arising which is recorded
\nin the Income Statement, although for the Group this is not material.
\nFinancial instruments
\u2013
liabilities
\nRecognition and derecognition of financial liabilities
\nFinancial liabilities are recognised in the Group\u2019s Ba
lance Sheet when the Group becomes a party to the contractual provisions of the
\ninstruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities
when the Group\u2019s
\nobligations are discharged, significantly modified, cancelled or they expire.
\nClassification and measurement
\nNon-derivative financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense
\nrecognised on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial
\nliability and of allocating interest expense over the relevant periods. The effective interest rate is the rate that discounts estimated future
\ncash payments throughout the expected life of the financial liability, or, where appropriate, a shorter period to the gross carrying amount of
\nthe financial liability.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19388": {
"value": "Recognition and derecognition of financial assets
\nFinancial assets are recognised in the Group\u2019s Balance Sheet when the Group becomes a party to the contractual provisions of
the
\ninstrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
\ntransfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Recognition and derecognition of financial liabilities
\nFinancial liabilities are recognised in the Group\u2019s Ba
lance Sheet when the Group becomes a party to the contractual provisions of the
\ninstruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities
when the Group\u2019s
\nobligations are discharged, significantly modified, cancelled or they expire.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19395": {
"value": "Impairment of financial assets For trade receivables and contract assets, the simplified approach permitted under IFRS 9 is applied. The simplified approach requires that
\nat the point of initial recognition the expected credit loss across the life of the receivable must be recognised. As these balances do not
\ncontain a significant financing element, the simplified approach relating to expected lifetime losses is applicable under IFRS 9. Cash and
\ncash equivalents and other receivables are also subject to impairment requirements. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19403": {
"value": "Investments The Group has investments in unlisted shares that are not traded in an active market, but are classified as financial assets, measured at
\nfair value. Fair value is determined by assessment of expected future dividends discounted to net present value. Any changes in fair value
\nare recognised in Other Comprehensive Income and accumulated in retained earnings. Dividends from investments are recognised in the
\nIncome Statement when the Group\u2019s right to receive the dividend is established.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19441": {
"value": "Trade and other receivables Trade and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. For
\ntrade receivables, the carrying amount is reduced by an allowance for expected lifetime losses. Subsequent recoveries of amounts
\npreviously written off are credited against the allowance account and changes in the carrying amount of the allowance account are
\nrecognised in the Income Statement.
\nTrade receivables that are assessed not to be impaired individually are also assessed for impairment on a collective basis. In measuring
\nthe expected credit losses, the Group considers all reasonable and supportable information such as the Group\u2019s past experienc
e at
\ncollecting receipts, any increase in the number of delayed receipts in the portfolio past the average credit period, and forward looking
\ninformation such as forecasts of future economic decisions.
\nOther receivables are also considered for impairment and if required the carrying amount is reduced by any loss arising which is recorded
in the Income Statement, although for the Group this is not material.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19457": {
"value": "Financial instruments \u2013
liabilities
\nRecognition and derecognition of financial liabilities
\nFinancial liabilities are recognised in the Group\u2019s Ba
lance Sheet when the Group becomes a party to the contractual provisions of the
\ninstruments and are initially measured at fair value, net of transaction costs. The Group derecognises financial liabilities
when the Group\u2019s
\nobligations are discharged, significantly modified, cancelled or they expire.
\nClassification and measurement
\nNon-derivative financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense
\nrecognised on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial
\nliability and of allocating interest expense over the relevant periods. The effective interest rate is the rate that discounts estimated future
\ncash payments throughout the expected life of the financial liability, or, where appropriate, a shorter period to the gross carrying amount of
the financial liability.
\nDerivative financial instruments and hedging
\nThe Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
\nremeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19477": {
"value": "Derivative financial instruments and hedging The Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
remeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement.
\nHedge accounting
\nIn order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged
\nand the hedging instrument, along with its risk management objectives and its strategy for undertaking various hedge transactions.
\nFurthermore, at the inception of the hedge and on an ongoing basis, the Group documents that the hedge will be highly effective, which is
\nwhen the hedging relationships meet all of the following hedge effectiveness requirements:
\n\u2022
there is an economic relationship between the hedged item and the hedging instrument;
\n\u2022
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
\n\u2022
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
\nhedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\nThe Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
\n(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
\ndiscontinuation is accounted for prospectively.
\nThe Group designates certain hedging instruments as either cash flow hedges or hedges of net investments in foreign operations.
\nCash flow hedge
\nDerivative financial instruments are classified as cash flow
hedges when they hedge the Group\u2019s exposure to the variability in cash flows
\nthat are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.
\nThe Group designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the
\nhedging instrument for all of its hedging relationships involving foreign exchange forward contracts.
\nThe effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive
\nIncome and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
\nAmounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income
\nStatement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer
\nexpected to occur. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-
\nfinancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
\nthe cost of the non-financial asset or non-financial liability.
\n\n
\nHedges of net investments in foreign operations
\nDerivative financial instruments are
classified as net investment hedges when they hedge the Group\u2019s net investment in foreign operations.
\nThe effective element of any foreign exchange gain or loss from revaluing the derivative at a reporting period end is recognised in the
\nStatement of Comprehensive Income. Any ineffective element is recognised immediately in the Income Statement.
\nThe Group designates only the spot rate component of cross currency swaps in net investment hedges. The changes in the fair value of
\nthe aligned forward and currency basis elements are recognised in other comprehensive income and accumulated in equity. If the hedged
\nitem is time
\u2011
period related, then the amount accumulated in equity is reclassified to profit or loss on an appropriate basis.
\nGains and losses accumulated in equity are recognised immediately in the Income Statement when the foreign operation is disposed.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19478": {
"value": "Derivative financial instruments and hedging The Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
remeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement.
\nHedge accounting
\nIn order to qualify for hedge accounting, the Group is required to document from inception the relationship between the item being hedged
\nand the hedging instrument, along with its risk management objectives and its strategy for undertaking various hedge transactions.
\nFurthermore, at the inception of the hedge and on an ongoing basis, the Group documents that the hedge will be highly effective, which is
\nwhen the hedging relationships meet all of the following hedge effectiveness requirements:
\n\u2022
there is an economic relationship between the hedged item and the hedging instrument;
\n\u2022
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
\n\u2022
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
\nhedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
\nThe Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
\n(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The
\ndiscontinuation is accounted for prospectively.
\nThe Group designates certain hedging instruments as either cash flow hedges or hedges of net investments in foreign operations.
\nCash flow hedge
\nDerivative financial instruments are classified as cash flow
hedges when they hedge the Group\u2019s exposure to the variability in cash flows
\nthat are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.
\nThe Group designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the
\nhedging instrument for all of its hedging relationships involving foreign exchange forward contracts.
\nThe effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive
\nIncome and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
\nAmounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income
\nStatement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer
\nexpected to occur. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-
\nfinancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
\nthe cost of the non-financial asset or non-financial liability.
\n\n
\nHedges of net investments in foreign operations
\nDerivative financial instruments are
classified as net investment hedges when they hedge the Group\u2019s net investment in foreign operations.
\nThe effective element of any foreign exchange gain or loss from revaluing the derivative at a reporting period end is recognised in the
\nStatement of Comprehensive Income. Any ineffective element is recognised immediately in the Income Statement.
\nThe Group designates only the spot rate component of cross currency swaps in net investment hedges. The changes in the fair value of
\nthe aligned forward and currency basis elements are recognised in other comprehensive income and accumulated in equity. If the hedged
\nitem is time
\u2011
period related, then the amount accumulated in equity is reclassified to profit or loss on an appropriate basis.
\nGains and losses accumulated in equity are recognised immediately in the Income Statement when the foreign operation is disposed.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19479": {
"value": "Derivative financial instruments and hedging The Group uses derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and commodity risks,
\narising from operating and financing activities. The Group does not hold or issue derivative financial instruments for speculative trading
\npurposes. Details of derivative financial instruments are disclosed in note 25 of the Financial Statements.
\nDerivative financial instruments are recognised and stated at fair value in the Group\u2019s Balance Sheet. Their fair value is re
calculated at
\neach reporting date. The accounting treatment for the resulting gain or loss will depend on whether the derivative meets the criteria to
\nqualify for hedge accounting and are designated as such.
\nWhere derivatives do not meet the criteria to qualify for hedge accounting, any gains or losses on the revaluation to fair value at the period
\nend are recognised immediately in the Income Statement. Where derivatives do meet the criteria to qualify for hedge accounting,
\nrecognition of any resulting gain or loss on revaluation depends on the nature of the hedge relationship and the item being hedged.
\nDerivative financial instruments with maturity dates of less than one year from the period end date are classified as current in the Balance
\nSheet. Derivatives embedded in non-derivative host contracts are recogn
ised at their fair value in the Group\u2019s Balance Sheet when the
\nnature, characteristics and risks of the derivative are not closely related to the host contract. Gains and losses arising on the
remeasurement of these embedded derivatives at each balance sheet date are recognised in the Income Statement. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19519": {
"value": "Cash flow hedge Derivative financial instruments are classified as cash flow
hedges when they hedge the Group\u2019s exposure to the variability in cash flows
\nthat are either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted cash flow.
\nThe Group designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the
\nhedging instrument for all of its hedging relationships involving foreign exchange forward contracts.
\nThe effective portion of any gain or loss from revaluing the derivative financial instrument is recognised in the Statement of Comprehensive
\nIncome and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.
\nAmounts previously recognised in the Statement of Comprehensive Income and accumulated in equity are recycled to the Income
\nStatement in the periods when the hedged item is recognised in the Income Statement or when the forecast transaction is no longer
\nexpected to occur. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-
\nfinancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
\nthe cost of the non-financial asset or non-financial liability. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19582": {
"value": "Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
\noutflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
\namount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future
\ncash flows at a rate that reflects the current market assessment of the time value of money and, where appropriate, the risks specific to the
\nliability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19591": {
"value": "Contingent liabilities acquired in a business combination Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of
\nsubsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance
\nwith IAS 37: Provisions, contingent liabilities and contingent assets and the amount initially recognised less cumulative amount of revenue
\nrecognised in accordance with the principles of IFRS 15: Revenue from contracts with customers.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19599": {
"value": "Pensions and other retirement benefits The Group operates defined benefit pension plans and defined contribution plans, some of which require contributions to be made to
\nadministered funds separate from the Group.
\nFor the defined benefit pension and retirement benefit plans, plan assets are measured at fair value and plan liabilities are measured on an
\nactuarial basis and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent
\ncurrency and term to the plan liabilities. Any assets resulting from this calculation are limited to past service cost plus the present value of
\navailable refunds and reductions in future contributions to the plan. The present value of the defined benefit obligation, and the related
\ncurrent service cost and past service cost, are measured using the projected unit credit method.
\nThe service cost of providing pension and other retirement benefits to employees for the period is charged to the Income Statement.
\nNet interest expense on net defined benefit obligations is determined by applying discount rates used to measure defined benefit
\nobligations at the beginning of the year to net defined benefit obligations at the beginning of the year. The net interest expense is
\nrecognised within finance costs.
\nRemeasurement gains and losses comprise actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan
\nassets (excluding interest). Remeasurement gains and losses, and taxation thereon, are recognised in full in the Statement of
\nComprehensive Income in the period in which they occur and are not subsequently recycled.
\nActuarial gains and losses may result from differences between the actuarial assumptions underlying the plan obligations and actual
\nexperience during the period or changes in the actuarial assumptions used in the valuation of the plan obligations.
\nFor defined contribution plans, contributions payable are charged to the Income Statement as an operating expense when employees have
\nrendered services entitling them to the contributions. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19621": {
"value": "Foreign currencies The individual Financial Statements of each Group company are presented in the currency of the primary economic environment in which it
\noperates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and financial position of each
\nGroup company are expressed in pounds Sterling, which is the functional currency of the Company, and the presentation currency for the
\nConsolidated Financial Statements.
\nIn preparing the Financial Statements of the individual companies, transactions in currencies other than the entity\u2019s functio
nal currency
\n(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
\nmonetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date.
\nNon-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when
\nthe fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
\nExchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Income
\nStatement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
\nIncome Statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and
\nlosses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised
\ndirectly in equity.
\n
\n169
\n
\n
\nFor the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group\u2019s
foreign operations are translated
\nat exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
\nperiod, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are
\nused. Exchange differences arising, if any, are recognised in the Statement of Comprehensive Income and accumulated in equity
\n(attributed to non-controlling interests as appropriate). Such translation differences are recognised as income or as expenses in the period
\nin which the related operation is disposed of. Any exchange differences that have previously been attributed to non-controlling interests are
\nderecognised but they are not reclassified to the Income Statement.
\nGoodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
\ntranslated at the rate prevailing at the balance sheet date. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19678": {
"value": "Taxation The tax expense is based on the taxable profits for the period and represents the sum of the tax paid or currently payable and deferred tax.
\nTaxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable
\nor deductible in other years and it further excludes items that are never taxable or deductible. The Group\u2019s liability for cu
rrent tax is
\ncalculated using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
\nA tax provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a
\nfuture outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
\nThe assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such
\nactivities and in certain cases based on specialist independent advice.
\nDeferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets
\nand liabilities and their carrying amounts for financial reporting purposes.
\nDeferred tax liabilities are recognised for all taxable temporary differences except:
\n\u2022
where the deferred tax liability arises on the initial recognition of goodwill or an asset or liability in a transaction that is not a business
\ncombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
where the timing of the reversal of the temporary differences associated with investments in subsidiaries and interests in equity
\naccounted investments can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
\nDeferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to
\nthe extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of
\nunused tax assets and unused tax losses can be utilised except:
\n\u2022
where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination
\nand, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
in respect of deductible temporary differences associated with investments in subsidiaries and interests in equity accounted investments,
\ndeferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable
\nfuture and taxable profit will be available against which the temporary differences can be utilised.
\nThe carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
\nthat sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
\nDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
\nliability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the relevant balance sheet date.
\nDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
\nliabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
\nand liabilities on a net basis.
\nTax relating to items recognised directly in other comprehensive income is recognised in the Statement of Comprehensive Income and not
\nin the Income Statement.
\nRevenues, expenses and assets are recognised net of the amount of sales tax except:
\n\u2022
where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales
\ntax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
\n\u2022
where receivables and payables are stated with the amount of sales tax included.
\nThe net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
\nBalance Sheet. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19690": {
"value": "Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
\nDeferred tax liabilities are recognised for all taxable temporary differences except:
\n\u2022
where the deferred tax liability arises on the initial recognition of goodwill or an asset or liability in a transaction that is not a business
\ncombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
where the timing of the reversal of the temporary differences associated with investments in subsidiaries and interests in equity
\naccounted investments can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
\nDeferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to
\nthe extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of
\nunused tax assets and unused tax losses can be utilised except:
\n\u2022
where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination
\nand, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
\n\u2022
in respect of deductible temporary differences associated with investments in subsidiaries and interests in equity accounted investments,
\ndeferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable
\nfuture and taxable profit will be available against which the temporary differences can be utilised.
\nThe carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
\nthat sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
\nDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
\nliability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the relevant balance sheet date.
\nDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
\nliabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
\nand liabilities on a net basis.
\nTax relating to items recognised directly in other comprehensive income is recognised in the Statement of Comprehensive Income and not
\nin the Income Statement.
\nRevenues, expenses and assets are recognised net of the amount of sales tax except:
\n\u2022
where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales
\ntax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
\n\u2022
where receivables and payables are stated with the amount of sales tax included.
\nThe net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Balance Sheet.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19730": {
"value": "Share-based payments The Group has applied the requirements of IFRS 2: Share-based payment. The Group issues equity-settled share-based payments to
\ncertain employees. Equity-settled share-based payments are measured at fair value of the equity instrument excluding the effect of non-
\nmarket based vesting conditions at the date of grant. The fair value determined at the grant date of the equity-settled share-based
\npayments is expensed on a straight-line basis over the vesting period, bas
ed on the Group\u2019s estimate of shares that will eventually vest
\nand adjusted for the effect of non-market based vesting conditions.
\nFair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on the
\nDirectors\u2019 best estimate, for the effects of non
-transferability, exercise restrictions, and behavioural considerations.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19771": {
"value": "Non-current assets and disposal groups Non-current assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to
\nsell. Non-current assets and businesses are classified as held for sale if their carrying amount will be recovered principally through a sale
\ntransaction rather than through continuing use. This condition is regarded as having been met only when the sale is highly probable and
\nthe asset or business is available for immediate sale in its present condition. Management must be committed to the sale which should be
\nexpected to qualify for recognition as a completed sale within one year from the date of classification.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19772": {
"value": "Non-current assets and disposal groups Non-current assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to
\nsell. Non-current assets and businesses are classified as held for sale if their carrying amount will be recovered principally through a sale
\ntransaction rather than through continuing use. This condition is regarded as having been met only when the sale is highly probable and
\nthe asset or business is available for immediate sale in its present condition. Management must be committed to the sale which should be
\nexpected to qualify for recognition as a completed sale within one year from the date of classification.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19796": {
"value": "3. Critical accounting judgements and key sources of estimation uncertainty
\nIn the application of the Group\u2019s accounting policies, which are described in note 2, the Directors are required to make judg
ements,
\nestimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
\nestimates and associated assumptions are based on historical experiences and other factors that are considered to be relevant. Actual
\nresults may differ from these estimates.
\nThe estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
\nperiod in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision
\naffects both current and future periods.
\nCritical judgements
\nIn the course of preparing the Financial Statements, a critical judgement within the scope of paragraph 122 of IAS 1: Presentation of
\nFinancial Statements is made during the process of applying the
Group\u2019s accounting policies
.
\nAdjusting items
\nJudgements are required as to whether items are disclosed as adjusting, with consideration given to both quantitative and qualitative
\nfactors. Further information about the determination of adjusting items in the year ended 31 December 2022 is included in note 2.
\nThere are no other critical judgements other than those involving estimates, that have had a significant effect on the amounts recognised in
\nthe Financial Statements. Those involving estimates are set out below.
\nKey sources of estimation uncertainty
\nAssumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that may have a significant
\nrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
\na)
Assumptions used to determine the recoverable amount of goodwill and other assets
\nDetermining whether the goodwill of groups of cash generating units (\u201cCGUs\u201d) is impaired requires
an estimation of its recoverable amount
\nwhich is compared against the carrying value. The recoverable amount is deemed to be the higher of the value in use and fair value less
\ncosts to sell. For the year ended 31 December 2022, impairment testing has been performed for each group of CGUs using the fair value
\nless costs to sell method. The fair values of the groups of CGUs are calculated using a combination of estimated discounted cash flows
\nand EBITDA multiple valuations, as in the current economic environment it has been difficult to assess a sales value using observable
\nmarket inputs (level 1) or inputs based on market evidence (level 2) and so unobservable inputs (level 3) have been used.
\nThe Automotive and Powder Metallurgy groups of CGUs are the most sensitive to a change in estimates, depending on how their markets
\ncontinue to recover from the implications of the COVID-19 pandemic and supply chain disruption as well as how they continue to recover
\ninflation impacts on input costs. As at 31 December 2022, the carrying amount of goodwill and other intangible assets (not including
\ncomputer software and development costs) in the Automotive group of CGUs is \u00a31,938 million (31 December 2021: \u00a31,980 million) and in
\nthe Powder Metallurgy group of CGUs is \u00a31,081 million (31 December 2021: \u00a31,066 million). The sensitivity disclosures in note 11 show
\nreasonably possible changes to key assumptions and their effect on the impairment models, which could reduce headroom to nil. In order
\nfor a material impairment charge or loss on disposal to be recorded in the next year the following reasonably possible changes in key
\nassumptions would need to occur:
\n\u2022
In the Automotive groups of CGUs, terminal operating profit would need to reduce by 16% which would reduce the terminal operating
\nmargin by 1.7 percentage points.
\n\u2022
In the Powder Metallurgy groups of CGUs, terminal operating profit would need to reduce by 10% which would reduce the terminal
\noperating margin by 1.3 percentage points.
\n
\n171
\n
\n
\nb)
Assumptions used to determine the carrying amount of the Group\u2019s
net retirement benefit obligations
\nThe Group\u2019s pension plans are significant in size. The defined benefit obligations in respect of
the plans are discounted at rates set by
\nreference to market yields on high quality corporate bonds. Significant estimation is required when setting the criteria for bonds to be
\nincluded in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds to
\ninclude are the issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded. In addition,
\nassumptions are made in determining mortality and inflati
on rates to be used when valuing the plan\u2019s defined benefit obligations. At 31
\nDecember 2022, the retirement benefit obligation was a net deficit of \u00a3488 million (31 December 2021: \u00a3461 million).
\nFurther details of the assumptions applied and a sensitivity analysis on the principal assumptions used to determine the defined benefit
\nliabilities of the Group\u2019s obligations are shown in note 24.
Whilst actual movements might be different to sensitivities shown, these are a
\nreasonably possible change that could occur.
\nc)
Loss-making contracts
\nLoss-making contract provisions represent the forecast unavoidable costs required to meet the obligations of long-term agreements, in
\nexcess of the contractual inflow expected to be generated in respect of these agreements. In assessing the unavoidable costs,
\nmanagement has considered the possibility that future actions could impact the profitability of the contracts. Calculation of the liability
\nincludes estimations of volumes, price and costs to be incurred over the life of the contract, which are discounted to a current value. Future
\nchanges within these estimates, or commercial progress could have a material impact on the provision in future periods. At 31 December
\n2022, the carrying value of the loss-making contract provision in the Group was \u00a3108 million (31 December 2021: \u00a3167 million). In the last
\nfour years significant progress has been made resolving commercial and operational issues within a large number of loss-making contracts
\ninherited on acquisition of GKN. The release has on average been 18% of the balance immediately before reassessment. If the Group
\nwere to achieve a similar level of success on the amount outstanding at 31 December 2022, there could be a further \u00a319 million released to
\nadjusting items in the next year.
\nd)
Estimates of future revenues and costs of long-term contractual arrangements
\nThe Group has certain large, complex contracts where significant judgements and estimates are required in order to allocate total
\nassociated consideration.
\nA key judgement is the measurement of unbilled work done, in particular relating to certain risk and revenue sharing partnerships
\n(\u201cRRSPs\u201d). A detailed review of the Group\u2019s RRSP contracts determined where terms and conditions result in
unbilled work done and this
\nis further set out in note 17. Distinguishing between a contractual right and the economic compulsion of partners with regard to the sale of
\noriginal equipment (\u201cOE\u201d) components and aftermarket activities relies on an interpretation of complex legal agreements. This
specific point
\ngoverns whether unbilled work done is recognised on the sale of OE components and this can significantly impact the level of profitability
\nfrom one period to the next. Further disclosure is set out in note 4.
\nThe forecast revenues and costs in respect of RRSP contracts are inherently imprecise and significant estimates are required to assess
\nthe pattern of future maintenance activity, the costs to be incurred and escalation of revenue and costs. The estimates take account of the
\nuncertainties, constraining the expected level of revenue as appropriate. Measurement of unbilled work done is driven by forecasting
\naftermarket revenue per delivered engine which is in turn contingent on overall programme success, levels of discounting that might be
\noffered by the engine manufacturers (the Group\u2019s customers), engineering requirem
ents needed for optimal performance of the engine and
\nthe allocation of revenue to individual units. In addition, where programmes are at an early stage the wider implications of any competing
\nengines as well as complications outside of the Group can be difficult to assess. Any of these inputs could change in the next year as
\nprogrammes evolve and due to the size and scale of these contracts, almost any modification could result in material changes in future
\nperiods.
\nThe unbilled work done contract asset calculated is the best estimate of revenue allocated to completed performance obligations using
\ninput assumptions and constraints as detailed further in note 17. As the impacted RRSP contracts mature, there are reasonably possible
\nchanges to assumptions, such as engineering requirements to support programmes and the expected life of certain engines which could
\nlead to the unbilled work done contract asset on the Balance Sheet of \u00a3450 million (31 December 2021: \u00a3305 million) increasing to
\nbetween \u00a3480 million and \u00a3500 million. This would lead to recognition of additional revenue and profit in the next year of between \u00a330
\nmillion and \u00a350 million. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f19926": {
"value": "4. Revenue An analysis of the Group\u2019s revenue is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue recognised at a point in time
\nRevenue recognised over time
\n6,613
\n924
\n5,713
\n937
\nRevenue
7,537
6,650
\n(1) Restated for discontinued operations (note 1).
\nAs set out in the accounting policies in note 2, the Group has four primary revenue streams. There is little judgement or estimation in the
\nrevenue recognition of three of these areas; (i) sale of products and services, (ii) design and build and (iii) construction contracts. However,
\nin the fourth area, as disclosed in note 3d, there is estimation involved in accounting for certain RRSP contracts, which arise exclusively in
\nthe Aerospace business. RRSP contracts generally include the sale of products and services as well as certain aspects of design and build
\narrangements. Further details are set out below.
\n
\n
\n
\n172
\nRisk and revenue sharing partnerships
\nThe Group has approximately \u00a313 billion (31 December 2021: \u00a311 billion) in respect of contractual transaction prices including a
\nconstrained estimate of unbilled work done, on four engine programmes, out of a wider population of such programmes, which has been
\nallocated to contracted performance obligations not satisfied at 31 December 2022. These performance obligations will be satisfied and
\nrevenue will be recognised over a period of up to 30 years (2021: 30 years).
\nThe amount of revenue recognised from RRSP contracts during the year was \u00a3547 million, which includes an increase in the unbilled work
\ndone contract asset of \u00a3106 million (2021: \u00a3402 million, which included an increase in the unbilled work done contract asset of \u00a355 million).
\nWithin this there is revenue from the delivery of product which is recognised at a point in time of \u00a3517 million (2021: \u00a3377 million) and
\nrevenue from provision of service which is recognised over time of \u00a330 million (2021: \u00a325 million). Due to the nature of certain of these
\nRRSP arrangements, there is an associated unbilled work done contract asset including movements during the year which is disclosed in
\nnote 17.
\nThe nature of products and services delivered in RRSP contracts varies depending on the individual terms. Typically, they include a design
\nand development phase (which has been determined not to be a distinct performance obligation and so no revenue is recognised) and two
\nother phases where the Group does have performance obligations and earns revenue:
\ni)
Sale of structural OE engine components, such as turbine cases, principally to engine manufacturers, where revenue is recognised at
\na point in time; and
\nii)
Aftermarket support which can include: sale of spare parts where revenue is recognised at a point in time and stand ready services
\nfor life of engine obligations to maintain permanent technical, and other programme related, support functions. Obligations can occur
\nat any time during the engine life and include: engineering and technical support for engine configuration changes and provision of
\naftermarket inventory support solutions.
\nRRSP revenue recognised over time
\nThe nature of these RRSP contracts on long-term engine programmes means that, as a partner, the Aerospace business can share
\nrevenue earned from maintenance, repair and overh
aul services which are provided by the engine manufacturers (the Group\u2019s customers)
\nor their sub-contractors, but not the Group. The Group has a stand ready obligation to contribute to certain of the partnerships which
\ntypically results in the provision of services such as technical and other programme support activities over the whole life of the engine.
\nThese services occur over the life of the engine and due to the nature of compensation from customer arrangements, which is often flight
\nhour based, as we
ll as costs which are less predictable, revenue is recognised over time using the engine manufacturer\u2019s actual overhaul
\ncosts as an input method. This method is considered appropriate as it best reflects the customers\u2019 receipt and consumption of
benefit from
\nthe Group\u2019s stand ready performance obligation.
\nThe total contract revenue includes amounts from: expected sales of OE engine components, expected sales of spare parts and
\naftermarket revenue per delivered engine for stand ready services for the life of engine obligations. The total contract revenue is allocated
\nto all of the performance obligations.
\nThere has been \u00a319 million (2021: \u00a324 million) of revenue recognised from changes in assumptions which will also impact the revenue
\nallocation between future years. Assumption changes were made following commercial and operational progress by engine manufacturers
\nwith their customers, providing more certainty over future volumes for the RRSP partners. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRevenueExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f20023": {
"value": "5. Segment information
\nSegment information is presented in accordance with IFRS 8: Operating Segments which requires operating segments to be identified on
\nthe basis of internal reports about components of the Group that are regularly reported to the Group\u2019s Chief Operating Decisi
on Maker
\n(\u201cCODM\u201d), which has been deemed to be the Group\u2019s Board, in order to allocate resources to the segments and assess their performance.
\nFollowing the disposal of the Ergotron business during the year its results, which were previously included within the Other Industrial
\nsegment, are classified within discontinued operations and the comparative results for 2021 have been restated accordingly. In addition,
\nthe results of the Nortek Air Management, Brush and Nortek Control businesses, which were disposed of in the prior year, are also
\nclassified as discontinued operations.
\nThe operating segments are as follows:
\nAerospace
\u2013
a multi-technology global tier one supplier of both civil and defence airframes and engine structures.
\nAutomotive
\u2013
a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of
\ndriveline technologies, including electric vehicle components.
\nPowder Metallurgy
\u2013
a global leader in precision powder metal parts for the automotive and industrial sectors, as well as the production of
\npowder metal.
\nOther Industrial
\u2013
comprises the Group\u2019s
Hydrogen Technology business which was launched in the prior year.
\nIn addition, there is a central cost centre which is also reported to the Board. The central cost centre contains the Melrose Group head
\noffice costs and charges related to the divisional management long-term incentive plans.
\nReportable segment results include items directly attributable to a segment as well as those which can be allocated on a reasonable basis.
\nInter-
segment pricing is determined on an arm\u2019s length basis in a manner similar to transactions with third parties.
\nThe Group\u2019s geographical segments are determined by the location of the Group\u2019s no
n-current assets and, for revenue, the location of
\nexternal customers. Inter-segment sales are not material and have not been disclosed.
\nThe following tables present the results and certain asset and liability information regarding the Group\u2019s operating se
gments and central
\ncost centre for the year ended 31 December 2022.
\n
\n173
\n
\n
\na)
Segment revenues
\nThe Group derives its revenue from the transfer of goods and services over time and at a point in time. The Group has assessed that the
\ndisaggregation of revenue recognised from contracts with customers by operating segment is appropriate as this is the information
\nregularly reviewed by the CODM in evaluating financial performance. The Group also believes that presenting this disaggregation of
\nrevenue based on the timing of transfer of goods or services provides useful information as to the nature and timing of revenue from
\ncontracts with customers.
\nYear ended 31 December 2022
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted revenue
\nEquity accounted investments
\n2,957
\n(3)
\n4,211
\n(625)
\n1,022
\n(26)
\n1
\n\u2013
\n8,191
\n(654)
\nRevenue
2,954
3,586
996
1
7,537
\nTiming of revenue recognition
\nAt a point in time
\nOver time
\n2,030
\n924
\n3,586
\n\u2013
\n996
\n\u2013
\n1
\n\u2013
\n6,613
\n924
\nRevenue
2,954
3,586
996
1
7,537
\nYear ended 31 December 2021
\u2013
restated
\n(1)
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted revenue
\nEquity accounted investments
\n2,543
\n(5)
\n3,745
\n(581)
\n975
\n(27)
\n\u2013
\n\u2013
\n7,263
\n(613)
\nRevenue
2,538
3,164
948
\u2013
6,650
\nTiming of revenue recognition
\nAt a point in time
\nOver time
\n1,601
\n937
\n3,164
\n\u2013
\n948
\n\u2013
\n\u2013
\n\u2013
\n5,713
\n937
\nRevenue
2,538
3,164
948
\u2013
6,650
\n(1) Restated for discontinued operations (note 1).
\nb)
Segment operating profit
\nYear ended 31 December 2022
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n(1)
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted operating profit/(loss)
186
250
96
(14)
(38)
480
\nItems not included in adjusted operating profit
\n(2)
\n:
\nAmortisation of intangible assets acquired in
\nbusiness combinations
\nRestructuring costs
\nMovement in derivatives and associated
\nfinancial assets and liabilities
\nEquity accounted investments adjustments
\nImpairment of assets
\nMelrose equity-settled compensation scheme
\ncharges
\nNet release and changes in discount rates of fair
\nvalue items
\nAcquisition and disposal related gains and losses
\n(260)
\n(88)
\n21
\n\u2013
\n\u2013
\n\u2013
\n12
\n(5)
\n(147)
\n(37)
\n(7)
\n(29)
\n(20)
\n\u2013
\n5
\n(4)
\n(51)
\n(17)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n9
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n(100)
\n\u2013
\n\u2013
\n(15)
\n\u2013
\n20
\n(458)
\n(144)
\n(87)
\n(29)
\n(20)
\n(15)
\n26
\n11
\nOperating (loss)/profit
(134)
11
36
(14)
(135)
(236)
\nFinance costs
\nFinance income
\n(104)
\n33
\nLoss before tax
\nTax
\n(307)
\n84
\nLoss for the year from continuing operations
(223)
\n
\n\n
\n174
\n\nYear ended 31 December 2021
\u2013
restated
\n(3)
\nContinuing operations
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n(1)
\n\u00a3m
\nTotal
\n\u00a3m
\nAdjusted operating profit/(loss)
112
172
91
(7)
(51)
317
\nItems not included in adjusted operating profit
\n(2)
\n:
\nAmortisation of intangible assets acquired in
\nbusiness combinations
\nRestructuring costs
\nMovement in derivatives and associated
\nfinancial assets and liabilities
\nEquity accounted investments adjustments
\nMelrose equity-settled compensation scheme
\ncharges
\nNet release and changes in discount rates of fair
\nvalue items
\nAcquisition and disposal related gains and losses
\n(245)
\n(92)
\n4
\n\u2013
\n\u2013
\n23
\n2
\n(142)
\n(147)
\n(1)
\n(28)
\n\u2013
\n14
\n1
\n(49)
\n(18)
\n(3)
\n\u2013
\n\u2013
\n11
\n8
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(12)
\n(114)
\n\u2013
\n(19)
\n1
\n(4)
\n(436)
\n(269)
\n(114)
\n(28)
\n(19)
\n49
\n7
\nOperating (loss)/profit
(196)
(131)
40
(7)
(199)
(493)
\nFinance costs
\nFinance income
\n(169)
\n2
\nLoss before tax
\nTax
\n(660)
\n180
\nLoss for the year from continuing operations
(480)
\n(1) Corporate adjusted operating loss of \u00a338 million (2021: \u00a351 million), includes \u00a33 million (2021: \u00a317 million) of costs in respect of divisional management long-term incentive plans.
\n(2) Further details on adjusting items are discussed in note 6.
\n(3) Restated for discontinued operations (note 1).
\nc)
Segment total assets and liabilities
\nTotal assets
Total liabilities
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n6,692
\n4,711
\n1,791
\n17
\n776
\n6,267
\n4,608
\n1,669
\n14
\n847
\n2,517
\n2,033
\n421
\n5
\n1,843
\n2,231
\n2,042
\n405
\n\u2013
\n1,718
\nContinuing operations
13,987
13,405
6,819
6,396
\nDiscontinued operations
\u2013
617
\u2013
86
\nTotal
13,987
14,022
6,819
6,482
\n(1) Restated for discontinued operations (note 1).
\n
\n175
\n
\n
\nd)
Segment capital expenditure and depreciation
\nCapital expenditure
\n(1)
\nDepreciation of
\nowned assets
\n(1)
\nDepreciation of
\nleased assets
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n77
\n187
\n44
\n\u2013
\n\u2013
\n66
\n113
\n40
\n1
\n\u2013
\n123
\n184
\n53
\n\u2013
\n\u2013
\n122
\n198
\n51
\n\u2013
\n1
\n21
\n14
\n10
\n\u2013
\n1
\n24
\n15
\n9
\n\u2013
\n1
\nContinuing operations
308
220
360
372
46
49
\nDiscontinued operations
\u2013
14
1
20
1
8
\nTotal
308
234
361
392
47
57
\n(1) Including computer software and development costs. Capital expenditure excludes lease additions.
\n(2) Restated for discontinued operations (note 1).
\ne)
Geographical information
\nThe Group operates in various geographical areas around the world. The par
ent company\u2019s country of domicile is the UK and the Group\u2019s
\nrevenues and non-current assets in the rest of Europe and North America are also considered to be material.
\nThe Group\u2019s revenue from external customers and information about its segment assets (no
n-current assets excluding deferred tax assets;
\nnon-current derivative financial assets; non-current other receivables; and non-current retirement benefit surplus) by geographical location
\nare detailed below:
\nRevenue
\n(1)
\nfrom
\nexternal customers
Segment assets
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(2)
\n31 December
\n2021
\n\u00a3m
\nUK
\nRest of Europe
\nNorth America
\nOther
\n682
\n1,902
\n3,906
\n1,047
\n570
\n1,824
\n3,275
\n981
\n1,785
\n4,453
\n2,562
\n1,142
\n1,977
\n4,374
\n2,404
\n1,145
\nContinuing operations
7,537
6,650
9,942
9,900
\nDiscontinued operations
132
1,117
\u2013
534
\nTotal
7,669
7,767
9,942
10,434
\n(1) Revenue is presented by destination.
\n(2) Restated for discontinued operations (note 1). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOperatingSegmentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f20036": {
"value": "Aerospace \u2013
a multi-technology global tier one supplier of both civil and defence airframes and engine structures.
\nAutomotive
\u2013
a global technology and systems engineer which designs, develops, manufactures and integrates an extensive range of
\ndriveline technologies, including electric vehicle components.
\nPowder Metallurgy
\u2013
a global leader in precision powder metal parts for the automotive and industrial sectors, as well as the production of
\npowder metal.
\nOther Industrial
\u2013
comprises the Group\u2019s
Hydrogen Technology business which was launched in the prior year.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f20703": {
"value": "a) Operating profit
\nContinuing operations
Notes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nOperating loss
(236)
(493)
\nAmortisation of intangible assets acquired in business combinations
\nRestructuring costs
\nMovement in derivatives and associated financial assets and liabilities
\nEquity accounted investments adjustments
\nImpairment of assets
\nMelrose equity-settled compensation scheme charges
\nNet release and changes in discount rates of fair value items
\nAcquisition and disposal related gains and losses
\na
\nb
\nc
\nd
\ne
\nf
\ng
\nh
\n458
\n144
\n87
\n29
\n20
\n15
\n(26)
\n(11)
\n436
\n269
\n114
\n28
\n\u2013
\n19
\n(49)
\n(7)
\nTotal adjustments to operating loss
716
810
\nAdjusted operating profit
480
317
\n(1) Restated for discontinued operations (note 1).
\n
\n
\n
\n176
\na.
The amortisation charge on intangible assets acquired in business combinations of \u00a3458 million (2021: \u00a3436 million) is excluded from
\nadjusted results due to its non-trading nature and to enable comparison with companies that grow organically. However, where
\nintangible assets are trading in nature, such as computer software and development costs, the amortisation is not excluded from
\nadjusted results.
\nb.
Restructuring and other associated costs in the year totalled \u00a3144 million (2021: \u00a3269 million), including a write down of assets in
\naffected sites of \u00a311 million (2021: \u00a3112 million). These are shown as adjusting items due to their size and non-trading nature and
\nduring the year ended 31 December 2022 these included:
\n\u2022
A charge of \u00a388 million (2021: \u00a392 million) within the Aerospace division primarily relating to the continuation of significant
\nrestructuring projects, necessary for the Aerospace business to achieve its full potential target operating margins. These included
\nfurther progress on European footprint consolidations in both the Civil and Engines businesses, which commenced in 2021 and are
\nexpected to materially conclude in 2023. In addition, further progress has been made in North America on multi-site restructuring
\nprogrammes across all three Aerospace sub-segments. There are three significant ongoing multi-year restructuring programmes,
\nimpacting multiple sites across the Aerospace division, incurring a combined charge of \u00a379 million in the year. Since commencement
\nin 2020, the cumulative charge on these three restructuring programmes at 31 December 2022 was \u00a3155 million (31 December 2021:
\n\u00a376 million, 31 December 2020: \u00a37 million). As at 31 December 2022, these projects on average are approximately 75% complete
\nand are expected to be substantially complete by the end of 2023. In addition to the remaining charges to be incurred on these
\nprojects, \u00a340 million is included in restructuring provisions at 31 December 2022 to be settled in cash in the next twelve months.
\n\u2022
A charge of \u00a337 million (2021: \u00a3147 million) within the Automotive division. These included multiple restructuring projects which
\nconcluded within the year, including two significant footprint consolidation actions in Europe, which commenced last year. In addition,
\nrestructuring costs were incurred in North America, continuing the movement of production from high to low cost countries.
\n\u2022
A charge of \u00a317 million (2021: \u00a318 million) within the Powder Metallurgy division. Multiple restructuring projects in the business
\nconcluded within the year, including the closure of a factory in Canada.
\n\u2022
A net charge of \u00a32 million (2021: \u00a312 million) within the central cost centre.
\nc.
Movements in the fair value of derivative financial instruments (primarily forward foreign currency exchange contracts where hedge
\naccounting is not applied) entered into to mitigate the potential volatility of future cash flows, on long-term foreign currency customer
\nand supplier contracts, including foreign exchange movements on the associated financial assets and liabilities are shown as an
\nadjusting item because of its volatility and size. This totalled a charge of \u00a387 million (2021: \u00a3114 million) in the year.
\nd.
The Group has a number of equity accounted investments (\u201cEAIs\u201d) in which it does not hold full control, the largest of which
is a 50%
\ninterest in Shanghai GKN HUAYU Driveline Systems Co Limited
(\u201cSDS\u201d), within the Automotive business. The EAIs
generated \u00a3654
\nmillion (2021: \u00a3613 million) of revenue in the year, which is not included in the statutory results but is shown within adjusted revenue so
\nas not to distort the operating margins reported in the businesses when the adjusted operating profit earned from these EAIs is
\nincluded.
\nIn addition, the profits and losses of EAIs, which are shown after amortisation of acquired intangible assets, interest and tax in the
\nstatutory results, are adjusted to show the adjusted operating profit consistent with the adjusted operating profits of the subsidiaries of
\nthe Group. The revenue and profit of EAIs are adjusted because they are considered to be significant in size and are important in
\nassessing the performance of the business.
\ne.
A write down of assets of \u00a320 million (2021: \u00a3nil), has been recognised as a result of exiting any direct trading links with Russian
\noperations as a result of the conflict in Ukraine. The write down of these assets are predominantly within the Automotive division and
\nare shown as an adjusting item due to their non-trading nature and size.
\nf.
The charge for the Melrose equity-settled Employee Share
Scheme, including its associated employer\u2019s tax charge, of \u00a3
15 million
\n(2021: \u00a319 million) is excluded from adjusted results due to its size and volatility. The shares that would be issued, based on the
\nScheme\u2019s current value at the end of the reporting period, are included in the calculation of the adjusted diluted earnings p
er share,
\nwhich the Board considers to be a key measure of performance.
\ng.
The net release of fair value items in the year of \u00a326 million (2021: \u00a349 million) where items have been resolved for more favourable
\namounts than first anticipated are shown as an adjusting item, avoiding positively distorting adjusted operating profit. During the year
\nthis included a net release of \u00a311 million in respect of loss-making contract provisions, where either contractual terms have been
\nrenegotiated with the relevant customer or operational efficiencies have been identified and demonstrated for a sustained period.
\nh.
An acquisition and disposal related net credit of \u00a311 million (2021: \u00a37 million) arose in the year which primarily includes the net profits
\non disposal of two disused properties, a loss on disposal of a non-core Aerospace business and the initial costs incurred in respect of
\nthe proposed demerger. These items are excluded from adjusted results due to their non-trading nature.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f20986": {
"value": "7. Expenses Continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nNet operating expenses comprise:
\nSelling and distribution costs
\nAdministration expenses
\n(2)
\n(31)
\n(1,333)
\n(28)
\n(1,403)
\nTotal net operating expenses
(1,364)
(1,431)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes \u00a3687 million (2021: \u00a3782 million) of adjusting items (note 6).
\n
\n
\n
\n178
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nOperating loss is stated after charging/(crediting):
\nCost of inventories
\nAmortisation of intangible assets acquired in business combinations
\nDepreciation and impairment of property, plant and equipment
\nAmortisation and impairment of computer software and development costs
\nLease expense
\n(2)
\nStaff costs
\nResearch and development costs
\n(3)
\nProfit on disposal of property, plant and equipment
\n(4)
\nExpense of writing down inventory to net realisable value
\nReversals of previous write-downs of inventory
\nImpairment recognised on trade receivables
\nImpairment reversed on trade receivables
\n6,458
\n458
\n374
\n59
\n3
\n2,127
\n198
\n(42)
\n59
\n(55)
\n6
\n(7)
\n5,750
\n436
\n479
\n54
\n4
\n1,986
\n193
\n(3)
\n76
\n(67)
\n2
\n(3)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes costs relating to short-term leases of \u00a32 million (2021: \u00a32 million), low value leases of \u00a31 million (2021: \u00a31 million) and variable lease payments not included in lease liabilities of
\n\u00a3nil (2021: \u00a31 million).
\n(3) Includes staff costs totalling \u00a3145 million (2021: \u00a3136 million).
\n(4) Includes the profit from the disposal of a corporate property, held for sale at 30 June 2022.
\nThe analysis of auditor\u2019s remuneration is as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFees payable to the Company\u2019s auditor for the audit of the Company\u2019s annual accounts
6.8
5.9
\nFees payable to the Company\u2019s auditor and their associates for other audit services to the Group:
\nThe audit of the Company\u2019s subsidiaries
\nNon-
statutory audit of certain of the Company\u2019s businesses
\n1.1
\n1.9
\n1.0
\n3.8
\nTotal audit fees
9.8
10.7
\nAudit-related assurance services:
\nReview of the half year interim statement
\nOther assurance services
\n0.4
\n0.2
\n0.4
\n0.5
\nTotal audit-related assurance services
0.6
0.9
\nTotal audit and audit-related assurance services
10.4
11.6
\nTax services
\nReporting accountant services
\n\u2013
\n0.9
\n\u2013
\n0.1
\nTotal audit and non-audit fees
11.3
11.7
\nDetails of the Company\u2019s policy on the use of the auditors for non
-
audit services and how auditor\u2019s independence and objectivity were
\nsafeguarded are set out in the Audit Committee report on page 110 to 115. No services were provided pursuant to contingent fee
\narrangements.
\nAn analysis of staff costs and employee numbers is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nStaff costs during the year (including executive Directors)
\nWages and salaries
\n(2)
\nSocial security costs
\n(3)
\nPension costs (note 24)
\n\u2013
defined benefit plans
\n\u2013
defined contribution plans
\nShare-based compensation expense
\n(4)
\n(note 23)
\n1,746
\n287
\n9
\n69
\n16
\n1,613
\n281
\n8
\n68
\n16
\nTotal staff costs
2,127
1,986
\n(1) Restated for discontinued operations (note 1).
\n(2) Wages and salaries for discontinued operations was \u00a318 million in the period prior to disposal (2021: \u00a3216 million).
\n(3) Includes an
employer\u2019s tax
credit of \u00a31 million (2021: charge of \u00a33 million) on the change in value of the employee share plans, shown as an adjusting item (note 6).
\n(4) Shown as an adjusting item (note 6).
\n
\n179
\n
\n
\nYear ended
\n31 December
\n2022
\nNumber
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\nNumber
\nAverage monthly number of persons employed (including executive Directors)
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n14,466
\n18,520
\n5,672
\n65
\n49
\n14,316
\n19,141
\n6,080
\n23
\n50
\nContinuing operations
38,772
39,610
\nDiscontinued operations
1,187
9,048
\nTotal average number of persons employed
39,959
48,658
\n(1) Restated for discontinued operations (note 1).
\nAn analysis of finance costs and income is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
\n(3) These are shown as adjusting items (note 6). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f20987": {
"value": "7. Expenses Continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nNet operating expenses comprise:
\nSelling and distribution costs
\nAdministration expenses
\n(2)
\n(31)
\n(1,333)
\n(28)
\n(1,403)
\nTotal net operating expenses
(1,364)
(1,431)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes \u00a3687 million (2021: \u00a3782 million) of adjusting items (note 6).
\n
\n
\n
\n178
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nOperating loss is stated after charging/(crediting):
\nCost of inventories
\nAmortisation of intangible assets acquired in business combinations
\nDepreciation and impairment of property, plant and equipment
\nAmortisation and impairment of computer software and development costs
\nLease expense
\n(2)
\nStaff costs
\nResearch and development costs
\n(3)
\nProfit on disposal of property, plant and equipment
\n(4)
\nExpense of writing down inventory to net realisable value
\nReversals of previous write-downs of inventory
\nImpairment recognised on trade receivables
\nImpairment reversed on trade receivables
\n6,458
\n458
\n374
\n59
\n3
\n2,127
\n198
\n(42)
\n59
\n(55)
\n6
\n(7)
\n5,750
\n436
\n479
\n54
\n4
\n1,986
\n193
\n(3)
\n76
\n(67)
\n2
\n(3)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes costs relating to short-term leases of \u00a32 million (2021: \u00a32 million), low value leases of \u00a31 million (2021: \u00a31 million) and variable lease payments not included in lease liabilities of
\n\u00a3nil (2021: \u00a31 million).
\n(3) Includes staff costs totalling \u00a3145 million (2021: \u00a3136 million).
\n(4) Includes the profit from the disposal of a corporate property, held for sale at 30 June 2022.
\nThe analysis of auditor\u2019s remuneration is as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFees payable to the Company\u2019s auditor for the audit of the Company\u2019s annual accounts
6.8
5.9
\nFees payable to the Company\u2019s auditor and their associates for other audit services to the Group:
\nThe audit of the Company\u2019s subsidiaries
\nNon-
statutory audit of certain of the Company\u2019s businesses
\n1.1
\n1.9
\n1.0
\n3.8
\nTotal audit fees
9.8
10.7
\nAudit-related assurance services:
\nReview of the half year interim statement
\nOther assurance services
\n0.4
\n0.2
\n0.4
\n0.5
\nTotal audit-related assurance services
0.6
0.9
\nTotal audit and audit-related assurance services
10.4
11.6
\nTax services
\nReporting accountant services
\n\u2013
\n0.9
\n\u2013
\n0.1
\nTotal audit and non-audit fees
11.3
11.7
\nDetails of the Company\u2019s policy on the use of the auditors for non
-
audit services and how auditor\u2019s independence and objectivity were
\nsafeguarded are set out in the Audit Committee report on page 110 to 115. No services were provided pursuant to contingent fee
\narrangements.
\nAn analysis of staff costs and employee numbers is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nStaff costs during the year (including executive Directors)
\nWages and salaries
\n(2)
\nSocial security costs
\n(3)
\nPension costs (note 24)
\n\u2013
defined benefit plans
\n\u2013
defined contribution plans
\nShare-based compensation expense
\n(4)
\n(note 23)
\n1,746
\n287
\n9
\n69
\n16
\n1,613
\n281
\n8
\n68
\n16
\nTotal staff costs
2,127
1,986
\n(1) Restated for discontinued operations (note 1).
\n(2) Wages and salaries for discontinued operations was \u00a318 million in the period prior to disposal (2021: \u00a3216 million).
\n(3) Includes an
employer\u2019s tax
credit of \u00a31 million (2021: charge of \u00a33 million) on the change in value of the employee share plans, shown as an adjusting item (note 6).
\n(4) Shown as an adjusting item (note 6).
\n
\n179
\n
\n
\nYear ended
\n31 December
\n2022
\nNumber
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\nNumber
\nAverage monthly number of persons employed (including executive Directors)
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n14,466
\n18,520
\n5,672
\n65
\n49
\n14,316
\n19,141
\n6,080
\n23
\n50
\nContinuing operations
38,772
39,610
\nDiscontinued operations
1,187
9,048
\nTotal average number of persons employed
39,959
48,658
\n(1) Restated for discontinued operations (note 1).
\nAn analysis of finance costs and income is as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
\n(3) These are shown as adjusting items (note 6). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21099": {
"value": "The analysis of auditor\u2019s remuneration is as follows: Year ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFees payable to the Company\u2019s auditor for the audit of the Company\u2019s annual accounts
6.8
5.9
\nFees payable to the Company\u2019s auditor and their associates for other audit services to the Group:
\nThe audit of the Company\u2019s subsidiaries
\nNon-
statutory audit of certain of the Company\u2019s businesses
\n1.1
\n1.9
\n1.0
\n3.8
\nTotal audit fees
9.8
10.7
\nAudit-related assurance services:
\nReview of the half year interim statement
\nOther assurance services
\n0.4
\n0.2
\n0.4
\n0.5
\nTotal audit-related assurance services
0.6
0.9
\nTotal audit and audit-related assurance services
10.4
11.6
\nTax services
\nReporting accountant services
\n\u2013
\n0.9
\n\u2013
\n0.1
\nTotal audit and non-audit fees
11.3
11.7
\nDetails of the Company\u2019s policy on the use of the auditors for non
-
audit services and how auditor\u2019s independence and objectivity were
\nsafeguarded are set out in the Audit Committee report on page 110 to 115. No services were provided pursuant to contingent fee
\narrangements.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21152": {
"value": "An analysis of staff costs and employee numbers is as follows: Continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nStaff costs during the year (including executive Directors)
\nWages and salaries
\n(2)
\nSocial security costs
\n(3)
\nPension costs (note 24)
\n\u2013
defined benefit plans
\n\u2013
defined contribution plans
\nShare-based compensation expense
\n(4)
\n(note 23)
\n1,746
\n287
\n9
\n69
\n16
\n1,613
\n281
\n8
\n68
\n16
\nTotal staff costs
2,127
1,986
\n(1) Restated for discontinued operations (note 1).
\n(2) Wages and salaries for discontinued operations was \u00a318 million in the period prior to disposal (2021: \u00a3216 million).
\n(3) Includes an
employer\u2019s tax
credit of \u00a31 million (2021: charge of \u00a33 million) on the change in value of the employee share plans, shown as an adjusting item (note 6).
\n(4) Shown as an adjusting item (note 6).
\n
\n179
\n
\n
\nYear ended
\n31 December
\n2022
\nNumber
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\nNumber
\nAverage monthly number of persons employed (including executive Directors)
\nAerospace
\nAutomotive
\nPowder Metallurgy
\nOther Industrial
\nCorporate
\n14,466
\n18,520
\n5,672
\n65
\n49
\n14,316
\n19,141
\n6,080
\n23
\n50
\nContinuing operations
38,772
39,610
\nDiscontinued operations
1,187
9,048
\nTotal average number of persons employed
39,959
48,658
\n(1) Restated for discontinued operations (note 1).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21266": {
"value": "Continuing operations Year ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
(3) These are shown as adjusting items (note 6).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21267": {
"value": "Continuing operations Year ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
(3) These are shown as adjusting items (note 6).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21268": {
"value": "Continuing operations Year ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nFinance costs and income
\nInterest on bank loans and overdrafts
\n(2)
\nAmortisation of costs of raising finance
\nNet interest cost on pensions
\nLease interest
\nUnwind of discount on provisions
\nFair value changes on cross-currency swaps
\n(3)
\n(81)
\n(10)
\n(5)
\n(9)
\n(2)
\n3
\n(138)
\n(10)
\n(8)
\n(14)
\n(2)
\n3
\nTotal finance costs
(104)
(169)
\nInterest receivable
\nBond redemption gains
\n(3)
\n9
\n24
\n2
\n\u2013
\nTotal finance income
33
2
\nTotal net finance costs
(71)
(167)
\n(1) Restated for discontinued operations (note 1).
\n(2) Includes a \u00a3nil (2021: \u00a345 million) charge in respect of the settlement of interest rate swaps which are shown as an adjusting item (note 6).
(3) These are shown as adjusting items (note 6).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21328": {
"value": "8. Tax Continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAnalysis of tax credit in the year:
\nCurrent tax
\nCurrent year tax charge
\nAdjustments in respect of prior years
\n73
\n(9)
\n53
\n(1)
\nTotal current tax charge
64
52
\nDeferred tax
\nOrigination and reversal of temporary differences
\nAdjustments in respect of prior years
\nTax on the change in value of derivative financial instruments
\nAdjustments to deferred tax attributable to changes in tax rates
\nNon-recognition of deferred tax
\nRecognition of previously unrecognised deferred tax assets
\n(118)
\n(20)
\n(24)
\n1
\n13
\n\u2013
\n(125)
\n(4)
\n(27)
\n(5)
\n4
\n(75)
\nTotal deferred tax credit
(148)
(232)
\nTax credit on continuing operations
(84)
(180)
\nTax charge on discontinued operations
5
61
\nTotal tax credit for the year
(79)
(119)
\nAnalysis of tax credit on continuing operations in the year:
\u00a3m
\u00a3m
\nTax charge in respect of adjusted profit before tax
\nTax credit recognised as an adjusting item
\n85
\n(169)
\n43
\n(223)
\nTax credit on continuing operations
(84)
(180)
\n(1) Restated for discontinued operations (note 1).
\n
\n
\n
\n180
\nThe tax
charge of \u00a385 million (2021: \u00a343 million) arising on adjusted profit before tax of \u00a3384 million (2021: \u00a3194 million), results in an
\neffective tax rate of 22.1% (2021: 22.2%).
\nThe \u00a3169 million (2021: \u00a3223 million) tax credit recognised as an adjusting item includes a credit of \u00a3170 million (2021: \u00a3176 million) in
\nrespect of tax credits on adjustments to loss before tax of \u00a3691 million (2021: \u00a3854 million), \u00a39 million (2021: \u00a39 million) in respect of the
\ntax on equity accounted investments, a charge of \u00a310 million (2021: \u00a332 million) in respect of internal Group restructuring and \u00a3nil (2021:
\ncredit of \u00a370 million) in respect of additional deferred tax asset recognition from legislative changes.
\nThe tax credit for the year for continuing and discontinued operations can be reconciled to the (loss)/profit before tax per the Income
\nStatement as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\n(Loss)/profit before tax:
\nContinuing operations
\nDiscontinued operations (note 13)
\n(307)
\n(59)
\n(660)
\n45
\n(366)
(615)
\nTax credit on loss before tax at the weighted average rate of 25.0% (2021: 23.0%)
\nTax effect of:
\nDisallowable expenses and other permanent differences within adjusted profit
\nDisallowable items included within adjusting items
\nTemporary differences not recognised in deferred tax
\nRecognition of previously unrecognised deferred tax assets
\nTax credits, withholding taxes and other rate differences
\nAdjustments in respect of prior years
\nTax charge classified within adjusting items
\u2013
continuing operations
\nTax charge classified within adjusting items
\u2013
discontinued operations
\nEffect of changes in tax rates
\n(91)
\n4
\n(2)
\n13
\n\u2013
\n15
\n(29)
\n10
\n\u2013
\n1
\n(141)
\n(2)
\n31
\n4
\n(75)
\n11
\n(5)
\n32
\n31
\n(5)
\nTotal tax credit for the year
(79)
(119)
\n(1) Restated for discontinued operations (note 1).
\nThe reconciliation has been performed at a blended Group tax rate of 25.0% (2021: 23.0%) which represents the weighted average of the
\ntax rates applying to profits and losses in the jurisdictions in which those results arose in the year.
\nTax (credits)/charges included in Other Comprehensive Income are as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nDeferred tax on retirement benefit obligations
\nDeferred tax on hedge relationship gains and losses
\n1
\n(5)
\n71
\n19
\nTotal (credit)/charge for the year
(4)
90
\nFranked investment income
\u2013
litigation
\nSince 2003, certain entities in the Group have been involved in litigation with HMRC in respect of various advance corporate tax payments
\nand corporate tax paid on certain foreign dividends which, in their view, were levied by HMRC in breach of the Group\u2019s
EU community law
\nrights. The continuing complexity of the case and uncertainty over the issues raised means that it is not possible to predict the final
\noutcome of the litigation with any reasonable degree of certainty.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21329": {
"value": "8. Tax Continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAnalysis of tax credit in the year:
\nCurrent tax
\nCurrent year tax charge
\nAdjustments in respect of prior years
\n73
\n(9)
\n53
\n(1)
\nTotal current tax charge
64
52
\nDeferred tax
\nOrigination and reversal of temporary differences
\nAdjustments in respect of prior years
\nTax on the change in value of derivative financial instruments
\nAdjustments to deferred tax attributable to changes in tax rates
\nNon-recognition of deferred tax
\nRecognition of previously unrecognised deferred tax assets
\n(118)
\n(20)
\n(24)
\n1
\n13
\n\u2013
\n(125)
\n(4)
\n(27)
\n(5)
\n4
\n(75)
\nTotal deferred tax credit
(148)
(232)
\nTax credit on continuing operations
(84)
(180)
\nTax charge on discontinued operations
5
61
\nTotal tax credit for the year
(79)
(119)
\nAnalysis of tax credit on continuing operations in the year:
\u00a3m
\u00a3m
\nTax charge in respect of adjusted profit before tax
\nTax credit recognised as an adjusting item
\n85
\n(169)
\n43
\n(223)
\nTax credit on continuing operations
(84)
(180)
\n(1) Restated for discontinued operations (note 1).
\n
\n
\n
\n180
\nThe tax
charge of \u00a385 million (2021: \u00a343 million) arising on adjusted profit before tax of \u00a3384 million (2021: \u00a3194 million), results in an
\neffective tax rate of 22.1% (2021: 22.2%).
\nThe \u00a3169 million (2021: \u00a3223 million) tax credit recognised as an adjusting item includes a credit of \u00a3170 million (2021: \u00a3176 million) in
\nrespect of tax credits on adjustments to loss before tax of \u00a3691 million (2021: \u00a3854 million), \u00a39 million (2021: \u00a39 million) in respect of the
\ntax on equity accounted investments, a charge of \u00a310 million (2021: \u00a332 million) in respect of internal Group restructuring and \u00a3nil (2021:
\ncredit of \u00a370 million) in respect of additional deferred tax asset recognition from legislative changes.
\nThe tax credit for the year for continuing and discontinued operations can be reconciled to the (loss)/profit before tax per the Income
\nStatement as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\n(Loss)/profit before tax:
\nContinuing operations
\nDiscontinued operations (note 13)
\n(307)
\n(59)
\n(660)
\n45
\n(366)
(615)
\nTax credit on loss before tax at the weighted average rate of 25.0% (2021: 23.0%)
\nTax effect of:
\nDisallowable expenses and other permanent differences within adjusted profit
\nDisallowable items included within adjusting items
\nTemporary differences not recognised in deferred tax
\nRecognition of previously unrecognised deferred tax assets
\nTax credits, withholding taxes and other rate differences
\nAdjustments in respect of prior years
\nTax charge classified within adjusting items
\u2013
continuing operations
\nTax charge classified within adjusting items
\u2013
discontinued operations
\nEffect of changes in tax rates
\n(91)
\n4
\n(2)
\n13
\n\u2013
\n15
\n(29)
\n10
\n\u2013
\n1
\n(141)
\n(2)
\n31
\n4
\n(75)
\n11
\n(5)
\n32
\n31
\n(5)
\nTotal tax credit for the year
(79)
(119)
\n(1) Restated for discontinued operations (note 1).
\nThe reconciliation has been performed at a blended Group tax rate of 25.0% (2021: 23.0%) which represents the weighted average of the
\ntax rates applying to profits and losses in the jurisdictions in which those results arose in the year.
\nTax (credits)/charges included in Other Comprehensive Income are as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nDeferred tax on retirement benefit obligations
\nDeferred tax on hedge relationship gains and losses
\n1
\n(5)
\n71
\n19
\nTotal (credit)/charge for the year
(4)
90
\nFranked investment income
\u2013
litigation
\nSince 2003, certain entities in the Group have been involved in litigation with HMRC in respect of various advance corporate tax payments
\nand corporate tax paid on certain foreign dividends which, in their view, were levied by HMRC in breach of the Group\u2019s
EU community law
\nrights. The continuing complexity of the case and uncertainty over the issues raised means that it is not possible to predict the final
\noutcome of the litigation with any reasonable degree of certainty.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21524": {
"value": "9. Dividends Year ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nInterim dividend for the year ended 31 December 2022 of 0.825p
\nFinal dividend for the year ended 31 December 2021 of 1.0p
\nInterim dividend for the year ended 31 December 2021 of 0.75p
\nFinal dividend for the year ended 31 December 2020 of 0.75p
\n33
\n44
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n33
\n36
\n77
69
\nA second interim dividend for the year ended 31 December 2022 of 1.5p per share totalling \u00a361 million is declared by the Board. The
\nsecond interim dividend of 1.5p per share was declared by the Board on 2 March 2023 and in accordance with IAS 10: Events after the
\nreporting period, has not been included as a liability in the Consolidated Financial Statements.
\n
\n181
\n
\n
\nDuring the year, the Group undertook a \u00a3500 million share buy back programme (note 1). In the prior year, a return of capital of 15p per
\nordinary share, totalling \u00a3729 million was paid. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDividendsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21580": {
"value": "10. Earnings per share
\nEarnings attributable to owners of the parent
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nEarnings for basis of earnings per share
\nLess: earnings from discontinued operations (note 13)
\n(308)
\n80
\n833
\n(1,317)
\nEarnings for basis of earnings per share from continuing operations
(228)
(484)
\nYear ended
\n31 December
\n2022
\nNumber
\nYear ended
\n31 December
\n2021
\nNumber
\nWeighted average number of ordinary shares for the purposes of basic earnings per share (million)
\nFurther shares for the purposes of diluted earnings per share (million)
\n4,218
\n\u2013
\n4,695
\n\u2013
\nWeighted average number of ordinary shares for the purposes of diluted earnings per share (million)
4,218
4,695
\nOn 9 June 2022, the Group commenced a \u00a3500 million share buyback programme, which completed on 1 August 2022 with 318,003,512
\nshares repurchased and subsequently cancelled.
\nEarnings per share
\nYear ended
\n31 December
\n2022
\npence
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\npence
\nBasic earnings per share
\nFrom continuing and discontinued operations
\nFrom continuing operations
\nFrom discontinued operations
\n(7.3)
\n(5.4)
\n(1.9)
\n17.7
\n(10.3)
\n28.0
\nDiluted earnings per share
\nFrom continuing and discontinued operations
\nFrom continuing operations
\nFrom discontinued operations
\n(7.3)
\n(5.4)
\n(1.9)
\n17.7
\n(10.3)
\n28.0
\nAdjusted earnings from continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAdjusted earnings for the basis of adjusted earnings per share
\n(2)
\n294
147
\nAdjusted earnings per share from continuing operations
\nYear ended
\n31 December
\n2022
\npence
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\npence
\nAdjusted basic earnings per share
\nAdjusted diluted earnings per share
\n7.0
\n7.0
\n3.1
\n3.1
\n(1) Restated for discontinued operations (note 1).
\n(2) Adjusted earnings for the year ended 31 December 2022 comprises adjusted profit after tax of \u00a3299 million (2021: \u00a3151 million) (note 6), net of an allocation to non-controlling interests of \u00a35
\nmillion (2021: \u00a34 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21710": {
"value": "11. Goodwill and other intangible assets
\nGoodwill
\n\u00a3m
\nCustomer
\nrelationships
\nand contracts
\n\u00a3m
\nBrands and
\nintellectual
\nproperty
\n\u00a3m
\nOther
\n(1)
\n\u00a3m
\nComputer
\nsoftware
\n\u00a3m
\nDevelopment
\ncosts
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n4,023
\n\u2013
\n\u2013
\n(778)
\n(330)
\n(65)
\n4,916
\n\u2013
\n\u2013
\n(331)
\n(120)
\n(59)
\n776
\n\u2013
\n\u2013
\n(250)
\n(37)
\n(9)
\n1,045
\n\u2013
\n\u2013
\n(3)
\n(26)
\n(5)
\n59
\n6
\n(1)
\n(14)
\n\u2013
\n(1)
\n529
\n13
\n(3)
\n(11)
\n\u2013
\n(6)
\n11,348
\n19
\n(4)
\n(1,387)
\n(513)
\n(145)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(4)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n2,850
\n\u2013
\n1
\n\u2013
\n(455)
\n189
\n4,406
\n\u2013
\n\u2013
\n\u2013
\n(122)
\n386
\n480
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n13
\n1,011
\n\u2013
\n3
\n\u2013
\n\u2013
\n33
\n49
\n6
\n\u2013
\n(2)
\n\u2013
\n3
\n522
\n21
\n\u2013
\n(4)
\n\u2013
\n31
\n9,318
\n27
\n4
\n(6)
\n(677)
\n655
\nAt 31 December 2022
2,585
4,670
393
1,047
56
570
9,321
\nAmortisation and impairment
\nAt 1 January 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n(383)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n214
\n165
\n4
\n(1,083)
\n\u2013
\n(339)
\n\u2013
\n\u2013
\n143
\n42
\n11
\n(198)
\n\u2013
\n(30)
\n\u2013
\n\u2013
\n117
\n13
\n3
\n(306)
\n\u2013
\n(107)
\n\u2013
\n\u2013
\n3
\n26
\n1
\n(31)
\n(8)
\n\u2013
\n\u2013
\n1
\n7
\n\u2013
\n2
\n(149)
\n(46)
\n\u2013
\n(3)
\n\u2013
\n2
\n\u2013
\n1
\n(2,150)
\n(54)
\n(476)
\n(3)
\n1
\n486
\n246
\n22
\nAt 31 December 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(1,226)
\n\u2013
\n(338)
\n\u2013
\n\u2013
\n71
\n(105)
\n(95)
\n\u2013
\n(24)
\n\u2013
\n\u2013
\n35
\n(9)
\n(383)
\n\u2013
\n(104)
\n\u2013
\n\u2013
\n\u2013
\n(9)
\n(29)
\n(7)
\n\u2013
\n\u2013
\n2
\n\u2013
\n(2)
\n(195)
\n(43)
\n\u2013
\n(9)
\n4
\n\u2013
\n(9)
\n(1,928)
\n(50)
\n(466)
\n(9)
\n6
\n106
\n(134)
\nAt 31 December 2022
\u2013
(1,598)
(93)
(496)
(36)
(252)
(2,475)
\nNet book value
\nAt 31 December 2022
2,585
3,072
300
551
20
318
6,846
\nAt 31 December 2021
2,850
3,180
385
628
20
327
7,390
\n(1) Other includes technology and order backlog intangible assets recognised on acquisitions.
\n(2) Disposal of businesses in 2021 relate to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(4) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(5) Includes \u00a39 million within impairment of assets (2021: \u00a33 million within restructuring costs) shown as adjusting items (note 6).
\nThe goodwill generated as a result of major acquisitions represents the premium paid in excess of the fair value of all net assets, including
\nintangible assets, identified at the point of acquisition. The carrying value of goodwill includes a premium, paid in order to secure
\nshareholder agreement to the business combination, that is less than the value that the Directors believed could be added to the acquired
\nbusinesses through the application of their specialist turnaround experience.
\nThe goodwill arising on bolt-on acquisitions is attributable to the anticipated profitability and cash flows arising from the businesses
\nacquired, synergies as a result of the complementary nature of the business with existing Melrose businesses, the assembled workforce,
\ntechnical expertise, knowhow, market share and geographical advantages afforded to the Group.
\nThe future improvements applied to the acquired businesses, achieved through a combination of revised strategic direction, operational
\nimprovements and investment, are expected to result in improved profitability of the acquired businesses during the period of ownership
\nand are also expected to result in enhanced disposal proceeds when the acquired businesses are ultimately disposed. The combined value
\nachieved from these improvements is expected to be in excess of the value of goodwill acquired.
\nGoodwill acquired in business combinations, net of impairment, has been allocated to the businesses, each of which comprises several
\ncash-
generating units (\u201cCGUs\u201d).
\n
\n183
\n
\n
\nGoodwill
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n990
\n1,056
\n539
\n933
\n1,001
\n507
\nContinuing operations
2,585
2,441
\nDiscontinued operations
\u2013
409
\nTotal
2,585
2,850
\n(1) Restated for discontinued operations (note 1).
\nImpairment testing
\nThe Group tests goodwill annually or more frequently if there are indications that goodwill might be impaired. The date of the annual
\nimpairment test is 31 October, aligned with internal forecasting and review processes. In accordance with IAS 36: Impairment of assets, the
\nGroup assesses goodwill based on the recoverable amount, being the higher of the value in use basis and the fair value less costs to sell
\nbasis. Due to the nature of the groups of CGUs within Melrose\u2019s strategic life cycle of \u201cBuy, Improve, Sell\u201d
, the fair value less costs to sell
\nmethodology has been used as the improvement phase is ongoing.
\nFair value less costs to sell calculations have been used to determine the recoverable amount of goodwill and other relevant net assets
\nallocated to the Aerospace, Automotive and Powder Metallurgy groups of CGUs. When applying the fair value less costs to sell
\nmethodology, it has been difficult to assess a sale value using observable market inputs (level 1) or inputs based on market evidence (level
\n2) in the current environment and so unobservable inputs (level 3) have been used. A combination of discounted cash flows and EBITDA
\nmultiple valuations have been used to establish fair values for each of the groups of CGUs.
\nUnder IAS 36, the benefits from future uncommitted restructuring plans are permitted when applying the fair value less costs to sell basis,
\nto the extent that similar actions would be carried out by a market participant.
\nBased on impairment testing completed no impairment was identified in respect of any of the groups of CGUs. The COVID-19 pandemic
\nhad a significant effect on global end markets in which certain of the Group\u2019s businesses operate and whilst these markets co
ntinue to
\nrecover, there have been consequential impacts of disrupted supply chains, interest rate rises and other inflationary pressure on input
\ncosts. Implications on the levels of headroom are shown in the sensitivity analysis which has been provided in respect of reasonably
\npossible changes to key assumptions.
\nSignificant assumptions and estimates
\nThe basis of impairment tests and the key assumptions are set out in the tables below:
\nGroups of CGUs
\u2013
fair value less costs to sell
\n31 December 2022
31 December 2021
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n10.75%
\n11.25
%
\n12.0%
\n3.0%
\n3.5
%
\n3.9%
\n5
\n5
\n5
\n7.8%
\n8.8%
\n8.8%
\n3.0%
\n2.5%
\n2.5%
\n5
\n5
\n5
\nGroups of CGUs
\u2013
value in use
\n31 December 2021
\nPre-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nErgotron
%
10.1%
3.0%
3
\nRisk adjusted discount rates
\nCash flows within the Aerospace, Automotive and Powder Metallurgy groups of CGUs are discounted using a post-tax discount rate
\nspecific to each group of CGUs. Discount rates reflect the current market assessments of the time value of money and the territories in
\nwhich the group of CGUs operates. In dete
rmining the cost of equity, the Capital Asset Pricing Model (\u201cCAPM\u201d) has been used. Under
\nCAPM, the cost of equity is determined by adding a risk premium, based on an industry adjustment (\u201cBeta\u201d), to the expected re
turn of the
\nequity market above the risk-free return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all other
\nsectors and geographies on average.
\nThe cost of debt is determined using a risk-free rate based on the cost of government bonds, and an interest rate premium equivalent to a
\ncorporate bond with a similar credit rating to the Group.
\nAssumptions applied in financial forecasts
\nThe Group prepares cash flow forecasts derived from financial budgets and medium-term forecasts. Each forecast has been prepared
\nusing a cash flow period deemed most appropriate by management, considering the nature of each group of CGUs. The key assumptions
\nused in forecasting cash flows relate to future budgeted revenue and operating margins likely to be achieved and the expected rates of
\nlong-term growth by market sector. Underlying factors in determining the values assigned to each key assumption are shown below:
\n
\n
\n
\n184
\nRevenue growth and operating margins:
\nRevenue growth assumptions in the forecast period are based on financial budgets and medium-term forecasts by management, taking
\ninto account industry growth rates and ma
nagement\u2019s historical experience in the context of wider industry and economic conditions.
\nProjected sales are built up with reference to markets and product categories. They incorporate past performance, historical growth rates,
\nprojections of developments in key markets, secured orders and orders forecast to be achieved in the short to medium-term given trends in
\nthe relevant market sector. Revenue assumptions are made using external market data, where available, and also consider the recovery
\nperiod to return to pre COVID-19 levels.
\nOperating margins have been forecast based on historical levels achieved considering the likely impact of changing economic
\nenvironments and competitive landscapes on volumes and revenues and the impact of management actions on costs. Testing has been
\nperformed using the fair value less costs to sell methodology and the assumptions to derive operating margins take into account both
\nnormal cost saving activities and, where applicable, a significant contribution from planned restructuring activity to improve operational
\nefficiency and leverage scale. Forecasts for other operating costs are based on inflation forecasts and supply and demand factors, which
\ntake account of climate change implications for affected markets. Overall, climate risk exposure is considered to be relatively low across
\nthe divisions in the short and medium-term but starts to increase in the longer-term, for example through increasing likelihood of river
\nflooding risk in the UK or increasing wildfire risk in California. Impairment testing includes short to medium-term planning (five years) for
\neach of the groups of CGUs, which will address known risks from climate change and other environmental factors impacting forecast costs
\nas well as the opportunities in associated markets as they prepare for change e.g. electrification in automotive and hydrogen propulsion in
\naerospace which impact revenues.
\nAerospace
\u2013
The key drivers for growth in revenue and operating margins are global demand for commercial and military aircraft.
\nConsumer spending, passenger load factors, raw material input costs, market expectations for aircraft production requirements,
\ntechnological advancements, and other macro-economic factors influence demand for these products.
\nAutomotive
\u2013
The key drivers for growth in revenue and operating margins are global demand for a large range of cars, from smaller low-
\ncost cars to larger premium vehicles. This is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted
\nby the COVID-19 pandemic. Demand is influenced by technological advancements, particularly in electric and full hybrid vehicles, market
\nexpectations for global vehicle production requirements, fuel prices, raw material input costs and expectations of their recovery, consumer
\nspending, credit availability, and other macro-economic factors.
\nPowder Metallurgy
\u2013
The key drivers for growth in revenue and operating margins are trends in the automotive and industrial markets.
\nThis is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted by the COVID-19 pandemic. Market
\nexpectations for global light vehicle production requirements, raw material input costs and technological advancements, particularly in
\nadditive manufacturing, influence demand for these products along with other macro-economic factors.
\nLong-term growth rates:
\nLong-term growth rates are based on long-term forecasts for growth in the sectors and geography in which the groups of CGUs operate.
\nLong-term growth rates are determined using long-term growth rate forecasts that take into account the international presence and the
\nmarkets in which each business operates.
\nSensitivity analysis
\nDue to consequential impacts from the COVID-19 pandemic of disrupted supply chains, interest rate rises and other inflationary pressure
\non input costs, certain businesses are mitigating the impact of volatile customer scheduling through cost reduction and efficiency actions,
\nincluding restructuring. The Automotive and Powder Metallurgy groups of CGUs are the most affected at this point in the cycle, as they rely
\non the global automotive market.
\nAutomotive group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Automotive group of CGUs. Sensitivity analysis has been carried out and
\na reasonably possible change in the discount rate and long-term growth rate from 11.25% to 12.50% or from 3.5% to 1.8% respectively
\nwould reduce headroom to \u00a3nil. Executing restructuring plans and continuing the recovery of inflationary impacts on input costs are key to
\nmargin assumptions and a reduction in the terminal operating profit of 15% would reduce the terminal operating margin by 1.6 percentage
\npoints and would reduce headroom to \u00a3nil.
\nPowder Metallurgy group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Powder Metallurgy group of CGUs. Sensitivity analysis has been carried
\nout and a reasonably possible change in the discount rate and long-term growth rate from 12.0% to 12.5% or from 3.9% to 3.2%
\nrespectively would reduce headroom to \u00a3nil. Executing restructuring plans and optimising market penetration are key to margin
\nassumptions and a reduction in the terminal operating profit of 8% would reduce the terminal operating margin by 1.0 percentage points
\nand would reduce headroom to \u00a3nil.
\n
\n185
\n\n
\nAllocation of significant intangible assets
\nThe allocation of significant customer relationships and contracts, brands, intellectual property and technology is as follows:
\nCustomer relationships and contracts
Brands, intellectual property and technology
\nRemaining amortisation
\nperiod
Net book value
\nRemaining amortisation
\nperiod
Net book value
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n16
\n8
\n13
\n17
\n9
\n14
\n1,965
\n621
\n486
\n1,967
\n670
\n492
\n16
\n16
\n16
\n17
\n17
\n17
\n534
\n261
\n56
\n575
\n309
\n67
\nContinuing operations
3,072
3,129
851
951
\nDiscontinued operations
\u2013
51
\u2013
62
\nTotal
3,072
3,180
851
1,013
\n(1) Restated for discontinued operations (note 1).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21711": {
"value": "11. Goodwill and other intangible assets
\nGoodwill
\n\u00a3m
\nCustomer
\nrelationships
\nand contracts
\n\u00a3m
\nBrands and
\nintellectual
\nproperty
\n\u00a3m
\nOther
\n(1)
\n\u00a3m
\nComputer
\nsoftware
\n\u00a3m
\nDevelopment
\ncosts
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n4,023
\n\u2013
\n\u2013
\n(778)
\n(330)
\n(65)
\n4,916
\n\u2013
\n\u2013
\n(331)
\n(120)
\n(59)
\n776
\n\u2013
\n\u2013
\n(250)
\n(37)
\n(9)
\n1,045
\n\u2013
\n\u2013
\n(3)
\n(26)
\n(5)
\n59
\n6
\n(1)
\n(14)
\n\u2013
\n(1)
\n529
\n13
\n(3)
\n(11)
\n\u2013
\n(6)
\n11,348
\n19
\n(4)
\n(1,387)
\n(513)
\n(145)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(4)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n2,850
\n\u2013
\n1
\n\u2013
\n(455)
\n189
\n4,406
\n\u2013
\n\u2013
\n\u2013
\n(122)
\n386
\n480
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n13
\n1,011
\n\u2013
\n3
\n\u2013
\n\u2013
\n33
\n49
\n6
\n\u2013
\n(2)
\n\u2013
\n3
\n522
\n21
\n\u2013
\n(4)
\n\u2013
\n31
\n9,318
\n27
\n4
\n(6)
\n(677)
\n655
\nAt 31 December 2022
2,585
4,670
393
1,047
56
570
9,321
\nAmortisation and impairment
\nAt 1 January 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n(383)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n214
\n165
\n4
\n(1,083)
\n\u2013
\n(339)
\n\u2013
\n\u2013
\n143
\n42
\n11
\n(198)
\n\u2013
\n(30)
\n\u2013
\n\u2013
\n117
\n13
\n3
\n(306)
\n\u2013
\n(107)
\n\u2013
\n\u2013
\n3
\n26
\n1
\n(31)
\n(8)
\n\u2013
\n\u2013
\n1
\n7
\n\u2013
\n2
\n(149)
\n(46)
\n\u2013
\n(3)
\n\u2013
\n2
\n\u2013
\n1
\n(2,150)
\n(54)
\n(476)
\n(3)
\n1
\n486
\n246
\n22
\nAt 31 December 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(1,226)
\n\u2013
\n(338)
\n\u2013
\n\u2013
\n71
\n(105)
\n(95)
\n\u2013
\n(24)
\n\u2013
\n\u2013
\n35
\n(9)
\n(383)
\n\u2013
\n(104)
\n\u2013
\n\u2013
\n\u2013
\n(9)
\n(29)
\n(7)
\n\u2013
\n\u2013
\n2
\n\u2013
\n(2)
\n(195)
\n(43)
\n\u2013
\n(9)
\n4
\n\u2013
\n(9)
\n(1,928)
\n(50)
\n(466)
\n(9)
\n6
\n106
\n(134)
\nAt 31 December 2022
\u2013
(1,598)
(93)
(496)
(36)
(252)
(2,475)
\nNet book value
\nAt 31 December 2022
2,585
3,072
300
551
20
318
6,846
\nAt 31 December 2021
2,850
3,180
385
628
20
327
7,390
\n(1) Other includes technology and order backlog intangible assets recognised on acquisitions.
\n(2) Disposal of businesses in 2021 relate to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(4) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(5) Includes \u00a39 million within impairment of assets (2021: \u00a33 million within restructuring costs) shown as adjusting items (note 6).
\nThe goodwill generated as a result of major acquisitions represents the premium paid in excess of the fair value of all net assets, including
\nintangible assets, identified at the point of acquisition. The carrying value of goodwill includes a premium, paid in order to secure
\nshareholder agreement to the business combination, that is less than the value that the Directors believed could be added to the acquired
\nbusinesses through the application of their specialist turnaround experience.
\nThe goodwill arising on bolt-on acquisitions is attributable to the anticipated profitability and cash flows arising from the businesses
\nacquired, synergies as a result of the complementary nature of the business with existing Melrose businesses, the assembled workforce,
\ntechnical expertise, knowhow, market share and geographical advantages afforded to the Group.
\nThe future improvements applied to the acquired businesses, achieved through a combination of revised strategic direction, operational
\nimprovements and investment, are expected to result in improved profitability of the acquired businesses during the period of ownership
\nand are also expected to result in enhanced disposal proceeds when the acquired businesses are ultimately disposed. The combined value
\nachieved from these improvements is expected to be in excess of the value of goodwill acquired.
\nGoodwill acquired in business combinations, net of impairment, has been allocated to the businesses, each of which comprises several
\ncash-
generating units (\u201cCGUs\u201d).
\n
\n183
\n
\n
\nGoodwill
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n990
\n1,056
\n539
\n933
\n1,001
\n507
\nContinuing operations
2,585
2,441
\nDiscontinued operations
\u2013
409
\nTotal
2,585
2,850
\n(1) Restated for discontinued operations (note 1).
\nImpairment testing
\nThe Group tests goodwill annually or more frequently if there are indications that goodwill might be impaired. The date of the annual
\nimpairment test is 31 October, aligned with internal forecasting and review processes. In accordance with IAS 36: Impairment of assets, the
\nGroup assesses goodwill based on the recoverable amount, being the higher of the value in use basis and the fair value less costs to sell
\nbasis. Due to the nature of the groups of CGUs within Melrose\u2019s strategic life cycle of \u201cBuy, Improve, Sell\u201d
, the fair value less costs to sell
\nmethodology has been used as the improvement phase is ongoing.
\nFair value less costs to sell calculations have been used to determine the recoverable amount of goodwill and other relevant net assets
\nallocated to the Aerospace, Automotive and Powder Metallurgy groups of CGUs. When applying the fair value less costs to sell
\nmethodology, it has been difficult to assess a sale value using observable market inputs (level 1) or inputs based on market evidence (level
\n2) in the current environment and so unobservable inputs (level 3) have been used. A combination of discounted cash flows and EBITDA
\nmultiple valuations have been used to establish fair values for each of the groups of CGUs.
\nUnder IAS 36, the benefits from future uncommitted restructuring plans are permitted when applying the fair value less costs to sell basis,
\nto the extent that similar actions would be carried out by a market participant.
\nBased on impairment testing completed no impairment was identified in respect of any of the groups of CGUs. The COVID-19 pandemic
\nhad a significant effect on global end markets in which certain of the Group\u2019s businesses operate and whilst these markets co
ntinue to
\nrecover, there have been consequential impacts of disrupted supply chains, interest rate rises and other inflationary pressure on input
\ncosts. Implications on the levels of headroom are shown in the sensitivity analysis which has been provided in respect of reasonably
\npossible changes to key assumptions.
\nSignificant assumptions and estimates
\nThe basis of impairment tests and the key assumptions are set out in the tables below:
\nGroups of CGUs
\u2013
fair value less costs to sell
\n31 December 2022
31 December 2021
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n10.75%
\n11.25
%
\n12.0%
\n3.0%
\n3.5
%
\n3.9%
\n5
\n5
\n5
\n7.8%
\n8.8%
\n8.8%
\n3.0%
\n2.5%
\n2.5%
\n5
\n5
\n5
\nGroups of CGUs
\u2013
value in use
\n31 December 2021
\nPre-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nErgotron
%
10.1%
3.0%
3
\nRisk adjusted discount rates
\nCash flows within the Aerospace, Automotive and Powder Metallurgy groups of CGUs are discounted using a post-tax discount rate
\nspecific to each group of CGUs. Discount rates reflect the current market assessments of the time value of money and the territories in
\nwhich the group of CGUs operates. In dete
rmining the cost of equity, the Capital Asset Pricing Model (\u201cCAPM\u201d) has been used. Under
\nCAPM, the cost of equity is determined by adding a risk premium, based on an industry adjustment (\u201cBeta\u201d), to the expected re
turn of the
\nequity market above the risk-free return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all other
\nsectors and geographies on average.
\nThe cost of debt is determined using a risk-free rate based on the cost of government bonds, and an interest rate premium equivalent to a
\ncorporate bond with a similar credit rating to the Group.
\nAssumptions applied in financial forecasts
\nThe Group prepares cash flow forecasts derived from financial budgets and medium-term forecasts. Each forecast has been prepared
\nusing a cash flow period deemed most appropriate by management, considering the nature of each group of CGUs. The key assumptions
\nused in forecasting cash flows relate to future budgeted revenue and operating margins likely to be achieved and the expected rates of
\nlong-term growth by market sector. Underlying factors in determining the values assigned to each key assumption are shown below:
\n
\n
\n
\n184
\nRevenue growth and operating margins:
\nRevenue growth assumptions in the forecast period are based on financial budgets and medium-term forecasts by management, taking
\ninto account industry growth rates and ma
nagement\u2019s historical experience in the context of wider industry and economic conditions.
\nProjected sales are built up with reference to markets and product categories. They incorporate past performance, historical growth rates,
\nprojections of developments in key markets, secured orders and orders forecast to be achieved in the short to medium-term given trends in
\nthe relevant market sector. Revenue assumptions are made using external market data, where available, and also consider the recovery
\nperiod to return to pre COVID-19 levels.
\nOperating margins have been forecast based on historical levels achieved considering the likely impact of changing economic
\nenvironments and competitive landscapes on volumes and revenues and the impact of management actions on costs. Testing has been
\nperformed using the fair value less costs to sell methodology and the assumptions to derive operating margins take into account both
\nnormal cost saving activities and, where applicable, a significant contribution from planned restructuring activity to improve operational
\nefficiency and leverage scale. Forecasts for other operating costs are based on inflation forecasts and supply and demand factors, which
\ntake account of climate change implications for affected markets. Overall, climate risk exposure is considered to be relatively low across
\nthe divisions in the short and medium-term but starts to increase in the longer-term, for example through increasing likelihood of river
\nflooding risk in the UK or increasing wildfire risk in California. Impairment testing includes short to medium-term planning (five years) for
\neach of the groups of CGUs, which will address known risks from climate change and other environmental factors impacting forecast costs
\nas well as the opportunities in associated markets as they prepare for change e.g. electrification in automotive and hydrogen propulsion in
\naerospace which impact revenues.
\nAerospace
\u2013
The key drivers for growth in revenue and operating margins are global demand for commercial and military aircraft.
\nConsumer spending, passenger load factors, raw material input costs, market expectations for aircraft production requirements,
\ntechnological advancements, and other macro-economic factors influence demand for these products.
\nAutomotive
\u2013
The key drivers for growth in revenue and operating margins are global demand for a large range of cars, from smaller low-
\ncost cars to larger premium vehicles. This is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted
\nby the COVID-19 pandemic. Demand is influenced by technological advancements, particularly in electric and full hybrid vehicles, market
\nexpectations for global vehicle production requirements, fuel prices, raw material input costs and expectations of their recovery, consumer
\nspending, credit availability, and other macro-economic factors.
\nPowder Metallurgy
\u2013
The key drivers for growth in revenue and operating margins are trends in the automotive and industrial markets.
\nThis is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted by the COVID-19 pandemic. Market
\nexpectations for global light vehicle production requirements, raw material input costs and technological advancements, particularly in
\nadditive manufacturing, influence demand for these products along with other macro-economic factors.
\nLong-term growth rates:
\nLong-term growth rates are based on long-term forecasts for growth in the sectors and geography in which the groups of CGUs operate.
\nLong-term growth rates are determined using long-term growth rate forecasts that take into account the international presence and the
\nmarkets in which each business operates.
\nSensitivity analysis
\nDue to consequential impacts from the COVID-19 pandemic of disrupted supply chains, interest rate rises and other inflationary pressure
\non input costs, certain businesses are mitigating the impact of volatile customer scheduling through cost reduction and efficiency actions,
\nincluding restructuring. The Automotive and Powder Metallurgy groups of CGUs are the most affected at this point in the cycle, as they rely
\non the global automotive market.
\nAutomotive group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Automotive group of CGUs. Sensitivity analysis has been carried out and
\na reasonably possible change in the discount rate and long-term growth rate from 11.25% to 12.50% or from 3.5% to 1.8% respectively
\nwould reduce headroom to \u00a3nil. Executing restructuring plans and continuing the recovery of inflationary impacts on input costs are key to
\nmargin assumptions and a reduction in the terminal operating profit of 15% would reduce the terminal operating margin by 1.6 percentage
\npoints and would reduce headroom to \u00a3nil.
\nPowder Metallurgy group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Powder Metallurgy group of CGUs. Sensitivity analysis has been carried
\nout and a reasonably possible change in the discount rate and long-term growth rate from 12.0% to 12.5% or from 3.9% to 3.2%
\nrespectively would reduce headroom to \u00a3nil. Executing restructuring plans and optimising market penetration are key to margin
\nassumptions and a reduction in the terminal operating profit of 8% would reduce the terminal operating margin by 1.0 percentage points
\nand would reduce headroom to \u00a3nil.
\n
\n185
\n\n
\nAllocation of significant intangible assets
\nThe allocation of significant customer relationships and contracts, brands, intellectual property and technology is as follows:
\nCustomer relationships and contracts
Brands, intellectual property and technology
\nRemaining amortisation
\nperiod
Net book value
\nRemaining amortisation
\nperiod
Net book value
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n16
\n8
\n13
\n17
\n9
\n14
\n1,965
\n621
\n486
\n1,967
\n670
\n492
\n16
\n16
\n16
\n17
\n17
\n17
\n534
\n261
\n56
\n575
\n309
\n67
\nContinuing operations
3,072
3,129
851
951
\nDiscontinued operations
\u2013
51
\u2013
62
\nTotal
3,072
3,180
851
1,013
\n(1) Restated for discontinued operations (note 1). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f21712": {
"value": "11. Goodwill and other intangible assets
\nGoodwill
\n\u00a3m
\nCustomer
\nrelationships
\nand contracts
\n\u00a3m
\nBrands and
\nintellectual
\nproperty
\n\u00a3m
\nOther
\n(1)
\n\u00a3m
\nComputer
\nsoftware
\n\u00a3m
\nDevelopment
\ncosts
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n4,023
\n\u2013
\n\u2013
\n(778)
\n(330)
\n(65)
\n4,916
\n\u2013
\n\u2013
\n(331)
\n(120)
\n(59)
\n776
\n\u2013
\n\u2013
\n(250)
\n(37)
\n(9)
\n1,045
\n\u2013
\n\u2013
\n(3)
\n(26)
\n(5)
\n59
\n6
\n(1)
\n(14)
\n\u2013
\n(1)
\n529
\n13
\n(3)
\n(11)
\n\u2013
\n(6)
\n11,348
\n19
\n(4)
\n(1,387)
\n(513)
\n(145)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(4)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n2,850
\n\u2013
\n1
\n\u2013
\n(455)
\n189
\n4,406
\n\u2013
\n\u2013
\n\u2013
\n(122)
\n386
\n480
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n13
\n1,011
\n\u2013
\n3
\n\u2013
\n\u2013
\n33
\n49
\n6
\n\u2013
\n(2)
\n\u2013
\n3
\n522
\n21
\n\u2013
\n(4)
\n\u2013
\n31
\n9,318
\n27
\n4
\n(6)
\n(677)
\n655
\nAt 31 December 2022
2,585
4,670
393
1,047
56
570
9,321
\nAmortisation and impairment
\nAt 1 January 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n(383)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n214
\n165
\n4
\n(1,083)
\n\u2013
\n(339)
\n\u2013
\n\u2013
\n143
\n42
\n11
\n(198)
\n\u2013
\n(30)
\n\u2013
\n\u2013
\n117
\n13
\n3
\n(306)
\n\u2013
\n(107)
\n\u2013
\n\u2013
\n3
\n26
\n1
\n(31)
\n(8)
\n\u2013
\n\u2013
\n1
\n7
\n\u2013
\n2
\n(149)
\n(46)
\n\u2013
\n(3)
\n\u2013
\n2
\n\u2013
\n1
\n(2,150)
\n(54)
\n(476)
\n(3)
\n1
\n486
\n246
\n22
\nAt 31 December 2021
\nCharge for the year:
\nAdjusted operating profit
\nAdjusting items
\nImpairments
\n(5)
\nDisposals
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(1,226)
\n\u2013
\n(338)
\n\u2013
\n\u2013
\n71
\n(105)
\n(95)
\n\u2013
\n(24)
\n\u2013
\n\u2013
\n35
\n(9)
\n(383)
\n\u2013
\n(104)
\n\u2013
\n\u2013
\n\u2013
\n(9)
\n(29)
\n(7)
\n\u2013
\n\u2013
\n2
\n\u2013
\n(2)
\n(195)
\n(43)
\n\u2013
\n(9)
\n4
\n\u2013
\n(9)
\n(1,928)
\n(50)
\n(466)
\n(9)
\n6
\n106
\n(134)
\nAt 31 December 2022
\u2013
(1,598)
(93)
(496)
(36)
(252)
(2,475)
\nNet book value
\nAt 31 December 2022
2,585
3,072
300
551
20
318
6,846
\nAt 31 December 2021
2,850
3,180
385
628
20
327
7,390
\n(1) Other includes technology and order backlog intangible assets recognised on acquisitions.
\n(2) Disposal of businesses in 2021 relate to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(4) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(5) Includes \u00a39 million within impairment of assets (2021: \u00a33 million within restructuring costs) shown as adjusting items (note 6).
\nThe goodwill generated as a result of major acquisitions represents the premium paid in excess of the fair value of all net assets, including
\nintangible assets, identified at the point of acquisition. The carrying value of goodwill includes a premium, paid in order to secure
\nshareholder agreement to the business combination, that is less than the value that the Directors believed could be added to the acquired
\nbusinesses through the application of their specialist turnaround experience.
\nThe goodwill arising on bolt-on acquisitions is attributable to the anticipated profitability and cash flows arising from the businesses
\nacquired, synergies as a result of the complementary nature of the business with existing Melrose businesses, the assembled workforce,
\ntechnical expertise, knowhow, market share and geographical advantages afforded to the Group.
\nThe future improvements applied to the acquired businesses, achieved through a combination of revised strategic direction, operational
\nimprovements and investment, are expected to result in improved profitability of the acquired businesses during the period of ownership
\nand are also expected to result in enhanced disposal proceeds when the acquired businesses are ultimately disposed. The combined value
\nachieved from these improvements is expected to be in excess of the value of goodwill acquired.
\nGoodwill acquired in business combinations, net of impairment, has been allocated to the businesses, each of which comprises several
\ncash-
generating units (\u201cCGUs\u201d).
\n
\n183
\n
\n
\nGoodwill
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n990
\n1,056
\n539
\n933
\n1,001
\n507
\nContinuing operations
2,585
2,441
\nDiscontinued operations
\u2013
409
\nTotal
2,585
2,850
\n(1) Restated for discontinued operations (note 1).
\nImpairment testing
\nThe Group tests goodwill annually or more frequently if there are indications that goodwill might be impaired. The date of the annual
\nimpairment test is 31 October, aligned with internal forecasting and review processes. In accordance with IAS 36: Impairment of assets, the
\nGroup assesses goodwill based on the recoverable amount, being the higher of the value in use basis and the fair value less costs to sell
\nbasis. Due to the nature of the groups of CGUs within Melrose\u2019s strategic life cycle of \u201cBuy, Improve, Sell\u201d
, the fair value less costs to sell
\nmethodology has been used as the improvement phase is ongoing.
\nFair value less costs to sell calculations have been used to determine the recoverable amount of goodwill and other relevant net assets
\nallocated to the Aerospace, Automotive and Powder Metallurgy groups of CGUs. When applying the fair value less costs to sell
\nmethodology, it has been difficult to assess a sale value using observable market inputs (level 1) or inputs based on market evidence (level
\n2) in the current environment and so unobservable inputs (level 3) have been used. A combination of discounted cash flows and EBITDA
\nmultiple valuations have been used to establish fair values for each of the groups of CGUs.
\nUnder IAS 36, the benefits from future uncommitted restructuring plans are permitted when applying the fair value less costs to sell basis,
\nto the extent that similar actions would be carried out by a market participant.
\nBased on impairment testing completed no impairment was identified in respect of any of the groups of CGUs. The COVID-19 pandemic
\nhad a significant effect on global end markets in which certain of the Group\u2019s businesses operate and whilst these markets co
ntinue to
\nrecover, there have been consequential impacts of disrupted supply chains, interest rate rises and other inflationary pressure on input
\ncosts. Implications on the levels of headroom are shown in the sensitivity analysis which has been provided in respect of reasonably
\npossible changes to key assumptions.
\nSignificant assumptions and estimates
\nThe basis of impairment tests and the key assumptions are set out in the tables below:
\nGroups of CGUs
\u2013
fair value less costs to sell
\n31 December 2022
31 December 2021
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nPost-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n10.75%
\n11.25
%
\n12.0%
\n3.0%
\n3.5
%
\n3.9%
\n5
\n5
\n5
\n7.8%
\n8.8%
\n8.8%
\n3.0%
\n2.5%
\n2.5%
\n5
\n5
\n5
\nGroups of CGUs
\u2013
value in use
\n31 December 2021
\nPre-tax
\ndiscount rates
\nLong-term
\ngrowth rates
\nYears in
\nforecast
\nErgotron
%
10.1%
3.0%
3
\nRisk adjusted discount rates
\nCash flows within the Aerospace, Automotive and Powder Metallurgy groups of CGUs are discounted using a post-tax discount rate
\nspecific to each group of CGUs. Discount rates reflect the current market assessments of the time value of money and the territories in
\nwhich the group of CGUs operates. In dete
rmining the cost of equity, the Capital Asset Pricing Model (\u201cCAPM\u201d) has been used. Under
\nCAPM, the cost of equity is determined by adding a risk premium, based on an industry adjustment (\u201cBeta\u201d), to the expected re
turn of the
\nequity market above the risk-free return. The relative risk adjustment reflects the risk inherent in each group of CGUs relative to all other
\nsectors and geographies on average.
\nThe cost of debt is determined using a risk-free rate based on the cost of government bonds, and an interest rate premium equivalent to a
\ncorporate bond with a similar credit rating to the Group.
\nAssumptions applied in financial forecasts
\nThe Group prepares cash flow forecasts derived from financial budgets and medium-term forecasts. Each forecast has been prepared
\nusing a cash flow period deemed most appropriate by management, considering the nature of each group of CGUs. The key assumptions
\nused in forecasting cash flows relate to future budgeted revenue and operating margins likely to be achieved and the expected rates of
\nlong-term growth by market sector. Underlying factors in determining the values assigned to each key assumption are shown below:
\n
\n
\n
\n184
\nRevenue growth and operating margins:
\nRevenue growth assumptions in the forecast period are based on financial budgets and medium-term forecasts by management, taking
\ninto account industry growth rates and ma
nagement\u2019s historical experience in the context of wider industry and economic conditions.
\nProjected sales are built up with reference to markets and product categories. They incorporate past performance, historical growth rates,
\nprojections of developments in key markets, secured orders and orders forecast to be achieved in the short to medium-term given trends in
\nthe relevant market sector. Revenue assumptions are made using external market data, where available, and also consider the recovery
\nperiod to return to pre COVID-19 levels.
\nOperating margins have been forecast based on historical levels achieved considering the likely impact of changing economic
\nenvironments and competitive landscapes on volumes and revenues and the impact of management actions on costs. Testing has been
\nperformed using the fair value less costs to sell methodology and the assumptions to derive operating margins take into account both
\nnormal cost saving activities and, where applicable, a significant contribution from planned restructuring activity to improve operational
\nefficiency and leverage scale. Forecasts for other operating costs are based on inflation forecasts and supply and demand factors, which
\ntake account of climate change implications for affected markets. Overall, climate risk exposure is considered to be relatively low across
\nthe divisions in the short and medium-term but starts to increase in the longer-term, for example through increasing likelihood of river
\nflooding risk in the UK or increasing wildfire risk in California. Impairment testing includes short to medium-term planning (five years) for
\neach of the groups of CGUs, which will address known risks from climate change and other environmental factors impacting forecast costs
\nas well as the opportunities in associated markets as they prepare for change e.g. electrification in automotive and hydrogen propulsion in
\naerospace which impact revenues.
\nAerospace
\u2013
The key drivers for growth in revenue and operating margins are global demand for commercial and military aircraft.
\nConsumer spending, passenger load factors, raw material input costs, market expectations for aircraft production requirements,
\ntechnological advancements, and other macro-economic factors influence demand for these products.
\nAutomotive
\u2013
The key drivers for growth in revenue and operating margins are global demand for a large range of cars, from smaller low-
\ncost cars to larger premium vehicles. This is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted
\nby the COVID-19 pandemic. Demand is influenced by technological advancements, particularly in electric and full hybrid vehicles, market
\nexpectations for global vehicle production requirements, fuel prices, raw material input costs and expectations of their recovery, consumer
\nspending, credit availability, and other macro-economic factors.
\nPowder Metallurgy
\u2013
The key drivers for growth in revenue and operating margins are trends in the automotive and industrial markets.
\nThis is impacted in the short to medium-term by expectations of recovery in supply chains, interrupted by the COVID-19 pandemic. Market
\nexpectations for global light vehicle production requirements, raw material input costs and technological advancements, particularly in
\nadditive manufacturing, influence demand for these products along with other macro-economic factors.
\nLong-term growth rates:
\nLong-term growth rates are based on long-term forecasts for growth in the sectors and geography in which the groups of CGUs operate.
\nLong-term growth rates are determined using long-term growth rate forecasts that take into account the international presence and the
\nmarkets in which each business operates.
\nSensitivity analysis
\nDue to consequential impacts from the COVID-19 pandemic of disrupted supply chains, interest rate rises and other inflationary pressure
\non input costs, certain businesses are mitigating the impact of volatile customer scheduling through cost reduction and efficiency actions,
\nincluding restructuring. The Automotive and Powder Metallurgy groups of CGUs are the most affected at this point in the cycle, as they rely
\non the global automotive market.
\nAutomotive group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Automotive group of CGUs. Sensitivity analysis has been carried out and
\na reasonably possible change in the discount rate and long-term growth rate from 11.25% to 12.50% or from 3.5% to 1.8% respectively
\nwould reduce headroom to \u00a3nil. Executing restructuring plans and continuing the recovery of inflationary impacts on input costs are key to
\nmargin assumptions and a reduction in the terminal operating profit of 15% would reduce the terminal operating margin by 1.6 percentage
\npoints and would reduce headroom to \u00a3nil.
\nPowder Metallurgy group of CGUs
\u2013
sensitivity analysis
\nThe forecasts show headroom above the carrying amount for the Powder Metallurgy group of CGUs. Sensitivity analysis has been carried
\nout and a reasonably possible change in the discount rate and long-term growth rate from 12.0% to 12.5% or from 3.9% to 3.2%
\nrespectively would reduce headroom to \u00a3nil. Executing restructuring plans and optimising market penetration are key to margin
\nassumptions and a reduction in the terminal operating profit of 8% would reduce the terminal operating margin by 1.0 percentage points
\nand would reduce headroom to \u00a3nil.
\n
\n185
\n\n
\nAllocation of significant intangible assets
\nThe allocation of significant customer relationships and contracts, brands, intellectual property and technology is as follows:
\nCustomer relationships and contracts
Brands, intellectual property and technology
\nRemaining amortisation
\nperiod
Net book value
\nRemaining amortisation
\nperiod
Net book value
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\nyears
\n31 December
\n2021
\nyears
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\n31 December
\n2021
\n\u00a3m
\nAerospace
\nAutomotive
\nPowder Metallurgy
\n16
\n8
\n13
\n17
\n9
\n14
\n1,965
\n621
\n486
\n1,967
\n670
\n492
\n16
\n16
\n16
\n17
\n17
\n17
\n534
\n261
\n56
\n575
\n309
\n67
\nContinuing operations
3,072
3,129
851
951
\nDiscontinued operations
\u2013
51
\u2013
62
\nTotal
3,072
3,180
851
1,013
\n(1) Restated for discontinued operations (note 1). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f22378": {
"value": "12. Investments
\nInvestments, carried at fair value
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nShares
62
87
\nThe Group holds a 10% equity share in HiiROC Limited, a hydrogen technology company, and a 4% investment in PW1100G-JM Engine
\nLeasing LLC, an engine leasing business.
\nThere was a loss on remeasurement to fair value of \u00a334 million (2021: gain of \u00a343 million) and a foreign exchange translation gain of \u00a39
\nmillion (2021: \u00a3nil). A dividend of \u00a34 million (2021: \u00a317 million) was received during the year which was recorded within operating profit.
\nThese investments are classified as a level 3 fair value under the IFRS 13 fair value hierarchy. To calculate the value at 31 December
\n2022, the expected dividend flow was discounted to net present value using a discount rate of 12.75%. If the discount rate changed from
\n12.75% to 11.75% the fair value would increase by \u00a35 million.
15.
Equity accounted investments
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAggregated amounts relating to equity accounted investments:
\nShare of current assets
\nShare of non-current assets
\nShare of current liabilities
\nShare of non-current liabilities
\n416
\n322
\n(289)
\n(14)
\n403
\n350
\n(310)
\n(14)
\nInterests in equity accounted investments
435
429
\nGroup share of results from continuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nRevenue
\nOperating costs
\n654
\n(576)
\n613
\n(547)
\nAdjusted operating profit
\nAdjusting items
\nNet finance income
\n78
\n(22)
\n2
\n66
\n(21)
\n2
\nProfit before tax
\nTax
\n58
\n(9)
\n47
\n(9)
\nShare of results of equity accounted investments
49
38
\nGroup share of equity accounted investments
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nShare of results of equity accounted investments
\nAdditions
\nDividends paid to the Group
\nExchange adjustments
\n429
\n49
\n3
\n(59)
\n13
\n430
\n38
\n\u2013
\n(52)
\n13
\nAt 31 December
435
429
Within the Group\u2019s share of equity accounted investments
there is one significant joint venture, held within the Automotive segment,
\nShanghai GKN HUAYU Driveline Systems Co Limited (\u201cSDS\u201d). SDS had total sales in the year of \u00a3
1,243 million (2021: \u00a31,159 million),
\nadjusted operating profit of \u00a3142 million (2021: \u00a3116 million), adjusting items of \u00a344 million (2021: \u00a341 million), statutory operating profit of
\n\u00a398 million (2021: \u00a375 million), an interest credit of \u00a34 million (2021: \u00a34 million) and a tax charge of \u00a318 million (2021: \u00a316 million), leaving
\nretained profit of \u00a384 million (2021: \u00a363 million).
\nTotal net assets of SDS at 31 December 2022 were \u00a3786 million (31 December 2021: \u00a3790 million). These comprised non-current assets
\nof \u00a3580 million (31 December 2021: \u00a3636 million), current assets of \u00a3715 million (31 December 2021: \u00a3668 million), current liabilities of
\n\u00a3504 million (31 December 2021: \u00a3508 million) and non-current liabilities of \u00a35 million (31 December 2021: \u00a36 million). During 2022, SDS
\npaid a dividend to the Group of \u00a358 million (2021: \u00a350 million). Further information about SDS can be found in note 3 to the Melrose
\nIndustries PLC Company Financial Statements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f22612": {
"value": "14. Property, plant and equipment
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,394
\n68
\n4
\n(12)
\n(256)
\n(24)
\n(31)
\n2,995
\n192
\n(1)
\n(42)
\n(314)
\n(13)
\n(95)
\n4,389
\n260
\n3
\n(54)
\n(570)
\n(37)
\n(126)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,143
\n38
\n1
\n\u2013
\n(19)
\n(6)
\n(49)
\n61
\n2,722
\n281
\n\u2013
\n(1)
\n(117)
\n\u2013
\n(20)
\n263
\n3,865
\n319
\n1
\n(1)
\n(136)
\n(6)
\n(69)
\n324
\nAt 31 December 2022
1,169
3,128
4,297
\nAccumulated depreciation and impairment
\nAt 1 January 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(316)
\n(69)
\n2
\n112
\n9
\n(40)
\n2
\n(940)
\n(326)
\n40
\n204
\n10
\n(69)
\n44
\n(1,256)
\n(395)
\n42
\n316
\n19
\n(109)
\n46
\nAt 31 December 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(300)
\n(59)
\n4
\n6
\n27
\n(2)
\n(6)
\n(1,037)
\n(299)
\n108
\n\u2013
\n15
\n(16)
\n(139)
\n(1,337)
\n(358)
\n112
\n6
\n42
\n(18)
\n(145)
\nAt 31 December 2022
(330)
(1,368)
(1,698)
\nNet book value
\nAt 31 December 2022
839
1,760
2,599
\nAt 31 December 2021
843
1,685
2,528
\n(1) Disposal of businesses in 2022 relates to the sale of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to a corporate property and the Ergotron business (2021: Nortek Control business) which were subsequently disposed of during the second half of the
\nyear (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(4) Includes \u00a311 million (2021: \u00a3109 million) within restructuring costs and \u00a37 million (2021: \u00a3nil) within impairment of assets both shown as adjusting items (note 6).
\nAssets under the course of construction at 31 December 2022 totalled \u00a3243 million (31 December 2021: \u00a3150 million).
\nThe basis of testing for impaired assets, which resulted in a charge totalling \u00a318 million, primarily used a fair value less costs to sell
\nmethodology which was classified as a level 3 fair value under the IFRS 13 fair value hierarchy. The largest impairment, in the Aerospace
\nsegment, at a site subject to restructuring activities, was derived by calculating the net present value from a discounted cash flow
\nassessment, using a post-tax discount rate of 10.5%. The assets were deemed to have no further recoverable value.
\n
\n
\n
\n188
\nProperty, plant and equipment includes the net book value of right-of-use assets as follows:
\nRight-of-use asset
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\nExchange adjustments
\n381
\n31
\n4
\n(39)
\n(3)
\n(75)
\n(8)
\n(15)
\n(11)
\n67
\n14
\n(1)
\n(18)
\n\u2013
\n(3)
\n\u2013
\n\u2013
\n(11)
\n448
\n45
\n3
\n(57)
\n(3)
\n(78)
\n(8)
\n(15)
\n(22)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n265
\n19
\n1
\n\u2013
\n(31)
\n(2)
\n(1)
\n14
\n48
\n19
\n\u2013
\n(1)
\n(16)
\n(3)
\n(5)
\n4
\n313
\n38
\n1
\n(1)
\n(47)
\n(5)
\n(6)
\n18
\nAt 31 December 2022
265
46
311
\n(1) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f22613": {
"value": "14. Property, plant and equipment
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nCost
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,394
\n68
\n4
\n(12)
\n(256)
\n(24)
\n(31)
\n2,995
\n192
\n(1)
\n(42)
\n(314)
\n(13)
\n(95)
\n4,389
\n260
\n3
\n(54)
\n(570)
\n(37)
\n(126)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n1,143
\n38
\n1
\n\u2013
\n(19)
\n(6)
\n(49)
\n61
\n2,722
\n281
\n\u2013
\n(1)
\n(117)
\n\u2013
\n(20)
\n263
\n3,865
\n319
\n1
\n(1)
\n(136)
\n(6)
\n(69)
\n324
\nAt 31 December 2022
1,169
3,128
4,297
\nAccumulated depreciation and impairment
\nAt 1 January 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(316)
\n(69)
\n2
\n112
\n9
\n(40)
\n2
\n(940)
\n(326)
\n40
\n204
\n10
\n(69)
\n44
\n(1,256)
\n(395)
\n42
\n316
\n19
\n(109)
\n46
\nAt 31 December 2021
\nCharge for the year
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\n(4)
\nExchange adjustments
\n(300)
\n(59)
\n4
\n6
\n27
\n(2)
\n(6)
\n(1,037)
\n(299)
\n108
\n\u2013
\n15
\n(16)
\n(139)
\n(1,337)
\n(358)
\n112
\n6
\n42
\n(18)
\n(145)
\nAt 31 December 2022
(330)
(1,368)
(1,698)
\nNet book value
\nAt 31 December 2022
839
1,760
2,599
\nAt 31 December 2021
843
1,685
2,528
\n(1) Disposal of businesses in 2022 relates to the sale of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to a corporate property and the Ergotron business (2021: Nortek Control business) which were subsequently disposed of during the second half of the
\nyear (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\n(4) Includes \u00a311 million (2021: \u00a3109 million) within restructuring costs and \u00a37 million (2021: \u00a3nil) within impairment of assets both shown as adjusting items (note 6).
\nAssets under the course of construction at 31 December 2022 totalled \u00a3243 million (31 December 2021: \u00a3150 million).
\nThe basis of testing for impaired assets, which resulted in a charge totalling \u00a318 million, primarily used a fair value less costs to sell
\nmethodology which was classified as a level 3 fair value under the IFRS 13 fair value hierarchy. The largest impairment, in the Aerospace
\nsegment, at a site subject to restructuring activities, was derived by calculating the net present value from a discounted cash flow
\nassessment, using a post-tax discount rate of 10.5%. The assets were deemed to have no further recoverable value.
\n
\n
\n
\n188
\nProperty, plant and equipment includes the net book value of right-of-use assets as follows:
\nRight-of-use asset
\nLand and
\nbuildings
\n\u00a3m
\nPlant and
\nequipment
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nAdditions
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nImpairments
\nExchange adjustments
\n381
\n31
\n4
\n(39)
\n(3)
\n(75)
\n(8)
\n(15)
\n(11)
\n67
\n14
\n(1)
\n(18)
\n\u2013
\n(3)
\n\u2013
\n\u2013
\n(11)
\n448
\n45
\n3
\n(57)
\n(3)
\n(78)
\n(8)
\n(15)
\n(22)
\nAt 31 December 2021
\nAdditions
\nAcquisition of businesses
\n(3)
\nRight-of-use asset reassessments
\nDepreciation
\nDisposals
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n265
\n19
\n1
\n\u2013
\n(31)
\n(2)
\n(1)
\n14
\n48
\n19
\n\u2013
\n(1)
\n(16)
\n(3)
\n(5)
\n4
\n313
\n38
\n1
\n(1)
\n(47)
\n(5)
\n(6)
\n18
\nAt 31 December 2022
265
46
311
\n(1) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(3) Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23027": {
"value": "16. Inventories 31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nRaw materials
\nWork in progress
\nFinished goods
\n518
\n328
\n179
\n413
\n280
\n200
\n1,025
893
\nIn 2022, the write down of inventories to net realisable value amounted to \u00a359 million (2021: \u00a393 million), of which \u00a3nil related to
\nrestructuring activities (2021: \u00a38 million) and \u00a32 million related to impairment of assets (2021: \u00a3nil) and are included within adjusting items
\n(note 6). The reversal of write downs amounted to \u00a355 million (2021: \u00a377 million). Write downs and reversals in both years relate to
\nongoing assessments of inv
entory obsolescence, excess inventory holding and inventory resale values across all of the Group\u2019s
\nbusinesses.
\nThe Directors consider that there is no material difference between the net book value of inventories and their replacement cost. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInventoriesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23055": {
"value": "17. Trade and other receivables
\nCurrent
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nTrade receivables
\nAllowance for expected credit loss
\nOther receivables
\nPrepayments
\nContract assets
\n989
\n(20)
\n286
\n36
\n135
\n847
\n(23)
\n200
\n40
\n120
\n1,426
1,184
\nTrade receivables are non interest-bearing. Credit terms offered to customers vary upon the country of operation but are generally between
\n30 and 90 days.
\nNon-current
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nOther receivables
\nContract assets
\n23
\n647
\n32
\n491
\n670
523
\nAs described in note 25, certain businesses participate in receivables working capital programmes and have the ability to choose whether
\nto receive payment earlier than the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, eligible
\nreceivables under these programmes have been factored and derecognised in line with the derecognition criteria of IFRS 9.
\n
\n
\n
\n190
\nAn
allowance has been made for expected lifetime credit losses with reference to past default experience and management\u2019s assess
ment
\nof credit worthiness over trade receivables, an analysis of which is as follows:
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder Metallurgy
\n\u00a3m
\nRestated
\n(1)
\nOther Industrial
\n\u00a3m
\nRestated
\n(1)
\nDiscontinued
\nOperations
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nIncome Statement (credit)/charge
\nUtilised
\nDisposal of businesses
\n(2)
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n12
\n\u2013
\n(1)
\n(3)
\n\u2013
\n(1)
\n11
\n(1)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n5
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n13
\n4
\n(6)
\n(7)
\n(2)
\n\u2013
\n41
\n3
\n(8)
\n(10)
\n(2)
\n(1)
\nAt 31 December 2021
\nIncome Statement charge/(credit)
\nUtilised
\nTransfer to held for sale
\n(3)
\nExchange adjustments
\n7
\n1
\n(2)
\n\u2013
\n1
\n9
\n(3)
\n\u2013
\n\u2013
\n\u2013
\n5
\n1
\n\u2013
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n2
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n23
\n(1)
\n(2)
\n(2)
\n2
\nAt 31 December 2022
7
6
7
\u2013
\u2013
20
\n(1) Restated for discontinued operations (note 1).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n(3) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\nThe concentration of credit risk is limited due to the large number of unrelated customers. Credit control procedures are implemented to
\nensure that sales are only made to organisations that are willing and able to pay for them. Such procedures include the establishment and
\nreview of customer credit limits and terms. The Group does not hold any collateral or any other credit enhancements over any of its trade
\nreceivables nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.
\nThe ageing of impaired trade receivables past due is as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n0
\u2013
30 days
\n31
\u2013
60 days
\n60+ days
\n4
\n\u2013
\n16
\n12
\n\u2013
\n11
\n20
23
\nIncluded in the
Group\u2019s trade receivables balance are overdue trade receivables with a gross carrying amount of \u00a3
53 million (31 December
\n2021: \u00a363 million) against which a provision of \u00a320 million (31 December 2021: \u00a323 million) is held.
\nThere are no amounts provided against balances that are not overdue as these are deemed recoverable, following an assessment for
\nimpairment in accordance with policies described in note 2.
\nThe ageing of the balance deemed recoverable of \u00a333 million (31 December 2021: \u00a340 million) is as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n0
\u2013
30 days
\n31
\u2013
60 days
\n60+ days
\n30
\n3
\n\u2013
\n27
\n11
\n2
\n33
40
\nThe Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
\n
\n191
\n
\n
\nThe Group\u2019s contract assets comprise the following:
\nParticipation
\nfees
\n\u00a3m
\nUnbilled
\nreceivables
\n\u00a3m
\nUnbilled work
\ndone
\n\u00a3m
\nOther
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2021
\nAdditions
\nUtilised
\nExchange adjustments
\n195
\n5
\n(9)
\n2
\n52
\n949
\n(941)
\n1
\n247
\n68
\n(13)
\n3
\n50
\n9
\n(6)
\n(1)
\n544
\n1,031
\n(969)
\n5
\nAt 31 December 2021
\nAdditions
\nUtilised
\nDisposal of businesses
\n(1)
\nExchange adjustments
\n193
\n2
\n(13)
\n\u2013
\n22
\n61
\n929
\n(918)
\n(3)
\n10
\n305
\n124
\n(18)
\n\u2013
\n39
\n52
\n\u2013
\n(7)
\n\u2013
\n4
\n611
\n1,055
\n(956)
\n(3)
\n75
\nAt 31 December 2022
204
79
450
49
782
\n(1) Disposal of businesses in 2022 relates to the disposal of a non-core entity.
\nAn assessment for impairment of contract assets has been performed in accordance with policies described in note 2. No such impairment
\nhas been recorded.
\nParticipation fees
\nParticipation fees are described in the accounting policies (note 2) and are considered to be a reduction in revenue for the related customer
\ncontract. Amounts are capitalised and
\u201c
amortised
\u201d
to match to the related performance obligation.
\nUnbilled receivables for over time recognition
\nUnbilled receivables for over time recognition represent work completed with associated margins where contracts contain a legal right to
\ncompensation for work completed, including a margin, and there is no alternative use for
the customer\u2019s asset.
\nUnbilled work done
\nUnbilled work done only has a material impact on one entity in the Group, exclusively relating to certain RRSP arrangements in the
\nAerospace business.
\nWhere the Group has a contractual right to aftermarket revenue, IFRS 15 requires that the total contract revenue is allocated to the
\nperformance obligations. The principal contractual term that determines the existence of unbilled work done is the absence of a termination
\nclause that the customer can unilaterally exercise and which results in future purchases being considered optional. Where there is such a
\ntermination clause and the Group commercially relies on economic compulsion of the contracting parties, the two phases of activity are
\ntreated as distinct and no unbilled work done contract asset is recognised. In the absence of such a term, there is a contractual link
\nbetween the sale of OE components and aftermarket, which results in unbilled work done, and the total contract revenue is allocated to the
\ndistinct performance obligations.
\nUnbilled work done is measured using a weighted average unit method, taking account of an estimate of stand-alone selling price for
\nindividual performance obligations and is recognised when control of the OE component passes to the customer (the engine
\nmanufacturer). Due to the long-term nature of agreements, calculation of the total programme revenues is inherently imprecise and as set
\nout in note 3d requires significant estimates, including an assessment of the aftermarket revenue per engine which reflects the pattern of
\nfuture maintenance activity and associated costs to be incurred. In order to address the future uncertainties, risk adjustments as well as
\nconstraints have been applied to the expected level of revenue as appropriate. This approach best represents the value of goods and
\nservices supplied taking account of the performance obligations, risk and overall contract revenues.
\nAs a consequence of allocating additional revenue to the sale of OE components, an unbilled work done contract asset has been
\nrecognised which will be satisfied through cash receipt during the aftermarket phase. The constraints applied to unbilled work done are
\nreassessed at each period end, and will unwind as risks reduce and when uncertainties are resolved. This is expected to lead to additional
\nrevenue recognition in future periods in relation to items sold in the current and preceding periods. Further information is shown in note 4. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23433": {
"value": "18.
Cash and cash equivalents
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCash and cash equivalents
355
473
\nCash and cash equivalents comprises cash at bank and in hand which earns interest at floating rates based on daily bank deposit rates
\nand short-term deposits which are made for varying periods of between one day and one month. The carrying amount of these assets is
\nconsidered to be equal to their fair value.
Reconciliation of cash and cash equivalents, net of bank overdrafts
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCash and cash equivalents per Balance Sheet
\nBank overdrafts included within current interest-bearing loans and borrowings (note 20)
\n355
\n(63)
\n473
\n(5)
\nCash and cash equivalents, net of bank overdrafts per Statement of Cash Flows
292
468
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23469": {
"value": "19. Trade and other payables
\nCurrent
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nTrade payables
\nOther payables
\nCustomer advances and contract liabilities
\nOther taxes and social security
\nGovernment refundable advances
\nFunded development costs
\nAccruals
\nDeferred government grants
\n1,257
\n375
\n281
\n73
\n7
\n57
\n279
\n18
\n1,016
\n338
\n263
\n59
\n5
\n84
\n264
\n22
\n2,347
2,051
\nAs at 31 December 2022, and as described in note 25, included within trade payables were drawings on supplier finance facilities of \u00a3200
\nmillion (31 December 2021: \u00a3102 million).
\nTrade payables are non-interest-bearing. Normal settlement terms vary by country and the average credit period taken for trade and other
\npayables is 93 days (31 December 2021: 86 days).
\nNon-current
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nOther payables
\nCustomer advances and contract liabilities
\nOther taxes and social security
\nGovernment refundable advances
\nFunded development costs
\nAccruals
\nDeferred government grants
\n19
\n213
\n3
\n52
\n89
\n29
\n26
\n12
\n185
\n6
\n50
\n88
\n27
\n22
\n431
390
\nThe Directors consider that the carrying amount of trade and other payables approximates to their fair value.
\nNon-current amounts; other payables, other taxes and social security and accruals fall due for payment within one to two years;
\ngovernment refundable advances are forecast to fall due for repayment between 2023 and 2055 and the deferred government grants will
\nbe utilised over the next five years.
\nFunded development costs
\nWhen the Group is awarded design and development work as part of a related serial production of components contract, management
\nassesses whether the two phases of work are distinct under IFRS 15: Revenue from contracts with customers.
\nWhere it is considered there is only one performance obligation under the contract, being the delivery of manufactured product, any cash
\nreceived from customers which contributes to
\u2018funding\u2019 the up
-front design and development expenditure incurred, is deferred on the
\nBalance Sheet as an obligation and released to revenue in the Income Statement based on expectations of volumes.
\nDevelopment cost funding is in the Aerospace division (\u00a3131 million) and Automotive division (\u00a315 million).
\nCustomer advances and contract liabilities include cash receipts from customers in advance of the Group completing its performance
\nobligations and are generally utilised as product is delivered. Non-current amounts in respect of customer advances and contract liabilities
\nwill be utilised as follows: one to two years \u00a365 million, two to five years \u00a350 million and over five years \u00a398 million (31 December 2021:
\none to two years \u00a322 million, two to five years \u00a362 million and over five years \u00a3101 million).
\nThe G
roup\u2019s Customer advances and contract liabilities comprise the following:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCustomer cash advances
\nMaterial rights given
\nRRSP related obligations
\n95
\n34
\n365
\n92
\n48
\n308
\n494
448
\nCustomer cash advances
\nThere are a discrete number of contracts with customers, exclusively in the Aerospace business, where commercial terms lead to customer
\nadvances relating to serial production of components. Where cash is received in advance of performance, this usually addresses non-
\nstandard commercial impacts on the Group such as long lead times on inventory.
\nCustomer cash advances received before the Group delivers product is deferred on the Balance Sheet as an obligation and released to
\nrevenue based on expectations of volumes.
\n
\n193
\n
\n
\nMaterial rights given
\nWhere the Group has agreed contracts with customers that contain any unusual pricing features, these are assessed to determine if
\nmaterial rights have been transferred to the customer. A material right could occur when there is a material step down in price or if
\ncontracts are modified with lump sum cash receipts offset by a reduction in future pricing.
\nIf a material right has transferred to the customer, any cash received in advance of the Group performing its obligations under a contract is
\ndeferred on the Balance Sheet and released to revenue in the Income Statement based on the terms of the contract.
\nMaterial rights given are exclusively in the Aerospace business.
\nRRSP related obligations
\nAs detailed in the accounting policies (note 2), significant estimates disclosure (note 3), revenue disclosures (note 4) and contract asset
\ndisclosure (note 17), the Group has certain RRSP arrangements in the Aerospace business, with more complex revenue recognition
\nconsiderations. Whilst the Group has an unbilled work done contract asset of \u00a3450 million (31 December 2021: \u00a3305 million), detailed in
\nnote 17, which represents the Group having completed certain of its performance obligations in advance of cash receipt, it also has
\ncontract liabilities.
\nThese include:
\n\u2022
C
ash received for a \u201cstand ready\u201d obligation (described in note 4) of \u00a391 million (31 December 2021: \u00a392 million) to contribut
e to
\naftermarket activities of certain RRSPs, which typically results in the provision of services such as technical and other programme
\nsupport activities over the whole life of the engine. This will be recognised over time in line with the engine manufacturer\u2019
s actual
\nmaintenance, repair and overhaul costs.
\n\u2022
A pricing rebate provision for estimated discounts provided by engine manufacturers on the sale of OE of \u00a363 million (31 December
\n2021: \u00a385 million).
\n\u2022
C
ash received to compensate where the production cost incurred on an RRSP contract is in excess of the Group\u2019s share of the
\nprogramme, totalling \u00a38 million (31 December 2021: \u00a3nil). This will be released to the Income Statement when the Group has satisfied its
\nperformance obligations.
\n\u2022
Cash received in respect of RRSP contract amendments of \u00a361 million (31 December 2021: \u00a333 million).
This will be released over the
\nlife of the contract in accordance with the original terms of the contract.
\n\u2022
A provision for engineering and warranty commitments in respect of RRSP contracts of \u00a327 million (31 December 2021: \u00a326 million).
\nThis is expected to be utilised over the warranty terms of the contracts.
\n\u2022
Other contract liabilities of \u00a3115 million (31 December 2021: \u00a372 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23648": {
"value": "20. Interest-bearing loans and borrowings
\nThis note provides information about the contractual terms of the Group\u2019s interest
-bearing loans and borrowings. Details of
the Group\u2019s
\nexposure to credit, liquidity, interest rate and foreign currency risk are included in note 25.
\nCurrent
Non-current
Total
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nFloating rate obligations
\nBank borrowings
\u2013
US Dollar loan
\nBank borrowings
\u2013
Sterling loan
\nBank borrowings
\u2013
Euro loan
\nOther loans and bank overdrafts
\n\u2013
\n\u2013
\n\u2013
\n63
\n\u2013
\n\u2013
\n\u2013
\n5
\n759
\n182
\n363
\n\u2013
\n582
\n30
\n\u2013
\n\u2013
\n759
\n182
\n363
\n63
\n582
\n30
\n\u2013
\n5
\nFixed rate obligations
\n2022 bond
\n2032 bond
\n\u2013
\n\u2013
\n450
\n\u2013
\n\u2013
\n130
\n\u2013
\n300
\n\u2013
\n130
\n450
\n300
\nUnamortised finance costs
\nNon-cash acquisition fair value adjustment
\n63
\n\u2013
\n\u2013
\n455
\n\u2013
\n7
\n1,434
\n(3)
\n2
\n912
\n(13)
\n4
\n1,497
\n(3)
\n2
\n1,367
\n(13)
\n11
\nTotal interest-bearing loans and borrowings
63
462
1,433
903
1,496
1,365
\nThe Group\u2019s committed bank funding includes a multi
-currency denominated term loan of \u00a330 million (31 December 2021: \u00a330 million) and
\nUS$788 million (31 December 2021: US$788 million) and a multi-currency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion
\nand \u20ac0.5 billion. Loans drawn under this facility are guaranteed by Melrose Industries PLC and certain of its subsidiaries, a
nd there is no
\nsecurity over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and \u00a3152 million (31 December 2021: \u00a3nil), US$130 million (31 December 2021: \u00a3nil)
\nand \u20ac410 million (31 December 2021: \u00a3nil) were
drawn on the multi-currency revolving credit facility. Applying the exchange rates at 31
\nDecember 2022, the headroom equated to \u00a32.6 billion (31 December 2021: \u00a33.0 billion). There are also a number of uncommitted
\noverdraft, guarantee and borrowing facilities made available to the Group.
\n
\n\n\n194
\nThroughout the year, the Group remained compliant with all covenants under the facilities disclosed above. A number of Group companies
\ncontinue to be guarantors under the bank facilities. Further details on covenant compliance for the year ended 31 December 2022 are
\ncontained in note 25.
\nThe bank margin on the bank facility depends on the Group leverage, and ranges from 0.75% to 2.0% for both the term loan and revolving
\ncredit facility. As at 31 December 2022, the margin was 1.2% (31 December 2021: 0.75%).
\nThe \u00a3450 million bond along with associated cross-currency swaps matured in 2022.
\nDuring the year, the Group undertook a tender to buy back the 2032 \u00a3300 million bond with \u00a3170 million repurchased and a cash outflow of
\n\u00a3148 million. The Group has \u00a3130 million of the bond remaining which matures in 2032 on its existing terms.
\nDetails of the remaining bond are in the table below:
\nMaturity date
\nNotional amount
\n\u00a3m
\nCoupon
\n% p.a.
\nMay 2032
130
4.625%
\nMaturity of financial liabilities (excluding currency contracts and lease obligations)
\nThe table below shows the maturity profile of anticipated future cash flows, including interest, on an undiscounted basis in relation to the
\nGroup\u2019s financial liabilities (other than those associated with currency risk, which are shown in note 25, and leas
e obligations which are
\nshown in note 28). The amounts shown therefore differ from the carrying value and fair value of the Group\u2019s financial liabili
ties.
\nInterest-
bearing
\nloans and
\nborrowings
\n\u00a3m
\nInterest rate
\nderivative
\nfinancial
\nliabilities
\n\u00a3m
\nOther f
inancial
\nliabilities
\n\u00a3m
\nTotal financial
\nliabilities
\n\u00a3m
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n131
\n1,358
\n18
\n160
\n(171)
\n3
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1,918
\n60
\n15
\n25
\n\u2013
\n2,052
\n1,418
\n33
\n185
\n(171)
\n31 December 2022
1,496
3
2,018
3,517
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n501
\n27
\n661
\n383
\n(207)
\n4
\n3
\n\u2013
\n\u2013
\n\u2013
\n1,623
\n45
\n15
\n29
\n\u2013
\n2,128
\n75
\n676
\n412
\n(207)
\n31 December 2021
1,365
7
1,712
3,084",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBorrowingsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23649": {
"value": "20. Interest-bearing loans and borrowings
\nThis note provides information about the contractual terms of the Group\u2019s interest
-bearing loans and borrowings. Details of
the Group\u2019s
\nexposure to credit, liquidity, interest rate and foreign currency risk are included in note 25.
\nCurrent
Non-current
Total
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nFloating rate obligations
\nBank borrowings
\u2013
US Dollar loan
\nBank borrowings
\u2013
Sterling loan
\nBank borrowings
\u2013
Euro loan
\nOther loans and bank overdrafts
\n\u2013
\n\u2013
\n\u2013
\n63
\n\u2013
\n\u2013
\n\u2013
\n5
\n759
\n182
\n363
\n\u2013
\n582
\n30
\n\u2013
\n\u2013
\n759
\n182
\n363
\n63
\n582
\n30
\n\u2013
\n5
\nFixed rate obligations
\n2022 bond
\n2032 bond
\n\u2013
\n\u2013
\n450
\n\u2013
\n\u2013
\n130
\n\u2013
\n300
\n\u2013
\n130
\n450
\n300
\nUnamortised finance costs
\nNon-cash acquisition fair value adjustment
\n63
\n\u2013
\n\u2013
\n455
\n\u2013
\n7
\n1,434
\n(3)
\n2
\n912
\n(13)
\n4
\n1,497
\n(3)
\n2
\n1,367
\n(13)
\n11
\nTotal interest-bearing loans and borrowings
63
462
1,433
903
1,496
1,365
\nThe Group\u2019s committed bank funding includes a multi
-currency denominated term loan of \u00a330 million (31 December 2021: \u00a330 million) and
\nUS$788 million (31 December 2021: US$788 million) and a multi-currency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion
\nand \u20ac0.5 billion. Loans drawn under this facility are guaranteed by Melrose Industries PLC and certain of its subsidiaries, a
nd there is no
\nsecurity over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and \u00a3152 million (31 December 2021: \u00a3nil), US$130 million (31 December 2021: \u00a3nil)
\nand \u20ac410 million (31 December 2021: \u00a3nil) were
drawn on the multi-currency revolving credit facility. Applying the exchange rates at 31
\nDecember 2022, the headroom equated to \u00a32.6 billion (31 December 2021: \u00a33.0 billion). There are also a number of uncommitted
\noverdraft, guarantee and borrowing facilities made available to the Group.
\n
\n\n\n194
\nThroughout the year, the Group remained compliant with all covenants under the facilities disclosed above. A number of Group companies
\ncontinue to be guarantors under the bank facilities. Further details on covenant compliance for the year ended 31 December 2022 are
\ncontained in note 25.
\nThe bank margin on the bank facility depends on the Group leverage, and ranges from 0.75% to 2.0% for both the term loan and revolving
\ncredit facility. As at 31 December 2022, the margin was 1.2% (31 December 2021: 0.75%).
\nThe \u00a3450 million bond along with associated cross-currency swaps matured in 2022.
\nDuring the year, the Group undertook a tender to buy back the 2032 \u00a3300 million bond with \u00a3170 million repurchased and a cash outflow of
\n\u00a3148 million. The Group has \u00a3130 million of the bond remaining which matures in 2032 on its existing terms.
\nDetails of the remaining bond are in the table below:
\nMaturity date
\nNotional amount
\n\u00a3m
\nCoupon
\n% p.a.
\nMay 2032
130
4.625%
\nMaturity of financial liabilities (excluding currency contracts and lease obligations)
\nThe table below shows the maturity profile of anticipated future cash flows, including interest, on an undiscounted basis in relation to the
\nGroup\u2019s financial liabilities (other than those associated with currency risk, which are shown in note 25, and leas
e obligations which are
\nshown in note 28). The amounts shown therefore differ from the carrying value and fair value of the Group\u2019s financial liabili
ties.
\nInterest-
bearing
\nloans and
\nborrowings
\n\u00a3m
\nInterest rate
\nderivative
\nfinancial
\nliabilities
\n\u00a3m
\nOther f
inancial
\nliabilities
\n\u00a3m
\nTotal financial
\nliabilities
\n\u00a3m
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n131
\n1,358
\n18
\n160
\n(171)
\n3
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1,918
\n60
\n15
\n25
\n\u2013
\n2,052
\n1,418
\n33
\n185
\n(171)
\n31 December 2022
1,496
3
2,018
3,517
\nWithin one year
\nIn one to two years
\nIn two to five years
\nAfter five years
\nEffect of financing rates
\n501
\n27
\n661
\n383
\n(207)
\n4
\n3
\n\u2013
\n\u2013
\n\u2013
\n1,623
\n45
\n15
\n29
\n\u2013
\n2,128
\n75
\n676
\n412
\n(207)
\n31 December 2021
1,365
7
1,712
3,084",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f23899": {
"value": "21. Provisions Loss-making
\ncontracts
\n\u00a3m
\nProperty
\nrelated costs
\n\u00a3m
\nEnvironmental
\nand litigation
\n\u00a3m
\nWarranty
\nrelated costs
\n\u00a3m
\nRestructuring
\n\u00a3m
\nOther
\n\u00a3m
\nTotal
\n\u00a3m
\nAt 1 January 2022
\nUtilised
\nCharge to operating profit
\n(1)
\nRelease to operating profit
\n(2)
\nDisposal of businesses
\n(3)
\nTransfer to held for sale
\n(4)
\nUnwind of discount
\n(5)
\nExchange adjustments
\n167
\n(40)
\n\u2013
\n(15)
\n(9)
\n\u2013
\n(3)
\n8
\n29
\n\u2013
\n2
\n\u2013
\n(5)
\n\u2013
\n\u2013
\n2
\n135
\n(16)
\n16
\n(21)
\n\u2013
\n(2)
\n\u2013
\n7
\n222
\n(29)
\n48
\n(50)
\n(2)
\n(3)
\n\u2013
\n14
\n81
\n(121)
\n130
\n(11)
\n\u2013
\n\u2013
\n\u2013
\n4
\n67
\n(2)
\n10
\n(2)
\n(2)
\n\u2013
\n1
\n1
\n701
\n(208)
\n206
\n(99)
\n(18)
\n(5)
\n(2)
\n36
\n31 December 2022
108
28
119
200
83
73
611
\nCurrent
\nNon-current
\n40
\n68
\n4
\n24
\n61
\n58
\n98
\n102
\n67
\n16
\n11
\n62
\n281
\n330
\n108
28
119
200
83
73
611
\n(1) Includes \u00a3130 million of adjusting items and \u00a376 million recognised in adjusted operating profit.
\n(2) Includes \u00a330 million of adjusting items and \u00a369 million recognised in adjusted operating profit.
\n(3) Disposal of businesses in 2022 relates to the sale of a non-core entity.
\n(4) Transfer to held for sale relates to the Ergotron business, which was subsequently disposed of during the second half of the year (note 1).
\n(5) Includes \u00a32 million within finance costs relating to the time value of money and a \u00a34 million credit relating to changes in discount rates on loss-making contract provisions recognised as fair value
\nitems on the acquisition of GKN, which has been included as an adjusting item within operating profit (note 6).
\n
\n195
\n
\n
\nLoss-making contracts
\nProvisions for loss-making contracts are considered to exist where the Group has a contract under which the unavoidable costs of meeting
\nthe obligations exceed the economic benefits expected to be received under it. This obligation has been discounted and will be utilised
\nover the period of the respective contracts, which is up to 15 years. At 31 December 2022, the loss-making contracts provision within
\nAerospace totalled \u00a362 million (31 December 2021: \u00a398 million), Automotive \u00a339 million (31 December 2021: \u00a354 million) and Powder
\nMetallurgy \u00a37 million (31 December 2021: \u00a315 million).
\nCalculation of loss-making contract provisions is based on contract documentation and delivery expectations, along with an estimate of
\ndirectly attributable costs and represent
s management\u2019s best estimate of the unavoidable costs of fulfilling the contract.
\nUtilisation during the year of \u00a340 million (2021: \u00a348 million) has benefited adjusted operating profit with \u00a323 million (2021: \u00a323 million)
\nrecognised in Aerospace, \u00a315 million (2021: \u00a321 million) recognised in Automotive, \u00a32 million (2021: \u00a34 million) recognised in Powder
\nMetallurgy. In addition, \u00a315 million (2021: \u00a322 million) has been released on a net basis with \u00a311 million (2021: \u00a322 million) shown as an
\nadjusting item, as described in note 6, as part of the release of fair value items split; \u00a34 million (2021: \u00a34 million) in Aerospace, \u00a3nil (2021:
\n\u00a38 million) in Automotive and \u00a37 million (2021: \u00a310 milion) in Powder Metallurgy.
\nProperty related costs
\nThe provision for property related costs represents dilapidation costs for ongoing leases and is expected to result in cash expenditure over
\nthe next eight years. Calculation of dilapidation obligations are based on lease agreements with landlords and external quotes, or in the
\nabsence of specific documentation, management\u2019s best estimate of the costs required to fulfil obligations
.
\nEnvironmental and litigation
\nThere are environmental provisions amounting to \u00a326 million (31 December 2021: \u00a326 million) relating to the estimated remediation costs of
\npollution, soil and groundwater contamination at certain sites and estimated future costs and settlements in relation to legal claims and
\nassociated insurance obligations amounting to \u00a393 million (31 December 2021: \u00a3109 million). Liabilities for environmental costs are recognised
\nwhen environmental assessments are probable and the associated costs can be reasonably estimated.
\nProvisions are recorded for product and general liability claims which are probable and for which the cost can be reliably estimated. These
\nliabilities include an estimate of claims incurred but not yet reported and are based on actuarial valuations using claim data. Due to their
\nnature, it is not possible to predict precisely when these provisions will be utilised.
\nThe Group has on occasion been required to take legal or other actions to defend itself against proceedings brought by other parties.
\nProvisions are made for the expected costs associated with such matters, based on past experience of similar items and other known
\nfactors, considering professional advice received. This represents management\u2019s best estimate of the likely outcome. The timi
ng of
\nutilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcome of various court proceedings and
\nnegotiations. Contractual and other provisions represent management\u2019s best estimate of the cost of settling future obligation
s and reflect
\nmanagement\u2019s assessment of the likely settlement method, which may change
over time. However, no provision is made for proceedings
\nwhich have been, or might be, brought by other parties against Group companies unless management, considering professional advice
\nreceived, assess that it is more likely than not that such proceedings may be successful.
\nWarranty related costs
\nProvisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the
\nrelevant products and subsequently updated for changes in estimates as necessary. The provision for warranty related costs represents
\nthe best estimate of the expenditure required to settle the Group\u2019s obligations, based on past experience, recent claims and
current
\nestimates of costs relating to specific claims. Warranty terms are, on average, between one and five years.
\nRestructuring
\nRestructuring provisions relate to committed costs in respect of restructuring programmes, as described in note 6, usually resulting in cash
\nspend within one year. A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring
\nand has raised a valid expectation in those affected that it will carry out the restructuring by either starting to implement the plan or by
\nannouncing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures
\narising from the restructuring, which are those amounts that are necessarily entailed by the restructuring programmes.
\nOther
\nOther provisions include long-term incentive plans for divisional senior management and the employer tax on equity-settled incentive
\nschemes which are expected to result in cash expenditure during the next four years.
\nWhere appropriate, provisions have been discounted using discount rates between 0% and 14% (31 December 2021: 0% and 11%)
\ndepending on the territory in which the provision resides and the length of its expected utilisation.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfProvisionsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f24126": {
"value": "22. Deferred tax
\nThe following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior
\nyear.
\nDeferred tax
\nassets
Deferred tax liabilities
\nTax losses and
\nother assets
\n\u00a3m
\nAccelerated
\ncapital allowances
\nand other liabilities
\n\u00a3m
\nDeferred tax on
\nintangible assets
\n\u00a3m
\nTotal deferred
\ntax liabilities
\n\u00a3m
\nTotal net
\ndeferred tax
\n\u00a3m
\nAt 1 January 2021
\nCredit to income
\nCharge to equity
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\nMovement in set off of assets and liabilities
\n(3)
\n180
\n149
\n(90)
\n(53)
\n(6)
\n(18)
\n88
\n(167)
\n41
\n\u2013
\n\u2013
\n\u2013
\n(3)
\n2
\n(565)
\n48
\n\u2013
\n78
\n24
\n18
\n(90)
\n(732)
\n89
\n\u2013
\n78
\n24
\n15
\n(88)
\n(552)
\n238
\n(90)
\n25
\n18
\n(3)
\n\u2013
\nAt 31 December 2021
\nCredit to income
\nCredit to equity
\nDisposal of businesses
\n(1)
\nAcquisition of businesses
\n(4)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\nMovement in set off of assets and liabilities
\n(3)
\n250
\n35
\n4
\n(10)
\n\u2013
\n(9)
\n44
\n59
\n(127)
\n3
\n\u2013
\n\u2013
\n(1)
\n\u2013
\n(18)
\n(7)
\n(487)
\n111
\n\u2013
\n\u2013
\n\u2013
\n30
\n(71)
\n(52)
\n(614)
\n114
\n\u2013
\n\u2013
\n(1)
\n30
\n(89)
\n(59)
\n(364)
\n149
\n4
\n(10)
\n(1)
\n21
\n(45)
\n\u2013
\nAt 31 December 2022
373
(150)
(469)
(619)
(246)
\n(1) Disposal of businesses in 2022 relates to the sale of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities
\n(note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\n(3)
Set off of deferred tax assets and liabilities in accordance with IAS 12 within territories with a right of set off.
\n(4)
Acquisition of businesses in 2022 relates to Permanova Lasersystem AB within the Aerospace segment (note 1).
\nAs at 31 December 2022, the Group had gross unused corporate income tax losses of \u00a32,176 million (31 December 2021: \u00a31,841 million)
\navailable for offset against future profits. A deferred tax asset of \u00a3477 million (31 December 2021: \u00a3396 million) has been recognised in
\nrespect of \u00a31,938 million (31 December 2021: \u00a31,683 million) of these gross losses. The movement in deferred tax assets relating to tax
\nlosses arises primarily through the Income Statement. There is also a credit of \u00a36 million (2021: \u00a3nil) included within equity. No asset has
\nbeen recognised in respect of the remaining losses due to the divisional and geographic split of anticipated future profit streams. Most of
\nthese losses may be carried forward indefinitely subject to certain continuity of business requirements. Where losses are subject to time
\nexpiry, a deferred tax asset is recognised to the extent that sufficient future profits are anticipated to utilise these losses. Despite incurring
\ntax losses in certain territories due to the effects of COVID-19, the Group continues to recognise deferred tax assets in those territories as
\nit is confident that the global recovery, together with restructuring actions taken, will result in future taxable profits against which the
\ndeferred tax assets will be realised. In addition to the corporate income tax losses included above, a deferred tax asset of \u00a347 million (31
\nDecember 2021: \u00a350 million) has been recognised on tax credits (primarily US) and US state tax losses.
\nDeferred tax assets have also been recognised on Group retirement benefit obligations at \u00a314 million (31 December 2021: \u00a333 million) and
\non other temporary differences at \u00a3318 million (31 December 2021: \u00a3313 million). The gross deferred tax assets therefore amount to \u00a3856
\nmillion (31 December 2021: \u00a3792 million).
\nDeferred tax liabilities have been recognised on intangible assets at \u00a3923 million (31 December 2021: \u00a3993 million) and accelerated capital
\nallowances and other temporary differences at \u00a3179 million (31 December 2021: \u00a3163 million). The gross deferred tax liabilities therefore
\namount to \u00a31,102 million (31 December 2021: \u00a31,156 million).
\nThere are no material unrecognised deferred tax assets at 31 December 2022 (31 December 2021: \u00a3nil), other than the losses referred to
\nabove.
\nNo deferred tax is recognised on the unremitted earnings of overseas subsidiaries except where the distribution of such profits is planned.
\nIf these earnings were remitted in full, tax of \u00a362 million (31 December 2021: \u00a353 million) would be payable. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f24283": {
"value": "23. Share-based payments
\n2020 Employee Share Plan
\nDuring the year, the Group recognised a charge of \u00a315 million (2021: \u00a319 million) in respect of the 2020 Employee Share Plan, inclusive of
\na \u00a31 million credit in respect of related national insurance (2021: charge of \u00a33 million), recognised in adjusting items (note 6).
\nFurther details of the 2020 Employee Share Plan are set ou
t in the Directors\u2019 Remuneration Report on page
125.
\nThe estimated value of the 2020 Employee Share Plan at 31 December 2022 if settled at that date was \u00a3nil (31 December 2021: \u00a3nil).
\nUsing a Black-Scholes option pricing model, the projected value of this plan at 31 May 2023 (being the end of the three year performance
\nperiod) is \u00a322 million (31 December 2021: \u00a351 million). The projected value is impacted by future acquisition and disposal assumptions.
\n
\n197
\n
\n
\nThe annual IFRS 2 charge in respect of the 2020 Employee Share Plan is \u00a316 million. The inputs into the Black-Scholes valuation model
\nthat were used to fair value the plan at the grant date were as follows:
\nValuation assumptions
\nWeighted average share price
\nWeighted average exercise price
\nExpected volatility
\nExpected life as at inception
\nRisk free interest
\n\u00a31.81
\n\u00a31.71
\n58%
\n2.4 years
\n0.0%
\nExpected volatility was determined by calculating the
historical volatility of the Company\u2019s share price. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f24287": {
"value": "2020 Employee Share Plan During the year, the Group recognised a charge of \u00a315 million (2021: \u00a319 million) in respect of the 2020 Employee Share Plan, inclusive of
\na \u00a31 million credit in respect of related national insurance (2021: charge of \u00a33 million), recognised in adjusting items (note 6).
\nFurther details of the 2020 Employee Share Plan are set ou
t in the Directors\u2019 Remuneration Report on page
125.
\nThe estimated value of the 2020 Employee Share Plan at 31 December 2022 if settled at that date was \u00a3nil (31 December 2021: \u00a3nil).
\nUsing a Black-Scholes option pricing model, the projected value of this plan at 31 May 2023 (being the end of the three year performance
\nperiod) is \u00a322 million (31 December 2021: \u00a351 million). The projected value is impacted by future acquisition and disposal assumptions.
\n
\n197
\n
\n
\nThe annual IFRS 2 charge in respect of the 2020 Employee Share Plan is \u00a316 million. The inputs into the Black-Scholes valuation model
\nthat were used to fair value the plan at the grant date were as follows:
\nValuation assumptions
\nWeighted average share price
\nWeighted average exercise price
\nExpected volatility
\nExpected life as at inception
\nRisk free interest
\n\u00a31.81
\n\u00a31.71
\n58%
\n2.4 years
\n0.0%
\nExpected volatility was determined by calculating the
historical volatility of the Company\u2019s share price.
\n24.
Retirement benefit obligations
\nDefined contribution plans
\nThe Group operates defined contribution plans for qualifying employees across several jurisdictions. The assets of the plans are held
\nseparately from those of the Group in funds under the control of Trustees.
\nThe total costs charged in relation to the continuing businesses during the year of \u00a369 million (2021: \u00a368 million) represent contributions
\npayable to these plans by the Group at rates specified in the rules of the plans.
\nDefined benefit plans
\nThe Group sponsors defined benefit plans for qualifying employees of certain subsidiaries. The funded defined benefit plans are
\nadministered by separate funds that are legally separated from the Group. The Trustees of the funds are required by law to act in the
\ninterest of the fund and of all relevant stakeholders in the plans. The Trustees of the pension funds are responsible for the investment
\npolicy with regard to the assets of the fund.
\nThe most significant defined benefit pension plans in the Group at 31 December 2022 were:
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nThe GKN Group Pension Schemes (Numbers 1
\u2013
4) are shown within the Aerospace and Automotive segments and the net surplus is split
\n43% and 57% respectively as at 31 December 2022. These plans are funded, closed to new members and were closed to future accrual in
\n2017. The valuation of the plans was based on a full actuarial valuation as of 5 April 2022, updated to 31 December 2022 by independent
\nactuaries.
\nGKN US Consolidated Pension Plan
\nThe GKN US Consolidated Pension Plan is a funded plan, closed to new members and closed to future accrual. The US Pension Plan
\nvaluation was based on a full actuarial valuation as of 1 January 2022, updated to 31 December 2022 by independent actuaries.
\nGKN Germany Pension Plans
\nThe GKN Germany Pension Plans provide benefits dependent on final salary and service with the Company. The plans are generally
\nunfunded and closed to new members.
\nOther plans include a number of funded and unfunded defined benefit arrangements and retiree medical insurance plans, predominantly in
\nthe US and Europe.
\nThe cost of the Group\u2019s defined benefit plans is determined in accordance with IAS 19 (revise
d): Employee benefits using the advice of
\nindependent professionally qualified actuaries on the basis of formal actuarial valuations and using the projected unit credit method. In line
\nwith normal practice, these valuations are undertaken triennially in the UK and annually in the US and Germany.
\nContributions
\nDuring the prior year, the funding target agreed on acquisition of GKN was achieved, being gilts plus 25 basis points for the GKN UK 2016
\nPension Plan and gilts plus 75 basis points for the GKN Group Pension Schemes (Numbers 1
\u2013
4). The commitments from acquisition
\nceased as a result and the Group now contributes \u00a330 million per year into the GKN Group Pension Schemes (Numbers 1
\u2013
4).
\nThe Group contributed \u00a359 million (2021: \u00a3128 million) to defined benefit pension plans and post-employment plans in the year ended 31
\nDecember 2022. The Group expects to contribute \u00a351 million in 2023.
\nActuarial assumptions
\nThe major assumptions used by the actuaries in calculating the Group\u2019s pension
liabilities are as set out below:
\nRate of increase
\nof pensions in payment
\n% per annum
\nDiscount rate
\n%
\nPrice inflation
\n(RPI/CPI)
\n%
\n31 December 2022
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nGKN US plans
\nGKN Europe plans
\n2.7
\nn/a
\n2.6
\n4.8
\n5.0
\n3.7
\n3.2/2.7
\nn/a
\n2.6/2.6
\n31 December 2021
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nGKN US plans
\nGKN Europe plans
\n2.7
\nn/a
\n2.1
\n2.0
\n2.7
\n1.1
\n3.2/2.7
\nn/a
\n2.1/2.1
\n
\n
\n
\n198
\nMortality
\nGKN Group Pension Schemes (Numbers 1
\u2013
4)
\nThe GKN Group Pension Schemes (Numbers 1
\u2013
4) use the SAPS \u201cS3PA\u201d base tables with
scheme-specific adjustments. The base table
\nmortality assumption for each of the UK plans reflects best estimate results from the most recent mortality experience analyses for each
\nscheme. Weighting factors vary by scheme.
\nFuture improvements for all UK plans are in line with the 2021
Continuous Mortality Investigation (\u201cCMI\u201d) core p
rojection model (SK = 7.5,
\nA = 0%) with a long-term rate of improvement of 1.25% p.a. for both males and females.
\nGKN US Consolidated Pension Plan
\nGKN US Pension and Medical Plans use base mortality tables that are adjusted for recent plan experience (equivalent to RP2006
\nprojected to 2018 using scale MP2018 with a 6.1% load). Future improvements for all US plans are in line with MP2021.
\nGKN Germany Pension Plans
\nAll German plans use the Richttafein 2018 G tables, with no adjustment.
\nThe following table shows the future life expectancy of individuals age 65 at the year end and the future life expectancy of individuals aged
\n65 in 20 years\u2019 time.
\nGKN Group
\nPension Schemes
\n(Numbers 1
\u2013
4)
\nyears
\nGKN US
\nConsolidated
\nPension Plan
\nyears
\nGKN
Germany
\nPension Plans
\nyears
\nMale today
\nFemale today
\nMale in 20 years\u2019 time
\nFemale in 20 years\u2019 time
\n21.7
\n23.6
\n22.6
\n24.8
\n19.2
\n21.1
\n20.7
\n22.6
\n20.6
\n2
4.0
\n23.
4
\n26.3
\nBalance Sheet disclosures
\nThe amounts recognised in the Consolidated Balance Sheet in respect of defined benefit plans were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPresent value of funded defined benefit obligations
\nFair value of plan assets
\n(1,931)
\n1,941
\n(2,848)
\n3,010
\nFunded status
\nPresent value of unfunded defined benefit obligations
\n10
\n(498)
\n162
\n(623)
\nNet liabilities
(488)
(461)
\nAnalysed as:
\nRetirement benefit surplus
\n(1)
\nRetirement benefit obligations
\n93
\n(581)
\n184
\n(645)
\nNet liabilities
(488)
(461)
\n(1) Retirement benefit surplus at 31 December 2021 was previously shown within other receivables.
\nThe net retirement benefit obligation in continuing businesses is attributable to Aerospace: liability of \u00a327 million (31 December 2021: asset
\nof \u00a367 million), Automotive: liability of \u00a3427 million (31 December 2021: \u00a3484 million), Powder Metallurgy: liability of \u00a334 million (31
\nDecember 2021: \u00a337 million) and Corporate: liability of \u00a3nil (31 December 2021: liability of \u00a37 million).
\nThe plan assets and liabilities at 31 December 2022 were as follows:
\nUK
\nPlans
\n(1)
\n\u00a3m
\nUS
\nPlans
\n\u00a3m
\nEuropean
\nPlans
\n\u00a3m
\nOther
\nPlans
\n\u00a3m
\nTotal
\n\u00a3m
\nPlan assets
\nPlan liabilities
\n1,779
\n(1,755)
\n120
\n(202)
\n20
\n(443)
\n22
\n(29)
\n1,941
\n(2,429)
\nNet assets/(liabilities)
24
(82)
(423)
(7)
(488)
\n(1) Includes a liability in respect of the GKN post-employment medical plans of \u00a36 million and a net surplus in respect of the GKN Group Pension Scheme (Numbers 1
\u2013
4) of \u00a330 million.
\n
\n199
\n
\n
\nThe major categories and fair values of plan assets at the end of the year for each category were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nEquities
\nGovernment bonds
\nCorporate bonds
\nProperty
\nInsurance contracts
\nMulti-strategy/Diversified growth funds
\nPrivate equity
\nOther
\n(1)
\n85
\n722
\n196
\n18
\n28
\n354
\n80
\n458
\n141
\n1,420
\n459
\n71
\n38
\n424
\n209
\n248
\nTotal
1,941
3,010
\n(1) Primarily consists of cash collateral and liability driven investments.
\nThe assets were well diversified and the majority of plan assets had quoted prices in active markets. All government bonds were issued by
\nreputable governments and were generally AA rated or higher. Interest rate and inflation rate swaps were also employed to complement
\nthe role of fixed and index-linked bond holdings for liability risk management.
\nThe Trustees continually review whether the chosen investment strategy is appropriate with a view to providing the pension benefits and to
\nensure appropriate matching of risk and return profiles. The main strategic policies included maintaining an appropriate asset mix,
\nmanaging interest rate sensitivity and maintaining an appropriate equity buffer. Investment results are regularly reviewed.
\nMovements in the present value of defined benefit obligations during the year:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nCurrent service cost
\nInterest cost on obligations
\nRemeasurement gains
\u2013
demographic
\nRemeasurement gains
\u2013
financial
\nRemeasurement losses/(gains)
\u2013
experience
\nBenefits paid out of plan assets
\nBenefits paid out of Group assets for unfunded plans
\nSettlements
\n(1)
\nDisposal of businesses
\n(2)
\nExchange adjustments
\n3,471
\n9
\n66
\n(1)
\n(1,072)
\n102
\n(134)
\n(24)
\n(44)
\n\u2013
\n56
\n4,613
\n8
\n59
\n(14)
\n(162)
\n(49)
\n(186)
\n(16)
\n(366)
\n(379)
\n(37)
\nAt 31 December
2,429
3,471
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\nThe defined benefit plan liabilities were 15% (31 December 2021: 23%) in respect of active plan participants, 25% (31 December 2021:
\n27%) in respect of deferred plan participants and 60% (31 December 2021: 50%) in respect of pensioners.
\nThe weighted average duration of the defined benefit plan liabilities at 31 December 2022 was 12.8 years (31 December 2021: 17.7
\nyears).
\nMovements in the fair value of plan assets during the year:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nInterest income on plan assets
\nReturn on plan assets, excluding interest income
\nContributions
\nBenefits paid out of plan assets
\nPlan administrative costs
\nSettlements
\n(1)
\nDisposal of businesses
\n(2)
\nExchange adjustments
\n3,010
\n61
\n(1,003)
\n35
\n(134)
\n(8)
\n(42)
\n\u2013
\n22
\n3,775
\n51
\n72
\n112
\n(186)
\n(7)
\n(372)
\n(432)
\n(3)
\nAt 31 December
1,941
3,010
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core entities (note 1).
\n
\n
\n
\n200
\nThe actual return on plan assets was a loss of \u00a3942 million (2021: gain of \u00a3123 million).
\nIncome Statement disclosures
\nAmounts recognised in the Consolidated Income Statement in respect of these defined benefit plans were as follows:
\nContinuing operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nIncluded within operating loss:
\n\u2013
current service cost
\n\u2013
settlement (gains)/losses
\n(1)
\n\u2013
plan administrative costs
\n(2)
\nIncluded within net finance costs:
\n\u2013
interest cost on defined benefit obligations
\n\u2013
interest income on plan assets
\n9
\n(2)
\n8
\n66
\n(61)
\n8
\n6
\n7
\n56
\n(48)
\nDiscontinued operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nIncluded within net finance costs:
\n\u2013
interest cost on defined benefit obligations
\n\u2013
interest income on plan assets
\n\u2013
\n\u2013
\n3
\n(3)
\n(1) During 2022, a settlement gain of \u00a32 million was recognised relating to the buy-out of certain US pension schemes and is shown as an adjusting item (note 6). During 2021, a settlement
\nloss of \u00a36 million was recognised relating to the buy-out of the GKN UK 2016 pension plan and was shown as an adjusting item (note 6).
\n(2) Includes \u00a31 million of costs relating to the buy-out of the GKN UK 2016 Pension Plan in 2021. This was treated as an adjusting item (note 6).
\nStatement of Comprehensive Income disclosures
\nAmounts recognised in the Consolidated Statement of Comprehensive Income in respect of these defined benefit plans were as follows:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nReturn on plan assets, excluding interest income
\nRemeasurement gains arising from changes in demographic assumptions
\nRemeasurement gains arising from changes in financial assumptions
\nRemeasurement (losses)/gains arising from experience adjustments
\n(1,003)
\n1
\n1,072
\n(102)
\n72
\n14
\n162
\n49
\nNet remeasurement (loss)/gain on retirement benefit obligations
(32)
297
\nRisks and sensitivities
\nThe defined benefit plans expose the Group to actuarial risks, such as longevity risk, inflation risk, interest rate risk and market
\n(investment) risk. The Group is not exposed to any unusual, entity specific or plan specific risks.
\nA sensitivity analysis on the principal assumptions used to measure the plan liabilities at the year end was as follows:
\nChange in assumption
\nDecrease/(increase)
\nto plan liabilities
\n\u00a3m
\nIncrease/(decrease)
\nto profit before tax
\n\u00a3m
\nDiscount rate
\nInflation assumption
\n(1)
\nAssumed life expectancy at age 65 (rate of mortality)
\nIncrease by 0.5 ppts
\nDecrease by 0.5
ppts
\nIncrease by 0.5
ppts
\nDecrease by 0.5
ppts
\nIncrease by 1
year
\nDecrease by 1 year
\n142
\n(156)
\n(90)
\n91
\n(99)
\n100
\n(5)
\n5
\nn/a
\nn/a
\nn/a
\nn/a
\n(1) The inflation sensitivity encompasses the impact on pension increases, where applicable.
\nThe sensitivity analysis above was determined based on reasonably possible changes to the respective assumptions, while holding all
\nother assumptions constant. There has been no change in the methods or assumptions used in preparing the sensitivity analysis from prior
\nyears. Sensitivities are based on the relevant assumptions and membership profile as at 31 December 2022 and are applied to obligations
\nat the end of the reporting period. Whilst the analysis does not take account of the full distribution of cash flows expected, it does provide
\nan approximation to the sensitivity of assumptions shown. Extrapolation of these results beyond the sensitivity figures shown may not be
\nappropriate and the sensitivity analysis presented may not be representative of the actual change in the defined benefit obligation as it is
\nunlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f24929": {
"value": "25. Financial instruments and risk management The tabl
e below sets out the Group\u2019s accounting classification of each category of financial assets and liabilities and their carryin
g values at
\n31 December 2022 and 31 December 2021:
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n\u00a3m
\nDiscontinued
\nOperations
\n\u00a3m
\nTotal
\n\u00a3m
\n31 December 2022
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n458
\n52
\n\u2013
\n12
\n\u2013
\n(59)
\n(199)
\n(758)
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n365
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n(981)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n145
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(59)
\n(168)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(5)
\n\u2013
\n\u2013
\n\u2013
\n355
\n\u2013
\n\u2013
\n61
\n\u2013
\n(1,496)
\n\u2013
\n(8)
\n(47)
\n(217)
\n(3)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n355
\n969
\n62
\n62
\n12
\n(1,496)
\n(59)
\n(366)
\n(1,959)
\n(218)
\n(3)
\n(6)
\n31 December 2021 (restated)
\n(2)
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nCross-currency swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n393
\n77
\n\u2013
\n11
\n\u2013
\n(55)
\n(203)
\n(585)
\n\u2013
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n274
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(105)
\n(798)
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n123
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(58)
\n(165)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n\u2013
\n\u2013
\n58
\n\u2013
\n(1,365)
\n\u2013
\n(9)
\n(57)
\n(113)
\n(7)
\n(69)
\n\u2013
\n\u2013
\n33
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(1)
\n(52)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n824
\n87
\n59
\n11
\n(1,365)
\n(55)
\n(376)
\n(1,657)
\n(116)
\n(7)
\n(69)
\n(6)
\n(1)
The embedded derivative is classified as a level 3 fair value under the IFRS 13 fair value hierarchy.
\n(2)
Restated for discontinued operations (note 1).
\nReconciliation of liabilities arising from financing activities
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a31,805 million at 31 December 2021 comprising; external debt of
\n\u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369 million and lease obligations of \u00a3376 million. During
\nthe year a cash outflow in those liabilities totalled \u00a3127 million as follows: net repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a375 million (note 27) and repayment of principal on lease obligations of \u00a352 million (note 28). There is also an
\nincrease to liabilities arising from financing activities relating to non-cash items totalling \u00a3121 million comprising; an increase in external
\ndebt and cross-currency swaps associated with debt of \u00a379 million due to changes in foreign exchange rates and other non-cash
\nmovements and an increase in respect of lease obligations of \u00a342 million. As at 31 December 2022, liabilities arising from financing
\nactivities, as defined by IAS 7, totalled \u00a31,799 million comprising; external debt of \u00a31,433 million (excluding \u00a363 million of bank overdrafts),
\ncross currency swaps of \u00a3nil and lease obligations of \u00a3366 million.
\n
\n\n
\n202
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a33,584 million at 31 December 2020 comprising; external debt of
\n\u00a32,940 million (excluding \u00a3151 million of bank overdrafts), cross currency swaps of \u00a389 million and lease obligations of \u00a3555 million. During
\nthe year a cash outflow in those liabilities totalled \u00a31,616 million as follows: repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a31,555 million (note 27) and repayment of principal on lease obligations of \u00a361 million (note 28). Whilst there is a
\npayment of \u00a34 million included within the financing activities section of the Consolidated Statement of Cash Flows, in respect of costs of
\nraising debt finance, this does not affect liabilities arising from financing activities. There is also a decrease to liabilities arising from
\nfinancing activities relating to non-cash items totalling \u00a3163 million comprising; a reduction in external debt and cross-currency swaps
\nassociated with debt of \u00a345 million due to changes in foreign exchange rates and other non-cash movements and a net decrease in
\nrespect of lease obligations of \u00a3118 million. As at 31 December 2021, liabilities arising from financing activities, as defined by IAS 7,
\ntotalled \u00a31,805 million comprising; external debt of \u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369
\nmillion and lease obligations of \u00a3376 million.
\nFair values
\nAs at 31 December 2022, the \u00a3130 million (31 December 2021: \u00a3300 million) bond maturing in 2032 had a carrying value of \u00a3132 million
\n(31 December 2021: \u00a3304 million) and a fair value of \u00a3110 million (31 December 2021: \u00a3321 million). At 31 December 2021, the \u00a3450
\nmillion bond which matured in 2022 had a carrying value of \u00a3457 million and a fair value of \u00a3462 million.
\nThe Directors consider that the other financial assets and liabilities have fair values not materially different to the carrying values.
\nCredit risk
\nThe Group\u2019s
principal financial assets were cash and cash equivalents, trade receivables and derivative financial assets which represented
\nthe Group\u2019s maximum exposure to credit risk in relation to financial assets.
\nThe Group\u2019s credit risk on cash and cash equivalents
and derivative financial assets was limited because the counterparties were banks
\nwith strong credit ratings assigned by international credit rating agencies. Exposure is managed on the basis of risk rating and counterparty
\nlimits. The value of credit risk in derivative assets has been modelled using publicly available inputs as part of their fair value.
\nThe Group\u2019s credit risk was therefore primarily attributable to its trade receivables. The amounts presented in the Consolida
ted Balance
\nSheet were net of allowance for expected credit loss
, estimated by the Group\u2019s management based on prior experience and their
\nassessment of the current economic environment. Note 17 provides further details regarding the recovery of trade receivables.
\nThe following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements:
\n31 December 2022
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n355
\n74
\n\u2013
\n\u2013
\n355
\n74
\n(71)
\n(62)
\n284
\n12
\nFinancial assets subject to master
\nnetting arrangements
429
\u2013
429
(133)
296
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,496)
\n(227)
\n\u2013
\n\u2013
\n(1,496)
\n(227)
\n(81)
\n214
\n(1,577)
\n(13)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,723)
\u2013
(1,723)
133
(1,590)
\n31 December 2021
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n473
\n70
\n\u2013
\n\u2013
\n473
\n70
\n(5)
\n(58)
\n468
\n12
\nFinancial assets subject to master netting
\narrangements
543
\u2013
543
(63)
480
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,365)
\n(198)
\n\u2013
\n\u2013
\n(1,365)
\n(198)
\n(127)
\n190
\n(1,492)
\n(8)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,563)
\u2013
(1,563)
63
(1,500)
\n
\n203
\n
\n
\nCapital risk
\nThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern.
\nThe capital structure of the Group as at 31 December 2022 consists of net debt, as disclosed in note 27, and equity attributable to the
\nowners of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of
\nChanges in Equity.
\nLiquidity risk management
\nOverview of banking facilities
\nThe Group\u2019s committed bank facilities include a multi
-currency denominated term loan of \u00a330 million and US$788 million and a multi-
\ncurrency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion and \u20ac0.5 billion. Loans drawn under this facil
ity are guaranteed
\nby Melrose Industries PLC and certa
in of its subsidiaries, and there is no security over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and there were drawings of US$130 million, \u00a3152 million and \u20ac410 million o
n the
\nmulti-currency revolving credit facility. Applying the exchange rates at 31 December 2022, the headroom equated to \u00a32.6 billion (31
\nDecember 2021: \u00a33.0 billion).
\nCash, deposits and marketable securities amounted to \u00a3355 million at 31 December 2022 (31 December 2021: \u00a3473 million) and are offset
\nto arrive at the Group net debt position of \u00a31,139 million (31 December 2021: \u00a3950 million). The combination of this cash and the
\nheadroom on the revolving credit facility allows the Directors to consider that the Group has sufficient access to liquidity for its current
\nneeds. The Board takes careful consideration of counterparty risk with banks when deciding where to place cash on deposit.
\nCovenants
\nThe committed bank funding has two financial covenants, being a net debt to adjusted EBITDA covenant and an interest cover covenant,
\nboth of which are normally tested half-yearly in June and December.
\nThe net debt to adjusted EBITDA covenant test level is 3.75x at 31 December 2022 and 3.5x at 30 June 2023 onwards. At 31 December
\n2022, the Group net debt leverage was 1.4x.
\nThe interest cover bank covenant test is set at 4.0x at 31 December 2022 onwards. At 31 December 2022, the Group interest cover was
\n11.6x, affording comfortable headroom.
\nBonds
\nCapital market borrowings as at 31 December 2022, inherited as part of the GKN acquisition, consist of a \u00a3130 million bond maturing May
\n2032 following the tender during the year, see note 20 for further details. The \u00a3450 million bond matured in September 2022. Details of the
\nbond outstanding at 31 December 2022 is shown in note 20.
\nWorking capital
\nThe Group has a small number of uncommitted working capital programmes that provide favourable financing terms on eligible customer
\nreceipts and competitive financing terms to suppliers on eligible supplier payments.
\nBusinesses which participate in these customer related finance programmes have the ability to choose whether to receive payment earlier
\nthan the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, the drawings on these facilities were
\n\u00a3325 million (31 December 2021: \u00a3310 million), as a result there was a net cash increase in the year of \u00a315 million (2021: reduction of \u00a34
\nmillion). At 31 December 2022, the drawings within Aerospace were \u00a3138 million (31 December 2021: \u00a3114 million), Automotive \u00a3178
\nmillion (31 December 2021: \u00a3187 million) and Powder Metallurgy \u00a39 million (31 December 2021: \u00a39 million).
\nIn addition, some suppliers have access to utilise the Group\u2019s supplier finance
programmes, which are provided by a small number of the
\nGroup\u2019s banks. There is no cost to the Group for providing these programmes to its suppliers. These arrangements do not chang
e the date
\nsuppliers are due to be paid by the Group, and therefore there i
s no additional impact on the Group\u2019s liquidity. If the Group exited these
\narrangements there could be a potential impact of up to \u00a394 million (31 December 2021: \u00a360
million) on the Group\u2019s cash flow. These
\nprogrammes allow suppliers to choose whether they want to accelerate the payment of their invoices, by the financing banks, for an
\ninterest cost which is competitive, based on the credit rating of the Group as determined by the financing banks. The amounts owed to the
\nbanks are presented in trade payables on the Balance Sheet and the cash flows are presented in cash flows from operating activities. As at
\n31 December 2022, total facilities were \u00a3328 million (31 December 2021: \u00a3321 million) with drawings of \u00a3200 million (31 December 2021:
\n\u00a3102 million). The
arrangements do not change the timing of the Group\u2019s cash outflows.
At 31 December 2022, the drawings within
\nAerospace were \u00a375 million (31 December 2021: \u00a350 million) and Automotive \u00a3125 million (31 December 2021: \u00a352 million).
\nHedge of net investments in foreign entities using loans and derivatives
\nInterest-bearing loans and borrowings together with cross-
currency swaps are designated as hedges of net investments in the Group\u2019s
\nsubsidiaries in the USA and Europe to reduce the exposure to the related foreign exchange risks.
\nThe value of these were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nLocal borrowing:
\nUS Dollar
\nEuro
\n759
\n363
\n457
\n126
\nGKN cross-currency swaps:
\nUS Dollar
\nEuro
\n\u2013
\n\u2013
\n276
\n239
\n
\n
\n
\n204
\nThe foreign exchange movement on the local borrowings, which is recorded in currency translation on net investments within Other
\nComprehensive Income, was a loss of \u00a360 million (2021: gain of \u00a313 million).
\nAt 31 December 2021, Euro borrowings included US$170 million debt that was swapped into
\u20ac150 million
using cross-currency swaps. The
\nfair value of these cross-currency swaps was a liability of \u00a31 million. The foreign exchange movement on these cross-currency swaps,
\nwhich was recorded in derivative gains/(losses) on hedge relationships within Other Comprehensive Income, was a gain of \u00a319 million
\n(2021: \u00a315 million) and net cash receipts in the year totalled \u00a318 million (2021: \u00a37 million). There were no cross-currency swaps
\noutstanding at 31 December 2022.
\nThe foreign exchange movement on the GKN cross-currency swaps, which is recorded in derivative gains/(losses) on hedge relationships,
\nwas a loss of \u00a362 million (2021: gain of \u00a312 million).
\nFinance cost risk management
\nThe bank margin on the bank facility depends on the Group leverage. Following the extension of the bank facility in December 2021, the
\nbank margin on the revolving credit facility was reduced to align to the term loan and ranges from 0.75% to 2.0%. As at 31 December 2022,
\nthe margin was 1.2% (31 December 2021: 0.75%) on both the term loan and revolving credit facility.
\nThe policy of the Board is to fix up to approximately 70% of the interest rate exposure of the Group.
\nThe interest rate swaps are designated as cash flow hedges and were highly effective throughout 2022. The fair value of the contracts as
\nat 31 December 2022, was a net liability of \u00a33 million (31 December 2021: \u00a37 million). The movement of \u00a34 million for the year ended 31
\nDecember 2022 (2021: charge of \u00a380 million) comprised of a credit of \u00a34 million (2021: \u00a319 million) booked to derivatives gains/(losses) on
\nhedge relationships in the year within Other Comprehensive Income, a \u00a3nil cash outflow (2021: \u00a347 million) from cancelling interest rate
\nswaps and a \u00a3nil (2021: \u00a314 million) reduction in the interest accrual. During the year, a balance of \u00a32 million retained in the cash flow
\nhedge reserve following the cancellation of interest rate swaps in 2021 was recycled to finance costs in the Income Statement.
\nDuring the year ended 31 December 2022, some of the critical terms of the interest rate swaps and the hedged items were not perfectly
\nmatched; however, this did not give rise to any ineffectiveness through the Income Statement in the year (2021: \u00a3nil).
\nInterest rate sensitivity analysis
\nAssuming the net debt, inclusive of interest rate swaps, held as at the balance sheet date was outstanding for the whole year, a one
\npercentage point rise in market interest rates for all currencies would decrease profit before tax by the following amounts:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nSterling
\nUS Dollar
\nEuro
\n(2)
\n(5)
\n(2)
\n\u2013
\n(2)
\n(1)
\nOn the basis of the floating-to-fixed interest rate swaps in place at the balance sheet date, a one percentage point fall in market interest
\nrates for all currencies would decrease Group equity by \u00a3nil (31 December 2021: \u00a32 million).
\nExchange rate risk management
\nThe Group trades in various countries around the world and is exposed to movements in a number of foreign currencies. The Group
\ntherefore carries exchange rate risk that can be categorised into three types, transaction, translation and disposal related risk as described
\nin the paragraphs below. The
Group\u2019s
policy is designed to protect against the majority of the cash risks but not the non-cash risks.
\nThe most common exchange rate risk is the transaction risk the Group takes when it invoices a customer or purchases from suppliers in a
\ndifferent currency to the underlying functional currency of the relevant business. The Group
\u2019s
policy is to review transactional foreign
\nexchange exposures, and place necessary hedging contracts, quarterly on a rolling basis. To the extent the cash flows associated with a
\ntransactional foreign exchange risk are committed, the Group will hedge 100% at the time the cash flow becomes committed. For forecast
\nand variable cash flows, the Group hedges a proportion of the expected cash flows, with the percentage being hedged lowering as the time
\nhorizon lengthens. Typically, in total the Group hedges around 90% of foreign exchange exposures expected over the next year, and
\napproximately 60% to 80% of exposures between one and two years. For GKN Aerospace, the Group hedges beyond two years due to the
\nlonger term nature of some of its contracts, with the percentage of expected exposure hedged reducing for each subsequent year. This
\npolicy does not eliminate the cash risk but does bring some certainty to it.
\nThe translation rate risk is the effect on the Group results in the period due to the movement of exchange rates used to translate foreign
\nresults into Sterling from one period to the next. No specific exchange instruments are used to protect against the translation risk because
\nit is a non-cash risk to the Group, until foreign currency is converted to Sterling. However, the Group utilises its multi-currency revolving
\ncredit facility and cross-currency swaps, where relevant, to maintain an appropriate mix of debt in each currency. The hedge of having debt
\ndrawn in these currencies funding the trading units with US Dollars or Euro functional currencies protects against some of the Balance
\nSheet and banking covenant translation risk.
\nLastly, exchange rate risk arises when a business that is predominantly based in a foreign currency is sold. The proceeds for those
\nbusinesses may be received in a foreign currency and therefore an exchange rate risk may arise on conversion of foreign currency
\nproceeds into Sterling, for instance to pay a Sterling dividend or Capital Return to shareholders. Protection against this risk is considered
\non a case-by-case basis and, if appropriate, hedged at the time.
\n
\n205
\n
\n
\nAs at 31 December 2022, the Group held foreign exchange forward contracts to mitigate expected exchange rate fluctuations on future
\ncash flows from sales to customers and purchases from suppliers. The fair value of all foreign exchange forward contracts across the
\nGroup was a net liability at 31 December 2022 of \u00a3156 million (31 December 2021: \u00a357 million). There were no contracts where hedge
\naccounting was applied as at 31 December 2022 (31 December 2021: fair value asset of \u00a31 million).
\nThe change in fair value of foreign exchange forward contracts recognised in derivative gains/(losses) on hedging relationships within
\nOther Comprehensive Income was \u00a3nil (2021: credit of \u00a38 million) and a credit of \u00a31 million (2021: \u00a32 million) was reclassified to the
\nIncome Statement.
\nIn respect of the cross-currency swaps designated as net investment hedges, for the year ended 31 December 2022, a credit of \u00a35 million
\n(2021: \u00a34 million) was booked through the Income Statement in finance costs, of which a credit of \u00a33 million (2021: \u00a33 million) was treated
\nas an adjusting item (note 6). The cross-currency swaps matured in the year and were designated in a net investment hedge accounting
\nrelationship against US Dollar and Euro net assets of certain subsidiaries. The hedged risk was the spot rate, which represented the
\nsignificant component of the movement and therefore was recorded in the foreign currency translation reserve (note 26).
\nThe following table shows the maturity profile of undiscounted contracted gross cash outflows of derivative financial liabilities used to
\nmanage currency risk, being both the cross-currency swaps above and foreign exchange forward contracts used to manage transaction
\nexchange rate risk:
\n0-1 year
\n\u00a3m
\n1-2 years
\n\u00a3m
\n2-5 years
\n\u00a3m
\n5+ years
\n\u00a3m
\nTotal
\n\u00a3m
\nYear ended 31 December 2022
\nForeign exchange forward contracts
855
618
834
19
2,326
\nYear ended 31 December 2021
\nForeign exchange forward contracts
\nCross-currency swaps
\n1,051
\n666
\n479
\n\u2013
\n715
\n\u2013
\n28
\n\u2013
\n2,273
\n666
\nForeign currency sensitivity analysis
\nCurrency risks are defined by IFRS 7: Financial instruments: Disclosures as the risk that the fair value or future cash flows of a financial
\nasset or liability will fluctuate because of changes in foreign exchange rates.
\nThe following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at
\nthe balance sheet date, illustrating the (decrease)/increase in Group operating profit caused by a 10% strengthening of the US Dollar and
\nEuro against Sterling compared to the year-end spot rate. The analysis assumes that all other variables, in particular other foreign currency
\nexchange rates, remain constant. The Group operates in a range of different currencies, and those with a notable impact are shown below:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(11)
\n(3)
\n2
\n7
\nThe following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance
\nsheet date, illustrating the increase/(decrease) in Group equity caused by a 10% strengthening of the US Dollar and Euro against Sterling.
\nThe analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant.
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(10)
\n(7)
\n(5)
\n(10)
\nIn addition, the change in equity due to a 10% strengthening of the US Dollar against Sterling for the translation of net investment hedging
\ninstruments would be a decrease of \u00a377 million (2021: \u00a374 million) and for the Euro, a decrease of \u00a336 million (2021: \u00a337 million).
\nHowever, there would be no overall effect on equity because there would be an offset in the currency translation of the foreign operation.
\nFair value measurements recognised in the Balance Sheet
\nForeign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates
\nmatching the maturities of the contracts.
\nInterest rate swap and cross-currency swap contracts are measured using yield curves derived from quoted interest and foreign exchange
\nrates.
\n
\n\n
\n206
\nHedge accounted derivatives
\nThe following table sets out details of the Group\u2019s material hedging instruments where hedge accounting is applied at the
balance sheet
\ndate:
\nAverage fixed rate
Notional principal
\nFair value of assets/
\n(liabilities)
\nHedging Instruments
\n31 December
\n2022
\n%
\n31 December
\n2021
\n%
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPay fixed, receive floating interest rate swaps
\nWithin one year
\nIn one to two years
\n2.24%
\n\u2013
\n2.24%
\n2.24%
\n260
\n\u2013
\n246
\n246
\n(3)
\n\u2013
\n\u2013
\n(7)
\nTotal
(3)
(7)
\nPay fixed, receive fixed cross-currency swaps
\nWithin one year
\nIn one to two years
\n\u2013
\n\u2013
\n4.85%
\n\u2013
\n\u2013
\n\u2013
\n515
\n\u2013
\n\u2013
\n\u2013
\n(68)
\n\u2013
\nTotal
\u2013
(68)
\nThe Group is exposed to the following interest rate benchmarks within its hedge accounting relationships, which are subject to interest rate
\nbenchmark reform: USD LIBOR, EURIBOR (\u201cIBORs\u201d). The hedged items are US Dollar and Euro floating rate d
ebt.
\nThe Group has closely monitored the market and the output from various industry working groups managing the transition to new
\nbenchmark interest rates. This includes announcements made by LIBOR regulators (including the Financial Conduct Authority (\u201cFCA\u201d) and
\nthe US Commodity Trading Futures Commission) regarding the transition away from LIBOR to the Sterling Overnight Indexed Average
\nRate (\u201cSONIA\u201d), Secured Overnight Financing Rate (\u201cSOFR\u201d) and Euro Short
-
Term Rate (\u201cESTR\u201d) respectively.
\nIn response to the announcements, the Group has Sterling borrowings under SONIA and US Dollar borrowings continuing under USD
\nLIBOR with the option to switch to SOFR on or prior to discontinuation in June 2023. The Group expects to continue using EURIBOR for
\nEuro borrowings going forward.
\nBelow are the details of the hedging instruments and hedged items in scope of the IFRS 9 amendments due to interest rate benchmark
\nreform by hedge type. The terms of hedged items listed match those of the corresponding hedging instruments.
\nHedge type
Instrument type
Maturing
Notional
Hedged item
\nCash flow
\nhedges
\nInterest rate swaps, pay US Dollar fixed
\nannually, receive 1 month US Dollar LIBOR
January 2023
$315 million
\nUS Dollar floating rate
\ndebt linked to US LIBOR
\nInterest rate 0% caps, pay Euro fixed annually,
\nreceive 1 month EURIBOR
January 2023
\u20ac220 million
\nEuro floating rate debt
\nlinked to EURIBOR
\nThe Group will continue to apply the amendments to IFRS 9 until the uncertainty arising from the interest rate benchmark reforms with
\nrespect to the timing and the amount of the underlying cash flows that the Group is exposed to ends. The Group has assumed that this
\nuncertainty will not end until the Group\u2019s contracts that reference IBORs are amended to specify the date on which the intere
st rate
\nbenchmark will be replaced, the cash flows of the alternative benchmark rate and the relevant spread adjustment. This will, in part, be
\ndependent
on the introduction of fallback clauses which have yet to be added to the Group\u2019s contracts and the negotiation with lenders.
\nDerivative and financial assets and liabilities are presented within the Balance Sheet as:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nNon-current assets
\nCurrent assets
\nCurrent liabilities
\nNon-current liabilities
\n36
\n38
\n(86)
\n(141)
\n47
\n23
\n(119)
\n(79)
\nThe change in fair value of interest rate swaps is discussed in the Finance Risk Management section
of the Finance Director\u2019s Review.
\nAll hedging instruments are booked in the Balance Sheet as derivative financial assets or derivative financial liabilities.
\nThe fair value of derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability,
\neither directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within Level 2 of the fair value
\nhierarchy set out in IFRS 13: Fair value meas
urement. The Group\u2019s policy is to recognise transfers into and out of the different fair value
\nhierarchy levels at the date the event or change in circumstances that caused the transfer to occur. There have been no transfers between
\nlevels in the year.
\n
\n207
\n\n
\nThe following table sets out details of the Group\u2019s material hedged items at the balance sheet date where hedge accounting is
applied:
\nChange in fair value for
\ncalculating ineffectiveness
\nBalance in translation
\nand hedging reserve
\nfor continuing hedges
\nBalance in translation
\nand hedging reserve
\nfor discontinued hedges
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n202
1
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nHedged items
\nFloating rate borrowings
\u2013
interest risk
\nNet assets of designated investments
\n(4)
\n\u2013
\n(66)
\n6
\n\u2013
\n\u2013
\n4
\n53
\n\u2013
\n116
\n2
\n\u2013
\nThere is no balance held in cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied. During
\n2020, at the request of one of its financial counterparties, the Group novated one of its interest rate swaps to another of its financial
\ncounterparties, which had the initial effect of leaving a \u00a39 million debit in the translation and hedging reserve for the discontinued hedge,
\nreducing to \u00a3nil by 31 December 2022 (31 December 2021: \u00a32 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f24930": {
"value": "25. Financial instruments and risk management The tabl
e below sets out the Group\u2019s accounting classification of each category of financial assets and liabilities and their carryin
g values at
\n31 December 2022 and 31 December 2021:
\nAerospace
\n\u00a3m
\nAutomotive
\n\u00a3m
\nPowder
\nMetallurgy
\n\u00a3m
\nOther
\nIndustrial
\n\u00a3m
\nCorporate
\n\u00a3m
\nDiscontinued
\nOperations
\n\u00a3m
\nTotal
\n\u00a3m
\n31 December 2022
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n458
\n52
\n\u2013
\n12
\n\u2013
\n(59)
\n(199)
\n(758)
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n365
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(100)
\n(981)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n145
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(59)
\n(168)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(5)
\n\u2013
\n\u2013
\n\u2013
\n355
\n\u2013
\n\u2013
\n61
\n\u2013
\n(1,496)
\n\u2013
\n(8)
\n(47)
\n(217)
\n(3)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n355
\n969
\n62
\n62
\n12
\n(1,496)
\n(59)
\n(366)
\n(1,959)
\n(218)
\n(3)
\n(6)
\n31 December 2021 (restated)
\n(2)
\nFinancial assets
\nClassified as amortised cost:
\nCash and cash equivalents
\nNet trade receivables
\nClassified as fair value:
\nInvestments
\nDerivative financial assets
\nForeign currency forward contracts
\nEmbedded derivatives
\n(1)
\nFinancial liabilities
\nClassified as amortised cost:
\nInterest-bearing loans and borrowings
\nGovernment refundable advances
\nLease obligations
\nOther financial liabilities
\nClassified as fair value:
\nDerivative financial liabilities
\nForeign currency forward contracts
\nInterest rate swaps
\nCross-currency swaps
\nEmbedded derivatives
\n(1)
\n\u2013
\n393
\n77
\n\u2013
\n11
\n\u2013
\n(55)
\n(203)
\n(585)
\n\u2013
\n\u2013
\n\u2013
\n(6)
\n\u2013
\n274
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(105)
\n(798)
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n123
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(58)
\n(165)
\n(1)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n1
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n\u2013
\n\u2013
\n58
\n\u2013
\n(1,365)
\n\u2013
\n(9)
\n(57)
\n(113)
\n(7)
\n(69)
\n\u2013
\n\u2013
\n33
\n\u2013
\n1
\n\u2013
\n\u2013
\n\u2013
\n(1)
\n(52)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n473
\n824
\n87
\n59
\n11
\n(1,365)
\n(55)
\n(376)
\n(1,657)
\n(116)
\n(7)
\n(69)
\n(6)
\n(1)
The embedded derivative is classified as a level 3 fair value under the IFRS 13 fair value hierarchy.
\n(2)
Restated for discontinued operations (note 1).
\nReconciliation of liabilities arising from financing activities
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a31,805 million at 31 December 2021 comprising; external debt of
\n\u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369 million and lease obligations of \u00a3376 million. During
\nthe year a cash outflow in those liabilities totalled \u00a3127 million as follows: net repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a375 million (note 27) and repayment of principal on lease obligations of \u00a352 million (note 28). There is also an
\nincrease to liabilities arising from financing activities relating to non-cash items totalling \u00a3121 million comprising; an increase in external
\ndebt and cross-currency swaps associated with debt of \u00a379 million due to changes in foreign exchange rates and other non-cash
\nmovements and an increase in respect of lease obligations of \u00a342 million. As at 31 December 2022, liabilities arising from financing
\nactivities, as defined by IAS 7, totalled \u00a31,799 million comprising; external debt of \u00a31,433 million (excluding \u00a363 million of bank overdrafts),
\ncross currency swaps of \u00a3nil and lease obligations of \u00a3366 million.
\n
\n\n
\n202
\nLiabilities arising from financing activities, as defined by IAS 7, totalled \u00a33,584 million at 31 December 2020 comprising; external debt of
\n\u00a32,940 million (excluding \u00a3151 million of bank overdrafts), cross currency swaps of \u00a389 million and lease obligations of \u00a3555 million. During
\nthe year a cash outflow in those liabilities totalled \u00a31,616 million as follows: repayment of external debt and cross-currency swaps
\nassociated with debt of \u00a31,555 million (note 27) and repayment of principal on lease obligations of \u00a361 million (note 28). Whilst there is a
\npayment of \u00a34 million included within the financing activities section of the Consolidated Statement of Cash Flows, in respect of costs of
\nraising debt finance, this does not affect liabilities arising from financing activities. There is also a decrease to liabilities arising from
\nfinancing activities relating to non-cash items totalling \u00a3163 million comprising; a reduction in external debt and cross-currency swaps
\nassociated with debt of \u00a345 million due to changes in foreign exchange rates and other non-cash movements and a net decrease in
\nrespect of lease obligations of \u00a3118 million. As at 31 December 2021, liabilities arising from financing activities, as defined by IAS 7,
\ntotalled \u00a31,805 million comprising; external debt of \u00a31,360 million (excluding \u00a35 million of bank overdrafts), cross currency swaps of \u00a369
\nmillion and lease obligations of \u00a3376 million.
\nFair values
\nAs at 31 December 2022, the \u00a3130 million (31 December 2021: \u00a3300 million) bond maturing in 2032 had a carrying value of \u00a3132 million
\n(31 December 2021: \u00a3304 million) and a fair value of \u00a3110 million (31 December 2021: \u00a3321 million). At 31 December 2021, the \u00a3450
\nmillion bond which matured in 2022 had a carrying value of \u00a3457 million and a fair value of \u00a3462 million.
\nThe Directors consider that the other financial assets and liabilities have fair values not materially different to the carrying values.
\nCredit risk
\nThe Group\u2019s
principal financial assets were cash and cash equivalents, trade receivables and derivative financial assets which represented
\nthe Group\u2019s maximum exposure to credit risk in relation to financial assets.
\nThe Group\u2019s credit risk on cash and cash equivalents
and derivative financial assets was limited because the counterparties were banks
\nwith strong credit ratings assigned by international credit rating agencies. Exposure is managed on the basis of risk rating and counterparty
\nlimits. The value of credit risk in derivative assets has been modelled using publicly available inputs as part of their fair value.
\nThe Group\u2019s credit risk was therefore primarily attributable to its trade receivables. The amounts presented in the Consolida
ted Balance
\nSheet were net of allowance for expected credit loss
, estimated by the Group\u2019s management based on prior experience and their
\nassessment of the current economic environment. Note 17 provides further details regarding the recovery of trade receivables.
\nThe following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements:
\n31 December 2022
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n355
\n74
\n\u2013
\n\u2013
\n355
\n74
\n(71)
\n(62)
\n284
\n12
\nFinancial assets subject to master
\nnetting arrangements
429
\u2013
429
(133)
296
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,496)
\n(227)
\n\u2013
\n\u2013
\n(1,496)
\n(227)
\n(81)
\n214
\n(1,577)
\n(13)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,723)
\u2013
(1,723)
133
(1,590)
\n31 December 2021
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n473
\n70
\n\u2013
\n\u2013
\n473
\n70
\n(5)
\n(58)
\n468
\n12
\nFinancial assets subject to master netting
\narrangements
543
\u2013
543
(63)
480
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,365)
\n(198)
\n\u2013
\n\u2013
\n(1,365)
\n(198)
\n(127)
\n190
\n(1,492)
\n(8)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,563)
\u2013
(1,563)
63
(1,500)
\n
\n203
\n
\n
\nCapital risk
\nThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern.
\nThe capital structure of the Group as at 31 December 2022 consists of net debt, as disclosed in note 27, and equity attributable to the
\nowners of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of
\nChanges in Equity.
\nLiquidity risk management
\nOverview of banking facilities
\nThe Group\u2019s committed bank facilities include a multi
-currency denominated term loan of \u00a330 million and US$788 million and a multi-
\ncurrency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion and \u20ac0.5 billion. Loans drawn under this facil
ity are guaranteed
\nby Melrose Industries PLC and certa
in of its subsidiaries, and there is no security over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and there were drawings of US$130 million, \u00a3152 million and \u20ac410 million o
n the
\nmulti-currency revolving credit facility. Applying the exchange rates at 31 December 2022, the headroom equated to \u00a32.6 billion (31
\nDecember 2021: \u00a33.0 billion).
\nCash, deposits and marketable securities amounted to \u00a3355 million at 31 December 2022 (31 December 2021: \u00a3473 million) and are offset
\nto arrive at the Group net debt position of \u00a31,139 million (31 December 2021: \u00a3950 million). The combination of this cash and the
\nheadroom on the revolving credit facility allows the Directors to consider that the Group has sufficient access to liquidity for its current
\nneeds. The Board takes careful consideration of counterparty risk with banks when deciding where to place cash on deposit.
\nCovenants
\nThe committed bank funding has two financial covenants, being a net debt to adjusted EBITDA covenant and an interest cover covenant,
\nboth of which are normally tested half-yearly in June and December.
\nThe net debt to adjusted EBITDA covenant test level is 3.75x at 31 December 2022 and 3.5x at 30 June 2023 onwards. At 31 December
\n2022, the Group net debt leverage was 1.4x.
\nThe interest cover bank covenant test is set at 4.0x at 31 December 2022 onwards. At 31 December 2022, the Group interest cover was
\n11.6x, affording comfortable headroom.
\nBonds
\nCapital market borrowings as at 31 December 2022, inherited as part of the GKN acquisition, consist of a \u00a3130 million bond maturing May
\n2032 following the tender during the year, see note 20 for further details. The \u00a3450 million bond matured in September 2022. Details of the
\nbond outstanding at 31 December 2022 is shown in note 20.
\nWorking capital
\nThe Group has a small number of uncommitted working capital programmes that provide favourable financing terms on eligible customer
\nreceipts and competitive financing terms to suppliers on eligible supplier payments.
\nBusinesses which participate in these customer related finance programmes have the ability to choose whether to receive payment earlier
\nthan the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, the drawings on these facilities were
\n\u00a3325 million (31 December 2021: \u00a3310 million), as a result there was a net cash increase in the year of \u00a315 million (2021: reduction of \u00a34
\nmillion). At 31 December 2022, the drawings within Aerospace were \u00a3138 million (31 December 2021: \u00a3114 million), Automotive \u00a3178
\nmillion (31 December 2021: \u00a3187 million) and Powder Metallurgy \u00a39 million (31 December 2021: \u00a39 million).
\nIn addition, some suppliers have access to utilise the Group\u2019s supplier finance
programmes, which are provided by a small number of the
\nGroup\u2019s banks. There is no cost to the Group for providing these programmes to its suppliers. These arrangements do not chang
e the date
\nsuppliers are due to be paid by the Group, and therefore there i
s no additional impact on the Group\u2019s liquidity. If the Group exited these
\narrangements there could be a potential impact of up to \u00a394 million (31 December 2021: \u00a360
million) on the Group\u2019s cash flow. These
\nprogrammes allow suppliers to choose whether they want to accelerate the payment of their invoices, by the financing banks, for an
\ninterest cost which is competitive, based on the credit rating of the Group as determined by the financing banks. The amounts owed to the
\nbanks are presented in trade payables on the Balance Sheet and the cash flows are presented in cash flows from operating activities. As at
\n31 December 2022, total facilities were \u00a3328 million (31 December 2021: \u00a3321 million) with drawings of \u00a3200 million (31 December 2021:
\n\u00a3102 million). The
arrangements do not change the timing of the Group\u2019s cash outflows.
At 31 December 2022, the drawings within
\nAerospace were \u00a375 million (31 December 2021: \u00a350 million) and Automotive \u00a3125 million (31 December 2021: \u00a352 million).
\nHedge of net investments in foreign entities using loans and derivatives
\nInterest-bearing loans and borrowings together with cross-
currency swaps are designated as hedges of net investments in the Group\u2019s
\nsubsidiaries in the USA and Europe to reduce the exposure to the related foreign exchange risks.
\nThe value of these were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nLocal borrowing:
\nUS Dollar
\nEuro
\n759
\n363
\n457
\n126
\nGKN cross-currency swaps:
\nUS Dollar
\nEuro
\n\u2013
\n\u2013
\n276
\n239
\n
\n
\n
\n204
\nThe foreign exchange movement on the local borrowings, which is recorded in currency translation on net investments within Other
\nComprehensive Income, was a loss of \u00a360 million (2021: gain of \u00a313 million).
\nAt 31 December 2021, Euro borrowings included US$170 million debt that was swapped into
\u20ac150 million
using cross-currency swaps. The
\nfair value of these cross-currency swaps was a liability of \u00a31 million. The foreign exchange movement on these cross-currency swaps,
\nwhich was recorded in derivative gains/(losses) on hedge relationships within Other Comprehensive Income, was a gain of \u00a319 million
\n(2021: \u00a315 million) and net cash receipts in the year totalled \u00a318 million (2021: \u00a37 million). There were no cross-currency swaps
\noutstanding at 31 December 2022.
\nThe foreign exchange movement on the GKN cross-currency swaps, which is recorded in derivative gains/(losses) on hedge relationships,
\nwas a loss of \u00a362 million (2021: gain of \u00a312 million).
\nFinance cost risk management
\nThe bank margin on the bank facility depends on the Group leverage. Following the extension of the bank facility in December 2021, the
\nbank margin on the revolving credit facility was reduced to align to the term loan and ranges from 0.75% to 2.0%. As at 31 December 2022,
\nthe margin was 1.2% (31 December 2021: 0.75%) on both the term loan and revolving credit facility.
\nThe policy of the Board is to fix up to approximately 70% of the interest rate exposure of the Group.
\nThe interest rate swaps are designated as cash flow hedges and were highly effective throughout 2022. The fair value of the contracts as
\nat 31 December 2022, was a net liability of \u00a33 million (31 December 2021: \u00a37 million). The movement of \u00a34 million for the year ended 31
\nDecember 2022 (2021: charge of \u00a380 million) comprised of a credit of \u00a34 million (2021: \u00a319 million) booked to derivatives gains/(losses) on
\nhedge relationships in the year within Other Comprehensive Income, a \u00a3nil cash outflow (2021: \u00a347 million) from cancelling interest rate
\nswaps and a \u00a3nil (2021: \u00a314 million) reduction in the interest accrual. During the year, a balance of \u00a32 million retained in the cash flow
\nhedge reserve following the cancellation of interest rate swaps in 2021 was recycled to finance costs in the Income Statement.
\nDuring the year ended 31 December 2022, some of the critical terms of the interest rate swaps and the hedged items were not perfectly
\nmatched; however, this did not give rise to any ineffectiveness through the Income Statement in the year (2021: \u00a3nil).
\nInterest rate sensitivity analysis
\nAssuming the net debt, inclusive of interest rate swaps, held as at the balance sheet date was outstanding for the whole year, a one
\npercentage point rise in market interest rates for all currencies would decrease profit before tax by the following amounts:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nSterling
\nUS Dollar
\nEuro
\n(2)
\n(5)
\n(2)
\n\u2013
\n(2)
\n(1)
\nOn the basis of the floating-to-fixed interest rate swaps in place at the balance sheet date, a one percentage point fall in market interest
\nrates for all currencies would decrease Group equity by \u00a3nil (31 December 2021: \u00a32 million).
\nExchange rate risk management
\nThe Group trades in various countries around the world and is exposed to movements in a number of foreign currencies. The Group
\ntherefore carries exchange rate risk that can be categorised into three types, transaction, translation and disposal related risk as described
\nin the paragraphs below. The
Group\u2019s
policy is designed to protect against the majority of the cash risks but not the non-cash risks.
\nThe most common exchange rate risk is the transaction risk the Group takes when it invoices a customer or purchases from suppliers in a
\ndifferent currency to the underlying functional currency of the relevant business. The Group
\u2019s
policy is to review transactional foreign
\nexchange exposures, and place necessary hedging contracts, quarterly on a rolling basis. To the extent the cash flows associated with a
\ntransactional foreign exchange risk are committed, the Group will hedge 100% at the time the cash flow becomes committed. For forecast
\nand variable cash flows, the Group hedges a proportion of the expected cash flows, with the percentage being hedged lowering as the time
\nhorizon lengthens. Typically, in total the Group hedges around 90% of foreign exchange exposures expected over the next year, and
\napproximately 60% to 80% of exposures between one and two years. For GKN Aerospace, the Group hedges beyond two years due to the
\nlonger term nature of some of its contracts, with the percentage of expected exposure hedged reducing for each subsequent year. This
\npolicy does not eliminate the cash risk but does bring some certainty to it.
\nThe translation rate risk is the effect on the Group results in the period due to the movement of exchange rates used to translate foreign
\nresults into Sterling from one period to the next. No specific exchange instruments are used to protect against the translation risk because
\nit is a non-cash risk to the Group, until foreign currency is converted to Sterling. However, the Group utilises its multi-currency revolving
\ncredit facility and cross-currency swaps, where relevant, to maintain an appropriate mix of debt in each currency. The hedge of having debt
\ndrawn in these currencies funding the trading units with US Dollars or Euro functional currencies protects against some of the Balance
\nSheet and banking covenant translation risk.
\nLastly, exchange rate risk arises when a business that is predominantly based in a foreign currency is sold. The proceeds for those
\nbusinesses may be received in a foreign currency and therefore an exchange rate risk may arise on conversion of foreign currency
\nproceeds into Sterling, for instance to pay a Sterling dividend or Capital Return to shareholders. Protection against this risk is considered
\non a case-by-case basis and, if appropriate, hedged at the time.
\n
\n205
\n
\n
\nAs at 31 December 2022, the Group held foreign exchange forward contracts to mitigate expected exchange rate fluctuations on future
\ncash flows from sales to customers and purchases from suppliers. The fair value of all foreign exchange forward contracts across the
\nGroup was a net liability at 31 December 2022 of \u00a3156 million (31 December 2021: \u00a357 million). There were no contracts where hedge
\naccounting was applied as at 31 December 2022 (31 December 2021: fair value asset of \u00a31 million).
\nThe change in fair value of foreign exchange forward contracts recognised in derivative gains/(losses) on hedging relationships within
\nOther Comprehensive Income was \u00a3nil (2021: credit of \u00a38 million) and a credit of \u00a31 million (2021: \u00a32 million) was reclassified to the
\nIncome Statement.
\nIn respect of the cross-currency swaps designated as net investment hedges, for the year ended 31 December 2022, a credit of \u00a35 million
\n(2021: \u00a34 million) was booked through the Income Statement in finance costs, of which a credit of \u00a33 million (2021: \u00a33 million) was treated
\nas an adjusting item (note 6). The cross-currency swaps matured in the year and were designated in a net investment hedge accounting
\nrelationship against US Dollar and Euro net assets of certain subsidiaries. The hedged risk was the spot rate, which represented the
\nsignificant component of the movement and therefore was recorded in the foreign currency translation reserve (note 26).
\nThe following table shows the maturity profile of undiscounted contracted gross cash outflows of derivative financial liabilities used to
\nmanage currency risk, being both the cross-currency swaps above and foreign exchange forward contracts used to manage transaction
\nexchange rate risk:
\n0-1 year
\n\u00a3m
\n1-2 years
\n\u00a3m
\n2-5 years
\n\u00a3m
\n5+ years
\n\u00a3m
\nTotal
\n\u00a3m
\nYear ended 31 December 2022
\nForeign exchange forward contracts
855
618
834
19
2,326
\nYear ended 31 December 2021
\nForeign exchange forward contracts
\nCross-currency swaps
\n1,051
\n666
\n479
\n\u2013
\n715
\n\u2013
\n28
\n\u2013
\n2,273
\n666
\nForeign currency sensitivity analysis
\nCurrency risks are defined by IFRS 7: Financial instruments: Disclosures as the risk that the fair value or future cash flows of a financial
\nasset or liability will fluctuate because of changes in foreign exchange rates.
\nThe following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at
\nthe balance sheet date, illustrating the (decrease)/increase in Group operating profit caused by a 10% strengthening of the US Dollar and
\nEuro against Sterling compared to the year-end spot rate. The analysis assumes that all other variables, in particular other foreign currency
\nexchange rates, remain constant. The Group operates in a range of different currencies, and those with a notable impact are shown below:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(11)
\n(3)
\n2
\n7
\nThe following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance
\nsheet date, illustrating the increase/(decrease) in Group equity caused by a 10% strengthening of the US Dollar and Euro against Sterling.
\nThe analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant.
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(10)
\n(7)
\n(5)
\n(10)
\nIn addition, the change in equity due to a 10% strengthening of the US Dollar against Sterling for the translation of net investment hedging
\ninstruments would be a decrease of \u00a377 million (2021: \u00a374 million) and for the Euro, a decrease of \u00a336 million (2021: \u00a337 million).
\nHowever, there would be no overall effect on equity because there would be an offset in the currency translation of the foreign operation.
\nFair value measurements recognised in the Balance Sheet
\nForeign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates
\nmatching the maturities of the contracts.
\nInterest rate swap and cross-currency swap contracts are measured using yield curves derived from quoted interest and foreign exchange
\nrates.
\n
\n\n
\n206
\nHedge accounted derivatives
\nThe following table sets out details of the Group\u2019s material hedging instruments where hedge accounting is applied at the
balance sheet
\ndate:
\nAverage fixed rate
Notional principal
\nFair value of assets/
\n(liabilities)
\nHedging Instruments
\n31 December
\n2022
\n%
\n31 December
\n2021
\n%
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPay fixed, receive floating interest rate swaps
\nWithin one year
\nIn one to two years
\n2.24%
\n\u2013
\n2.24%
\n2.24%
\n260
\n\u2013
\n246
\n246
\n(3)
\n\u2013
\n\u2013
\n(7)
\nTotal
(3)
(7)
\nPay fixed, receive fixed cross-currency swaps
\nWithin one year
\nIn one to two years
\n\u2013
\n\u2013
\n4.85%
\n\u2013
\n\u2013
\n\u2013
\n515
\n\u2013
\n\u2013
\n\u2013
\n(68)
\n\u2013
\nTotal
\u2013
(68)
\nThe Group is exposed to the following interest rate benchmarks within its hedge accounting relationships, which are subject to interest rate
\nbenchmark reform: USD LIBOR, EURIBOR (\u201cIBORs\u201d). The hedged items are US Dollar and Euro floating rate d
ebt.
\nThe Group has closely monitored the market and the output from various industry working groups managing the transition to new
\nbenchmark interest rates. This includes announcements made by LIBOR regulators (including the Financial Conduct Authority (\u201cFCA\u201d) and
\nthe US Commodity Trading Futures Commission) regarding the transition away from LIBOR to the Sterling Overnight Indexed Average
\nRate (\u201cSONIA\u201d), Secured Overnight Financing Rate (\u201cSOFR\u201d) and Euro Short
-
Term Rate (\u201cESTR\u201d) respectively.
\nIn response to the announcements, the Group has Sterling borrowings under SONIA and US Dollar borrowings continuing under USD
\nLIBOR with the option to switch to SOFR on or prior to discontinuation in June 2023. The Group expects to continue using EURIBOR for
\nEuro borrowings going forward.
\nBelow are the details of the hedging instruments and hedged items in scope of the IFRS 9 amendments due to interest rate benchmark
\nreform by hedge type. The terms of hedged items listed match those of the corresponding hedging instruments.
\nHedge type
Instrument type
Maturing
Notional
Hedged item
\nCash flow
\nhedges
\nInterest rate swaps, pay US Dollar fixed
\nannually, receive 1 month US Dollar LIBOR
January 2023
$315 million
\nUS Dollar floating rate
\ndebt linked to US LIBOR
\nInterest rate 0% caps, pay Euro fixed annually,
\nreceive 1 month EURIBOR
January 2023
\u20ac220 million
\nEuro floating rate debt
\nlinked to EURIBOR
\nThe Group will continue to apply the amendments to IFRS 9 until the uncertainty arising from the interest rate benchmark reforms with
\nrespect to the timing and the amount of the underlying cash flows that the Group is exposed to ends. The Group has assumed that this
\nuncertainty will not end until the Group\u2019s contracts that reference IBORs are amended to specify the date on which the intere
st rate
\nbenchmark will be replaced, the cash flows of the alternative benchmark rate and the relevant spread adjustment. This will, in part, be
\ndependent
on the introduction of fallback clauses which have yet to be added to the Group\u2019s contracts and the negotiation with lenders.
\nDerivative and financial assets and liabilities are presented within the Balance Sheet as:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nNon-current assets
\nCurrent assets
\nCurrent liabilities
\nNon-current liabilities
\n36
\n38
\n(86)
\n(141)
\n47
\n23
\n(119)
\n(79)
\nThe change in fair value of interest rate swaps is discussed in the Finance Risk Management section
of the Finance Director\u2019s Review.
\nAll hedging instruments are booked in the Balance Sheet as derivative financial assets or derivative financial liabilities.
\nThe fair value of derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability,
\neither directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within Level 2 of the fair value
\nhierarchy set out in IFRS 13: Fair value meas
urement. The Group\u2019s policy is to recognise transfers into and out of the different fair value
\nhierarchy levels at the date the event or change in circumstances that caused the transfer to occur. There have been no transfers between
\nlevels in the year.
\n
\n207
\n\n
\nThe following table sets out details of the Group\u2019s material hedged items at the balance sheet date where hedge accounting is
applied:
\nChange in fair value for
\ncalculating ineffectiveness
\nBalance in translation
\nand hedging reserve
\nfor continuing hedges
\nBalance in translation
\nand hedging reserve
\nfor discontinued hedges
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n202
1
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nHedged items
\nFloating rate borrowings
\u2013
interest risk
\nNet assets of designated investments
\n(4)
\n\u2013
\n(66)
\n6
\n\u2013
\n\u2013
\n4
\n53
\n\u2013
\n116
\n2
\n\u2013
\nThere is no balance held in cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied. During
\n2020, at the request of one of its financial counterparties, the Group novated one of its interest rate swaps to another of its financial
\ncounterparties, which had the initial effect of leaving a \u00a39 million debit in the translation and hedging reserve for the discontinued hedge,
\nreducing to \u00a3nil by 31 December 2022 (31 December 2021: \u00a32 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25231": {
"value": "Fair values As at 31 December 2022, the \u00a3130 million (31 December 2021: \u00a3300 million) bond maturing in 2032 had a carrying value of \u00a3132 million
\n(31 December 2021: \u00a3304 million) and a fair value of \u00a3110 million (31 December 2021: \u00a3321 million). At 31 December 2021, the \u00a3450
\nmillion bond which matured in 2022 had a carrying value of \u00a3457 million and a fair value of \u00a3462 million.
\nThe Directors consider that the other financial assets and liabilities have fair values not materially different to the carrying values.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25239": {
"value": "Credit risk The Group\u2019s
principal financial assets were cash and cash equivalents, trade receivables and derivative financial assets which represented
\nthe Group\u2019s maximum exposure to credit risk in relation to financial assets.
\nThe Group\u2019s credit risk on cash and cash equivalents
and derivative financial assets was limited because the counterparties were banks
\nwith strong credit ratings assigned by international credit rating agencies. Exposure is managed on the basis of risk rating and counterparty
\nlimits. The value of credit risk in derivative assets has been modelled using publicly available inputs as part of their fair value.
\nThe Group\u2019s credit risk was therefore primarily attributable to its trade receivables. The amounts presented in the Consolida
ted Balance
\nSheet were net of allowance for expected credit loss
, estimated by the Group\u2019s management based on prior experience and their
\nassessment of the current economic environment. Note 17 provides further details regarding the recovery of trade receivables.
\nThe following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements:
\n31 December 2022
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n355
\n74
\n\u2013
\n\u2013
\n355
\n74
\n(71)
\n(62)
\n284
\n12
\nFinancial assets subject to master
\nnetting arrangements
429
\u2013
429
(133)
296
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,496)
\n(227)
\n\u2013
\n\u2013
\n(1,496)
\n(227)
\n(81)
\n214
\n(1,577)
\n(13)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,723)
\u2013
(1,723)
133
(1,590)
\n31 December 2021
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\n\u00a3m
\nGross amounts of
\nrecognised financial
\nassets/(liabilities)
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amounts of
\nfinancial
\nassets/(liabilities)
\npresented in the
\nBalance Sheet
\n\u00a3m
\nRelated amounts
\nof financial
\ninstruments not
\nset off in the
\nBalance Sheet
\n\u00a3m
\nNet amount
\n\u00a3m
\nCash and cash equivalents
\nDerivative financial assets
\n473
\n70
\n\u2013
\n\u2013
\n473
\n70
\n(5)
\n(58)
\n468
\n12
\nFinancial assets subject to master netting
\narrangements
543
\u2013
543
(63)
480
\nInterest-bearing loans and borrowings
\nDerivative financial liabilities
\n(1,365)
\n(198)
\n\u2013
\n\u2013
\n(1,365)
\n(198)
\n(127)
\n190
\n(1,492)
\n(8)
\nFinancial liabilities subject to master
\nnetting arrangements
(1,563)
\u2013
(1,563)
63
(1,500) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCreditRiskExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25410": {
"value": "Capital risk The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern.
\nThe capital structure of the Group as at 31 December 2022 consists of net debt, as disclosed in note 27, and equity attributable to the
\nowners of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of
\nChanges in Equity.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25418": {
"value": "Liquidity risk management Overview of banking facilities
\nThe Group\u2019s committed bank facilities include a multi
-currency denominated term loan of \u00a330 million and US$788 million and a multi-
\ncurrency denominated revolving credit facility of \u00a31.1 billion, US$2.0 billion and \u20ac0.5 billion. Loans drawn under this facil
ity are guaranteed
\nby Melrose Industries PLC and certa
in of its subsidiaries, and there is no security over any of the Group\u2019s assets in respect of this facility.
\nAt 31 December 2022, the term loan was fully drawn and there were drawings of US$130 million, \u00a3152 million and \u20ac410 million o
n the
\nmulti-currency revolving credit facility. Applying the exchange rates at 31 December 2022, the headroom equated to \u00a32.6 billion (31
\nDecember 2021: \u00a33.0 billion).
\nCash, deposits and marketable securities amounted to \u00a3355 million at 31 December 2022 (31 December 2021: \u00a3473 million) and are offset
\nto arrive at the Group net debt position of \u00a31,139 million (31 December 2021: \u00a3950 million). The combination of this cash and the
\nheadroom on the revolving credit facility allows the Directors to consider that the Group has sufficient access to liquidity for its current
\nneeds. The Board takes careful consideration of counterparty risk with banks when deciding where to place cash on deposit.
\nCovenants
\nThe committed bank funding has two financial covenants, being a net debt to adjusted EBITDA covenant and an interest cover covenant,
\nboth of which are normally tested half-yearly in June and December.
\nThe net debt to adjusted EBITDA covenant test level is 3.75x at 31 December 2022 and 3.5x at 30 June 2023 onwards. At 31 December
\n2022, the Group net debt leverage was 1.4x.
\nThe interest cover bank covenant test is set at 4.0x at 31 December 2022 onwards. At 31 December 2022, the Group interest cover was
\n11.6x, affording comfortable headroom.
\nBonds
\nCapital market borrowings as at 31 December 2022, inherited as part of the GKN acquisition, consist of a \u00a3130 million bond maturing May
\n2032 following the tender during the year, see note 20 for further details. The \u00a3450 million bond matured in September 2022. Details of the
\nbond outstanding at 31 December 2022 is shown in note 20.
\nWorking capital
\nThe Group has a small number of uncommitted working capital programmes that provide favourable financing terms on eligible customer
\nreceipts and competitive financing terms to suppliers on eligible supplier payments.
\nBusinesses which participate in these customer related finance programmes have the ability to choose whether to receive payment earlier
\nthan the normal due date, for specific customers on a non-recourse basis. As at 31 December 2022, the drawings on these facilities were
\n\u00a3325 million (31 December 2021: \u00a3310 million), as a result there was a net cash increase in the year of \u00a315 million (2021: reduction of \u00a34
\nmillion). At 31 December 2022, the drawings within Aerospace were \u00a3138 million (31 December 2021: \u00a3114 million), Automotive \u00a3178
\nmillion (31 December 2021: \u00a3187 million) and Powder Metallurgy \u00a39 million (31 December 2021: \u00a39 million).
\nIn addition, some suppliers have access to utilise the Group\u2019s supplier finance
programmes, which are provided by a small number of the
\nGroup\u2019s banks. There is no cost to the Group for providing these programmes to its suppliers. These arrangements do not chang
e the date
\nsuppliers are due to be paid by the Group, and therefore there i
s no additional impact on the Group\u2019s liquidity. If the Group exited these
\narrangements there could be a potential impact of up to \u00a394 million (31 December 2021: \u00a360
million) on the Group\u2019s cash flow. These
\nprogrammes allow suppliers to choose whether they want to accelerate the payment of their invoices, by the financing banks, for an
\ninterest cost which is competitive, based on the credit rating of the Group as determined by the financing banks. The amounts owed to the
\nbanks are presented in trade payables on the Balance Sheet and the cash flows are presented in cash flows from operating activities. As at
\n31 December 2022, total facilities were \u00a3328 million (31 December 2021: \u00a3321 million) with drawings of \u00a3200 million (31 December 2021:
\n\u00a3102 million). The
arrangements do not change the timing of the Group\u2019s cash outflows.
At 31 December 2022, the drawings within
\nAerospace were \u00a375 million (31 December 2021: \u00a350 million) and Automotive \u00a3125 million (31 December 2021: \u00a352 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25471": {
"value": "Hedge of net investments in foreign entities using loans and derivatives
\nInterest-bearing loans and borrowings together with cross-
currency swaps are designated as hedges of net investments in the Group\u2019s
\nsubsidiaries in the USA and Europe to reduce the exposure to the related foreign exchange risks.
\nThe value of these were as follows:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nLocal borrowing:
\nUS Dollar
\nEuro
\n759
\n363
\n457
\n126
\nGKN cross-currency swaps:
\nUS Dollar
\nEuro
\n\u2013
\n\u2013
\n276
\n239
The foreign exchange movement on the local borrowings, which is recorded in currency translation on net investments within Other
\nComprehensive Income, was a loss of \u00a360 million (2021: gain of \u00a313 million).
\nAt 31 December 2021, Euro borrowings included US$170 million debt that was swapped into
\u20ac150 million
using cross-currency swaps. The
\nfair value of these cross-currency swaps was a liability of \u00a31 million. The foreign exchange movement on these cross-currency swaps,
\nwhich was recorded in derivative gains/(losses) on hedge relationships within Other Comprehensive Income, was a gain of \u00a319 million
\n(2021: \u00a315 million) and net cash receipts in the year totalled \u00a318 million (2021: \u00a37 million). There were no cross-currency swaps
\noutstanding at 31 December 2022.
\nThe foreign exchange movement on the GKN cross-currency swaps, which is recorded in derivative gains/(losses) on hedge relationships,
\nwas a loss of \u00a362 million (2021: gain of \u00a312 million).
Hedge accounted derivatives
\nThe following table sets out details of the Group\u2019s material hedging instruments where hedge accounting is applied at the
balance sheet
\ndate:
\nAverage fixed rate
Notional principal
\nFair value of assets/
\n(liabilities)
\nHedging Instruments
\n31 December
\n2022
\n%
\n31 December
\n2021
\n%
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nPay fixed, receive floating interest rate swaps
\nWithin one year
\nIn one to two years
\n2.24%
\n\u2013
\n2.24%
\n2.24%
\n260
\n\u2013
\n246
\n246
\n(3)
\n\u2013
\n\u2013
\n(7)
\nTotal
(3)
(7)
\nPay fixed, receive fixed cross-currency swaps
\nWithin one year
\nIn one to two years
\n\u2013
\n\u2013
\n4.85%
\n\u2013
\n\u2013
\n\u2013
\n515
\n\u2013
\n\u2013
\n\u2013
\n(68)
\n\u2013
\nTotal
\u2013
(68)
\nThe Group is exposed to the following interest rate benchmarks within its hedge accounting relationships, which are subject to interest rate
\nbenchmark reform: USD LIBOR, EURIBOR (\u201cIBORs\u201d). The hedged items are US Dollar and Euro floating rate d
ebt.
\nThe Group has closely monitored the market and the output from various industry working groups managing the transition to new
\nbenchmark interest rates. This includes announcements made by LIBOR regulators (including the Financial Conduct Authority (\u201cFCA\u201d) and
\nthe US Commodity Trading Futures Commission) regarding the transition away from LIBOR to the Sterling Overnight Indexed Average
\nRate (\u201cSONIA\u201d), Secured Overnight Financing Rate (\u201cSOFR\u201d) and Euro Short
-
Term Rate (\u201cESTR\u201d) respectively.
\nIn response to the announcements, the Group has Sterling borrowings under SONIA and US Dollar borrowings continuing under USD
\nLIBOR with the option to switch to SOFR on or prior to discontinuation in June 2023. The Group expects to continue using EURIBOR for
\nEuro borrowings going forward.
\nBelow are the details of the hedging instruments and hedged items in scope of the IFRS 9 amendments due to interest rate benchmark
\nreform by hedge type. The terms of hedged items listed match those of the corresponding hedging instruments.
\nHedge type
Instrument type
Maturing
Notional
Hedged item
\nCash flow
\nhedges
\nInterest rate swaps, pay US Dollar fixed
\nannually, receive 1 month US Dollar LIBOR
January 2023
$315 million
\nUS Dollar floating rate
\ndebt linked to US LIBOR
\nInterest rate 0% caps, pay Euro fixed annually,
\nreceive 1 month EURIBOR
January 2023
\u20ac220 million
\nEuro floating rate debt
\nlinked to EURIBOR
\nThe Group will continue to apply the amendments to IFRS 9 until the uncertainty arising from the interest rate benchmark reforms with
\nrespect to the timing and the amount of the underlying cash flows that the Group is exposed to ends. The Group has assumed that this
\nuncertainty will not end until the Group\u2019s contracts that reference IBORs are amended to specify the date on which the intere
st rate
\nbenchmark will be replaced, the cash flows of the alternative benchmark rate and the relevant spread adjustment. This will, in part, be
\ndependent
on the introduction of fallback clauses which have yet to be added to the Group\u2019s contracts and the negotiation with lenders.
\nDerivative and financial assets and liabilities are presented within the Balance Sheet as:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nNon-current assets
\nCurrent assets
\nCurrent liabilities
\nNon-current liabilities
\n36
\n38
\n(86)
\n(141)
\n47
\n23
\n(119)
\n(79)
\nThe change in fair value of interest rate swaps is discussed in the Finance Risk Management section
of the Finance Director\u2019s Review.
\nAll hedging instruments are booked in the Balance Sheet as derivative financial assets or derivative financial liabilities.
\nThe fair value of derivative financial instruments is derived from inputs other than quoted prices that are observable for the asset or liability,
\neither directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are therefore categorised within Level 2 of the fair value
\nhierarchy set out in IFRS 13: Fair value meas
urement. The Group\u2019s policy is to recognise transfers into and out of the different fair value
\nhierarchy levels at the date the event or change in circumstances that caused the transfer to occur. There have been no transfers between
\nlevels in the year.
The following table sets out details of the Group\u2019s material hedged items at the balance sheet date where hedge accounting is
applied:
\nChange in fair value for
\ncalculating ineffectiveness
\nBalance in translation
\nand hedging reserve
\nfor continuing hedges
\nBalance in translation
\nand hedging reserve
\nfor discontinued hedges
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n202
1
\n\u00a3m
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nHedged items
\nFloating rate borrowings
\u2013
interest risk
\nNet assets of designated investments
\n(4)
\n\u2013
\n(66)
\n6
\n\u2013
\n\u2013
\n4
\n53
\n\u2013
\n116
\n2
\n\u2013
\nThere is no balance held in cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied. During
\n2020, at the request of one of its financial counterparties, the Group novated one of its interest rate swaps to another of its financial
\ncounterparties, which had the initial effect of leaving a \u00a39 million debit in the translation and hedging reserve for the discontinued hedge,
\nreducing to \u00a3nil by 31 December 2022 (31 December 2021: \u00a32 million).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25575": {
"value": "Exchange rate risk management The Group trades in various countries around the world and is exposed to movements in a number of foreign currencies. The Group
\ntherefore carries exchange rate risk that can be categorised into three types, transaction, translation and disposal related risk as described
\nin the paragraphs below. The
Group\u2019s
policy is designed to protect against the majority of the cash risks but not the non-cash risks.
\nThe most common exchange rate risk is the transaction risk the Group takes when it invoices a customer or purchases from suppliers in a
\ndifferent currency to the underlying functional currency of the relevant business. The Group
\u2019s
policy is to review transactional foreign
\nexchange exposures, and place necessary hedging contracts, quarterly on a rolling basis. To the extent the cash flows associated with a
\ntransactional foreign exchange risk are committed, the Group will hedge 100% at the time the cash flow becomes committed. For forecast
\nand variable cash flows, the Group hedges a proportion of the expected cash flows, with the percentage being hedged lowering as the time
\nhorizon lengthens. Typically, in total the Group hedges around 90% of foreign exchange exposures expected over the next year, and
\napproximately 60% to 80% of exposures between one and two years. For GKN Aerospace, the Group hedges beyond two years due to the
\nlonger term nature of some of its contracts, with the percentage of expected exposure hedged reducing for each subsequent year. This
\npolicy does not eliminate the cash risk but does bring some certainty to it.
\nThe translation rate risk is the effect on the Group results in the period due to the movement of exchange rates used to translate foreign
\nresults into Sterling from one period to the next. No specific exchange instruments are used to protect against the translation risk because
\nit is a non-cash risk to the Group, until foreign currency is converted to Sterling. However, the Group utilises its multi-currency revolving
\ncredit facility and cross-currency swaps, where relevant, to maintain an appropriate mix of debt in each currency. The hedge of having debt
\ndrawn in these currencies funding the trading units with US Dollars or Euro functional currencies protects against some of the Balance
\nSheet and banking covenant translation risk.
\nLastly, exchange rate risk arises when a business that is predominantly based in a foreign currency is sold. The proceeds for those
\nbusinesses may be received in a foreign currency and therefore an exchange rate risk may arise on conversion of foreign currency
\nproceeds into Sterling, for instance to pay a Sterling dividend or Capital Return to shareholders. Protection against this risk is considered
\non a case-by-case basis and, if appropriate, hedged at the time.
\n
\n205
\n
\n
\nAs at 31 December 2022, the Group held foreign exchange forward contracts to mitigate expected exchange rate fluctuations on future
\ncash flows from sales to customers and purchases from suppliers. The fair value of all foreign exchange forward contracts across the
\nGroup was a net liability at 31 December 2022 of \u00a3156 million (31 December 2021: \u00a357 million). There were no contracts where hedge
\naccounting was applied as at 31 December 2022 (31 December 2021: fair value asset of \u00a31 million).
\nThe change in fair value of foreign exchange forward contracts recognised in derivative gains/(losses) on hedging relationships within
\nOther Comprehensive Income was \u00a3nil (2021: credit of \u00a38 million) and a credit of \u00a31 million (2021: \u00a32 million) was reclassified to the
\nIncome Statement.
\nIn respect of the cross-currency swaps designated as net investment hedges, for the year ended 31 December 2022, a credit of \u00a35 million
\n(2021: \u00a34 million) was booked through the Income Statement in finance costs, of which a credit of \u00a33 million (2021: \u00a33 million) was treated
\nas an adjusting item (note 6). The cross-currency swaps matured in the year and were designated in a net investment hedge accounting
\nrelationship against US Dollar and Euro net assets of certain subsidiaries. The hedged risk was the spot rate, which represented the
\nsignificant component of the movement and therefore was recorded in the foreign currency translation reserve (note 26).
\nThe following table shows the maturity profile of undiscounted contracted gross cash outflows of derivative financial liabilities used to
\nmanage currency risk, being both the cross-currency swaps above and foreign exchange forward contracts used to manage transaction
\nexchange rate risk:
\n0-1 year
\n\u00a3m
\n1-2 years
\n\u00a3m
\n2-5 years
\n\u00a3m
\n5+ years
\n\u00a3m
\nTotal
\n\u00a3m
\nYear ended 31 December 2022
\nForeign exchange forward contracts
855
618
834
19
2,326
\nYear ended 31 December 2021
\nForeign exchange forward contracts
\nCross-currency swaps
\n1,051
\n666
\n479
\n\u2013
\n715
\n\u2013
\n28
\n\u2013
\n2,273
\n666
\nForeign currency sensitivity analysis
\nCurrency risks are defined by IFRS 7: Financial instruments: Disclosures as the risk that the fair value or future cash flows of a financial
\nasset or liability will fluctuate because of changes in foreign exchange rates.
\nThe following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at
\nthe balance sheet date, illustrating the (decrease)/increase in Group operating profit caused by a 10% strengthening of the US Dollar and
\nEuro against Sterling compared to the year-end spot rate. The analysis assumes that all other variables, in particular other foreign currency
\nexchange rates, remain constant. The Group operates in a range of different currencies, and those with a notable impact are shown below:
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(11)
\n(3)
\n2
\n7
\nThe following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the balance
\nsheet date, illustrating the increase/(decrease) in Group equity caused by a 10% strengthening of the US Dollar and Euro against Sterling.
\nThe analysis assumes that all other variables, in particular other foreign currency exchange rates, remain constant.
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nUS Dollar
\nEuro
\n(10)
\n(7)
\n(5)
\n(10)
\nIn addition, the change in equity due to a 10% strengthening of the US Dollar against Sterling for the translation of net investment hedging
\ninstruments would be a decrease of \u00a377 million (2021: \u00a374 million) and for the Euro, a decrease of \u00a336 million (2021: \u00a337 million).
\nHowever, there would be no overall effect on equity because there would be an offset in the currency translation of the foreign operation.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25719": {
"value": "Fair value measurements recognised in the Balance Sheet Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates
\nmatching the maturities of the contracts.
\nInterest rate swap and cross-currency swap contracts are measured using yield curves derived from quoted interest and foreign exchange
\nrates.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25972": {
"value": "26. Issued share capital and reserves
\nShare Capital
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAllotted, called-up and fully paid
\n4,054,425,961 (31 December 2021: 4,372,429,473) Ordinary Shares of 160/21 pence each
\n(1)
\n309
333
\n309
333
\n(1) During the year, a share buyback programme occurred where 318,003,512 shares were repurchased and subsequently cancelled (note 1).
\nThe rights associated with
each class of share are described in the Directors\u2019 Report.
\nMerger reserve and Other reserves
\nThe Merger reserve represents the excess of fair value over nominal value of shares issued in consideration for the acquisition of
\nsubsidiaries. Other reserves comprise accumulated adjustments in respect of Group reconstructions.
\nTranslation and hedging reserve
\nIn order to provide useful information about the Group\u2019s hedging arrangements, the translation reserve and hedging reserve
are combined.
\nIncluding the different components of hedging in one place enables a clearer explanation of the three components of hedging. These
\ncomponents are disaggregated below with movements within Other Comprehensive Income during the year shown below and further
\nexplanation provided in note 25.
\n
\n
\n
\n208
\nCost of hedge
\nreserve
\n\u00a3m
\nCash flow
\nhedge reserve
\n\u00a3m
\nForeign
\ncurrency
\ntranslation
\nreserve
\n\u00a3m
\nTranslation
\nand hedging
\nreserve
\n\u00a3m
\nAt 1 January 2021
(8)
(63)
41
(30)
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n27
\n(19)
\n46
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n\u2013
\n\u2013
\n115
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n27
\n(19)
\n159
\nAt 31 December 2021
(10)
(9)
95
76
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nAssociated deferred tax
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n4
\n(1)
\n6
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n\u2013
\n\u2013
\n(25)
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n4
\n(1)
\n(9)
\nAt 31 December 2022
\u2013
\u2013
638
638
\nThe cash flow hedge reserve represents the cumulative fair value gains and losses on derivatives for which cash flow hedge accounting
\nhas been applied. Movements and balances on derivatives designated in net investment hedges are shown as part of the foreign currency
\ntranslation reserve.
\nThe foreign currency translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other
\nthan Sterling, together with gains and losses on the translation of liabilities and cumulative fair value gains and losses on derivatives that
\nhedge the Company\u2019s net investment in foreign subsidiaries.
\nAmounts reclassified to the Income Statement during the year includes a credit of \u00a311 million (2021: charge of \u00a3113 million) following the
\ndisposal of businesses.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25973": {
"value": "26. Issued share capital and reserves
\nShare Capital
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAllotted, called-up and fully paid
\n4,054,425,961 (31 December 2021: 4,372,429,473) Ordinary Shares of 160/21 pence each
\n(1)
\n309
333
\n309
333
\n(1) During the year, a share buyback programme occurred where 318,003,512 shares were repurchased and subsequently cancelled (note 1).
\nThe rights associated with
each class of share are described in the Directors\u2019 Report.
\nMerger reserve and Other reserves
\nThe Merger reserve represents the excess of fair value over nominal value of shares issued in consideration for the acquisition of
\nsubsidiaries. Other reserves comprise accumulated adjustments in respect of Group reconstructions.
\nTranslation and hedging reserve
\nIn order to provide useful information about the Group\u2019s hedging arrangements, the translation reserve and hedging reserve
are combined.
\nIncluding the different components of hedging in one place enables a clearer explanation of the three components of hedging. These
\ncomponents are disaggregated below with movements within Other Comprehensive Income during the year shown below and further
\nexplanation provided in note 25.
\n
\n
\n
\n208
\nCost of hedge
\nreserve
\n\u00a3m
\nCash flow
\nhedge reserve
\n\u00a3m
\nForeign
\ncurrency
\ntranslation
\nreserve
\n\u00a3m
\nTranslation
\nand hedging
\nreserve
\n\u00a3m
\nAt 1 January 2021
(8)
(63)
41
(30)
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n27
\n(19)
\n46
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n\u2013
\n\u2013
\n115
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n27
\n(19)
\n159
\nAt 31 December 2021
(10)
(9)
95
76
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nAssociated deferred tax
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n4
\n(1)
\n6
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n\u2013
\n\u2013
\n(25)
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n4
\n(1)
\n(9)
\nAt 31 December 2022
\u2013
\u2013
638
638
\nThe cash flow hedge reserve represents the cumulative fair value gains and losses on derivatives for which cash flow hedge accounting
\nhas been applied. Movements and balances on derivatives designated in net investment hedges are shown as part of the foreign currency
\ntranslation reserve.
\nThe foreign currency translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other
\nthan Sterling, together with gains and losses on the translation of liabilities and cumulative fair value gains and losses on derivatives that
\nhedge the Company\u2019s net investment in foreign subsidiaries.
\nAmounts reclassified to the Income Statement during the year includes a credit of \u00a311 million (2021: charge of \u00a3113 million) following the
\ndisposal of businesses. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f25974": {
"value": "26. Issued share capital and reserves
\nShare Capital
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAllotted, called-up and fully paid
\n4,054,425,961 (31 December 2021: 4,372,429,473) Ordinary Shares of 160/21 pence each
\n(1)
\n309
333
\n309
333
\n(1) During the year, a share buyback programme occurred where 318,003,512 shares were repurchased and subsequently cancelled (note 1).
\nThe rights associated with
each class of share are described in the Directors\u2019 Report.
\nMerger reserve and Other reserves
\nThe Merger reserve represents the excess of fair value over nominal value of shares issued in consideration for the acquisition of
\nsubsidiaries. Other reserves comprise accumulated adjustments in respect of Group reconstructions.
\nTranslation and hedging reserve
\nIn order to provide useful information about the Group\u2019s hedging arrangements, the translation reserve and hedging reserve
are combined.
\nIncluding the different components of hedging in one place enables a clearer explanation of the three components of hedging. These
\ncomponents are disaggregated below with movements within Other Comprehensive Income during the year shown below and further
\nexplanation provided in note 25.
\n
\n
\n
\n208
\nCost of hedge
\nreserve
\n\u00a3m
\nCash flow
\nhedge reserve
\n\u00a3m
\nForeign
\ncurrency
\ntranslation
\nreserve
\n\u00a3m
\nTranslation
\nand hedging
\nreserve
\n\u00a3m
\nAt 1 January 2021
(8)
(63)
41
(30)
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(2)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n27
\n(19)
\n46
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n\u2013
\n\u2013
\n115
\n(101)
\n13
\n\u2013
\n27
\n\u2013
\n27
\n(19)
\n159
\nAt 31 December 2021
(10)
(9)
95
76
\nMovements within other comprehensive income/(expense):
\nRetranslation of net assets
\nAssociated deferred tax
\nForeign exchange differences on borrowings hedging net assets
\nAssociated deferred tax
\nChange in fair value of derivatives designated in net investment hedges
\nAssociated deferred tax
\nChange in fair value of derivatives designated in cash flow hedges
\nAssociated deferred tax
\nAmounts reclassified to the Income Statement
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n10
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n4
\n(1)
\n6
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n\u2013
\n\u2013
\n(25)
\n665
\n6
\n(60)
\n\u2013
\n(43)
\n\u2013
\n4
\n(1)
\n(9)
\nAt 31 December 2022
\u2013
\u2013
638
638
\nThe cash flow hedge reserve represents the cumulative fair value gains and losses on derivatives for which cash flow hedge accounting
\nhas been applied. Movements and balances on derivatives designated in net investment hedges are shown as part of the foreign currency
\ntranslation reserve.
\nThe foreign currency translation reserve contains exchange differences on the translation of subsidiaries with a functional currency other
\nthan Sterling, together with gains and losses on the translation of liabilities and cumulative fair value gains and losses on derivatives that
\nhedge the Company\u2019s net investment in foreign subsidiaries.
\nAmounts reclassified to the Income Statement during the year includes a credit of \u00a311 million (2021: charge of \u00a3113 million) following the
\ndisposal of businesses. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26184": {
"value": "27. Cash flow statement
\nNotes
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nReconciliation of operating loss to net cash from operating activities generated by
\ncontinuing operations
\nOperating loss
\nAdjusting items
6
\n(236)
\n716
\n(493)
\n810
\nAdjusted operating profit
\nAdjustments for:
\nDepreciation of property, plant and equipment
\nAmortisation of computer software and development costs
\nShare of adjusted operating profit of equity accounted investments
\nRestructuring costs paid and movements in provisions
\nDefined benefit pension contributions paid
\n(2)
\nChange in inventories
\nChange in receivables
\nChange in payables
\nTax paid
\nInterest paid on loans and borrowings
\nInterest paid on lease obligations
\nAcquisition and disposal costs
\n6
\n15
\n480
\n356
\n50
\n(78)
\n(195)
\n(59)
\n(119)
\n(268)
\n209
\n(80)
\n(87)
\n(12)
\n(10)
\n317
\n370
\n51
\n(66)
\n(233)
\n(88)
\n(14)
\n89
\n\u2013
\n(57)
\n(128)
\n(14)
\n(5)
\nNet cash from operating activities
187
222
\n(1)
Restated for discontinued operations (note 1).
\n(2)
The year ended 31 December 2021 includes \u00a334 million paid to the GKN UK Pension Schemes following the disposal of Nortek Air Management, satisfying the funding commitment made
\non the acquisition of GKN.
\nReconciliation of cash and cash equivalents, net of bank overdrafts
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nCash and cash equivalents per Balance Sheet
\nBank overdrafts included within current interest-bearing loans and borrowings (note 20)
\n355
\n(63)
\n473
\n(5)
\nCash and cash equivalents, net of bank overdrafts per Statement of Cash Flows
292
468
\nCash flow information relating to discontinued operations is as follows:
\nCash flow from discontinued operations
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nRestated
\n(1)
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nNet cash from discontinued operations
\nDefined benefit pension contributions paid
\nInterest paid on lease obligations
\nTax paid
\n26
\n\u2013
\n\u2013
\n(9)
\n133
\n(40)
\n(2)
\n(50)
\nNet cash from operating activities from discontinued operations
\n(2)
\n17
41
\nPurchase of property, plant and equipment
\nProceeds from disposal of property, plant and equipment
\nPurchase of computer software and capitalised development costs
\n(1)
\n\u2013
\n\u2013
\n(14)
\n2
\n(1)
\nNet cash used in investing activities from discontinued operations
(1)
(13)
\nRepayment of principal under lease obligations
(1)
(8)
\nNet cash used in financing activities from discontinued operations
(1)
(8)
\n(1) Restated for discontinued operations (note 1).
\n(2) The year ended 31 December 2021 includes tax paid in the year of \u00a332 million following the extraction of Ergotron and Nortek Control from the Nortek tax group prior to the disposal of Nortek Air
\nManagement and specific defined benefit pension contributions of \u00a339 million paid on disposal of Nortek Air Management and Brush.
\nNet debt reconciliation
\nNet debt consists of interest-bearing loans and borrowings (excluding any acquisition related fair value adjustments), cross-currency swaps
\nand cash and cash equivalents. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged
\nby cross-currency swaps.
\n
\n\n
\n210
\nNet debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure
\nis the aggregate of interest-bearing loans and borrowings (current and non-current) and cash and cash equivalents. A reconciliation from
\nthe most directly comparable IFRS measure to net debt, used as a basis for banking covenant calculations, is given below:
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nInterest-bearing loans and borrowings
\u2013
due within one year
\nInterest-bearing loans and borrowings
\u2013
due after one year
\n(63)
\n(1,433)
\n(462)
\n(903)
\nExternal debt
\nLess:
\nCash and cash equivalents
\n(1,496)
\n355
\n(1,365)
\n473
\n(1,141)
(892)
\nAdjustments:
\nImpact of cross-currency swaps
\nNon-cash acquisition fair value adjustments
\n\u2013
\n2
\n(69)
\n11
\nNet debt
(1,139)
(950)
\nThe table below shows the key components of the movement in net debt:
\nAt
\n31 December
\n2021
\n\u00a3m
\nCash flow
\n\u00a3m
\nAcquisitions
\nand disposals
\n\u00a3m
\nOther non-cash
\nmovements
\n\u00a3m
\nEffect of foreign
\nexchange
\n\u00a3m
\nAt
\n31 December
\n2022
\n\u00a3m
\nExternal debt (excluding bank overdrafts)
\nCross-currency swaps
\nNon-cash acquisition fair value adjustments
\n(1,360)
\n(69)
\n11
\n(34)
\n109
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n21
\n3
\n(9)
\n(60)
\n(43)
\n\u2013
\n(1,433)
\n\u2013
\n2
\n(1,418)
75
\u2013
15
(103)
(1,431)
\nCash and cash equivalents, net of bank
\noverdrafts
468
(664)
461
\u2013
27
292
\nNet debt
(950)
(589)
461
15
(76)
(1,139)",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26457": {
"value": "28.
Commitments
\nAmounts payable under lease obligations:
\nMinimum lease payments
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAmounts payable:
\nWithin one year
\nAfter one year but within five years
\nOver five years
\nLess: future finance charges
\n69
\n166
\n209
\n(78)
\n64
\n166
\n206
\n(60)
\nPresent value of lease obligations
366
376
\nAnalysed as:
\nAmounts due for settlement within one year
\nAmounts due for settlement after one year
\n60
\n306
\n57
\n319
\nPresent value of lease obligations
366
376
\nIt is the Group\u2019s policy to lease certain of its property, plant and equipment. The average lease term is 10 years. Interest
rates are fixed at
\nthe contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
\nThe Group\u2019s obligations under lease arrangements are secured by the lessors\u2019 rights over the leased assets.
\nCertain leases within the Group contain extension or termination options to allow for flexibility within these lease agreements. Where these
\noptions are not reasonably certain to be exercised, they are not included in the lease obligation. The value of these associated
\nundiscounted cash flows is \u00a3171 million (31 December 2021: \u00a3242 million).
The table below shows the key components in the movement in lease obligations.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nAdditions
\nInterest charge
\nReassessment of lease obligation
\nPayment of principal
\nPayment of interest
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n376
\n38
\n9
\n(1)
\n(52)
\n(12)
\n(5)
\n(3)
\n(7)
\n23
\n555
\n45
\n16
\n3
\n(61)
\n(16)
\n(3)
\n(138)
\n(13)
\n(12)
\nAt 31 December
366
376
\n(1) Disposal of businesses in 2022 relates to the disposal of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\nCapital commitments
\nAt 31 December 2022, there were commitments of \u00a3127 million (31 December 2021: \u00a3115 million) relating to the acquisition of new plant
\nand machinery.
30.
Contingent liabilities
\nAs a result of acquisitions made by the Group, certain contingent legal and warranty liabilities have been identified as part of the fair value
\nreview of these acquisition balance sheets. Whilst it is difficult to reasonably estimate the timing and ultimate outcome of these claims, the
\nDirectors\u2019 best estimate has been included in the Balance Sheet where they existed at the time of acquisition and hence were
recognised
\nin accordance with IFRS 3: Business combinations. Where a provision has been recognised, information regarding the different categories
\nof such liabilities and the amount and timing of outflows is included within note 21.
\nGiven the nature of the Gro
up\u2019s business many of the Group\u2019s products have a large installed base, and any recalls or reworks related to
\nsuch products could be particularly costly. The costs of product recalls or reworks are not always covered by insurance. Recalls or reworks
\nmay ha
ve a material adverse effect on the Group\u2019s financial condition, results of operations and cash flows.
\nThe Group has contingent liabilities representing guarantees and contract bonds given in the ordinary course of business on behalf of
\ntrading subsidiaries. No losses are anticipated to arise on these contingent liabilities. The Group does not have any other significant
\ncontingent liabilities.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26459": {
"value": "28. Commitments
\nAmounts payable under lease obligations:
\nMinimum lease payments
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nAmounts payable:
\nWithin one year
\nAfter one year but within five years
\nOver five years
\nLess: future finance charges
\n69
\n166
\n209
\n(78)
\n64
\n166
\n206
\n(60)
\nPresent value of lease obligations
366
376
\nAnalysed as:
\nAmounts due for settlement within one year
\nAmounts due for settlement after one year
\n60
\n306
\n57
\n319
\nPresent value of lease obligations
366
376
\nIt is the Group\u2019s policy to lease certain of its property, plant and equipment. The average lease term is 10 years. Interest
rates are fixed at
\nthe contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
\nThe Group\u2019s obligations under lease arrangements are secured by the lessors\u2019 rights over the leased assets.
\nCertain leases within the Group contain extension or termination options to allow for flexibility within these lease agreements. Where these
\noptions are not reasonably certain to be exercised, they are not included in the lease obligation. The value of these associated
\nundiscounted cash flows is \u00a3171 million (31 December 2021: \u00a3242 million).
\n211
\n
\n\nThe table below shows the key components in the movement in lease obligations.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nAt 1 January
\nAdditions
\nInterest charge
\nReassessment of lease obligation
\nPayment of principal
\nPayment of interest
\nDisposals
\nDisposal of businesses
\n(1)
\nTransfer to held for sale
\n(2)
\nExchange adjustments
\n376
\n38
\n9
\n(1)
\n(52)
\n(12)
\n(5)
\n(3)
\n(7)
\n23
\n555
\n45
\n16
\n3
\n(61)
\n(16)
\n(3)
\n(138)
\n(13)
\n(12)
\nAt 31 December
366
376
\n(1) Disposal of businesses in 2022 relates to the disposal of a non-core entity. Disposal of businesses in 2021 relates to the sales of Nortek Air Management, Brush and certain other non-core
\nentities (note 1).
\n(2) Transfer to held for sale in 2022 relates to the Ergotron business (2021: Nortek Control business), which was subsequently disposed of during the second half of the year (note 1).
\nCapital commitments
\nAt 31 December 2022, there were commitments of \u00a3127 million (31 December 2021: \u00a3115 million) relating to the acquisition of new plant
\nand machinery.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCommitmentsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26583": {
"value": "29. Related parties
\nTransactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
\ndisclosed in this note.
Sales to and purchases from Group companies are priced on an arm\u2019s length basis and generally are settled on 30
\nday terms.
\nIn the ordinary course of business, sales and purchases of goods take place between subsidiaries and equity accounted investment
\nco
mpanies priced on an arm\u2019s length basis. Sales by subsidiaries to equity accounted investments in the year ended 31 December
2022
\ntotalled \u00a317 million (2021: \u00a321 million). Purchases by subsidiaries from equity accounted investments in the year ended 31 December 2022
\ntotalled \u00a38 million (2021: \u00a310 million). At 31 December 2022, amounts receivable from equity accounted investments totalled \u00a33 million (31
\nDecember 2021: \u00a32 million) and amounts payable to equity accounted investments totalled \u00a32 million (31 December 2021: \u00a32 million).
\nRemuneration of key management personnel
\nThe remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the
\ncategories specified in IAS 24: Related party disclosures. Further information about the remuneration of individual Directors is provided
\nin the audited part of the Directors\u2019 Remuneration Report on pages
122 and 131.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nShort-term employee benefits
\nShare-based payments
\n5
\n10
\n5
\n10
\n15
15",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26587": {
"value": "Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Sales to and purchases from Group companies are priced on an arm\u2019s length basis and generally are settled on 30
\nday terms.
\nIn the ordinary course of business, sales and purchases of goods take place between subsidiaries and equity accounted investment
\nco
mpanies priced on an arm\u2019s length basis. Sales by subsidiaries to equity accounted investments in the year ended 31 December
2022
\ntotalled \u00a317 million (2021: \u00a321 million). Purchases by subsidiaries from equity accounted investments in the year ended 31 December 2022
\ntotalled \u00a38 million (2021: \u00a310 million). At 31 December 2022, amounts receivable from equity accounted investments totalled \u00a33 million (31
\nDecember 2021: \u00a32 million) and amounts payable to equity accounted investments totalled \u00a32 million (31 December 2021: \u00a32 million). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26601": {
"value": "Remuneration of key management personnel The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the
\ncategories specified in IAS 24: Related party disclosures. Further information about the remuneration of individual Directors is provided
\nin the audited part of the Directors\u2019 Remuneration Report on pages
122 and 131.
\nYear ended
\n31 December
\n2022
\n\u00a3m
\nYear ended
\n31 December
\n2021
\n\u00a3m
\nShort-term employee benefits
\nShare-based payments
\n5
\n10
\n5
\n10
\n15
15",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26627": {
"value": "30. Contingent liabilities
\nAs a result of acquisitions made by the Group, certain contingent legal and warranty liabilities have been identified as part of the fair value
\nreview of these acquisition balance sheets. Whilst it is difficult to reasonably estimate the timing and ultimate outcome of these claims, the
\nDirectors\u2019 best estimate has been included in the Balance Sheet where they existed at the time of acquisition and hence were
recognised
\nin accordance with IFRS 3: Business combinations. Where a provision has been recognised, information regarding the different categories
\nof such liabilities and the amount and timing of outflows is included within note 21.
\nGiven the nature of the Gro
up\u2019s business many of the Group\u2019s products have a large installed base, and any recalls or reworks related to
\nsuch products could be particularly costly. The costs of product recalls or reworks are not always covered by insurance. Recalls or reworks
\nmay ha
ve a material adverse effect on the Group\u2019s financial condition, results of operations and cash flows.
\nThe Group has contingent liabilities representing guarantees and contract bonds given in the ordinary course of business on behalf of
\ntrading subsidiaries. No losses are anticipated to arise on these contingent liabilities. The Group does not have any other significant
\ncontingent liabilities.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26666": {
"value": "31. Post balance sheet events
\nSince the balance sheet date,
the Board has approved the demerger of the Automotive, Powder Metallurgy and Hydrogen businesses (\u201cthe
\nDemerger\u201d). Whilst the Demerger remains subject to shareholder consent, the costs and expenses that are directly attributable
to the
\nDemerger are estimated to amount to \u00a370 million. Approximately 75% of this is contingent on the Demerger taking place.
\nOn 9 February 2023, the Trustees of GKN Group Pension Scheme 4 (
\u201c
the Scheme
\u201d
), sponsored by the Aerospace division, signed a
\ncontract to fully secure benefits for all members of the Scheme for a cash settlement of approximately \u00a345 million. At 31 December 2022,
\nthe Scheme had total liabilities of \u00a3433 million (31 December 2021: \u00a3628 million) and an accounting surplus of \u00a352 million (31 December
2021: \u00a387 million). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f26762": {
"value": "Company Balance Sheet for Melrose Industries PLCNotes
\n31 December
\n2022
\n\u00a3m
\n31 December
\n2021
\n\u00a3m
\nFixed assets
\nInvestment in subsidiaries
3
10,591
10,585
\nDebtors:
\nAmounts falling due after one year
\nCreditors:
\nAmounts falling due within one year
\n4
\n5
\n487
\n(3,443)
\n477
\n(2,842)
\nNet current liabilities
(2,956)
(2,365)
\nTotal assets less current liabilities
7,635
8,220
\nProvisions
6
(2)
(3)
\nNet assets
7,633
8,217
\nCapital and reserves
\nIssued share capital
\nShare premium account
\nMerger reserve
\nCapital redemption reserve
\nRetained earnings
\n7
309
\n3,271
\n109
\n753
\n3,191
\n333
\n3,271
\n109
\n729
\n3,775
\nShareholders\u2019 funds
7,633
8,217
\nThe Company reported a loss for the financial year ended 31 December 2022 of \u00a319 million (2021: profit of \u00a38 million).
\nThe financial statements were approved by the Board of Directors on 2 March 2023 and were signed on its behalf by:
\nGeoffrey Martin
Simon Peckham
\nGroup Finance Director
Chief Executive
\n2 March 2023
2 March 2023
\nRegistered number: 09800044
Company Statement of Changes in EquityIssued share
\ncapital
\n\u00a3m
\nShare premium
\naccount
\n\u00a3m
\nMerger reserve
\n\u00a3m
\nCapital redemption
\nreserve
\n\u00a3m
\nRetained
\nearnings
\n\u00a3m
\nShareholders\u2019
\nfunds
\n\u00a3m
\nAt 1 January 2021
333
8,138
109
\u2013
411
8,991
\nProfit for the year (note 2)
\u2013
\u2013
\u2013
\u2013
8
8
\nTotal comprehensive income
\nCapital reduction
\n(1)
\nReturn of capital
\n(1)
\nDividends paid
\nEquity-settled share-based payments
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n(4,138)
\n(729)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n729
\n\u2013
\n\u2013
\n8
\n4,138
\n(729)
\n(69)
\n16
\n8
\n\u2013
\n(729)
\n(69)
\n16
\nAt 31 December 2021
333
3,271
109
729
3,775
8,217
\nLoss for the year (note 2)
\u2013
\u2013
\u2013
\u2013
(19)
(19)
\nTotal comprehensive loss
\nPurchase of own shares
\n(1)
\nDividends paid
\nEquity-settled share-based payments
\n\u2013
\n(24)
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n\u2013
\n24
\n\u2013
\n\u2013
\n(19)
\n(504)
\n(77)
\n16
\n(19)
\n(504)
\n(77)
\n16
\nAt 31 December 2022
309
3,271
109
753
3,191
7,633
\n(1) Further information is set out in note 1.
\nRefer to the Section 172 statement in the Strategic Report on pages 49 to 54
for further details on the Company\u2019s Distribution Policy.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfConsolidatedAndSeparateFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"f27644": {
"value": "United Kingdom 11th Floor, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT",
"dimensions": {
"concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity",
"language": "en",
"entity": "scheme:213800RGNXXZY2M7TR85",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
}
}
}