Earnings per share
Operating cash flow
GKN Driveline had a positive year, delivering an organic increase to trading profit of £8 million, while GKN Powder Metallurgy delivered a £6 million organic increase in trading profit. GKN Land Systems’ trading profit reduced £18 million in the year organically, including an £11 million restructuring charge.
Dividend per share
Management sales increased £233 million (3%) to £7,689 million (2014: £7,456 million). The adverse impact of currency translation on sales was £4 million, including a £250 million increase due to movements in the US dollar and a £174 million decrease due to the Euro. Acquisitions and disposals caused a net £58 million increase in sales, mainly driven by the acquisition of Fokker (sales of £113 million) partly offset by the disposal of the Emitec joint venture in July 2014. Organic sales growth of £179 million (2%) was achieved with a notably strong performance from GKN Driveline (5% increase). GKN Powder Metallurgy’s organic sales were flat due to the pass through of lower raw material surcharges to customers. GKN Aerospace grew 2% organically, being the combination of commercial sales up 6% and military sales decreasing 9%. GKN Land Systems sales reduced 6% organically due to tough agricultural and construction equipment markets.
Dividend per share increased 0.3 pence to 8.7 pence (2014: 8.4 pence), a 4% increase.
Trading profit margin of 8.8% (2014: 9.2%) was lower due to the inclusion of the Fokker charges; otherwise it would have been unchanged.
The pension deficit for the Group decreased £153 million to £1,558 million (2014: £1,711 million) following changes in the discount rates used and further contributions.
Return on invested capital
Group ROIC increased 10 basis points to 17.8% (excluding Fokker which has not been owned for a full 12 month period) (2014: 17.7%), well ahead of the Group’s weighted average pre-tax cost of capital of c.12% and moving towards the Group target of 20%.
Operating cash flow increased £140 million to £525 million (2014: £385 million). This improvement was primarily driven by a net cash inflow from movements in working capital of £70 million (2014: £33 million outflow), primarily influenced by a customer advance payment, in addition to the absence of the £38 million repayment of a government advance in 2014.
The book tax rate increased to 24% (2014: 22%) as the ability to recognise deferred tax assets diminished.
Management trading profit reduced £8 million to £679 million (2014: £687 million) due to the impact of the Fokker acquisition. There was a £25 million reduction as a result of acquisitions and disposals, including £18 million of costs incurred in relation to Fokker, which were primarily acquisition and restructuring costs. Movements in foreign exchange rates caused an £18 million increase in trading profit. There was a £1 million reduction in organic trading profit as the reduction in GKN Land Systems offset the improvements in GKN Driveline and GKN Powder Metallurgy. GKN Aerospace’s organic profit was £1 million lower overall, with the lower profit caused by rate reductions on some mature programmes such as the C-17 military transporter and A330 wide-body aircraft programme partly offset by £25 million one-off benefits and reducing the start-up losses on the A350 programme.
Net interest payable for the year was £65 million (2014: £73 million) due to the lower interest charged on a refundable government advance that was repaid during 2014 and a receipt from the UK tax authorities in relation to tax that was previously levied on dividends.
Trading profit (subs) Depreciation and amortisation Working capital Capital expenditure Repayment of principal on gov. advance Other Operating cash flow Non-operating cash flows Free cash flow
609 261 70 (411) – (4) 525 (155) 370
612 252 (33) (403) (38) (5) 385 (151) 234
Earnings per share