2025 Interim results

Tuesday 5 August 2025

Rotork plc

2025 Interim results

Growth+ drives order intake, full year expectations unchanged

Summary

· Good H1 order intake despite a volatile macro backdrop, with 6.3% OCC growth year-on-year (YoY). All divisions experienced good order growth in H1, as a result of our Growth+ strategy

· Sales increased by 3.3% OCC YoY. The H1 book-to-bill4 ratio was 1.06x (2024: 1.04x), with an expected second half phasing of deliveries

· Adjusted operating profit grew 10.1% OCC YoY, with the adjusted operating margin at 22.0%, supported by Target Segment growth, mix and operational efficiencies

· ROCE3 of 37.0% (2024: 36.9%) remained at a high level, reflecting strong margins and a disciplined approach to capital allocation. The acquisition of Noah was completed and £22m was returned to shareholders via a share buyback (£30m by the end of July)

· The Board has declared an interim dividend of 2.95 pence per share (7.3% YoY growth) and we expect to complete the remaining portion of the buyback by the end of the year

Kiet Huynh, Chief Executive, commenting on the results, said:

"We're pleased to see good first-half order growth across all divisions, underpinned by our Growth+ strategy. There was a particularly strong order performance in Water & Power driven by the Target Segment focus on markets such as water infrastructure and treatment. Sales momentum accelerated during the period and we are confident of further growth in the second half, supported by order-book visibility and our project pipeline.

The Group continues to benefit from our strategic focus, business model and the dedication of our people. Growth+ is driving results, with Target Segment sales up 7% and Rotork Service growing ahead of the group, now contributing 23% of Group revenues. With a strong balance sheet, we're confident that we will continue to grow shareholder returns and can pursue value-accretive opportunities through bolt-on M&A and share buybacks.

Looking ahead, our full year expectations are unchanged and we continue to anticipate 2025 to be another year of progress on an OCC basis."

1 Adjusted3 figures exclude the amortisation of acquired intangible assets and other adjustments (see note 2).

2 OCC3 is organic constant currency results which exclude acquired businesses and are restated at 2025 H1 average exchange rates.

3 Adjusted figures, organic constant currency ('OCC') figures, cash conversion and ROCE are alternative performance measures and are used consistently throughout these results. They are defined in full and reconciled to the reported measures in note 2.

4 Book-to-bill ratio (BtB) is calculated as orders received in the period divided by revenue in the period.

There will be a virtual presentation for analysts and institutional investors at 8.00am BST today with access via  https://www.investis-live.com/rotork/68557556d645df000ef79a14/vdes. Please join the webcast a few minutes before 8.00am to complete registration.

Summary

H1 results overview

Group order intake increased by 4.5% YoY (6.3% higher on an OCC basis) to £391.1m, with a book-to-bill ratio of 1.06x (2024: 1.04x). All divisions reported good OCC order intake growth with the strongest growth in Water & Power and solid growth in Oil & Gas and Chemical, Process & Industrial (CPI).

Group revenue increased 1.6% compared to the prior year to £367.3m (3.3% higher OCC). Underlying market trends remained unchanged with stronger revenue momentum towards the end of the half due to delivery phasing and the 2024 sales comparator (H1 2024 OCC sales growth 11.6%). NOAH Actuation Co., Ltd. ('Noah'), acquired in March 2025, delivered a good initial performance, contributing 1.2% to total sales. This was in line with our business plan, primarily contributing to CPI and Water & Power. FX was a -2.8% headwind to revenues.

The Target Segment pillar of our strategy continued to deliver strong results, with H1 Target Segment revenue growth of 7% OCC. Within the divisions, Water & Power saw the strongest sales performance (8.6% OCC) helped by underlying water market growth in several geographies and our Target Segment approach in water infrastructure and treatment, and alternative energy. Power markets were also strong. Oil & Gas delivered modest growth of 2.3% OCC, with strong growth in upstream revenues (electrification), weaker midstream markets despite good growth in LNG and stable downstream sales. CPI sales were broadly flat YoY on an OCC basis (+0.3% OCC), reflecting good performance in mining and marine markets, but weaker trends in chemical markets.

From a regional perspective, APAC was the fastest-growing area, delivering mid to high single-digit OCC sales growth, driven primarily by a strong performance in Water & Power. EMEA recorded modest OCC growth, supported by solid Oil & Gas activity, though partially offset by softer CPI sales. In the Americas, sales were flat year-on-year, with strength in CPI counterbalanced by weaker trends in Oil & Gas.

Rotork Service, a key differentiator in our industry, reported another good trading performance, growing faster than the broader Group. For the period, it reached 23% of Group sales (22% in H1 2024) with good growth in Europe, India and the Middle East.

Adjusted operating profit reached £80.8m with an adjusted operating margin of 22.0%, up 80 bps YoY. The strong margin performance was primarily driven by the Oil & Gas segment, where margins improved to 25.8%, supported by strong Target Segment growth, product mix and operational efficiencies. CPI's reported margin was down slightly compared to the previous year (up 80bps on an OCC basis), whereas Water & Power saw softer margins driven by an unfavourable shift in mix and higher levels of investment.

Adjusted EPS of 7.1p rose 3.5% YoY on a reported basis, supported by strong underlying operating profit growth, partially offset by FX headwinds and lower net finance income following the acquisition of Noah and the share buyback. Reported basic earnings per share was 5.7p (2024: 6.0p), a decrease of 5.8% driven by lower net finance income of £0.4m (2024: £2.8m) and increased adjusting items, including Business Transformation costs, of £16.1m (2024: £9.6m).

Cash conversion of 89% (2024: 106%) was lower YoY largely driven by increases in working capital to support delivery phasing. Business Transformation cash costs and capex were in line with our expectations. Net cash finished the period at £43.3m. ROCE of 37.0% (2024: 36.9%) remained at a high level.

Safety

In the first half of 2025, we recorded a Lost Time Injury Rate of 0.12, compared to 0.09 recorded in H1 2024. Our Total Recordable Injury Rate was 0.37 (FY 2024: 0.22, H1 2024: 0.19). The safety of our people remains our top priority. In response to our first half performance, we are re-doubling our efforts to ensure the health and wellbeing of all our employees.

Growth+ strategy update

Our Growth+ strategy is rooted in our core purpose, keeping the world flowing for future generations, and our vision to lead in intelligent flow control. The strategy reflects our commitment to sustainability and our contribution to a low-carbon future, while delivering advanced, intelligent systems that enhance safety, efficiency, and uptime for our customers.

Our financial ambition is to deliver mid to high single-digit revenue growth and adjusted operating margin in the mid-20% range over time. Our strategy is structured around three key pillars: Target Segments, Customer Value and Innovative Products & Services. All are underpinned by our mission to Enable a Sustainable Future, supporting both our customers' environmental goals and our own.

Within our Target Segments, we are focusing on areas with the highest-potential across all divisions, those best positioned to deliver above-market growth and attractive returns. Major industry trends such as automation, electrification and digitalisation are accelerating demand, and we are investing where these trends create the greatest impact. In the first half of the year, we delivered several key wins across our Target Segments, including:

- Oil & Gas - upstream electrification on a next generation fully electrified offshore gas platform in the North Sea, decarbonisation-related spend for a new LNG facility in the Middle East, and a midstream electrification project for a significant gas pipeline in the Americas

- CPI - cooling and related applications for datacentres in a number of regions, alternative energy and electrification retrofit and newbuild projects in marine, and local processing and refining projects in LATAM mining markets

- Water & Power - desalination wins in Australia, the Middle East and the Americas, project wins across multiple consortia in the TenneT programme in the North Sea, and a PFAS water treatment project in the US

The Customer Value strategic pillar ensures that our customers remain at the centre of everything we do. Our focus ranges from go-to-market improvements, strengthening our global supply chain, and elevating the overall customer experience. In May, Rotork became a member of the Rockwell Technology Partner Program, increasing our visibility and integration within their network. Our IQ3 Pro electric actuator with Ethernet connectivity is now included in Rockwell's product catalogue and system design tools, making it easier for engineers, EPCs and end users to discover and specify our products.

Within Rotork Service, we launched a series of new customer offerings, including our Reliability Services Quote Builder tool, which streamlines and personalises maintenance plan quotations. Internally, we rolled out our DNA initiative, a group-wide competency framework built on a number of key behaviours that will support our continued sustainable, connected and purposeful growth.

The third pillar, Innovative Products & Services, continues to gain strong momentum as we develop new offerings that drive growth and reinforce our position as a market leader. Our strategy prioritises electrified and connected solutions that align closely with our Target Segments and leverage the strengths of Rotork Service. Recent launches include the IQ3 Perform, providing a cost-effective entry into IQ3 ownership across selected markets, the PIC0 intelligent controller, and the rollout of Noah products across our broader sales network.

Capital allocation, dividend & share buyback

We have a clear and disciplined approach to capital allocation. Our priorities in order remain organic investment, a progressive dividend, acquisitions and shareholder returns. We have a track record of over 20 years of progressive dividend per share growth (excluding covid), have strengthened the Group through two acquisitions (Hanbay and Noah) since 2023 under the Growth+ strategy and returned £80m of excess cash to shareholders since the beginning of 2024 through share buybacks.

In H1 we continued to deploy capital to drive further value creation:

- The Board declared a 2025 interim dividend of 2.95p per ordinary share (7.3% growth YoY). The interim dividend will be paid on 22 September 2025 to ordinary shareholders on the register on 15 August 2025

- On 11 March 2025, we announced the acquisition of Noah for an enterprise value of £42m. Noah is a leading South Korean manufacturer of electric actuators, aligning with Rotork's end markets and key target segments, and broadens Rotork's geographical coverage in Asia Pacific

- The Group completed £22m of the £50m buyback announced at the FY 2024 results (£30m by the end of July). The ordinary shares purchased will be cancelled.

Rotork remains a highly cash-generative business, with considerable financial flexibility, and we are well positioned to pursue value-generating opportunities in line with our Growth+ strategy.

Board update

As announced on 1 August 2025, Karin Meurk-Harvey has advised the Board that she will step down as a director of Rotork with effect from the conclusion of the Company's next AGM on 1 May 2026.

Market update and outlook

The outlook for our end markets remains supportive. We are confident that our Growth+ strategy, focused on Target Segments, will enable us to drive growth above our broader end markets despite the current uncertain global environment.

We continue to see opportunities in Oil & Gas markets. Our Target Segment approach in upstream and midstream electrification, LNG, decarbonisation and high Service exposure should continue to be tailwinds for growth. We expect downstream markets (which represent the largest segment of the Oil & Gas division) to be stable and despite the more uncertain macro environment, the book-to-bill ratio remains positive.

CPI remains focused on pivoting between the growth opportunities in its end markets. Its broad end markets have experienced subdued demand over the last 24 months, due to the energy crisis in Europe and slow investment growth in China. However, we expect the division to continue to identify Target Segments in structural growth markets, with a focus on specialty chemicals (including pharmaceuticals), mining, critical HVAC and marine markets.

The outlook is positive for Water & Power. Stricter water regulations are expected to remain a key driver for the division supported by tightening compliance requirements, growing demand for advanced treatment technologies and favourable funding cycles. Additionally, we expect to benefit from rephasing of projects into H2, supportive power markets, and good momentum in Rotork Service.

Our full-year expectations are unchanged, and we continue to anticipate 2025 to be another year of progress on an OCC basis.

Divisional review

Divisional revenue increased by 2.3% OCC YoY, with sales momentum gaining strength through the first half. Order intake outpaced sales resulting in a healthy book-to-bill ratio.

Upstream markets delivered good growth in H1, helped by strong growth in electrification related revenues. Electrification spend continues to see tailwinds as drilling and process equipment offerings expand, decarbonisation spend increases and customers look to improve process control and reliability. Midstream revenues were slightly down due to reduced spending in the US, despite good growth in LNG. Downstream markets were stable helped by solid demand for refined products and investments in operational efficiency.

Regionally, the division saw good growth in EMEA, helped by very strong upstream and midstream electrification growth. Markets in APAC were stable while the Americas declined, due to weaker demand in downstream markets.

Adjusted operating profit increased by 17.3% OCC to £43.8m. The margin increased to 25.8% helped by strong Target Segment growth, product mix, and operational efficiencies.

CPI sales remained broadly flat in H1 on an OCC basis, with underlying momentum improving as the period progressed. Orders grew faster than sales, maintaining a healthy book-to-bill ratio heading into the second half. Noah made a good first contribution post-acquisition, adding 3.0% to divisional sales in H1.

Mining continued to perform well in the period driven by strong copper demand in South America and Indonesia. Marine demand was supported by investment in electrification and alternative fuels for both new projects and retrofits. In contrast, the chemical sector saw weaker growth, largely due to challenging YoY comparisons and a weak bulk chemical market. Datacentres recorded strong growth, and despite limited exposure, general industrial markets delivered solid results. The broad process market saw a modest decline.

On a regional basis, CPI recorded robust growth in the Americas. EMEA declined with lower sales in chemical and process markets in Europe. APAC grew helped by good performance in India.

Adjusted operating profit of £23.7m was broadly flat YoY, with a margin of 23.4%. The solid underlying performance (OCC margins up 80bps) was offset by FX and the initial integration of Noah.

Divisional sales increased by 8.6% on an OCC basis, showing consistent growth throughout the period and maintaining a favourable book-to-bill ratio.

Water & Power saw robust demand in water infrastructure and treatment markets, with good growth in several regions. Alternative energy markets (including nuclear, hydro and solar) also saw strong growth, helped by wins in the HVDC market. Power markets also delivered good growth, driven by strong performance in the gas power segment (US, Middle East and China) and traditional generation markets.

Across regions, Water & Power posted strong results in APAC, with notable success in desalination, alternative energy and treatment projects. In the Americas, sales were broadly flat YoY but EMEA grew helped by strength in core gas power markets.

Adjusted operating profit of £24.5m was higher YoY on an OCC basis. Despite operating leverage on higher volumes, mix effects and higher investment resulted in the adjusted operating margin declining YoY.

By order of the Board

Kiet Huynh

Chief Executive

4 August 2025

Condensed consolidated balance sheet

At 30 June 2025

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2025

* Other reserves on face of the condensed consolidated balance sheet includes the Translation reserve, Capital redemption reserve and Hedging reserve.

Condensed consolidated statement of changes in equity (continued)

For the six months ended 30 June 2025

* Other reserves on face of the condensed consolidated balance sheet includes the Translation reserve, Capital redemption reserve and Hedging reserve.

Condensed consolidated statement of cash flows

For the six months ended 30 June 2025

Notes to the interim financial statements

1. Status of condensed consolidated interim financial statements, accounting policies and basis of significant estimates

General information

These interim financial statements are presented in sterling. All values are rounded to the nearest 0.1 million pounds (£m) except where otherwise indicated.

Rotork plc is a public company limited by shares, registered and domiciled in England and Wales. Its ordinary shares have a commercial companies (equity shares) category listing on the London Stock Exchange.

The condensed consolidated interim financial statements for the six months ended 30 June 2025 are unaudited and the auditor has reported in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'.

The information shown for the year ended 31 December 2024 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2024 were approved by the Board on 11 March 2025 and delivered to the Registrar of Companies. The auditor's report on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 (2) or (3) of the Companies Act 2006. The consolidated financial statements of the Group for the year ended 31 December 2024 are available from the Company's registered office or website.

Basis of preparation

The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2025 comprise the results for the Company and its subsidiaries (together referred to as 'the Group'). These condensed consolidated interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the United Kingdom. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2024, which have been prepared in accordance with international accounting standards in conformity with UK adopted international accounting standards (UK Adopted IFRS).

Adjustments to profit

Adjustments to profit are items of income and expense which, because of the nature, size and/or infrequency of the events giving rise to them, merit separate presentation. These specific items are presented as a footnote to the income statement to provide greater clarity and an enhanced understanding of the impact of these items on the Group's financial performance. In doing so, it also facilitates greater comparison of the Group's results with prior periods and assessment of trends in financial performance. This split is consistent with how business performance is measured internally.

Adjustments to profit items may include but are not restricted to: costs of significant business restructuring and any associated impairments of intangible or tangible assets, adjustments to the fair value of acquisition-related items such as contingent consideration, acquired intangible asset amortisation and other items considered to be significant due to their nature or the expected infrequency of the events giving rise to them.

Going concern

The directors are satisfied that the Group has sufficient resources to continue in operation for a period of not less than 12 months from the date of this report, and that no material uncertainties exist with respect to this assessment. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

In forming this view, the macroeconomic conditions and the impact of geopolitical instability on the Group have been considered. The directors have reviewed: the current financial position of the Group, which has net cash of £43.3m, an undrawn committed revolving credit facility of £75.0m and overdraft facilities of £45.8m (£0.7m of which was drawn at the period end); the significant order book, which contains customers spread across different geographic areas and industries; and the trading and cash flow forecasts for the Group.

A reverse stress test, where the Group's business model would become unviable, has been performed and the directors believe there is no reasonably possible scenario that would lead to the conditions modelled in the reverse stress test. The Group also has a number of mitigating actions that it can take at short notice to preserve cash, for example reduction in capital programmes, dividend deferral and other reductions in discretionary spend.

Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events, that are believed to be reasonable under the circumstances.

In the future, actual experience may deviate from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the current financial year are discussed in the financial statements for the year ended 31 December 2024.

Taxation (estimate)

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

Accounting policies

The accounting policies applied and significant estimates used by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2024, except for the adoption of new standards effective as of 1 January 2025 and income taxes as explained in note 7. The Group has not early-adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

New accounting standards and interpretations

A number of amended standards became applicable for the current reporting period. The application of these amendments has not had any material impact on the disclosures, net assets or results of the Group.

New standards and interpretations not yet adopted

There are no further narrow scope amendments which have been issued where the application of the amendments would have a material impact on the disclosures, net assets or results of the Group.

2. ALTERNATIVE PERFORMANCE MEASURES

The Group uses adjusted figures as key performance measures in addition to those reported under adopted IFRS, as management believe these measures provide stakeholders with additional useful information to facilitate greater comparison of the Group's underlying results with prior periods and assessment of trends in financial performance.

The Group believes alternative performance measures, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These alternative performance measures are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Some of these measures are also used for the purpose of setting remuneration targets.

The key alternative performance measures that the Group use include adjusted profit measures and organic constant currency (OCC). Explanations of how they are calculated and how they are reconciled to IFRS reported results are set out below.

a. Adjusted operating profit

Adjusted operating profit is the Group's operating profit excluding the amortisation of acquired intangible assets and other adjusting items as defined in note 1. Further details on these adjustments are given in note 5.

b. Adjusted profit before tax

The adjustments in calculating adjusted profit before tax are consistent with those in calculating adjusted operating profit above.

c. Adjusted basic and diluted earnings per share

Adjusted basic earnings per share is calculated using the adjusted net profit attributable to the ordinary shareholders and dividing it by the weighted average ordinary shares in issue (see note 9). Adjusted net profit attributable to ordinary shareholders is calculated as follows:

Adjusted diluted earnings per share is calculated by using the adjusted net profit attributable to ordinary shareholders and dividing it by the weighted average ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares (see note 9).

d. Adjusted dividend cover

Dividend cover is calculated as earnings per share divided by dividends per share. Adjusted dividend cover is calculated as adjusted earnings per share as defined in note 2c above divided by dividends per share.

e. Total shareholder return

Total shareholder return is the movement in the price of an ordinary share plus dividends during the year, divided by the opening share price.

f. Return on capital employed

The return on capital employed ratio is used by management to help ensure that capital is used efficiently.

1 Defined as the average of the capital employed at June 2024, December 2024 and June 2025 (2024: June 2023, December 2023 and June 2024).

2 Defined as the average of the capital employed at December 2023 and December 2024.

g. Working capital as a percentage of revenue

Working capital as a percentage of revenue is monitored as control of working capital is key to achieving our cash generation targets. It is calculated as inventory plus trade receivables, less trade payables, divided by revenue.

h. Organic constant currency (OCC)

OCC results adjust for currency movements and for acquisitions and disposals. The prior period results are translated at the reporting period's average exchange rates. Results from acquired businesses are not included until owned for more than one year and are then included on an equal perimeter basis. Disposed businesses are excluded entirely.

Key headings in the income statement are reconciled to OCC as follows:

i. Cash conversion

Cash conversion is calculated as cash generated from operations (referred to as 'adjusted operating cash flow' in prior year) as a percentage of adjusted operating profit. It is monitored to illustrate how efficiently adjusted operating profits are converted into cash. Cash generated from operations is calculated in note 12.

j. Free cash flow

Free cash flow is after organic investment and is calculated as 'net cash flows from operating activities', plus 'net cash flows from investing activities' (excluding acquisitions/disposals of businesses), plus 'net cash flows from financing activities' (excluding dividends paid on ordinary shares, the share buyback programme, and proceeds from or repayments of borrowings).

Free cash flow provides an additional view of the available funds of the Group. It is deemed useful to stakeholders as it represents cash flows that could be used for dividends, share buybacks, repayments of borrowings or to fund the Group's strategic initiatives, including any acquisitions.

The reconciliation of net (decrease)/increase in cash and cash equivalents to free cash flow is as follows:

3. OPERATING SEGMENTS

The three identifiable operating segments where the financial and operating performance is reviewed monthly by the chief operating decision maker are as follows:

· Oil & Gas

· Chemical, Process & Industrial

· Water & Power

The Group's customers are allocated to a segment. Sales to that customer, along with all directly associated costs of that sale, are reported under the segment to which that customer is allocated. Where customers sell into multiple segments, a lead segment is identified. Sales to these customers will generally be allocated to the lead segment unless the sale is of significance and an alternative segment has been identified, in which case it will be reported under the alternative segment.

Costs not directly attributed to a sale are allocated across the three segments. There are some costs which are directly attributable to a segment, but most support costs and facility costs are not directly attributable to a segment and are generally allocated based on split of revenue.

Half year to 30 June 2025

Half year to 30 June 2024

Full year to 31 December 2024

*Adjusted operating profit is operating profit before adjusting items (see note 5).

Balance sheets are reviewed by subsidiary and operating segment balance sheets are not prepared. Therefore, no further analysis of operating segments' assets and liabilities is presented.

Geographical analysis:

Rotork has a worldwide presence in all three operating segments.

4 ACQUISITIONS

Current period acquisitions

i) Noah

On 12 March 2025, the Group completed the acquisition of 100% of the share capital of NOAH Actuation Co., Ltd. ('Noah') for a total purchase consideration of £37.6m. Noah is headquartered in Seoul, South Korea and its acquisition will expand the Group's electric actuator offering. It is fully aligned to the Growth+ strategy and to key Target Segments. Initial consideration of £35.6m was paid on completion, with a further deferred consideration of £2.0m recognised, with future payment contingent on certain performance conditions being met.

In the period to 30 June 2025 Noah contributed £4.3m to Group revenue and £0.4m to consolidated adjusted operating profit. The amortisation charge in the three-month period from the acquired intangible assets was £0.5m.

If the acquisition had occurred on 1 January 2025 the business would have contributed £7.4m to Group revenue, £0.7m to Group adjusted operating profit and £0.5m to adjusted profit attributable to equity shareholders.

ii) Acquisitions fair value table

The acquisition had the following effect on the Group's assets and liabilities as at 30 June 2025.

The adjustments shown in the table represent the alignment of accounting policies of the acquired businesses to Rotork Group policies and the fair value adjustments of the assets and liabilities at the acquisition date of the business.

Due to their contractual dates, the fair value of receivables (shown above) approximate to the gross contractual amounts receivable. The amount of gross contractual receivables not expected to be recovered is immaterial.

The goodwill arising from this acquisition represents the opportunity to grow through expanding the Group's electric actuator offering and employee know-how.

The intangible assets identified comprise technology, customer relationships and the Noah brand. The intangible assets have been valued by modelling the discounted cashflows attributable to the respective asset. Discount rates between 14% to 15% have been used. Assumptions regarding future cashflows are based on a combination of historic performance data and management's forecasts. The range of potential outcomes based on sensitives around management's forecasts would not lead to any material differences to the values recognised.

iii) Acquisition costs

Acquisition costs of £1.1m have been expensed in administration expenses in the income statement during the period and disclosed as an adjusting item under 'other costs' in note 5.

Prior period acquisitions

There were no acquisitions in the prior period.

5. ADJUSTING ITEMS

Refer to note 1 for details on the adjustments to profit, including an explanation of 'other adjustments'. The adjustments to profit included in statutory profit are as follows:

Business Transformation costs

During the period £12.6m (2024: £7.6m) of costs were incurred on Business Transformation. The multi-year transformation includes the implementation and integration of common systems and processes throughout the Group, including a new cloud-based ERP system. This brings the total expensed under the programme to £74.7m. These costs were expensed as they do not meet the capitalisation criteria under IAS 38. Costs include an allocation of personnel expenses in respect of employees directly involved in the programme. Over the next three years we will deploy the Business Transformation programme, including the new ERP system, across all other Group entities at an estimated further cost of £50.0m to £55.0m.

Other costs

Other costs have largely been incurred in relation to the acquisition of Noah (note 4) and the relocation of the Shanghai (China) facility to Changshu (China).

Defined benefit scheme settlement loss

In August 2024 the UK defined benefit pension scheme transacted a second bulk annuity, covering the benefits of the remaining UK Scheme's membership (mainly deferred pensioners). Given all the UK Scheme's liabilities are now insured, this second bulk annuity has been accounted for as a settlement under IAS 19 and therefore a loss of £18.0m was recognised in the income statement.

Income statement disclosure

All adjustments are included in administrative expenses. The adjustments are taxable or tax-deductible in the country in which the expense is incurred.

Cash flow statement disclosure

Other adjustments have a net operating cash outflow of £14.0m (2024: £7.9m).

6. FINANCE INCOME AND EXPENSE