Annual Report 2008 in PDF - GKN

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100 Notes to the Financial Statements continued 13 Investments in joint ventures GKN plc Annual Report 2008 2008 2007 £m £m Group share of net assets At 1 January 100 83 Share of post-tax earnings of joint ventures 16 24 Dividends paid (24) (13) Actuarial gain on post-employment obligations, including deferred tax — 1 Additions 1 — Currency variations 36 5 At 31 December Accumulated impairment 129 100 Charge for the year 10 — At 31 December 10 — Net book amount at 31 December Group share of net book amount at 31 December 119 100 Non-current assets 97 70 Current assets 89 91 Current liabilities (54) (50) Non-current liabilities (13) (11) 119 100 The joint ventures have no significant contingent liabilities to which the Group is exposed and nor has the Group any significant contingent liabilities in relation to its interest in the joint ventures other than bank guarantees set out in note 27. The share of capital commitments of the joint ventures is shown in note 29. 2008 2007 Group share of results of joint ventures £m £m Sales 241 253 Operating costs and other income (221) (221) Trading profit 20 32 Net financing costs — — Profit before taxation 20 32 Taxation (4) (8) Share of post-tax earnings — before impairments 16 24 Impairment, including tax on impairment of nil (10) — Share of post-tax earnings 6 24 The impairment charge attributable to a provision for diminution in value, which is entirely attributable to Driveline, arises as customer supply logistics are addressed in selected geographical territories and joint venture relationships are unwound. The segmental analysis of the Group’s share of joint venture sales and trading profit is set out below: 2008 2007 Trading Trading Sales profit Sales profit £m £m £m £m Driveline 145 15 130 17 Other Automotive 92 6 120 15 OffHighway 4 — 3 — Aerospace — (1) — — 241 20 253 32
14 Other receivables and investments Financial Statements Notes to the Financial Statements 2008 2007 £m £m Other investments — — Indirect taxes and amounts recoverable under employee benefit plans 19 13 Other receivables 4 9 23 22 Other investments mainly comprise the Group’s net investment in GKN Aerospace Services Structures Corp. which is an entity in which the Group has, since 2003, had a 100% share in the equity. This corporation operates under a proxy agreement with the United States Department of Defense developing high technology, classified products for the Joint Strike Fighter. The agreement currently places significant restrictions on the Group’s management and control of the business for the life of the contract so that, in accordance with IAS 27 it has been excluded from the consolidation and treated as an investment. The investment, which is fully provided, is stated at cost less provision for diminution. At 31 December 2008, under the accounting policies of GKN Aerospace Services Structures Corp., the excluded net liabilities were £8 million (2007 – £5 million) and the operating loss for the year then ended was £1 million (2007 – £1 million). No goods or services were provided to GKN Aerospace Services Structures Corp. by the Group during 2008 and 2007. GKN Aerospace Services Structures Corp. supplied goods to the Group amounting to £1 million during 2008 (2007 – nil). Transactions between the Group and GKN Aerospace Services Structures Corp. are priced on an ‘arm’s length’ basis. 15 Inventories 2008 2007 £m £m Raw materials 315 264 Work in progress 242 176 Finished goods 161 112 718 552 Inventories of £64 million (2007 – £51 million) are carried at net realisable value. The amount of any write-down of inventory recognised as an expense in the period was £4 million (2007 – £2 million). 16 Trade and other receivables 2008 2007 £m £m Trade receivables 550 509 Amounts owed by joint ventures 11 10 Other receivables 39 19 Prepayments 16 14 Indirect taxes recoverable 29 19 Provisions for doubtful debts against trade receivables 645 571 At 1 January Charge for the year: (6) (5) Additions (6) (3) Unused amounts reversed 1 1 Amounts used 4 1 Currency variations (2) — At 31 December Ageing analysis of trade receivables and amounts owed by joint ventures past due but not impaired (9) (6) Up to 30 days overdue 47 40 31–60 days overdue 13 11 61–90 days overdue 6 4 More than 90 days overdue 11 7 Trade receivables subject to provisions for doubtful debts 15 12 www.gkn.com 101
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GKN plc Annual Report and Accounts
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Our Objective GKN is committed to p
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2008 Performance* Group results sig
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Although we expect 2009 to be a ver
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Constant velocity joints (CVJs) rev
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Off-highway driveshaft Blended wing
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Strategy and business objectives Th
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Operating cash flow performance of
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Restructuring and impairment costs
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2008 2007 Tax charge analysis % % W
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Overseas pensions The principal cou
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GKN received the prestigious Nissan
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GKN Driveline manufactures across a
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2008 2007 GKN Driveline £m £m Sal
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Continuing evolution of powder meta
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Despite a £6 million positive impa
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GKN OffHighway is a first tier supp
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Trading profit of subsidiaries of
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In January 2009 GKN completed the a
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Divisional strategy GKN Aerospace
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Financing The following section des
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Competitive markets and competition
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Living the Values GKN is a group of
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Delivering advanced technology Deli
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Engaging more fully with our employ
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Accident frequency rate (AFR) Numbe
Page 53 and 54: Contributing to our communities We
Page 55 and 56: Andrew Reynolds Smith (42) Chief Ex
Page 57 and 58: Dividend An interim dividend of 4.5
Page 59 and 60: On joining the Board, a Director re
Page 61 and 62: Directors’ attendance record The
Page 63 and 64: Audit Committee Report Role of the
Page 65 and 66: Directors’ Remuneration Report Ro
Page 67 and 68: The companies making up the compara
Page 69 and 70: The arrangements for providing reti
Page 71 and 72: Governance Directors’ Remuneratio
Page 73 and 74: Details of the options over GKN sha
Page 75 and 76: Governance Share interests The bene
Page 77 and 78: Independent Auditors’ Report to t
Page 79 and 80: Consolidated Statement of Recognise
Page 81 and 82: Consolidated Cash Flow Statement Fo
Page 83 and 84: charges relating to the Group-wide
Page 85 and 86: Financial Statements Notes to the F
Page 89 and 90: 2 Segmental analysis continued Prim
Page 91 and 92: 3 Operating profit continued (v) Au
Page 93 and 94: 3 Operating profit continued (c) Am
Page 95 and 96: 5 Taxation continued Financial Stat
Page 101 and 102: 11 Goodwill and other intangible as
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Page 107 and 108: 18 Net borrowings continued Financi
Page 111 and 112: Financial Statements 19 Financial r
Page 115 and 116: 24 Acquisitions There were no acqui
Page 117 and 118: 26 Post-employment obligations Fina
Page 119 and 120: 26 Post-employment obligations cont
Page 123 and 124: Independent Auditors’ Report to t
Page 125 and 126: Notes to the Financial Statements o
Page 127 and 128: Group Financial Record For the year
Page 129 and 130: OffHighway GKN OffHighway Ltd GKN W
Page 131 and 132: Unsolicited mail GKN is obliged by
Page 133 and 134: Contact Details GKN plc PO Box 55 I
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