Annual Report 2008 in PDF - GKN

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112 Notes to the Financial Statements continued 25 Cash flow reconciliations GKN plc Annual Report 2008 2008 2007 £m £m Cash generated from operations Operating profit/(loss) Adjustments for: Depreciation, impairment and amortisation of fixed assets Charged to trading profit (86) 221 Depreciation 165 141 Impairment 1 1 Amortisation 10 9 Amortisation of non-operating intangible assets arising on business combinations 10 8 Restructuring and impairment charges 127 (9) Changes in fair value of derivative financial instruments 133 10 Amortisation of capital grants (2) (2) Net profits on sale of fixed assets (1) (8) Charge for share-based payments 2 6 Movement in post-employment obligations (26) (29) Change in inventories 7 (51) Change in receivables 93 (14) Change in payables and provisions (105) 16 Movement in net debt 328 299 Net movement in cash and cash equivalents (156) (78) Net movement in borrowings (79) (8) Currency variations 24 5 Finance leases 9 1 Subsidiaries acquired and sold — — Movement in year (202) (80) Net debt at beginning of year (506) (426) Net debt at end of year Reconciliation of cash and cash equivalents (708) (506) Cash and cash equivalents per balance sheet 114 282 Bank overdrafts included within current liabilities — borrowings (20) (32) Cash and cash equivalents per cash flow 94 250
26 Post-employment obligations Financial Statements Notes to the Financial Statements 2008 2007 Post-employment obligations as at the year end comprise: £m £m Pensions — funded (417) (24) — unfunded (348) (260) Medical — funded (18) (9) — unfunded (51) (38) (834) (331) Pensions and medical — funded The Group’s pension arrangements comprise various defined benefit and defined contribution schemes throughout the world. A number of retirement plans are operated which provide certain employees with post-employment medical benefits. Pensions In the UK, pension arrangements are made through an externally funded defined benefit scheme. In the USA and the Rest of the World there are a number of externally funded defined benefit schemes while in certain companies in Europe funds are retained within the business to provide for post-employment obligations. (a) Defined benefit schemes — measurement and assumptions Independent actuarial valuations of all major defined benefit scheme assets and liabilities were carried out at 31 December 2008. The present value of the defined benefit obligation, the related current service cost and the past service cost were measured using the projected unit credit method. Key assumptions were: UK Americas Europe ROW % % % % 2008 Rate of increase in pensionable salaries 3.9 3.5 2.50 3.5 Rate of increase in payment and deferred pensions 3.0 2.0 1.75 n/a Discount rate 6.5 5.8 6.00 2.0 Inflation assumption Rate of increases in medical costs: 2.9 2.5 1.75 1.0 initial/long term 2007 6.6/4.5 9.0/5.0 n/a n/a Rate of increase in pensionable salaries 4.3 3.5 2.50 2.0 Rate of increase in payment and deferred pensions 3.4 2.0 1.75 n/a Discount rate 5.9 6.4 5.60 2.3 Inflation assumption Rate of increases in medical costs: 3.3 2.5 1.75 1.0 initial/long term 8.0/4.5 9.0/5.0 n/a n/a Discount rates in the table above for the UK and Europe were referenced against specific iBoxx indices, whilst the Citigroup liability index was the reference point for the USA discount rate. The reference for the UK discount rate was the yield as at 31 December on the iBoxx Corporate rated AA bonds with a maturity of 15 years plus, which was 6.7%. Allowing for movements in the rate immediately after the end of the year a discount rate of 6.5% was selected. The equivalent reference rate for Europe is the iBoxx Corporate rated AA bonds with a maturity of 10 years plus. The constituents of this index also changed on 2 January and the selected 6% discount rate reflects a 30 bps reduction in the yield from the reported 31 December 2008 yield. For the USA, the discount rate matched the Citigroup liability index as at end 2008 of 5.8%. www.gkn.com 113
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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
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Contributing to our communities We
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Andrew Reynolds Smith (42) Chief Ex
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Dividend An interim dividend of 4.5
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On joining the Board, a Director re
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Directors’ attendance record The
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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
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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
Page 103 and 104: 11 Goodwill and other intangible as
Page 105 and 106: 14 Other receivables and investment
Page 107 and 108: 18 Net borrowings continued Financi
Page 111 and 112: Financial Statements 19 Financial r
Page 115: 24 Acquisitions There were no acqui
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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Annual Report 2008 in PDF - GKN

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