2012 Annual Report - Spirax-Sarco Engineering plc

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Sustainability review With operations and offices in over 100 countries, and reaching customers in many more through our supply chain, the world is not just where we do business – it is where we live, play and raise our families. We are committed to increasing the sustainability of our business and that of our customers, and recognise our responsibilities towards the environment, the communities in which we operate and the people in our workplaces. Our sustainability objectives include: • Our business: Using our expertise to provide innovative solutions to meet our customers’ needs and to ensure increasing shareholder value. • Our environment: Leading as an accountable corporation working with our customers and suppliers to minimise our impact on the environment. • Our communities: Being a positive influence in the communities in which we work and live. • Our workplaces: Maintaining a professionally challenging, respectful and safe workplace for all Spirax-Sarco Engineering associates and business partners. The Group comprises exceptional people who share our core values of respect, accountability, passion, integrity and delivery. These values give us a strong foundation on which we base our decisions, drive innovation and actively manage our operations across the globe. We aim to do what is right, what is best and what is fair, while delivering value to our customers and maintaining a strong and viable business. We recognise the importance of sustainability in our business operations and believe that a sustainable business is one that provides long-term shareholder value, while reducing environmental impact and improving the societies and communities in which it operates. Sustainability is an intrinsic part of our long-term strategy, which creates competitive advantage and helps to achieve profitable, sustainable growth. Accountability is essential. While the Group is accountable to its shareholders, it also recognises that it has responsibilities to other stakeholders, including employees, customers, suppliers and the local communities in which it operates. The Board accepts its responsibility to be accountable to all stakeholders and is committed to sustainable and ethical business practices. Economic, social and environmental sustainability are at the heart of our business model: Engineer Understand Economy Increasing profitability through consistent annual organic sales growth. Society Working within our communities and workplaces to create a better future for all. Market Support Responsible product design and action to minimise our, and our customers’, impact on the environment. Environment Supply 32 Spirax Sarco Engineering PLC Annual Report and Accounts 2012 Creating sustainable, profitable growth
33 Overview UK Supply factory reduces carbon emissions Within Spirax Sarco’s UK factory, insulating ancillary steam equipment has saved 376 tonnes of CO 2 e emissions and reduced running costs by as much as £100,000 per annum. In addition, work recently completed to proactively manage the compressed air system is expected to achieve targeted savings in excess of 50 tonnes of CO 2 e emissions per year, compared to 2011. Strategy and performance Our environment Greenhouse gas emissions Spirax Sarco is determined to be a leader in addressing the threat of climate change. Improved carbon management is, and will continue to be, a priority across our businesses. In accordance with national and international commitments on climate change, we endeavour to continuously reduce the carbon intensity of our business, implement initiatives to cut our carbon emissions and improve the sustainability of our operations, and help our customers to do the same. We are committed to reducing our carbon footprint worldwide. We have reduced our total CO 2 e emissions (scope 1 and 2) from 32,150 tonnes in 2009 to 26,233 tonnes in 2012; a reduction of over 18%. As our business has grown, we have significantly reduced our CO 2 e intensity against inflation adjusted sales at constant currency, from 56.4 tonnes per £m of sales in 2009 to 39.6 tonnes per £m of sales in 2012; a reduction of nearly 30%. Between 2011 and 2012 our CO 2 e intensity fell 12% from 45.2 tonnes to 39.6 tonnes per £m of inflation adjusted sales, at constant currency. Using externally verified methodology we calculate that the energy saving products purchased from Spirax Sarco in 2012 could reduce our customers’ CO 2 e emissions by as much as 4.9 million tonnes annually. With our scope 1 and 2 emissions amounting to just 26,233 tonnes across the Group in 2012, our business has a significant net gain in reducing carbon emissions. Expressing this from a shareholder perspective, we calculate a net carbon benefit of approximately 62.5kg per Ordinary share in issue in 2012*. Since 2008, the Group has reported its carbon footprint to the Carbon Disclosure Project in the UK. In 2012 we were awarded a carbon disclosure index of 69 (2011 : 65), from a maximum possible score of 100, reflecting a year-on-year improvement. The carbon disclosure index reflects: • The extent to which a company measures its carbon emissions • The comprehensiveness of the information that it provides on climate-related actions • The depth of information given on the issues climate change presents to the business • Whether a company uses a third party for external verification of its data. Energy efficiency Increased energy efficiency is essential to reducing our carbon footprint and is central to the Group’s sustainability agenda. Much has been done to reduce energy consumption, with several notable success stories. Throughout the Group, staff awareness campaigns have been used effectively to encourage individuals to switch off non-essential equipment when not in use. For example, in Spirax Sarco Korea, adjusting indoor room temperatures, setting screen savers on all computers and laptops, and switching off lights at lunchtime has made significant base load savings. Although not directly reporting on scope 3 emissions, we recognise that we have a responsibility to improve energy efficiency and reduce emissions in all aspects of our business operations, including the transportation of our manufactured products. We have made significant progress towards increased energy efficiency in the intra-Group transportation of goods. Shorter internal supply chains have been created through the unification of manufacturing into one Cheltenham site. In addition, contracts have been negotiated to streamline transportation across Europe through the use of a single freight forwarder (we previously used 28) and two carriers within the UK (previously 18). * Net carbon savings per share are based on the average number of shares in circulation divided by the net savings in carbon emissions between our operations and the estimated savings made by our customers. Net savings in carbon emissions are based on scope 1 and scope 2 emissions only and do not include scope 3 emissions such as deliveries made by third party freight forwarders and emissions associated with our supply chain. Carbon savings are based on the sale of selected product lines and the emissions those products avoid through their use in a typical year. Total Group CO 2 e emissions (scope 1 and 2) tonnes 2009 2010 2011 2012 CO 2 e intensity tonnes per £m of inflation adjusted sales, at constant currency 2009 2010 2011 2012 Greenhouse gas (GHG) emissions inventory Electricity 45% Business travel 34% Natural gas 20% Other 1% 39.6 26,233 45.2 29,579 29,392 48.0 32,150 56.4 Sustainability Spirax-Sarco Engineering plc Annual Report and Accounts 2012 33
Page 1 and 2: The Business of Solutions 2012 Spir
Page 3 and 4: Performance highlights Revenue £m
Page 5 and 6: 3 Overview Chairman’s statement p
Page 7 and 8: Our businesses We comprise two worl
Page 9 and 10: 7 Overview Group structure Spirax-S
Page 11 and 12: 9 Overview EMEA 44% 2011: 48% Emerg
Page 13 and 14: 11 Overview Foods Brewing and disti
Page 15 and 16: 13 Overview Customer value Customer
Page 17 and 18: Aligning results and reward 15 Over
Page 19 and 20: The Business of Solutions We are a
Page 21 and 22: Strategies for growth Our understan
Page 23 and 24: Strategies for growth We provide ou
Page 25 and 26: Strategies for growth We have stron
Page 27 and 28: Strategies for growth We see furthe
Page 29 and 30: Strategies for growth We create con
Page 31 and 32: Business review 17 Overview We have
Page 33 and 34: 19 Overview Revenue £232.8m 2011:
Page 41 and 42: 27 Overview Strategy and performanc
Page 43 and 44: 29 Overview Return on capital emplo
Page 45: 31 Overview Strategy and performanc
Page 49 and 50: 35 Overview Saving energy and preve
Page 51 and 52: 37 Overview Watson-Marlow sponsors
Page 53 and 54: 39 Overview Engaging with our staff
Page 55 and 56: 41 Overview Employment practices Th
Page 57 and 58: 43 Overview Strategy and performanc
Page 59 and 60: 45 Overview The Boardroom Chairman
Page 61 and 62: 47 Overview David Meredith FCMA, CG
Page 63 and 64: 49 Overview Approach to governance
Page 65 and 66: 51 Overview Governance structure Th
Page 67 and 68: 53 Overview To assess the effective
Page 69 and 70: Risk management and principal risks
Page 71 and 72: 57 Overview Important developments
Page 73 and 74: 59 Overview There may be other risk
Page 75 and 76: 61 Overview Appointment of new Exec
Page 77 and 78: 63 Overview 2.1.2 Variable elements
Page 79 and 80: 65 Overview 2.3 Directors’ servic
Page 81 and 82: 67 Overview 3.2 Annual bonus The an
Page 83 and 84: 69 Overview 3.3.2 Awards made for 2
Page 85 and 86: 71 Overview 3.6 Total remuneration
Page 87 and 88: 73 Overview 4.1.2 Spirax-Sarco Engi
Page 89 and 90: Statement of compliance 75 Overview
Page 91 and 92: 77 Overview COMPLIANCE WITH THE UK
Page 93 and 94: 79 Overview COMPLIANCE WITH THE UK
Page 95 and 96: 81 Overview Share capital As at 28t
Page 97 and 98:
Statement of Directors’ responsib
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Statements of financial position at
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Consolidated statement of comprehen
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Cash flow statements for the year e
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91 Overview 1 Accounting policies c
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93 Overview 1 Accounting policies c
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95 Overview 2 Segmental reporting 2
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97 Overview 4 Staff costs and numbe
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99 Overview 10 Earnings per share P
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101 Overview 13 Goodwill and other
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103 Overview 13 Goodwill and other
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105 Overview 17 Deferred tax assets
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107 Overview 21 Obligations under f
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109 Overview 27 Employee benefits P
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111 Overview 27 Employee benefits c
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119 Overview 30 Purchase of busines
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121 Overview 31 Derivatives and oth
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127 Overview 2006 £000 2007 £000
Page 143 and 144:
Spirax Sarco worldwide Steam specia
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