Spirax-Sarco Engineering PLC Spirax Sarco to start direct operations in India (5806G)
March 05 2015 - 1:02AM
UK Regulatory
TIDMSPX
RNS Number : 5806G
Spirax-Sarco Engineering PLC
05 March 2015
News Release
5th March 2015
Spirax Sarco to start direct operations in India and exit joint
venture
Spirax-Sarco Engineering plc, the world leader in the control
and efficient use of steam and in niche fluid technology, announces
the establishment of a new wholly-owned operation through which it
will commence direct selling into the Indian market, which has good
medium and long-term opportunities for sales and profit growth. An
agreement has also been signed on 1(st) March 2015 to exit the
long-standing joint venture in India with Forbes Marshall Private
Limited, with completion expected before the 31(st) March 2015.
Our new Indian management team are completing the preparatory
actions of the last twelve months to start direct sales operations
in India by mid-2015 through our new wholly-owned company
Spirax-Sarco India Private Ltd. We will also be accelerating our
investment to rapidly establish world class local manufacturing and
training facilities at our recently purchased site in Chennai. We
had a 49.3% interest in the Associate Company in India, Spirax
Marshall Private Limited, which had been in operation since 1959
under the management control of our local partners. We have sold
our interest in this joint venture to our former partners in India,
at tangible asset value, for GBP6.5m in cash. The agreement also
provides for both parties to trade inside and outside India under
their respective names, while we retain exclusive rights to Spirax
Sarco's brands and product nomenclature.
In the twelve month period ended 31(st) December 2014, the
Group's 49.3% share of the adjusted after-tax profit of the
Associate Company was GBP1.3m, having declined 32% from GBP1.9m in
2013. Over the last four years, profit contribution from this
Associate Company has shown a steady decline to below 1% of the
Group's pre-tax profits. We expect that our new operation will make
a small negative contribution to earnings in 2015, as the business
builds both sales and manufacturing activities, but with an
increasing contribution thereafter. In the Group's 2014 accounts,
this investment in Associate is designated as an asset held for
sale. The 2014 statutory profit includes an impairment charge of
GBP1.0m largely in relation to goodwill that arose in 2007 when the
Group increased its shareholding from 40.0% to 49.3%.
In 2015, on completion of the sale of our 49.3% interest, there
will also be a charge to statutory profit, which we currently
estimate to be GBP1.7m, in respect of prior years' balance sheet
translation exchange differences that, under IAS 21, are required
to be recycled through the Profit & Loss account. Neither the
2014 nor the 2015 adjustments affects cash and neither are included
within our reported adjusted profits.
Nicholas Anderson, commenting on the agreement, said "We have
had a long association in India but the time has come to address
the Indian market directly with our own wholly-owned business,
which will create the flexibility required to take advantage of the
good medium and long-term growth prospects for this developing
economy."
Enquiries:
Nick Anderson, Chief Executive
David Meredith, Director Finance
Tel: 01242 535234
About Spirax Sarco
Spirax-Sarco Engineering plc is the world leader in both steam
system management and niche peristaltic pumps and associated fluid
path technologies. The Company provides a broad range of fluid
control products, engineered packages, site services and systems
expertise for its diverse range of over 100,000 industrial and
institutional customers. The Company helps its customers to
optimise production capacity, reduce energy costs and emissions,
improve product quality and enhance the safety of their operations.
Spirax Sarco is headquartered in Cheltenham, England, has
strategically located manufacturing plants around the world and
employs approximately 4,700 people, of whom around 1,300 are direct
sales and service engineers. Its shares have been listed on the
London Stock Exchange since 1959 (symbol: SPX). Further information
can be found at www.spiraxsarcoengineering.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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