TIDMWEIR
RNS Number : 2999D
Weir Group PLC
02 March 2022
Press Release: 2 March 2022
The Weir Group PLC reports its Full Year results for the year
ended 31 December 2021.
Positive order momentum and strong operational delivery
Strong orders driven by highly active end markets and strategic growth
initiatives
-- FY: Original Equipment (OE) orders(1) +45%; Aftermarket (AM)
orders(1) +16%
-- Q4: Orders(1) +26% YoY and +10% sequentially on Q3
Operational execution across the Group delivered +40 bps margin(1,2,3,4)
expansion
-- Swift response to cyber incident in September; financial impact
at lower end of range
-- Margin expansion delivered after mitigating cyber and Covid-19
headwinds of c.60 bps
-- PBTA(2,3) of GBP249m in line with last year despite FX headwinds
-- GBP266m operating cash flow (3) impacted by inventory build
and disruption from cyber incident
Accelerated delivery of smart, efficient, sustainable solutions strategy
-- Acquisition of Motion Metrics accelerates technology and digital
strategy
-- New products(2) increased to 6% of revenues and R&D investment(2)
+40 bps
-- 15%(2) reduction in CO(2) e emissions since 2019; science-based
targets to be set in 2022
Prioritising safety of impacted colleagues in Ukraine and Russia
-- Combined net assets c.2% of Group total, revenue and operating
profit <5%
On track to deliver medium-term targets
-- Clear path to 17% operating margins in 2023; adding cash conversion
targets
-- Subject to ongoing geopolitical uncertainty, strong growth
in constant currency revenue and profit expected in 2022
-- Full year dividend of 23.8p in line with capital allocation
policy
2021 2020 As Constant
reported currency(1)
================================= ========= ========= ========== ============
Continuing Operations(2)
================================= ========= ========= ========== ============
Orders(1) GBP2,196m GBP1,794m n/a +22%
================================= ========= ========= ========== ============
Revenue GBP1,934m GBP1,965m -2% +2%
================================= ========= ========= ========== ============
Adjusted operating profit(3,4) GBP296m GBP299m -1% +5%
================================= ========= ========= ========== ============
Adjusted operating margin(3,4) 15.3% 15.2% +10 bps +40 bps
================================= ========= ========= ========== ============
Adjusted profit before GBP249m GBP249m -% n/a
tax(3,4)
================================= ========= ========= ========== ============
Statutory profit before GBP209m GBP178m +18% n/a
tax(4)
================================= ========= ========= ========== ============
Adjusted earnings per share(3,4) 71.3p 72.3p -1% n/a
================================= ========= ========= ========== ============
Total Group
================================= ========= ========= ========== ============
Statutory profit (loss) GBP259m (GBP155m) +GBP414m n/a
after tax(4)
================================= ========= --------- ========== ============
Statutory earnings (loss)
per share(4) 99.7p (59.6p) +159.3p n/a
================================= ========= --------- ========== ============
Adjusted operating cash GBP266m GBP365m -27% n/a
flow(3,4)
================================= ========= ========= ========== ============
Dividend per share 23.8p 0.0p n/a n/a
================================= ========= ========= ========== ============
Net debt GBP772m GBP1,051m +GBP279m n/a
================================= ========= ========= ========== ============
(See footnotes on page 6)
Jon Stanton, Chief Executive Officer said:
"In 2021 we navigated successfully through a number of
significant external challenges to deliver a strong performance for
the year. Order momentum was strong, with a significant
acceleration in Q4, and demand for recurring aftermarket
consumables has now surpassed pre-Covid levels.
As events continue to unfold in Ukraine and Russia, where our
operations are relatively small, our priority is the safety of our
impacted colleagues; we are doing all we can to support them and
our thoughts are with them and their families.
We start 2022 with a record order book and market conditions
continue to be favourable. Subject to ongoing geopolitical
uncertainty, and with Covid-19, inflationary and supply chain
pressures likely to persist, we currently expect to deliver strong
growth in constant currency revenue and profit this year and
further progress towards our medium-term performance goals.
Longer-term, our mining technology focus places Weir at the
heart of a multi-decade growth opportunity in partnership with the
global mining industry as it delivers the minerals essential for
the clean energy transition more efficiently and sustainably."
A webcast of the management presentation will begin at 09:00
(GMT) on 2 March 2022 at www.investors.weir . A recording of the
webcast will also be available at www.investors.weir .
Link to PDF:
http://www.rns-pdf.londonstockexchange.com/rns/2999D_1-2022-3-2.pdf
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
At the time of writing, we have seen a rapid escalation of
events in Ukraine and Russia over the last week. Our first priority
is the safety of our impacted colleagues and their families and we
are doing all we can to support them. It is clearly a very
difficult and dynamic situation, and we have provided further
detail on the business context of these developments in the outlook
on page 5.
Reflecting on 2021, it was a year of strong execution and
significant strategic progress at Weir. Market trends have been
favourable, and order momentum is strong. Economic and external
factors have made for a complex operating environment - one in
which our resilience has shone through.
In that context, I am very pleased that we have delivered a good
set of results in our 150(th) anniversary year. That is down to the
phenomenal efforts of our employees who have worked safely and
tirelessly to serve our customers, protect our communities and
support each other through the ongoing Covid-19 pandemic, and
during the last quarter when we also responded to a major
cybersecurity incident. This performance demonstrates the strength
of our culture and I'd like to thank all my colleagues around the
world for their commitment and hard work over the last year.
That dedication is also reflected in a creditable set of safety
results. Our total incident rate of 0.45 (2020: 0.41) keeps us
among the safest companies in our sector. Another year of life and
work through the pandemic was not without its challenges, and I am
pleased that we have not wavered on our journey to becoming a zero
harm workplace.
Strong end markets and strategic growth initiatives drives order
momentum
2021 saw the global economy continue to recover supporting
strong demand for a wide range of commodities, with nearly all well
above incentive prices and several at record levels. Across our
main exposures of copper and iron ore, average prices were up c.50%
on 2020 and average gold prices remained at multi-year highs.
Demand for commodities was supported by the economic recovery in
the many sectors that had been impacted by Covid-19, underpinned by
global stimulus spending, whereas physical inventory shortages and
production constraints meant supply struggled to keep up. Given the
strength of commodity prices, customers were almost entirely
focused on maximising ore production with volumes and machine
utilisation continuing to normalise, reaching pre-Covid levels in
Q3 and accelerating further in Q4.
Our mining market order growth was strong across all regions,
with the exception of Australia, which saw good growth in the
previous year but suffered ore production constraints in 2021.
Growth was supported by two large OE orders for high pressure
grinding rolls (HPGRs) and electric-powered mine dewatering pumps.
Infrastructure markets continued their strong recovery with sand
and aggregates markets benefiting from residential housing
activity, particularly in North America. We also saw very strong
growth in industrial markets with orders up by nearly 50%.
The Group's continuing operations delivered strong order(1)
growth with a 22% improvement year-on-year. Original equipment
orders(1) were up 45% as we continued to see miners prioritise both
sustainability and efficiency. This was reflected in demand for our
differentiated technology with Integrated Solutions orders up 32%.
The GBP36m Ferrexpo order for our Enduron(R) HPGRs is an excellent
example of this. It will support a significant increase in
production while reducing energy consumption by around 40% compared
to alternative solutions. Comminution orders increased by 60% this
year and we have completed investment in expanding our technology
centre in Venlo, The Netherlands to support expected future
demand.
Aftermarket demand, on a constant currency basis, continued to
improve and returned to growth, increasing 16% year-on-year.
Momentum accelerated in Q4, with orders up 10% sequentially on Q3,
as market conditions improved and we leveraged our global service
network to fully capture the growth opportunities.
Good operational execution across the Group
Thanks to the resilience of our people and operations we were
able to deliver revenues 2% higher than last year on a constant
currency basis against a relatively strong comparator, while there
was a 5% increase in adjusted operating profit. Adjusted operating
margins(1,2,4) were up 40 bps year-on-year benefiting from strong
operational execution and full mitigation of inflationary
pressures. This improvement in margins was delivered after
absorbing a headwind of c.60 bps from the impact of the
cybersecurity incident and the net effects of ongoing Covid-19
costs.
The continuing improvement in end market conditions was seen
alongside an increasingly challenging global logistical and
inflationary backdrop. In regions where vaccination programmes are
less advanced, we saw continued workforce constraints on miners and
reduced access for third-party suppliers. Covid-related disruptions
also included government-mandated restrictions and enforced
shutdowns that reduced capacity in the period at Weir facilities in
India, Peru, Malaysia and Australia. In addition, our operations
dealt with several adverse weather events, political instability in
South Africa and Peru, and significant supply chain disruption that
increased materials and freight costs and lead times from the
Group's suppliers.
From September we have successfully managed the consequences of
a sophisticated attempted ransomware attack on our business. On
detecting the threat, our cybersecurity systems and controls
responded quickly and we took robust action to protect our
infrastructure and data. System restoration across the Group was
broadly completed by the end of January 2022 and we have taken
further steps to improve our future resilience. The consequences of
the attack caused us significant temporary operational disruption
including engineering, manufacturing and shipment rephasing, but
our teams responded magnificently to the challenge, pulling
together to keep the business running and minimising the impact on
our customers throughout. I am pleased to report that the financial
impact of the attack was at the lower end of the range we set out
in October, in large part due to the resilience inherent in our
operating model.
Winning through our 'We are Weir' strategic framework
This time last year we announced new medium-term targets which
were to grow faster than our end markets, expand Group operating
margins by 150 bps and deliver a 30% reduction in Scope 1 and 2
emissions by 2024. I am pleased to say that we are on track to
deliver all of these. The strength of our order intake this year is
demonstrating the growth potential of the business while the margin
progression delivered was particularly pleasing in the face of the
significant headwinds discussed above. We now expect to deliver a
constant currency operating margin(2,3) of 17% in 2023, and have
added medium-term operating cash conversion targets of 90-100%
reflecting the importance on cash generation to create the balance
sheet flexibility to enable us to invest in the opportunities that
lie ahead. However, capex is likely to be elevated above normal
levels for the next two years resulting in cash conversion of
between 80% and 90% over that period.
We have made significant progress with our sustainability
strategy, remaining on track to deliver a 30% reduction is CO(2) e
in 2024, and have now pledged our commitment to the Science Based
Targets initiative. This means we will set strengthened emissions
reduction targets aligned with the Paris Agreement on climate
change across Scope 1, 2 and 3. We expect to announce those more
ambitious, externally validated emissions targets later this
year.
Our strategic progress in 2021
Medium-term targets 2020 Benchmark(2) 2021 Progress(2)
----------- ---------------------- ------------------------------------ ------------------------------------
People Improving TIR(5) -- TIR of 0.41 -- TIR of 0.45
Increasing Employee -- eNPS of +42 -- eNPS of +48
Net Promotor Score
(eNPS)
----------- ---------------------- ------------------------------------ ------------------------------------
Customers Growing ahead of -- Ore production(6) -- Ore production(6)
our markets through c.-3%; Group AM c. +3%; Group AM
the cycle revenues(1) -6% revenues(1) +5%
----------- ---------------------- ------------------------------------ ------------------------------------
Technology Increase R&D as -- R&D(4) : 1.3% -- R&D: 1.7% of
a percentage of of revenues revenues
revenues
-- Integrated Solutions -- Integrated Solutions
Growth in sustainable orders +3% orders +32%
solutions
----------- ---------------------- ------------------------------------ ------------------------------------
Performance Operating margin -- Operating margin(1,3, -- Operating margin(1,3)
progression 4) of 14.9% of 15.3%
Expansion in ROCE -- ROCE(4) of 12.2% -- ROCE of 12.0%
30% reduction in -- -12% reduction -- -15% reduction
tCO(2) e per GBPm in tCO(2) e/GBPm in tCO(2) e/GBPm
revenue by 2024 to 84.4 to 81.0
vs 2019 baseline(1,7)
Accelerating delivery of smarter, more efficient and sustainable
solutions
Over the past five years we have repositioned the Group to focus
on mining technology, enabling us to take advantage of powerful
market trends and strong structural drivers, leveraging our leading
market positions and resilient aftermarket model. The sale of the
Oil & Gas Division in February 2021 was a significant milestone
in our transformation, following which we have continued to
strengthen our foundations and drive growth aligned to our purpose
- to enable the sustainable and efficient delivery of the natural
resources essential to create a better future for the world.
We have completed this transformation because of the
multi-decade growth opportunities that exist in partnership with
the mining industry. Demand for metals will always increase with
the demographic drivers of population growth and urbanisation but
these factors have now been overtaken by expected demand from the
clean energy transition. The rise of electric vehicles and
transition to renewable energy generation in the form of wind and
solar is now translating into significant increases in demand for
metals like copper, nickel and lithium.
While the outlook for demand remains extremely strong,
significant longer-term supply deficits are emerging in these
commodities where it is becoming evident that current and planned
production will not be adequate to meet the levels of
electrification and renewable power generation required to get to
net zero. At the same time, the mining sector is facing the ongoing
challenge of ore grade declines that mean more material needs to be
mined and processed, consuming more energy and water and creating
more waste, just to stand still on production. These supply
challenges are intensifying at the same time that miners are under
increasing pressure to decarbonise and reduce their broader
environmental impact so that they can maintain the social licence
to operate in the communities where natural resources exist.
These trends mean the mining industry will need to invest
significantly in expanding capacity while also meaningfully
reducing its environmental impact through the adoption of new
technologies and novel processes. I expect this to trigger a surge
in new exploration, the expansion of existing resources, and
accelerated investment in the development of new breakthrough
technologies, all of which will provide tremendous future growth
opportunities for innovative engineering partners like Weir.
Our goal is to play a leading role in developing and deploying
the technologies that will support our customers on this journey.
That means we will continue to invest in maintaining the
competitive advantages of our existing products through advances in
materials science and the mechanical/hydraulic properties of our
equipment. We will invest more in developing new sustainable
solutions to help customers reduce their emissions and water
consumption, building on the success we have had with HPGRs in
comminution, where we are now the clear market leader. We will also
continue to focus on Integrated Solutions where we can combine our
existing technologies to solve difficult problems as we are doing
with technologies such as hydro-hoisting. At the same time we are
increasing our investment in scouting and technology foresighting
to identify new opportunities that have the potential to be
transformational in mining processes, such as ore fragmentation and
characterisation, and coarse particle flotation.
Underpinning our technology strategy we have invested in
integrating our engineering expertise with digital technology. This
means digitising the business as it is today, transforming business
systems and processes to drive increased automation and enhance the
customer experience. For example, in our Minerals Division we are
close to completing the roll out of our digital Field Service
Management system which is further enhancing our service offering,
and all our main product lines are now enabled for Synertrex,
Weir's proprietary digital analytics platform.
Beyond this we are investing in ways to further enhance our
solutions offering through data insights. In November, we acquired
Motion Metrics, which has added world class expertise in Artificial
Intelligence (AI) and 3D Machine Vision technology and data science
to the Group. Motion Metrics technology is already used in mines
worldwide and its model is highly complementary to our
aftermarket-based business. Motion Metrics has become part of the
ESCO Division and will serve as Weir's global centre of excellence
for AI and Machine Vision technology, supporting the increased
digitisation of the broader Weir product portfolio. We have already
secured early orders as we leverage Weir's global sales network and
ESCO's large installed base to expand adoption of this value
enhancing technology and drive significant revenue growth. We are
making good early progress and I am excited by the opportunities
this acquisition brings to drive growth and accelerate our journey
to include data and insight as a core offering to our customers
across the Group.
Board changes
In April 2022, Charles Berry, our Chairman, will step down from
the Board after completing his nine year term and will be succeeded
by Barbara Jeremiah. Sir Jim McDonald will take over from Barbara
as Senior Independent Director. The Group has undergone a bold and
highly value adding transformation under Charles' Chairmanship and
I can't thank him enough for all the support he has given me
personally during that time. His deep rooted passion for Weir will
be missed by everyone in the business and beyond, so on behalf of
us all, I'd like to thank Charles for all he has done and wish him
the very best for his retirement. Of course, Barbara has been there
throughout our transformation too and I am delighted that she will
take over as our Chair. The next phase of our journey - driving the
technology-led transition to net zero in mining - is sure to be as
exciting as the last and I am looking forward to working with
Barbara as we rise to the opportunity.
Final dividend
Reflecting the high levels of confidence in our strategy and
future prospects, the Board has today announced a final dividend of
23.8 pence per share, which is 33% of adjusted EPS for the period,
in line with our capital allocation policy of returning a third of
EPS through the cycle.
Outlook
2022 has started well and the impact of September's cyber
incident is now behind us. We have a record order book and our
markets are buoyant, supported by long-term structural growth
drivers. In common with most global businesses we are managing
ongoing disruption from Covid-19, as well as inflationary and
logistics challenges in the supply chain, and remain vigilant of
the heightened geopolitical risk.
Specifically, the rapid escalation of events in Ukraine and
Russia has created significant uncertainty about our operations and
trading in those countries. Our overall exposure is small, with
combined Ukraine and Russia net assets of around 2% of the Group
total and combined revenue and operating profit being less than 5%.
We are actively assessing the situation closely and will update
further as required.
Subject to the ongoing geopolitical uncertainty, in 2022 we
expect to deliver strong growth in constant currency revenue and
profit in line with our medium-term targets. Looking beyond the
current year, medium-term growth prospects are exciting,
underpinned by underlying macro trends which remain extremely
favourable. With our strong and resilient business, we are well
positioned to grow faster than our markets and deliver sustainable
margin improvement in the long-term.
Segmental Analysis
Continuing operations(2) Minerals ESCO Unallocated Total Total Total
GBPm expenses OE AM
------------------------- -------- ----- ----------- ----- ----- -----
Orders (constant
currency)
FY 2021 1,651 545 n/a 2,196 568 1,628
FY 2020 1,358 436 n/a 1,794 392 1,402
Variance:
- Constant currency 22% 25% 22% 45% 16%
------------------------- -------- ----- ----------- ----- ----- -----
Revenue
FY 2021 1,422 512 n/a 1,934 446 1,488
FY 2020 (as reported) 1,469 496 n/a 1,965 491 1,474
Variance:
- As reported -3% 3% -2% -9% 1%
- Constant currency -1% 11% 2% -6% 5%
------------------------- -------- ----- ----------- ----- ----- -----
Adjusted operating
profit(3)
FY 2021 251 83 (38) 296
FY 2020 (as reported)(4) 260 81 (42) 299
Variance:
- As reported -3% 3% -1%
- Constant currency -% 11% 5%
------------------------- -------- ----- ----------- ----- ----- -----
Adjusted operating
margin(3)
FY 2021 17.7% 16.3% 15.3%
FY 2020 (as reported)(4) 17.7% 16.3% 15.2%
Variance:
- As reported (bps) 0 0 10
- Constant currency
(bps) 20 10 40
------------------------- -------- ----- ----------- ----- ----- -----
Notes:
The Group financial highlights and Divisional financial reviews
include a mixture of GAAP measures and those which have been
derived from our reported results in order to provide a useful
basis for measuring our operational performance. Adjusted results
are for continuing operations before adjusting items as presented
in the Consolidated Income Statement. Details of other alternative
performance measures are provided in note 1 of the Audited Results
contained in this press release.
1. 2020 restated at 2021 average exchange rates.
2. Continuing operations excludes the Oil & Gas Division which
was sold to Caterpillar Inc. in February 2021 and the Saudi
Arabian joint venture which was sold to Olayan Financing Company
in June 2021.
3. Profit figures before adjusting items. Continuing operations
statutory operating profit was GBP257m (2020 restated: GBP228m).
Total operations operating cash flow (cash generated from
operations) excludes additional pension contributions, exceptional
and other adjusting cash items, and income tax paid. Total
operations net cash generated from operating activities was
GBP156m (2020 restated: GBP266m).
4. 2020 has been restated to reflect a change in accounting treatment
for Software as a Service (SaaS) arrangements following the
publication of an Agenda Decision during the year by the International
Financial Reporting Standards Interpretations Committee. Details
of the restatements are provided in note 1 of the Audited
Results contained in this press release.
5. As measured by Total Incident Rate (TIR) which represents
the rate of any incident that causes an employee, visitor,
contractor, or anyone working on behalf of Weir to require
off-site medical treatment per 200,000 hours worked.
6. Weir-weighted commodity exposure - source McKinsey 2021.
7. Revenue for 2019 and 2020 is based on 2021 average exchange
rates. 2019 constant currency revenue is GBP1,917m. Market
based greenhouse gas emissions.
DIVISIONAL REVIEW
Minerals
Minerals is a global leader in engineering, manufacturing and
servicing of processing technology used in abrasive high-wear
mining applications. Its differentiated technology is also used in
infrastructure and general industrial markets.
2021 Summary
-- Original equipment orders(1) +45% supported by more sustainable
solutions
-- Aftermarket orders(1) +13%, with Q4 +29% and +19% sequentially
as mine production recovered
-- Revenues(1) -1% with operating margin(1,2) up 20 bps to
17.7%
2021 Operating Review
The Division benefited from both the strength of its market
positions and its comprehensive global service network as mining
markets recovered through the year, exceeding pre-Covid production
levels in Q4. At the same time, efficiency programmes and roll out
of new ERP systems supported margin progression, despite inflation
in input costs, global supply chain disruptions and the impact of
the cybersecurity incident. This performance was achieved while
also making significant strategic progress.
People
In terms of safety performance, the total incident rate (TIR)
across the Division was 0.36 (2020: 0.25). While this represented
an increase on prior year, it remained at a low rate and we made
good progress in catching hazards, particularly at remote service
areas, and in reducing common, lower severity incidents such as
hand and finger injuries and first aid events. Leading indicators
were also positive with a marked increase in the number of safety
conversations. We continued to invest in learning and development
and recently launched a new programme called, 'Leadership in
Mining', delivered in conjunction with the University of Utah, for
our emerging leaders.
Customers
Customer intimacy and our global footprint is a differentiator
for us and to support our customers in expanding their operations
in existing and new geographies, we continued to extend our service
network. During the year we opened seven new service centres,
including two that are co-located with ESCO. We also opened a new
GBP2m manufacturing plant in Turkey to support our growing customer
base in Central Asia.
Technology
We made strong progress with our Integrated Solutions strategy
through delivering tailored solutions that enhance productivity for
our customers. In 2021, Integrated Solutions orders of GBP210m were
up 32% on prior year, driven by strong demand for our comminution
and dewatering technologies. In October we opened a second
technology centre in Venlo, The Netherlands to support further
development of sustainable mining solutions. The new facility
represents a GBP4m investment and extends our capacity for the
development and manufacture of tailings solutions and comminution
technologies. Comminution is one of the most energy intensive
processes in the mine and Weir's technologies enable customers to
improve their energy efficiency by 40%, to achieve significant
reductions in emissions. These technologies continue to gain
traction with orders up by 60% in the year.
Performance
We continued to drive operational efficiency across the Division
to support the Group margin expansion targets. Major investments in
2021 include the upgrade to our foundry in Artarmon, Australia and
a new modern plant in China, where we consolidated our operations
into a world class facility in Binhu for slurry pumps and
comminution which is already benefiting efficiency and recoveries.
We have also continued to standardise our IT platforms with 80% of
the Division now operating on SAP.
We implemented a number of energy efficiency projects during
2021 and have further reduced emissions via renewable energy
purchasing and installation. The annualised savings of efficiency
projects implemented in 2021 by the Division would equate to a 6%
saving of Minerals' 2021 CO(2) e.
2021 Financial Review
Constant currency GBPm H1(1) H2 2021 2020(1) Growth(1)
----------------------------- ------------ ------------- ------------ ------------ ---------
Orders OE 285 248 533 367 45%
Orders AM 543 575 1,118 991 13%
Orders Total 828 823 1,651 1,358 22%
----------------------------- ------------ ------------- ------------ ------------ ---------
Revenue OE 173 240 413 448 -8%
Revenue AM 486 523 1,009 985 2%
Revenue Total 659 763 1,422 1,433 -1%
----------------------------- ------------ ------------- ------------ ------------ ---------
Adjusted operating profit(2) 119 132 251 250 -%
Adjusted operating margin(2) 18.0% 17.3% 17.7% 17.5% 20 bps
----------------------------- ------------ ------------- ------------ ------------ ---------
Operating cash flow(2) 135 92 227 283 -20 %
----------------------------- ------------ ------------- ------------ ------------ ---------
Book-to-bill 1.26 1.08 1.16 0.95
----------------------------- ------------ ------------- ------------ ------------ ---------
1. 2020 and 2021 H1 restated at 2021 average exchange rates
except for operating cash flow.
2. Profit figures before adjusting items. Operating cash flow
(cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items, and
income tax paid. Refer to note 1 of the Audited Results contained
in this press release further details of alternative performance
measures.
Orders increased by 22% on a constant currency basis to
GBP1,651m (2020: GBP1,358m) with a book-to-bill of 1.16 reflecting
strong growth in the order book which will underpin future revenue
growth. Original equipment (OE) orders increased by 45% reflecting
higher demand for our more sustainable solutions as we started to
see our strong project pipeline convert, as customers became more
confident in the global macro backdrop and the continuing recovery
of the global economy from the impact of Covid. As well as the two
large contracts for our more sustainable technology (initial GBP36m
Ferrexpo order for Enduron(R) HPGRs and screens and a GBP33m order
in Indonesia to replace diesel dewatering pumps with electric
alternatives) we also saw strong growth in demand for our core
Warman(c) centrifugal pumps. Aftermarket (AM) orders increased by
13% with strong growth across all spares products including pump,
mill circuit and comminution. Q4 was sequentially 19% higher than
Q3, delivering an all-time AM record for the Division and reflects
activity now above pre-Covid levels. Aftermarket orders represented
68% of total orders (2020: 73%). In total, mining end-market orders
accounted for 77% of the total (2020: 79%), as we saw a strong
recovery in industrial and oil & gas end-markets.
Revenue was 1% lower on a constant currency basis at GBP1,422m
(2020: GBP1,433m), primarily driven by a GBP35m reduction in OE
revenues as 2020 included the majority of the deliveries for the
c.GBP100m Iron Bridge project. AM revenues were up 2% on a constant
currency basis reflecting the positive mining production trends.
Product mix was also impacted by the non-repeat of the Iron Bridge
revenues with OE reducing to 29% of total revenues compared to 31%
last year.
Adjusted operating profit(2) increased slightly on a constant
currency basis to GBP251m (2020: GBP250m) as the Division benefited
from more favourable mix, strong operational execution and initial
benefits from our efficiency programme. The strength of our market
position and associated resilience was clearly demonstrated in the
year with full mitigation of inflationary pressures achieved
through sales price increases. The reversal of the prior year
temporary savings related to bonus and travel were largely offset
by lower under-recoveries as our plants faced less Covid-related
disruption in the period. However, the Division's operations were
impacted by the cybersecurity incident impacting the Group, which
resulted in an estimated GBP10m of under-recoveries as plants were
disrupted, and also led to the slippage of c.GBP10m of operating
profit as some Q4 revenues were deferred into 2022.
Adjusted operating margin(2) on a constant currency basis was
17.7% (2020: 17.5%), with the +20 bps increase driven by more
favourable product mix and initial efficiency programme benefits
offset by higher spend on R&D and the impact of the cyber
incident outlined above.
Operating cash flow(2) decreased by 20% to GBP227m (2020:
GBP283m), primarily reflecting a working capital outflow of GBP89m
as the Division saw an inventory build in Q4 to support its growing
order book for delivery in 2022 and the impact of the cybersecurity
incident, which led to higher receivables as revenues were more
back end loaded than normal in Q4.
ESCO
ESCO is a global leader in the provision of Ground Engaging
Tools (G.E.T.) for large mining machines. Its highly engineered
technology improves productivity through extended wear life,
increased safety and reduced energy consumption. The Division also
applies its differentiated technology to infrastructure markets
including construction, dredging and sand and aggregates.
2021 Summary
-- Orders(1) +25%, Q4 +37% YoY and delivered sixth quarter
of sequential order growth
-- Revenues(1) +11% YoY as mining and infrastructure markets
recovered strongly
-- Operating margins(1,2) up 10 bps YoY; strong operational
leverage offset by the reversal of temporary cost savings
2021 Operating Review
The Division benefited from its strong market position to
capture growth in infrastructure markets in both North America and
Europe, alongside entering other global construction markets in the
Southern Hemisphere. The Division also continued to extend its
product offering in mining markets, driving increased customer
relevance and market share gains.
People
Our continued focus on safety delivered further improvements in
performance in 2021 with TIR reducing by a further 19% to 0.85.
This marks a reduction in TIR of over 50% since the Division was
acquired in 2018. We introduced hazard identification training for
our operators during the year to reinforce safe behaviours and help
drive continuous improvement. More broadly, we continued to invest
in training and development of employees, for example, with sales
skills and sustainability training for our sales teams.
Customers
We made good progress in establishing our Nemysis(c) GET system
as the market leader across all mining systems, delivering 215 net
conversions in 2021. We also expanded our share of large mining
buckets with orders up by over 50%, and made further progress
towards our revenue synergies target of $50m. We opened new joint
facilities with Minerals in Nevada, USA, and in Almaty, Kazakhstan
and are in the final stages of permitting for our new foundry in
China, which will move into construction in 2022.
Technology
The acquisition of Motion Metrics has strengthened our
capability in digitally enabled solutions. Based in Vancouver,
Canada, Motion Metrics adds patent-protected technology to our
portfolio which reduces expensive downtime in GET applications,
helping improve our differentiated technology offering even
further. The additional capability in AI and Machine Vision will
also accelerate our expansion into adjacent markets including
developing smart eco-system offerings encompassing the load and
haul operations of our customers.
Performance
Continuous improvement activities at our foundry in Portland,
USA enabled us to quickly respond to market changes, benefiting
operational leverage. Additionally, the integration of digital
visualisation at our facilities improved overall energy
efficiencies. The annualised savings of efficiency projects
implemented in 2021 by the Division would equate to a 4% saving of
ESCO's 2021 CO(2) e.
2021 Financial Review
Constant currency GBPm H1(1) H2 2021 2020(1) Growth(1)
----------------------------- ----- ----- ----- ------- ---------
Orders OE 18 17 35 25 36%
Orders AM 241 269 510 411 24%
Orders Total 259 286 545 436 25%
----------------------------- ----- ----- ----- ------- ---------
Revenue OE 13 20 33 28 19%
Revenue AM 226 253 479 434 10%
Revenue Total 239 273 512 462 11%
----------------------------- ----- ----- ----- ------- ---------
Adjusted operating profit(2) 39 44 83 75 11%
Adjusted operating margin(2) 16.4% 16.2% 16.3% 16.2% 10 bps
----------------------------- ----- ----- ----- ------- ---------
Operating cash flow(2) 38 48 86 100 -14%
----------------------------- ----- ----- ----- ------- ---------
Book-to-bill 1.08 1.05 1.07 0.94
----------------------------- ----- ----- ----- ------- ---------
1. 2020 and 2021 H1 restated at 2021 average exchange rates
except for operating cash flow.
2. Profit figures before adjusting items. Operating cash flow
(cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items, and
income tax paid. Refer to note 1 of the Audited Results contained
in this press release for further details of alternative
performance measures.
Orders increased 25% on a constant currency basis to GBP545m
(2020: GBP436m), reflecting a strong recovery in both mining and
infrastructure markets globally, as we saw significantly reduced
Covid-19 disruptions to customer operations. The Division had
strong growth in most major regions, particularly North America and
Asia. The Division also delivered a book-to-bill of 1.07 as order
patterns normalised after the destocking seen in 2020 and the
Division has now delivered 6 straight quarters of sequential order
growth. Aftermarket represented 94% of orders (2020: 94%) in line
with ESCO's position as a provider of highly engineered consumables
used in abrasive operating environments.
Revenue, which was not impacted by the destocking seen in 2020,
increased 11% on a constant currency basis to GBP512m (2020:
GBP462m). Mining represented 57% of revenues (2020: 59%) and
infrastructure was 31% (2020: 28%).
Adjusted operating profit(2) increased by 11% on a constant
currency basis to GBP83m (2020: GBP75m), as the Division benefited
from further operating efficiency and strong operating leverage
from higher volumes which were partially offset by the reversal of
the temporary cost savings last year to bonus and travel. We saw
significant increases in freight and raw material costs which were
fully mitigated through sales price increases.
Adjusted operating margin(2) of 16.3% was up 10 bps on a
constant currency basis (2020: 16.2%), reflecting the operational
leverage from the additional revenues largely offset by the impact
of the reversal of the temporary cost reductions to bonus and
travel.
Operating cash flow(2) decreased by 14% to GBP86m (2020:
GBP100m), primarily driven by working capital, as the Division had
an outflow of GBP13m, as underlying activity levels and volumes
ramped up, and from the impact of the cyber incident.
GROUP FINANCIAL REVIEW
Continuing operations order input at GBP2,196m increased 22% on
a constant currency basis with growth in both operating Divisions
as the global economy continued to recover from the impact of
Covid. Minerals orders were up 22% as we saw higher demand for our
more sustainable OE solutions and increased aftermarket demand due
to supportive commodity prices and less Covid related mine site
disruption. ESCO orders were up 25% reflecting a strong recovery in
infrastructure markets in North America and Europe and
significantly reduced Covid disruptions to mining customer
operations. 74% of orders related to aftermarket compared to 78% in
the prior year.
Continuing operations revenue of GBP1,934m increased 2% on a
constant currency basis. In Minerals revenue was 1% lower on a
constant currency basis at GBP1,422m (2020: GBP1,433m). ESCO
increased 11% on a constant currency basis to GBP512m (2020:
GBP462m). Aftermarket accounted for 77% of revenues from continuing
operations, up from 75% in the prior year. Reported revenues
decreased 2%, impacted by a foreign exchange translation headwind
of GBP70m. Overall book to bill at 1.14 reflects the phasing of
orders and an element of revenue slippage related to the
cybersecurity incident, meaning that we enter 2022 with a record
order book.
Continuing operations adjusted operating profit decreased by
GBP3m (-1%) to GBP296m on a reported basis (2020: GBP299m).
Excluding a GBP16m foreign currency translation headwind, the
constant currency increase was GBP13m. Prior year operating profit
has been restated to reflect a change in accounting treatment for
Software as a Service (SaaS) arrangements following the publication
of an Agenda Decision during the year by the International
Financial Reporting Standards Interpretations Committee, which led
to a GBP7m reduction in 2020 adjusted operating profit with an
equivalent GBP4m in 2021. Further details are provided in note 2 of
the financial statements.
As explained further in the Divisional reviews, Minerals
adjusted operating profit increased by GBP1m on a constant currency
basis to GBP251m (2020: GBP250m) and ESCO's adjusted operating
profit increased by 11% on a constant currency basis to GBP83m
(2020: GBP75m). Across both divisions, we saw significant inflation
in raw material and freight costs. These were fully mitigated with
sales price increases underpinning our market leading positions and
ability to price accordingly. Unallocated costs are GBP4m lower
than the prior year at GBP38m primarily due to a reduction in SaaS
costs.
Continuing operations adjusted operating margin of 15.3% is up
40 bps versus last year on a constant currency basis and up 10 bps
as reported. We saw an underlying improvement in margins of 40 bps,
in keeping with our medium-term targets. This was driven by
operational efficiencies including facility consolidations,
benefits from 80% of Minerals now being on a standard SAP platform
and 70% of the Group leveraging common finance shared services.
This underlying benefit was offset by c.60 bps mainly as a result
of inefficiencies and overhead under-recoveries related to the
cyber-incident as processes were disrupted. Together the net 20 bps
reduction was offset by a favourable 60 bps movement due to mix as
AM increased from 75% of revenue to 77%.
Continuing operations statutory operating profit for the period
of GBP257m was GBP29m favourable to the prior year, with the
decrease in adjusted operating profit of GBP3m being offset by a
reduction in adjusting items.
Continuing operations adjusting items reduced by GBP31m to
GBP40m (2020: GBP71m). Intangibles amortisation decreased by GBP4m
to GBP35m (2020: GBP39m). Exceptional items reduced by GBP19m to
net nil (2020: GBP19m), with acquisition and integration costs
relating to Motion Metrics of GBP3m and costs of GBP5m directly
related to the cybersecurity incident response, being offset by a
GBP5m gain on sale of land in Malaysia and other small unutilised
provision releases totalling GBP3m. Other adjusting items which
mainly relate to the Group's legacy US asbestos-related provision
reduced by GBP8m to GBP4m (2020: GBP12m).
Continuing operations net finance costs were GBP47m (2020:
GBP50m) with the reduction mainly due to reduced net debt levels
following receipt of proceeds from the sale of the Oil & Gas
Division in February 2021.
Continuing operations adjusted profit before tax was GBP249m
(2020: GBP249m), after a translational foreign exchange headwind of
GBP15m. The statutory profit before tax from continuing operations
of GBP209m compares to GBP178m in 2020, the increase primarily due
to the reduction in adjusting items.
Continuing operations adjusted tax charge for the year of GBP64m
(2020: GBP61m) on profit before tax from continuing operations
(before adjusting items) of GBP249m (2020: GBP249m) represents an
adjusted effective tax rate (ETR) of 25.6% (2020: 24.5%). The
increase mainly reflects the geographic mix of profits.
A tax credit of GBP9m has been recognised in relation to
continuing operations adjusting items (2020: GBP16m).
Discontinued operations for the year reflect a statutory profit
after tax of GBP104m primarily due to the gain on disposal of the
Oil & Gas Division (excluding AMCO) of GBP99m and a small net
gain of GBP6m on the sale of the joint venture. This compares to a
loss in the prior year of GBP288m, which included an exceptional
impairment of GBP209m.
On 1 February 2021, the Group completed the sale of the Oil
& Gas Division, excluding the Saudi-Arabian based joint venture
Arabian Metals Company (AMCO), to Caterpillar Inc. (CAT) for an
enterprise value of $375m. Consideration received totalled GBP283m.
The sale of AMCO to the Group's joint venture partner, Olayan
Financing Company (Olayan), completed on 30 June 2021 for an
enterprise value of $30m. Net consideration received was
GBP24m.
Following last year's exceptional impairment, the overall gain
was finalised in 2021 following the completion of customary working
capital and debt-like adjustments, tax and recycling of net
cumulative foreign exchange gains from the foreign currency
translation reserve to the income statement. The latter, which is
only accounted for following completion, amounted to GBP103m and
was the main driver of the gain in the year.
Statutory profit for the year after tax from total operations of
GBP259m (2020: loss of GBP154m) reflects the increases in profit
from both continuing operations of GBP22m and discontinued
operations of GBP392m.
Adjusted earnings per share from continuing operations decreased
by 1% to 71.3p (2020: 72.3p) reflecting the higher effective tax
rate in the year. Statutory reported earnings per share from total
operations is 99.7p (2020: loss per share 59.6p), reflecting the
increase in profit from both continuing and discontinued
operations.
Acquisition of Motion Metrics
The Group completed the acquisition of Motion Metrics on 30
November 2021 for an enterprise value of CAD$150m (GBP88m), which
represents initial equity value consideration of GBP68m paid in
cash and adoption of GBP20m of vendor liabilities primarily
relating to tax, settlement of an employee growth participation
plan and disposal costs. Motion Metrics contributed GBP0.6m to
revenue and an operating loss of GBP0.3m (before adjusting items)
in the period from acquisition to 31 December 2021.
Cash flow and net debt
Cash generated from total operations decreased by GBP99m to
GBP266m (2020: GBP365m) in the year, including a decrease of GBP27m
from discontinued operations (2021: outflow of GBP14m vs 2020:
inflow of GBP13m). The cash generated from continuing operations
decreased by GBP72m primarily driven by an outflow of working
capital in the period of GBP103m (2020: GBP37m). This reflects an
increase in trade and other receivables due to back-end loading of
revenues at the end of the year as operations recovered from the
cybersecurity incident, together with an increase in inventory as
operations geared up to execute a record closing order book. As a
result, working capital as a percentage of sales increased to 27.9%
from 22.9% in the prior year. Continuing operations utilised
non-recourse invoice discounting facilities of GBP19m (2020: GBP3m)
and suppliers chose to utilise supply chain financing facilities of
GBP33m (2020: GBP33m).
Net capital expenditure reduced by GBP28m to GBP39m (2020:
GBP67m), including GBP12m proceeds from the sale of a property in
China, as spending was restricted in the final quarter as a result
of the cybersecurity incident. Lease payments of GBP28m reduced
from GBP43m last year mainly due to the disposal of the Oil &
Gas Division while purchase of shares for employee share plans
increased by GBP4m to GBP15m (2020: GBP11m).
Operating cash conversion (defined as the ratio of operating
cash flow less capital expenditure, lease payments, dividends from
joint ventures and purchase of shares for employee share plans to
adjusted operating profit) was 63% (2020: 91%) as a result of the
above noted working capital outflow. Over the medium-term we are
targeting operating cash conversion of 90% to 100% driven by
working capital efficiency and maintaining capex and lease costs
close to 1 times depreciation. Capex is likely to be elevated above
this level for the next two years as we construct our new ESCO
foundry in China and complete our roll-out of SAP and other digital
initiatives resulting in cash conversion between 80% and 90% over
that period.
Free cash flow (refer to note 1 of the Audited Results) from
total operations was an inflow of GBP62m (2020: GBP132m). In
addition to the movements noted above this was impacted by an
increase in tax payments of GBP19m reflecting a higher tax charge
and some payment deferrals last year, a reduction in interest
payments of GBP8m on lower net debt and refinancing costs and a
GBP6m increase in proceeds on settlement of derivative financial
instruments.
Net debt improved by GBP279m to GBP772m (2020: GBP1,051m) and
includes GBP105m (2020: GBP179m) in respect of IFRS 16: Leases. The
decrease was a result of free cash inflow of GBP62m, plus net
proceeds from the sale of the Oil & Gas Division and the AMCO
joint venture of GBP283m, a reduction in lease liabilities due to
the disposal of the Oil & Gas Division of GBP65m, an
exceptional cash inflow from the disposal of land in Malaysia of
GBP16m and a net decrease in continuing IFRS 16: Leases of GBP10m.
These movements are partially offset by the acquisition of Motion
Metrics for GBP68m, interim dividend of GBP30m, exceptional cash
costs from operating activities of GBP20m, foreign exchange
retranslation of GBP32m and other movements of GBP7m. Net debt to
EBITDA on a lender covenant basis was 1.9x (2020 restated: 2.8x)
compared to a covenant level of 3.5x.
In May 2021, the Group successfully completed the issuance of
five-year US$800m Sustainability-Linked Notes. This, together with
the successful refinancing in June 2020 of the Group's US$950m
Revolving Credit Facility (RCF), secures significant levels of
liquidity over an extended maturity profile. The RCF matures in
June 2023 with the option to extend for up to a further two years.
These refinancing actions plus the reduction in net debt in the
period, resulted in the Group having c.GBP800m of immediately
available committed facilities and cash balances following the
maturity of US$590m of US Private placement debt in February
2022.
Pensions
The net pension deficit decreased to GBP57m from GBP161m at
December 2020. The decrease is primarily due to changes in market
conditions, mainly the rise in discount rates over the period,
partially offset by an increase in inflation expectations. In
addition the results of the latest UK Main Scheme triennial
valuation as at 31 December 2020 led to experience gains on scheme
liabilities. A credit of GBP96m (2020: charge of GBP35m) has been
recognised in the Consolidated Statement of Comprehensive
Income.
Appendix 1 - 2021 continuing operations (1) quarterly order
trends
Reported growth
-------------- ----------------------------------------------------------------------------------------
2020 2020 2020 2020 2020 2021 2021 2021 2021 2021
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
-------------- -------- ------- -------- ------ ------ ------- ------- ------- ------- -------
Original
Equipment -13% -9% -57% -18% -29% 66% 50% 71% 9% 45%
Aftermarket -1% -6% -5% -3% -4% -1% 9% 16% 29% 13%
Minerals -5% -7% -27% -8% -12% 15% 20% 30% 23% 22%
-------------- -------- ------- -------- ------ ------ ------- ------- ------- ------- -------
Original
Equipment 25% 16% -23% 6% 2% 76% 17% 65% -9% 36%
Aftermarket -8% -28% -24% -2% -16% -2% 31% 34% 40% 24%
ESCO -7% -26% -24% -2% -15% 2% 30% 36% 37% 25%
-------------- -------- ------- -------- ------ ------ ------- ------- ------- ------- -------
Original
Equipment -11% -8% -55% -17% -27% 67% 48% 71% 8% 45%
Aftermarket -4% -13% -12% -3% -8% -2% 14% 21% 32% 16%
Continuing
Ops -5% -12% -26% -7% -13% 11% 22% 31% 26% 22%
-------------- -------- ------- -------- ------ ------ ------- ------- ------- ------- -------
Book-to-bill 1.10 1.03 0.82 0.87 0.95 1.22 1.20 1.14 1.01 1.14
-------------- -------- ------- -------- ------ ------ ------- ------- ------- ------- -------
Quarterly orders (2) GBPm
------------------- ----------------------------------------------------- -----
2020 2020 2020 2020 2020 2021 2021 2021 2021 2021
Division Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 80 102 75 110 367 133 152 128 120 533
Aftermarket 253 270 226 242 991 249 294 262 313 1,118
Minerals 333 372 301 352 1,358 382 446 390 433 1,651
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 6 6 6 7 25 11 7 10 7 35
Aftermarket 121 94 95 101 411 118 123 128 141 510
ESCO 127 100 101 108 436 129 130 138 148 545
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Original Equipment 86 108 81 117 392 144 159 138 127 568
Aftermarket 374 364 321 343 1,402 367 417 390 454 1,628
Continuing Ops 460 472 402 460 1,794 511 576 528 581 2,196
------------------- ---- ---- ---- ---- ----- ---- ---- ---- ---- -----
Appendix 2 - Foreign exchange (FX) rates and continuing
operations(1) profit exposure
Percentage
2021 2020 of FY 2021
average average operating
FX rates FX rates profits(3)
------------------- --------- --------- -----------
US Dollar 1.38 1.28 44%
Australian Dollar 1.83 1.86 17%
Euro 1.16 1.13 9%
Canadian Dollar 1.73 1.72 15%
Chilean Peso 1,043.54 1,015.14 14%
South African Rand 20.34 21.06 3%
Brazilian Real 7.42 6.61 2%
Chinese Yuan 8.88 8.86 2%
Indian Rupee 101.70 95.12 2%
------------------- --------- --------- -----------
1. Continuing operations excludes the Oil & Gas Division,
which was sold to Caterpillar Inc. in February 2021 and the
Saudi-Arabian joint venture which was sold in June 2021.
2. Restated at 2021 average exchange rates.
3. Profit figures before adjusting items. Refer to note 1 of the
Audited Results contained in this press release for further details
of alternative
performance measures.
This information includes 'forward-looking statements'. All
statements other than statements of historical fact included in
this presentation, including, without limitation, those regarding
The Weir Group PLC's ("the Group") financial position, business
strategy, plans (including development plans and objectives
relating to the Group's products and services) and objectives of
management for future operations, are forward-looking statements.
These statements contain the words "anticipate", "believe",
"intend", "estimate", "expect" and words of similar meaning. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance or achievements of the Group to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the Group's present and future business
strategies and the environment in which the Group will operate in
the future. These forward-looking statements speak only as at the
date of this document. The Group expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in the Group's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. Past business and financial performance cannot be relied on
as an indication of future performance.
AUDITED RESULTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2021
Restated (note 1)
Year ended 31 December Year ended 31 December
2021 2020
Adjusting Adjusting
items items
Adjusted (note Statutory Adjusted (note Statutory
results 4) results results 4) results
Notes GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Continuing
operations
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Revenue 2 1,933.6 - 1,933.6 1,964.7 - 1,964.7
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Continuing
operations
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Operating profit
before
share of
results of
joint ventures 294.5 (39.6) 254.9 297.0 (70.6) 226.4
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Share of results
of
joint ventures 1.7 - 1.7 1.6 - 1.6
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Operating profit 296.2 (39.6) 256.6 298.6 (70.6) 228.0
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Finance costs (52.7) - (52.7) (53.8) - (53.8)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Finance income 5.6 - 5.6 3.8 - 3.8
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Profit before
tax from
continuing
operations 249.1 (39.6) 209.5 248.6 (70.6) 178.0
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Tax (expense)
credit 5 (63.8) 9.4 (54.4) (60.8) 16.3 (44.5)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Profit for the
year
from continuing
operations 185.3 (30.2) 155.1 187.8 (54.3) 133.5
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
(Loss) profit
for the
year from
discontinued
operations 6 (2.2) 106.1 103.9 (26.6) (261.4) (288.0)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Profit (loss)
for the
year 183.1 75.9 259.0 161.2 (315.7) (154.5)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Attributable to:
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Equity holders
of the
Company 182.6 75.9 258.5 161.0 (315.7) (154.7)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Non-controlling
interests 0.5 - 0.5 0.2 - 0.2
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
183.1 75.9 259.0 161.2 (315.7) (154.5)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Earnings (loss)
per
share 7
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Basic - total
operations 99.7p (59.6p)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Basic -
continuing
operations 71.3p 59.6p 72.3p 51.4p
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Diluted - total
operations 99.0p (59.6p)
---------------- ----- -------------- --------------- ------------- ------------- --------------- --------------
Diluted -
continuing
operations 70.8p 59.2p 71.7p 50.9p
---------------- ----- ============== =============== ============= ============= =============== ==============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
Restated
(note 1)
Year ended Year ended
31 December 31 December
2021 2020
GBPm GBPm
----------------------------------------------------- ------------------------- -----------------------
Profit (loss) for the year 259.0 (154.5)
------------------------------------------------------ ------------------------- -----------------------
Other comprehensive income (expense)
----------------------------------------------------- ------------------------- -----------------------
Losses taken to equity on cash flow hedges (0.2) (1.1)
------------------------------------------------------ ------------------------- -----------------------
Exchange losses on translation of foreign operations (29.9) (34.2)
------------------------------------------------------ ------------------------- -----------------------
Reclassification of foreign currency translation
reserve on discontinued operations (103.4) -
----------------------------------------------------- ------------------------- -----------------------
Exchange (losses) gains on net investment hedges (18.2) 6.5
------------------------------------------------------ ------------------------- -----------------------
Reclassification adjustments on cash flow hedges 0.1 1.9
------------------------------------------------------ ------------------------- -----------------------
Tax relating to other comprehensive expense to
be reclassified in subsequent periods - 0.1
------------------------------------------------------ ------------------------- -----------------------
Items that are or may be reclassified to profit
or loss in subsequent periods (151.6) (26.8)
------------------------------------------------------ ------------------------- -----------------------
Other comprehensive income (expense) not to be
reclassified to profit or loss in subsequent
periods:
----------------------------------------------------- ------------------------- -----------------------
Remeasurements on defined benefit plans 96.3 (34.5)
------------------------------------------------------ ------------------------- -----------------------
Remeasurements on other benefit plans - 0.2
------------------------------------------------------ ------------------------- -----------------------
Tax relating to other comprehensive (income)
expense not to be reclassified in subsequent
periods (21.1) 6.5
------------------------------------------------------ ------------------------- -----------------------
Items that will not be reclassified to profit
or loss in subsequent periods 75.2 (27.8)
------------------------------------------------------ ------------------------- -----------------------
Net other comprehensive expense (76.4) (54.6)
------------------------------------------------------ ------------------------- -----------------------
Total net comprehensive income (expense) for
the year 182.6 (209.1)
------------------------------------------------------ ------------------------- -----------------------
Attributable to:
----------------------------------------------------- ------------------------- -----------------------
Equity holders of the Company 182.5 (210.3)
------------------------------------------------------ ------------------------- -----------------------
Non-controlling interests 0.1 1.2
------------------------------------------------------ ------------------------- -----------------------
182.6 (209.1)
----------------------------------------------------- ------------------------- -----------------------
Total net comprehensive income (expense) for
the year attributable to equity holders of the
Company
----------------------------------------------------- ------------------------- -----------------------
Continuing operations 183.3 74.3
------------------------------------------------------ ------------------------- -----------------------
Discontinued operations (0.8) (284.6)
------------------------------------------------------ ------------------------- -----------------------
182.5 (210.3)
----------------------------------------------------- ------------------------- -----------------------
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2021
Restated
(note
1)
31 December 31 December
2021 2020
Notes GBPm GBPm
------------------------------------- ----- ------------------ ------------------
ASSETS
------------------------------------- ----- ------------------ ------------------
Non-current assets
------------------------------------- ----- ------------------ ------------------
Property, plant & equipment 415.3 449.5
------------------------------------- ----- ------------------ ------------------
Intangible assets 1,308.3 1,249.4
------------------------------------- ----- ------------------ ------------------
Investments in joint ventures 12.3 15.0
------------------------------------- ----- ------------------ ------------------
Deferred tax assets 57.0 54.9
------------------------------------- ----- ------------------ ------------------
Other receivables 76.5 84.6
-------------------------------------
Derivative financial instruments 14 - 0.1
------------------------------------- ----- ------------------ ------------------
Total non-current assets 1,869.4 1,853.5
------------------------------------- ----- ------------------ ------------------
Current assets
------------------------------------- ----- ------------------ ------------------
Inventories 517.1 443.6
------------------------------------- ----- ------------------ ------------------
Trade & other receivables 505.7 420.2
------------------------------------- ----- ------------------ ------------------
Derivative financial instruments 14 7.1 16.0
------------------------------------- ----- ------------------ ------------------
Income tax receivable 32.0 29.6
------------------------------------- ----- ------------------ ------------------
Cash & short-term deposits 564.4 351.7
------------------------------------- ----- ------------------ ------------------
Assets held for sale - 427.6
------------------------------------- ----- ------------------ ------------------
Total current assets 1,626.3 1,688.7
------------------------------------- ----- ------------------ ------------------
Total assets 3,495.7 3,542.2
------------------------------------- ----- ------------------ ------------------
LIABILITIES
------------------------------------- ----- ------------------ ------------------
Current liabilities
------------------------------------- ----- ------------------ ------------------
Interest-bearing loans & borrowings 523.9 26.5
------------------------------------- ----- ------------------ ------------------
Trade & other payables 490.6 413.9
------------------------------------- ----- ------------------ ------------------
Derivative financial instruments 14 3.8 18.9
------------------------------------- ----- ------------------ ------------------
Income tax payable 7.6 12.3
------------------------------------- ----- ------------------ ------------------
Provisions 36.5 29.2
------------------------------------- ----- ------------------ ------------------
Liabilities held for sale - 143.3
------------------------------------- ----- ------------------ ------------------
Total current liabilities 1,062.4 644.1
------------------------------------- ----- ------------------ ------------------
Non-current liabilities
------------------------------------- ----- ------------------ ------------------
Interest-bearing loans & borrowings 812.3 1,332.6
------------------------------------- ----- ------------------ ------------------
Other payables - 0.3
------------------------------------- ----- ------------------ ------------------
Derivative financial instruments 14 0.1 -
------------------------------------- ----- ------------------ ------------------
Provisions 69.0 76.1
------------------------------------- ----- ------------------ ------------------
Deferred tax liabilities 40.7 21.4
------------------------------------- ----- ------------------ ------------------
Retirement benefit plan deficits 13 56.7 160.8
------------------------------------- ----- ------------------ ------------------
Total non-current liabilities 978.8 1,591.2
------------------------------------- ----- ------------------ ------------------
Total liabilities 2,041.2 2,235.3
------------------------------------- ----- ------------------ ------------------
NET ASSETS 1,454.5 1,306.9
------------------------------------- ----- ------------------ ------------------
CAPITAL & RESERVES
------------------------------------- ----- ------------------ ------------------
Share capital 32.5 32.5
------------------------------------- ----- ------------------ ------------------
Share premium 582.3 582.3
------------------------------------- ----- ------------------ ------------------
Merger reserve 332.6 332.6
------------------------------------- ----- ------------------ ------------------
Treasury shares (5.3) (6.8)
------------------------------------- ----- ------------------ ------------------
Capital redemption reserve 0.5 0.5
------------------------------------- ----- ------------------ ------------------
Foreign currency translation reserve (206.5) (55.4)
------------------------------------- ----- ------------------ ------------------
Hedge accounting reserve 1.5 1.6
------------------------------------- ----- ------------------ ------------------
Retained earnings 705.9 408.3
------------------------------------- ----- ------------------ ------------------
Shareholders' equity 1,443.5 1,295.6
------------------------------------- ----- ------------------ ------------------
Non-controlling interests 11.0 11.3
------------------------------------- ----- ------------------ ------------------
TOTAL EQUITY 1,454.5 1,306.9
------------------------------------- ----- ------------------ ------------------
The financial statements were approved by the Board of Directors
and authorised for issue on 2 March 2022.
JON STANTON JOHN HEASLEY
Director Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 DECEMBER 2021
Restated
(note
1)
Year ended Year ended
31 December 31 December
2021 2020
Notes GBPm GBPm
----------------------------------------------------- ----- ------------------ ------------------
Total operations
----------------------------------------------------- ----- ------------------ ------------------
Cash flows from operating activities 15
----------------------------------------------------- ----- ------------------ ------------------
Cash generated from operations 266.0 365.0
----------------------------------------------------- ----- ------------------ ------------------
Additional pension contributions paid (7.8) (11.3)
----------------------------------------------------- ----- ------------------ ------------------
Exceptional and other adjusting cash items (8.6) (24.1)
----------------------------------------------------- ----- ------------------ ------------------
Exceptional cash items - acquired vendor liabilities (11.1) -
----------------------------------------------------- ----- ------------------ ------------------
Income tax paid (82.4) (63.4)
----------------------------------------------------- ----- ------------------ ------------------
Net cash generated from operating activities 156.1 266.2
----------------------------------------------------- ----- ------------------ ------------------
Cash flows from investing activities
----------------------------------------------------- ----- ------------------ ------------------
Acquisitions of subsidiaries, net of cash acquired 15 (67.9) -
----------------------------------------------------- ----- ------------------ ------------------
Investment in joint ventures - 0.1
----------------------------------------------------- ----- ------------------ ------------------
Purchases of property, plant & equipment (44.4) (59.9)
----------------------------------------------------- ----- ------------------ ------------------
Purchases of intangible assets (8.4) (11.8)
----------------------------------------------------- ----- ------------------ ------------------
Exceptional item - proceeds from sale of property 15.8 -
----------------------------------------------------- ----- ------------------ ------------------
Other proceeds from sale of property, plant
& equipment and intangible assets 14.3 4.3
----------------------------------------------------- ----- ------------------ ------------------
Disposals of discontinued operations, net of
cash disposed and disposal costs 15 258.5 (6.8)
----------------------------------------------------- ----- ------------------ ------------------
Disposals of joint ventures 15 24.0 -
----------------------------------------------------- ----- ------------------ ------------------
Interest received 2.6 2.2
----------------------------------------------------- ----- ------------------ ------------------
Dividends received from joint ventures 0.7 8.3
----------------------------------------------------- ----- ------------------ ------------------
Net cash generated from (used in) investing
activities 195.2 (63.6)
----------------------------------------------------- ----- ------------------ ------------------
Cash flows from financing activities
----------------------------------------------------- ----- ------------------ ------------------
Proceeds from borrowings 794.1 1,467.2
----------------------------------------------------- ----- ------------------ ------------------
Repayments of borrowings (903.4) (1,455.8)
----------------------------------------------------- ----- ------------------ ------------------
Lease payments (27.8) (43.4)
----------------------------------------------------- ----- ------------------ ------------------
Proceeds from settlement of derivative financial
instruments 10.6 5.1
----------------------------------------------------- ----- ------------------ ------------------
Interest paid (45.6) (52.7)
----------------------------------------------------- ----- ------------------ ------------------
Net proceeds from changes in non-controlling
interests - 5.1
----------------------------------------------------- ----- ------------------ ------------------
Dividends paid to equity holders of the Company 8 (29.8) -
----------------------------------------------------- ----- ------------------ ------------------
Dividends paid to non-controlling interests (0.4) -
----------------------------------------------------- ----- ------------------ ------------------
Purchase of shares for employee share plans (15.0) (10.9)
----------------------------------------------------- ----- ------------------ ------------------
Net cash used in financing activities (217.3) (85.4)
----------------------------------------------------- ----- ------------------ ------------------
Net increase in cash & cash equivalents 134.0 117.2
----------------------------------------------------- ----- ------------------ ------------------
Cash & cash equivalents at the beginning of
the year 374.1 272.1
----------------------------------------------------- ----- ------------------ ------------------
Foreign currency translation differences (8.1) (15.2)
----------------------------------------------------- ----- ------------------ ------------------
Cash & cash equivalents at the end of the year 15 500.0 374.1
----------------------------------------------------- ----- ------------------ ------------------
The cash flows from discontinued operations included above are
disclosed separately in note 6.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2021
Attributable
Foreign to equity
Capital currency Hedge holders
Share Share Merger Treasury redemption translation accounting Retained of the Non-controlling Total
capital premium reserve shares reserve reserve reserve earnings Company interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
At 31 December
2019 32.5 582.3 332.6 (0.5) 0.5 (26.7) 0.7 590.6 1,512.0 1.4 1,513.4
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Restatement
(see note
1) - - - - - - - (5.7) (5.7) - (5.7)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Restated at
31 December
2019 32.5 582.3 332.6 (0.5) 0.5 (26.7) 0.7 584.9 1,506.3 1.4 1,507.7
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
(Loss) profit
for the year
(restated
note 2) - - - - - - - (154.7) (154.7) 0.2 (154.5)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Losses taken
to equity
on cash flow
hedges - - - - - - (1.1) - (1.1) - (1.1)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Exchange (losses)
gains on
translation
of foreign
operations - - - - - (35.2) - - (35.2) 1.0 (34.2)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Exchange gains
on net
investment
hedges - - - - - 6.5 - - 6.5 - 6.5
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Reclassification
adjustments
on cash flow
hedges - - - - - - 1.9 - 1.9 - 1.9
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Remeasurements
on defined
benefit plans - - - - - - - (34.5) (34.5) - (34.5)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Remeasurements
on other benefit
plans - - - - - - - 0.2 0.2 - 0.2
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Tax relating
to other
comprehensive
(expense)
income - - - - - - 0.1 6.5 6.6 - 6.6
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Total net
comprehensive
(expense)
income
for the year - - - - - (28.7) 0.9 (182.5) (210.3) 1.2 (209.1)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Cost of
share-based
payments
inclusive
of tax credit - - - - - - - 10.5 10.5 - 10.5
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Purchase of
shares for
employee share
plans - - - (10.9) - - - - (10.9) - (10.9)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Notional proceeds
of increase
in
non-controlling
interests - - - - - - - - - 3.6 3.6
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Proceeds of
increase in
non-controlling
interests - - - - - - - - - 5.4 5.4
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Proceeds from
decrease in
non-controlling
interests - - - - - - - - - (0.3) (0.3)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
Exercise of
share-based
payments - - - 4.6 - - - (4.6) - - -
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
At 31 December
2020 32.5 582.3 332.6 (6.8) 0.5 (55.4) 1.6 408.3 1,295.6 11.3 1,306.9
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ----------- --------------- --------------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEARED 31 DECEMBER 2021
Attributable
Foreign to equity
Capital currency Hedge holders
Share Share Merger Treasury redemption translation accounting Retained of the Non-controlling Total
capital premium reserve shares reserve reserve reserve earnings Company interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
At
31 December
2020 as
originally
presented 32.5 582.3 332.6 (6.8) 0.5 (55.4) 1.6 419.1 1,306.4 11.3 1,317.7
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Restatement
(see note
1) - - - - - - - (10.8) (10.8) - (10.8)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Restated at
31 December
2020 32.5 582.3 332.6 (6.8) 0.5 (55.4) 1.6 408.3 1,295.6 11.3 1,306.9
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Profit for
the year - - - - - - - 258.5 258.5 0.5 259.0
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Losses taken
to equity
on cash flow
hedges - - - - - - (0.2) - (0.2) - (0.2)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exchange losses
on translation
of foreign
operations - - - - - (29.5) - - (29.5) (0.4) (29.9)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Reclassification
of exchange
gains on
discontinued
operations - - - - - (103.4) - - (103.4) - (103.4)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exchange losses
on net
investment
hedges - - - - - (18.2) - - (18.2) - (18.2)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Reclassification
adjustments
on cash flow
hedges - - - - - - 0.1 - 0.1 - 0.1
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Remeasurements
on defined
benefit plans - - - - - - - 96.3 96.3 - 96.3
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Tax relating
to other
comprehensive
income - - - - - - - (21.1) (21.1) - (21.1)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Total net
comprehensive
(expense)
income
for the year - - - - - (151.1) (0.1) 333.7 182.5 0.1 182.6
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Cost of
share-based
payments
inclusive
of tax charge - - - - - - - 10.2 10.2 - 10.2
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Dividends - - - - - - - (29.8) (29.8) - (29.8)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Purchase of
shares for
employee share
plans - - - (15.0) - - - - (15.0) - (15.0)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Notional proceeds
of increase
of
non-controlling
interests - - - - - - - - - - -
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Dividends
to
non-controlling
interests - - - - - - - - - (0.4) (0.4)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Proceeds from
decrease in
non-controlling
interests - - - - - - - - - - -
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exercise of
share-based
payments - - - 16.5 - - - (16.5) - - -
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
At 31 December
2021 32.5 582.3 332.6 (5.3) 0.5 (206.5) 1.5 705.9 1,443.5 11.0 1,454.5
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Accounting policies
Basis of preparation
The audited results for the year ended 31 December 2021 ("2021")
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to those companies reporting under those
standards.
The financial information set out in the audited results does
not constitute the Group's statutory financial statements for the
year ended 31 December 2021 within the meaning of section 434 of
the Companies Act 2006 and has been extracted from the full
financial statements for the year ended 31 December 2021.
Statutory financial statements for the year ended 31 December
2020 ("2020"), which received an unqualified audit report, have
been delivered to the Registrar of Companies. The reports of the
auditors on the financial statements for the year ended 31 December
2020 and for the year ended 31 December 2021 were unqualified and
did not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006. The financial statements for the
period ended 31 December 2021 will be delivered to the Registrar of
Companies and made available to all Shareholders in due course.
These financial statements are presented in Sterling. All values
are rounded to the nearest 0.1 million pounds (GBPm) except where
otherwise indicated.
Climate change
As well as considering the impact of climate change across our
business model, the Directors have considered the impact on the
financial statements in accordance with the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations. There
has not been a material impact on the financial reporting
judgements and estimates arising from our considerations,
consistent with our assessment that climate change is not expected
to have a detrimental impact on the viability of the Group in the
medium-term.
New accounting standards, amendments and interpretations
The accounting policies which follow are consistent with those
of the previous period with the exception of the following
standards, amendments and interpretations which are effective for
the year ended 31 December 2021:
i) Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS
9, IAS 39, IFRS 7 and IFRS 16;
The Group has applied the practical expedient to changes to
interest rates resulting from IBOR reform. In all circumstances the
replacement of IBOR with an economically equivalent rate has
resulted in a change in the effective interest rate for the
liability affected. These changes have had no impact on the
Consolidated Income Statement for the period.
ii) IFRS 16 Covid-19 Related Rent Concessions Amendment; and
On 31 March 2021 the IASB published a further amendment to the
May 2020 practical expedient for lessees. The expedient provided
lessees with relief from assessing whether a rent concession in
relation to Covid-19 is a lease modification. The 2020 amendment
stated that any reduction in lease payments affected only payments
due on or before 30 June 2021. The March 2021 amendment extends the
scope of the exemption to 30 June 2022. The Group has previously
applied this exemption in 2020 and the effect in both 2020 and 2021
is not material.
iii) IFRIC - Configuration or Customisation Costs in a Cloud
Computing Arrangement (IAS 38 Intangible Assets).
The Group has revised its accounting policy in relation to
Software as a Service (SaaS) and related configuration and
customisation costs in response to the IFRIC configuration or
customisation costs in a cloud computing arrangement (April 2021)
agenda decision which clarified the interpretation of the current
accounting standard. SaaS arrangements provide the Group access to
software via payment of a subscription. Under the new guidance
these contracts are service contracts and the expense is recognised
in the Consolidated Income Statement when the service is received.
The costs related to implementing the software are split into those
which configure the software and those which generate a separate
asset controlled by the Group. The configuration costs are expensed
to the Consolidated Income Statement when the service is received.
Any expenditure resulting in a separate intangible asset is
capitalised in accordance with the current Group policy.
The Group's previous accounting policy has been to capitalise
SaaS arrangements and related customisation and configuration costs
as intangible assets. In response to this agenda decision the Group
has completed a review of the costs which are no longer eligible to
be capitalised as intangible assets and this has resulted in a
reclassification to operating expenditure and the reversal of
previously accumulated amortisation. This policy has been applied
retrospectively in accordance with IAS 8 resulting in a restatement
of prior year financial statements, with further details provided
below.
The following new accounting standards and interpretations have
been published but are not mandatory for 31 December 2021:
i) Narrow scope amendments to IFRS 3, IAS 16, IAS 37 and annual
improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16;
ii) Amendments to IAS 1, Presentation of financial statements
on classification of liabilities;
iii) Narrow scope amendments to IAS 1, Practice statement 2 and
IAS 8;
iv) Amendments to IAS 12 - deferred tax related to assets and
liabilities arising from a single transaction; and
v) IFRS 17 Insurance contracts
These amendments have not been early adopted by the Group. These
standards are not expected to have a material impact on the Group
in the current or future reporting periods or on foreseeable future
transactions.
Prior year restatement
All primary statements and (loss) earnings per share have been
restated to retrospectively apply the voluntary change in
accounting policy for Software as a Service as discussed above. The
directly impacted financial statement line items in the
Consolidated Balance Sheet, Consolidated Income Statement and
Consolidated Cash Flow Statement are shown below. The Consolidated
Balance Sheet as at 31 December 2019 has also been restated for
Software as a Service but is not presented below on the grounds of
materiality, the impact being reflected in the Consolidated
Statement of Changes in Equity.
Restated Consolidated Balance Sheet (extract)
at 31 December 2020
Restated
As previously 31 December
reported SaaS adjustment 2020
GBPm GBPm GBPm
---------------------- ------------- --------------- ------------
Non-current assets
---------------------- ------------- --------------- ------------
Intangible assets 1,262.7 (13.3) 1,249.4
---------------------- ------------- --------------- ------------
Current assets
---------------------- ------------- --------------- ------------
Income tax receivable 29.4 0.2 29.6
---------------------- ------------- --------------- ------------
Current liabilities
---------------------- ------------- --------------- ------------
Income tax payable 14.6 (2.3) 12.3
---------------------- ------------- --------------- ------------
CAPITAL & RESERVES
---------------------- ------------- --------------- ------------
31 December 2019 1,513.4 (5.7) 1,507.7
---------------------- ------------- --------------- ------------
31 December 2020 1,317.7 (10.8) 1,306.9
---------------------- ------------- --------------- ------------
Retained earnings 419.1 (10.8) 408.3
---------------------- ------------- --------------- ------------
Restated Consolidated Income Statement (extract)
for the year ended 31 December 2020
Adjusted Statutory
results: Adjusted results: Statutory
as previously results: as previously results:
reported SaaS adjustment restated reported SaaS adjustment restated
GBPm GBPm GBPm GBPm GBPm GBPm
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Operating
profit
before
share
of results
of joint
ventures 303.8 (6.8) 297.0 232.7 (6.3) 226.4
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Operating
profit 305.4 (6.8) 298.6 234.3 (6.3) 228.0
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit
before tax
from
continuing
operations 255.4 (6.8) 248.6 184.3 (6.3) 178.0
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Tax expense (62.1) 1.3 (60.8) (45.7) 1.2 (44.5)
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit for
the year
from
continuing
operations 193.3 (5.5) 187.8 138.6 (5.1) 133.5
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit
(loss) for
the year 166.7 (5.5) 161.2 (149.4) (5.1) (154.5)
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
As disclosed in note 4 certain amortisation costs are included
within adjusting items. GBP0.5m in relation to amortisation of SaaS
was included in adjusting items in 2020 and has subsequently been
reversed as shown in the table above.
Restated Consolidated Cash Flow Statement (extract)
for the year ended 31 December 2020
Restated
As previously 31 December
reported SaaS adjustment 2020
GBPm GBPm GBPm
------------------------------------------------------- ------------- --------------- ------------
Cash flows from operating activities
------------------------------------------------------- ------------- --------------- ------------
Cash generated from operations 372.2 (7.2) 365.0
------------------------------------------------------- ------------- --------------- ------------
Net cash generated from operating activities 273.4 (7.2) 266.2
------------------------------------------------------- ------------- --------------- ------------
Cash flows from investing activities
------------------------------------------------------- ------------- --------------- ------------
Purchases of intangible assets (19.0) 7.2 (11.8)
------------------------------------------------------- ------------- --------------- ------------
Net cash (used in) generated from investing activities (70.8) 7.2 (63.6)
------------------------------------------------------- ------------- --------------- ------------
As previously
reported Restated
2020 2020
pence pence
----------------------------------------------- ------------- --------
Basic earnings (loss) per share:
----------------------------------------------- ------------- --------
Total operations* (57.6) (59.6)
----------------------------------------------- ------------- --------
Continuing operations** 53.3 51.4
----------------------------------------------- ------------- --------
Continuing operations before adjusting items** 74.4 72.3
----------------------------------------------- ------------- --------
Diluted earnings (loss) per share:
----------------------------------------------- ------------- --------
Total operations* (57.6) (59.6)
----------------------------------------------- ------------- --------
Continuing operations** 52.9 50.9
----------------------------------------------- ------------- --------
Continuing operations before adjusting items** 73.8 71.7
----------------------------------------------- ------------- --------
(* Adjusted for a profit of GBP0.2m in respect of
non-controlling interests for total operations.)
(** Adjusted for a profit of GBP0.2m in respect of
non-controlling interests for continuing operations.)
Adjusting items
In order to provide the users of the Consolidated Financial
Statements with a more relevant presentation of the Group's
performance, statutory results for each year has been analysed
between:
i) adjusted results and;
ii) the effect of adjusting items.
The principal adjusting items are summarised below. These
specific items are presented on the face of the Consolidated Income
Statement, along with the related adjusting item's taxation, to
provide greater clarity and a better 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 underlying
results with prior years and assessment of trends in financial
performance. This split is consistent with how underlying business
performance is measured internally.
i) Intangibles amortisation
Intangibles amortisation is expensed in line with the other
intangible assets policy, with separate disclosure provided to
allow visibility of the impact of both:
a) intangible assets recognised via acquisition, which primarily
relate to items which would not normally be capitalised unless
identified as part of an acquisition opening balance sheet. The
ongoing costs associated with these assets are expensed; and
b) ongoing multi-year investment activities, which currently
include our IT transformation strategy and digitisation
strategy.
During the year, amortisation of GBP5.3m (restated 2020:
GBP4.6m) is included within adjusted operating profit in relation
to assets, which are no longer part of ongoing multi-year
investment activities.
ii) Exceptional items
Exceptional items 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. Exceptional items may include,
but are not restricted to: profits or losses arising on disposal or
closure of businesses; the cost of significant business
restructuring; significant impairments of intangible or tangible
assets; adjustments to the fair value of acquisition-related items
such as contingent consideration and inventory; acquisitions and
other items deemed exceptional due to their significance, size or
nature.
iii) Other adjusting items
Other adjusting items are those which do not relate to the
Group's current ongoing trading and, due to their nature, are
treated as adjusting items. For example these may include, but are
not restricted to, movements in the provision for asbestos-related
claims or the associated insurance assets, which relate to the Flow
Control Division that was sold in 2019 but the provision remains
with the Group and is in run-off, or past service costs related to
pension liabilities.
Further analysis of the items included in the column 'Adjusting
items' in the Consolidated Income Statement is provided in notes 3
and 4 to the financial statements.
Use of estimates and judgements
The Group's significant accounting policies are set out below.
The preparation of the Consolidated Financial Statements, in
conformity with IFRS, requires management to make judgements that
affect the application of accounting policies and estimates that
impact the reported amounts of assets, liabilities, income and
expense.
Management bases these judgements on a combination of past
experience, professional expert advice and other evidence that is
relevant to each individual circumstance. Actual results may differ
from these judgements and the resulting estimates which are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimate is revised.
Areas requiring significant judgement in the current year and on
a recurring basis are presented to the Audit Committee.
The areas where management considers critical judgements and
estimates to be required, which are areas more likely to be
materially adjusted due to inherent uncertainty regarding estimates
and assumptions, are those in respect of the following:
i) Retirement benefits (estimate)
The assumptions underlying the valuation of retirement benefit
assets and liabilities include discount rates, inflation rates and
mortality assumptions which are based on actuarial advice. Changes
in these assumptions could have a material impact on the
measurement of the Group's retirement benefit obligations.
ii) Provisions (judgement/estimate)
Management judgement is used to determine when a provision is
recognised, taking into account the commercial drivers which gave
rise to it, the Group's previous experience of similar obligations
and the progress of any associated legal proceedings. The
calculation of provisions typically involves management estimates
of associated cash flows and discount rates. The key provision
which currently requires a greater degree of management judgement
and estimate is the US asbestos provision and associated insurance
asset, details of which are included in note 11.
iii) Taxation (estimate)
The level of current and deferred tax recognised in the
financial statements is dependent on subjective judgements as to
the interpretation of complex international tax regulations and, in
some cases, the outcome of decisions by tax authorities in various
jurisdictions around the world, together with the ability of the
Group to utilise tax attributes within the time limits imposed by
the relevant tax legislation. The value of the recognised US
Deferred Tax Asset in relation to US tax attributes is based on
expected future US taxable profits with reference to the Group's
five year strategic plan. The application of this model may result
in future changes to the deferred tax asset recognised.
The Group faces a variety of tax risks which result from
operating in a complex global environment, including the ongoing
reform of both international and domestic tax rules in some of the
Group's larger markets and the challenge to fulfil ongoing tax
compliance filing and transfer pricing obligations given the scale
and diversity of the Group's global operations.
The Group makes provision for open tax issues where it is
probable that an exposure will arise including, in a number of
jurisdictions, ongoing tax audits and uncertain tax positions
including transfer pricing which are by nature complex and can take
a number of years to resolve. In all cases, provisions are based on
management's interpretation of tax law in each country, as
supported where appropriate by discussion and analysis undertaken
by the Group's external advisers, and reflect the single best
estimate of the likely outcome or the expected value for each
liability. Provisions for uncertain tax positions are included in
current tax liabilities and total GBP7.0m at 31 December 2021.
The Group believes it has made adequate provision for such
matters although it is possible that amounts ultimately paid will
be different from the amounts provided, but not materially within
the next 12 months.
Tax disclosures are provided in note 5.
iv) Acquisition accounting (estimate and judgement)
On the acquisition of a business, management assesses: (i) the
Purchase Price Allocation (PPA) in order to attribute fair values
to separately identifiable intangible assets providing they meet
the recognition criteria and (ii) the fair values of other assets
and liabilities.
The fair values of these intangible assets are dependent on
estimates of attributable future revenues, margins and cash flows,
as well as appropriate discount rates. In addition, the allocation
of useful lives to acquired intangible assets requires the
application of judgement based on available information and
management expectations at the time of recognition. The valuation
of other tangible assets and liabilities involves aligning
accounting policies with those of the Group, reflecting appropriate
external market valuations for property, plant & equipment,
assessing recoverability of receivables and inventory, and
exposures to unrecorded liabilities. In deriving appropriate fair
values the process will inevitably involve the use of estimates.
The disclosure in relation to business combinations is provided in
note 10.
Alternative performance measures
The Consolidated Financial Statements of The Weir Group PLC have
been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to those companies reporting under those
standards. In measuring our performance, the financial measures
that we use include those which have been derived from our reported
results in order to eliminate factors which we believe distort
period-on-period comparisons. These are considered alternative
performance measures. This information, along with comparable GAAP
measurements, is useful to investors in providing a basis for
measuring our operational performance. Our management uses these
financial measures, along with the most directly comparable GAAP
financial measures, in evaluating our performance and value
creation. Alternative performance measures should not be considered
in isolation from, or as a substitute for, financial information in
compliance with GAAP. Alternative performance measures as reported
by the Group may not be comparable with similarly titled amounts
reported by other companies.
Below we set out our definitions of alternative performance
measures and provide reconciliations to relevant GAAP measures.
Adjusted results and adjusting items
The Consolidated Income Statement presents Statutory results,
which are provided on a GAAP basis, and Adjusted results (non
GAAP), which are management's primary area of focus when reviewing
the performance of the business. Adjusting items represent the
difference between Statutory results and Adjusted results and are
defined within the accounting policies section above. The
accounting policy for Adjusting items should be read in conjunction
with this note. Details of each adjusting item are provided in note
4. We consider this presentation to be helpful as it allows greater
comparability of the underlying performance of the business from
year to year.
Operating cash flow (cash generated from operations)
Operating cash flow excludes additional pension contributions,
exceptional and other adjusting cash items and income tax paid.
This reflects our view of the underlying cash generation of the
business. A reconciliation to the GAAP measure 'Net cash generated
from operating activities' is provided in the Consolidated Cash
Flow Statement.
Free operating cash and free cash flow
Free operating cash flow is defined as operating cash flow (cash
generated from operations), adjusted for net capital expenditure,
lease payments, dividends received from joint ventures and purchase
of shares for employee share plans. Free cash flow (FCF) is defined
as free operating cash flow further adjusted for net interest,
income taxes, settlement of derivative financial instruments,
pension contributions and non-controlling interest dividends. FCF
reflects an additional way of viewing our available funds that we
believe is useful to investors as it represents cash flows that
could be used for repayment of debt, dividends, exceptional and
other adjusting items, or to fund our strategic initiatives,
including acquisitions, if any.
The reconciliation of operating cash flows (cash generated from
operations) to free operating cash flow and subsequently FCF is as
follows.
Restated
(note 1)
2021 2020
GBPm GBPm
----------------------------------------------------- ------ ---------
Operating cash flow (cash generated from operations) 266.0 365.0
----------------------------------------------------- ------ ---------
Net capital expenditure from purchase & disposal of
property, plant & equipment and intangibles (38.5) (67.4)
----------------------------------------------------- ------ ---------
Lease payments (27.8) (43.4)
----------------------------------------------------- ------ ---------
Dividends received from joint ventures 0.7 8.3
----------------------------------------------------- ------ ---------
Purchase of shares for employee share plans (15.0) (10.9)
----------------------------------------------------- ------ ---------
Free operating cash flow 185.4 251.6
----------------------------------------------------- ------ ---------
Net interest paid (43.0) (50.5)
----------------------------------------------------- ------ ---------
Income tax paid (82.4) (63.4)
----------------------------------------------------- ------ ---------
Settlement of derivative financial instruments 10.6 5.1
----------------------------------------------------- ------ ---------
Additional pension contributions paid (7.8) (11.3)
----------------------------------------------------- ------ ---------
Non-controlling interest dividends (0.4) -
----------------------------------------------------- ------ ---------
Free cash flow 62.4 131.5
----------------------------------------------------- ------ ---------
Free operating cash conversion
Free operating cash conversion is a new non GAAP key performance
measure used by management, which is defined as free operating cash
flow divided by adjusted operating profit on a total Group
basis.
Restated
(note 1)
2021 2020
GBPm GBPm
---------------------------------------- ------- ---------
Continuing operations 296.2 298.6
---------------------------------------- ------- ---------
Discontinued operations (0.3) (20.6)
---------------------------------------- ------- ---------
Adjusted operating profit - Total Group 295.9 278.0
---------------------------------------- ------- ---------
Free operating cash flow 185.4 251.6
---------------------------------------- ------- ---------
Free operating cash conversion % 63 % 91 %
---------------------------------------- ------- ---------
Working capital as a percentage of sales
Working capital includes inventories, trade & other
receivables, trade & other payables and derivative financial
instruments as included in the Consolidated Balance Sheet, adjusted
to exclude insurance contract assets totalling GBP82.2m and
GBP10.9m of interest accruals. This working capital measure
reflects the figure used by management to monitor the performance
of the business and is divided by revenue, as included in the
Consolidated Income Statement, to arrive at working capital as a
percentage of sales.
EBITDA
EBITDA is operating profit from continuing operations, before
exceptional items, other adjusting items, intangibles amortisation,
and excluding depreciation of owned assets and right-of-use assets.
EBITDA is used in conjunction with other GAAP and non GAAP
financial measures to assess our operating performance. A
reconciliation of EBITDA to the closest equivalent GAAP measure,
operating profit, is provided.
Restated
(note 1)
2021 2020
GBPm GBPm
--------------------------------------------------------- ----- ---------
Continuing operations
--------------------------------------------------------- ----- ---------
Operating profit 256.6 228.0
--------------------------------------------------------- ----- ---------
Adjusted for:
--------------------------------------------------------- ----- ---------
Exceptional and other adjusting items (note 4) 4.7 31.8
--------------------------------------------------------- ----- ---------
Adjusting amortisation (note 4) 34.9 38.8
--------------------------------------------------------- ----- ---------
Adjusted operating profit 296.2 298.6
--------------------------------------------------------- ----- ---------
Non-adjusting amortisation 5.3 4.6
--------------------------------------------------------- ----- ---------
Adjusted Earnings before interest, tax and amortisation
(EBITA) 301.5 303.2
--------------------------------------------------------- ----- ---------
Depreciation of owned property, plant & equipment 43.0 43.2
--------------------------------------------------------- ----- ---------
Depreciation of right-of-use property, plant & equipment 27.6 29.0
--------------------------------------------------------- ----- ---------
Adjusted Earnings before interest, tax, depreciation
and amortisation (EBITDA) 372.1 375.4
--------------------------------------------------------- ----- ---------
Net debt
Net debt is a common measure used by management and investors
when monitoring the capital management of the Group and is the
basis for covenant reporting. A reconciliation of net debt to cash
& short-term deposits, interest-bearing loans & borrowings
is provided in note 15.
2. Segment information
Continuing operations includes two operating Divisions: Minerals
and ESCO. These two Divisions are organised and managed separately
based on the key markets served and each is treated as an operating
segment and a reportable segment under IFRS 8. The operating and
reportable segments were determined based on the reports reviewed
by the Chief Executive Officer which are used to make operational
decisions.
The Minerals segment is the global leader in the provision of
slurry handling equipment and associated aftermarket support for
abrasive high-wear applications used in the mining and oil sands
markets. The ESCO segment is the world's leading provider of ground
engaging tools for large mining machines. Following its acquisition
on 30 November 2021, Motion Metrics, a mining technology business
which is the market leading developer of innovative Artificial
Intelligence (AI) and 3D rugged Machine Vision Technology used in
mines worldwide, is included within the ESCO segment.
On 5 October 2020 the Group announced an agreement had been
entered into to sell the Oil & Gas Division and, in line with
IFRS 5 'Non-current Assets Held for Sale and Discontinued
Operations', the Group classified the Division as a discontinued
operation as disclosed in note 6. The sale of the Division
completed during 2021.
The Chief Executive Officer assesses the performance of the
operating segments based on operating profit from continuing
operations before exceptional and other adjusting items (including
impairments) ('segment result'). Finance income and expenditure and
associated interest-bearing liabilities and financing derivative
financial instruments are not allocated to segments as all treasury
activity is managed centrally by the Group Treasury function. The
amounts provided to the Chief Executive Officer with respect to
assets and liabilities are measured in a manner consistent with
that of the financial statements. The assets are allocated based on
the operations of the segment and the physical location of the
asset. The liabilities are allocated based on the operations of the
segment.
Transfer prices between business segments are set on an arm's
length basis, in a manner similar to transactions with third
parties.
The segment information for the reportable segments for 2021 and
2020 is disclosed below. Information for Oil & Gas is included
in note 6.
Total continuing
Minerals ESCO operations
---------------- ------------
Restated
(note
1)
2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------- ------- ----- ----- -------- --------
Revenue
----------------------------------- ------- ------- ----- ----- -------- --------
Sales to external customers 1,422.1 1,469.2 511.5 495.5 1,933.6 1,964.7
----------------------------------- ------- ------- ----- ----- -------- --------
Inter-segment sales - 0.1 2.1 0.9 2.1 1.0
----------------------------------- ------- ------- ----- ----- -------- --------
Segment revenue 1,422.1 1,469.3 513.6 496.4 1,935.7 1,965.7
----------------------------------- ------- ------- ----- ----- -------- --------
Eliminations (2.1) (1.0)
-------- --------
1,933.6 1,964.7
-------- --------
Sales to external customers - 2020 at 2021 average exchange rates
Sales to external customers 1,422.1 1,433.2 511.5 462.3 1,933.6 1,895.5
----------------------------------- ------- ------- ----- ----- -------- --------
Segment result
----------------------------------- ------- ------- ----- ----- -------- --------
Segment result before share
of results of joint ventures 251.0 259.9 81.6 79.5 332.6 339.4
----------------------------------- ------- ------- ----- ----- -------- --------
Share of results of joint ventures - - 1.7 1.6 1.7 1.6
----------------------------------- ------- ------- ----- ----- -------- --------
Segment result 251.0 259.9 83.3 81.1 334.3 341.0
----------------------------------- ------- ------- ----- ----- -------- --------
Unallocated expenses (38.1) (42.4)
-------- --------
Adjusted operating profit 296.2 298.6
-------- --------
Adjusting items (39.6) (70.6)
-------- --------
Net finance costs (47.1) (50.0)
-------- --------
Profit before tax from continuing
operations 209.5 178.0
-------- --------
Segment result - 2020 at 2021 average exchange rates
Segment result before share
of results of joint ventures 251.0 250.4 81.6 73.6 332.6 324.0
----------------------------------- ------- ------- ----- ----- -------- --------
Share of results of joint ventures - - 1.7 1.5 1.7 1.5
----------------------------------- ------- ------- ----- ----- -------- --------
Segment result 251.0 250.4 83.3 75.1 334.3 325.5
----------------------------------- ------- ------- ----- ----- -------- --------
Unallocated expenses (38.1) (42.2)
-------- --------
Adjusted operating profit 296.2 283.3
-------- --------
Revenues from any single external customer do not exceed 10% of
Group revenue.
Discontinued
Minerals ESCO operations Total Group
----------------- ----------------- -------------- -----------------
Restated Restated Restated
(note (note (note
1) 1) 1)
2021 2020 2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Assets & liabilities
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Intangible assets 563.8 575.0 741.7 663.8 - - 1,305.5 1,238.8
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Property, plant &
equipment 280.1 311.7 123.7 124.0 - - 403.8 435.7
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Working capital assets 773.2 678.7 239.0 191.0 - - 1,012.2 869.7
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
1,617.1 1,565.4 1,104.4 978.8 - - 2,721.5 2,544.2
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Investments in joint
ventures - - 12.3 15.0 - - 12.3 15.0
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment assets held
for sale - - - - - 427.6 - 427.6
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment assets 1,617.1 1,565.4 1,116.7 993.8 - 427.6 2,733.8 2,986.8
Unallocated assets 761.9 555.4
------- --------
Total assets 3,495.7 3,542.2
------- --------
Working capital liabilities 406.9 365.2 119.4 83.4 - - 526.3 448.6
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment liabilities
held for sale - - - - - 143.3 - 143.3
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment liabilities 406.9 365.2 119.4 83.4 - 143.3 526.3 591.9
Unallocated liabilities 1,514.9 1,643.4
------- --------
Total liabilities 2,041.2 2,235.3
------- --------
Other segment information - total
Group
----------------------------------------------- ------- -------- ------ ------ ------- --------
Segment additions
to non-current assets 60.2 70.7 16.8 22.1 0.4 6.6 77.4 99.4
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Unallocated additions
to non-current assets 0.2 -
------- --------
Total additions to
non-current assets 77.6 99.4
------- --------
Other segment information - total
Group
----------------------------------------------- ------- -------- ------ ------ ------- --------
Segment depreciation
& amortisation 66.4 65.8 34.8 37.1 - 31.6 101.2 134.5
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment impairment
of property, plant
& equipment (1.4) (0.4) - - - (1.4) (1.4) (1.8)
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Segment impairment
of intangible assets 0.1 - - - - 176.1 0.1 176.1
---------------------------- ------- -------- ------- -------- ------ ------ ------- --------
Unallocated depreciation
& amortisation 9.6 12.7
------- --------
Total depreciation,
amortisation & impairment 109.5 321.5
------- --------
The asset and liability balances include right-of-use assets and
lease liabilities.
Unallocated assets are continuing operations and primarily
comprise cash and short-term deposits, asbestos-related insurance
asset, Trust Owned Life Insurance policy investments, derivative
financial instruments, income tax receivable, deferred tax assets
and elimination of intercompany as well as those assets which are
used for general head office purposes. Unallocated liabilities are
continuing operations and primarily comprise interest-bearing loans
& borrowings and related interest accruals, derivative
financial instruments, income tax payable, provisions, deferred tax
liabilities, elimination of intercompany and retirement benefit
deficits as well as liabilities relating to general head office
activities. Segment additions to non-current assets include
right-of-use assets.
Geographical information
Geographical information in respect of revenue and non-current
assets for 2021 and 2020 is disclosed below. Revenues are allocated
based on the location to which the product is shipped. Assets are
allocated based on the location of the assets and operations.
Non-current assets consist of property, plant & equipment,
intangible assets and investments in joint ventures.
Middle
Asia South East Europe
UK US Canada Pacific Australia America & Africa & FSU Total
----------------------------
Year ended 31 December
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Revenue from continuing
operations
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Sales to external customers 23.8 315.9 266.0 237.9 304.0 387.5 224.1 174.4 1,933.6
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Non-current assets 314.1 699.7 158.5 150.0 201.5 71.1 86.9 54.1 1,735.9
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Middle
Asia South East Europe
UK US Canada Pacific Australia America & Africa & FSU Total
----------------------------
Year ended 31 December
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Revenue from continuing
operations
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Sales to external customers 15.8 296.0 274.6 227.3 348.0 415.6 218.0 169.4 1,964.7
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
Non-current assets
(restated note 1) 332.5 747.7 61.8 138.8 210.1 82.6 98.1 42.3 1,713.9
---------------------------- ----- ----- ------ -------- --------- -------- --------- ------ -------
The following disclosures are given in relation to continuing
operations.
2021 2020
GBPm GBPm
================================================== ======= =======
An analysis of the Group's revenue is as follows:
-------------------------------------------------- ------- -------
Original equipment 386.9 444.3
-------------------------------------------------- ------- -------
Aftermarket parts 1,366.6 1,358.1
-------------------------------------------------- ------- -------
Sales of goods 1,753.5 1,802.4
-------------------------------------------------- ------- -------
Provision of services - Aftermarket 121.0 116.0
-------------------------------------------------- ------- -------
Construction contracts - Original equipment 59.1 46.3
-------------------------------------------------- ------- -------
Revenue 1,933.6 1,964.7
-------------------------------------------------- ------- -------
Total continuing
Minerals ESCO operations
---------------- ------------ ------------------
2021 2020 2021 2020 2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ------- ------- ----- ----- -------- --------
Timing of revenue
recognition
------------------- ------- ------- ----- ----- -------- --------
At a point in time 1,290.6 1,382.1 508.3 490.1 1,798.9 1,872.2
------------------- ------- ------- ----- ----- -------- --------
Over time 131.5 87.2 5.3 6.3 136.8 93.5
------------------- ------- ------- ----- ----- -------- --------
Segment revenue 1,422.1 1,469.3 513.6 496.4 1,935.7 1,965.7
------------------- ------- ------- ----- ----- -------- --------
Eliminations (2.1) (1.0)
-------- --------
1,933.6 1,964.7
-------- --------
3. Revenue & expenses
The following disclosures are given in relation to continuing
operations.
Restated (note 1)
Year ended 31 December Year ended 31 December
2021 2020
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------- --------- --------- --------- --------- --------- ---------
A reconciliation of revenue to operating
profit is as follows:
----------------------------------------- --------- --------- --------- --------- --------- ---------
Revenue 1,933.6 - 1,933.6 1,964.7 - 1,964.7
----------------------------------------- --------- --------- --------- --------- --------- ---------
Cost of sales (1,237.2) (4.4) (1,241.6) (1,263.6) (8.2) (1,271.8)
----------------------------------------- --------- --------- --------- --------- --------- ---------
Gross profit 696.4 (4.4) 692.0 701.1 (8.2) 692.9
----------------------------------------- --------- --------- --------- --------- --------- ---------
Other operating income 14.6 4.8 19.4 7.5 - 7.5
----------------------------------------- --------- --------- --------- --------- --------- ---------
Selling & distribution costs (218.9) - (218.9) (203.5) (5.8) (209.3)
----------------------------------------- --------- --------- --------- --------- --------- ---------
Administrative expenses (197.6) (40.0) (237.6) (208.1) (56.6) (264.7)
----------------------------------------- --------- --------- --------- --------- --------- ---------
Share of results of joint ventures 1.7 - 1.7 1.6 - 1.6
----------------------------------------- --------- --------- --------- --------- --------- ---------
Operating profit 296.2 (39.6) 256.6 298.6 (70.6) 228.0
----------------------------------------- --------- --------- --------- --------- --------- ---------
Details of adjusting items are included in note 4.
4. Adjusting items
Restated
(note
1)
2021 2020
GBPm GBPm
------------------------------------------------------------- ------ --------
Recognised in arriving at operating profit from continuing
operations
------------------------------------------------------------- ------ --------
Intangibles amortisation (34.9) (38.8)
------------------------------------------------------------- ------ --------
Exceptional items
------------------------------------------------------------- ------ --------
Motion Metrics acquisition and integration related costs (2.8) -
------------------------------------------------------------- ------ --------
Cybersecurity incident response (4.7) -
------------------------------------------------------------- ------ --------
Other restructuring and rationalisation activities 6.3 (2.0)
------------------------------------------------------------- ------ --------
ESCO acquisition and integration related costs 0.9 (3.3)
------------------------------------------------------------- ------ --------
Covid-19 restructuring and other costs - (9.7)
------------------------------------------------------------- ------ --------
Black Economic Empowerment transaction - (4.4)
------------------------------------------------------------- ------ --------
(0.3) (19.4)
------------------------------------------------------------- ------ --------
Other adjusting items
------------------------------------------------------------- ------ --------
Asbestos-related provision (4.4) (11.8)
------------------------------------------------------------- ------ --------
Pension equalisation - (0.6)
------------------------------------------------------------- ------ --------
(4.4) (12.4)
------------------------------------------------------------- ------ --------
Total adjusting items (39.6) (70.6)
------------------------------------------------------------- ------ --------
Recognised in arriving at operating profit from discontinued
operations
------------------------------------------------------------- ------ --------
Intangibles amortisation - (9.1)
------------------------------------------------------------- ------ --------
Exceptional items
------------------------------------------------------------- ------ --------
Impairment - Fair value adjustment - (209.2)
------------------------------------------------------------- ------ --------
Onerous purchase contracts 0.9 (3.8)
------------------------------------------------------------- ------ --------
Disposal related costs - (11.4)
------------------------------------------------------------- ------ --------
Covid-19 restructuring and other costs - (0.7)
------------------------------------------------------------- ------ --------
Other restructuring and rationalisation activities - (0.2)
------------------------------------------------------------- ------ --------
0.9 (225.3)
------------------------------------------------------------- ------ --------
Total adjusting items (note 6) 0.9 (234.4)
------------------------------------------------------------- ------ --------
Continuing operations
Intangibles amortisation
Intangibles amortisation of GBP34.9m relates to acquisition
related assets and ongoing multi-year investment activities as
outlined in the accounting policy in note 1.
Exceptional items
Exceptional items in the year include GBP2.8m of acquisition and
integration related costs associated with the Motion Metrics
acquisition, which completed on 30 November 2021 (note 10). The
majority of these costs relate to adviser fees, due diligence and
initial integration. This has resulted in a GBP0.9m exceptional
cash flow in the year. We anticipate further integration costs of
approximately GBP3m in 2022.
The Group incurred GBP4.7m of costs in the final quarter of 2021
as a direct result of the cybersecurity incident in September.
These costs primarily related to specialist advisory fees incurred
centrally to investigate and respond to the incident, incremental
hardware costs expensed to facilitate business continuity during
the period of recovery plus an impairment charge of GBP0.1m on
existing hardware. This has resulted in a GBP2.2m exceptional cash
outflow in the year with GBP2.4m expected to be settled in the
first half of 2022.
An exceptional credit for other restructuring and
rationalisation activities in the year is primarily the result of a
land sale in Sendayan, Malaysia. The land sold was part of our
restructuring decision to exit Minerals Malaysia foundry operations
in 2018. The land was sold in August 2021 for proceeds of GBP16.6m,
with a book value of GBP11.0m, resulting in a net gain of GBP4.8m
after deducting legal and tax fees of GBP0.8m. Overall this
transaction resulted in an exceptional cash inflow of GBP15.8m in
the year. The remaining credit of GBP1.5m relates to the partial
reversal of restructuring and rationalisation charges recognised in
North America and China in prior years.
An accrual of GBP0.9m has been released in relation to ESCO
integration costs which were initially expensed in 2019.
In the prior year, restructuring and rationalisation activities
primarily represented actions to further right-size certain central
functions as a result of the continued deep downturn in oil and gas
markets. Other exceptional items related to costs of GBP3.3m
associated with the integration of ESCO, the Black Economic
Empowerment transaction for ownership in Weir Minerals South Africa
(Pty) Ltd with Medu Capital (Pty) Ltd of GBP4.4m and specific
one-off and/or short-term costs as a direct result of the Covid-19
pandemic of GBP9.7m, of which GBP8.9m was severance.
Other adjusting items
A charge of GBP4.4m (2020: GBP11.8m) has been recorded in
respect of movements in the US asbestos-related liability and
associated insurance provision, plus settlements for post 1981 US
asbestos-related claims which relate to legacy Group products.
Further details of this are included in note 11.
In the prior year, a charge of GBP0.6m was recognised in respect
to pension equalisation costs.
Discontinued operations
Intangibles amortisation
In line with IFRS 5 'Non-current Assets Held for Sale and
Discontinued Operations', no amortisation has been recognised in
the period.
Exceptional items
In the current year a final adjustment has been made to an
onerous purchase contracts provision resulting in a credit of
GBP0.9m (2020: charge GBP3.8m).
Prior year exceptional items included an adjustment of GBP209.2m
to the carrying value of the Oil & Gas Division to reflect the
fair value less costs to sell of the Division. This reflected the
estimated proceeds from the disposal. The fair value adjustment
included GBP49.5m of intangible assets, GBP126.6m of goodwill and
GBP33.1m of inventory. Disposal costs of GBP11.4m were incurred
primarily relating to advisory and consultancy fees. Other
exceptional items related to Covid-19 costs within the Oil &
Gas Division of GBP0.7m and restructuring and rationalisation costs
of GBP0.2m. The restructuring and rationalisation costs related to
severance costs of GBP3.0m which were offset by credit balances of:
GBP1.1m gain on sale of a property written off as an exceptional in
2019, GBP1.0m credit for the final adjustments in relation to the
liquidation of the EPIX joint venture and GBP0.7m of prior year
unutilised provisions.
5. Income tax expense
Restated
(note
1)
2021 2020
GBPm GBPm
-------------------------------------------------------- ------ --------
Continuing Group - UK (5.2) (6.7)
-------------------------------------------------------- ------ --------
Continuing Group - Overseas (49.2) (37.8)
-------------------------------------------------------- ------ --------
Income tax expense in the Consolidated Income Statement
for continuing operations (54.4) (44.5)
-------------------------------------------------------- ------ --------
The total income tax expense is disclosed in the Consolidated
Income Statement as follows.
Restated
(note
1)
2021 2020
GBPm GBPm
---------------------------------------------------------------------------- ------ --------
Tax (expense) credit - adjusted continuing operations (63.8) (60.8)
---------------------------------------------------------------------------- ------ --------
exceptional and other adjusting items 1.5 (1.7)
---------------------------------------------------------------------------- ------ --------
adjusting intangibles amortisation and impairment 7.9 18.0
---------------------------------------------------------------------------- ------ --------
Total income tax (expense) in the Consolidated Income
Statement for continuing operations (54.4) (44.5)
---------------------------------------------------------------------------- ------ --------
The income tax expense included in the Continuing Group's share
of results of joint ventures is as follows.
2021 2020
GBPm GBPm
--------------- ----- -----
Joint ventures (0.2) (0.5)
--------------- ----- -----
6. Discontinued operations
On 5 October 2020, the Group announced it had entered into an
agreement to sell the Oil & Gas Division and, in line with IFRS
5 'Non-current Assets Held for Sale and Discontinued Operations',
the Group classified the Division as held for sale and its results
have since been reported in discontinued operations. Following the
initial announcement of the sale, the Group's joint venture
partner, Saudi Arabia-based, Arabian Metals Company (AMCO)
exercised its pre-emption right to purchase Weir's 49% stake in
AMCO for an enterprise value of US$30.0m. The Oil & Gas
Division provided pressure pumping and pressure control equipment
and aftermarket support across the oilfield equipment and services
value chain, primarily to customers in North America.
The Group completed the disposal of the Oil & Gas Division
(excluding AMCO) on 1 February 2021 to Caterpillar Inc. (CAT) for
an enterprise value of US$375.0m and a net consideration of
GBP275.3m after certain customary working capital and debt-like
adjustments. Following finalisation of working capital and tax
provision adjustments, the Group received a further GBP7.5m to
reflect a final consideration of GBP282.8m with adjustments made to
net assets sold in relation to tax as part of the agreed completion
accounts process. There remains minor offsetting balances relating
to potential tax liabilities and tariff rebates which are not
reflected below as at present the amounts relating to these items
are not yet finalised and the timing of settlement is currently
unknown. These are not expected to have a significant impact on the
results disclosed below.
The sale of AMCO to Olayan Financing Company (Olayan), our joint
venture partner, completed on 30 June 2021. A consideration of
US$37.8m (GBP27.4m) was received compared to the original fair
market value of US$30.0m agreed with CAT. The agreement with CAT in
respect of the joint venture sale was that any proceeds received
from Olayan above the fair market value would be split 90:10 in
favour of CAT, subject to certain capital gains tax and dividend
retentions. This resulted in a payment to CAT of US$4.7m (GBP3.4m)
in July 2021 and a payment of capital gains tax to the Saudi
authorities of US$6.3m (GBP4.6m) in August 2021.
Financial information relating to discontinued operations is set
out in the table below.
Year ended 31 December Year ended 31 December
2021 2020
Adjusting Adjusting
items items
Adjusted (note Statutory Adjusted (note Statutory
results 4) results results 4) results
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ -------- --------- --------- -------- --------- ---------
Revenue 25.1 - 25.1 314.3 - 314.3
------------------------------------------ -------- --------- --------- -------- --------- ---------
Operating (loss) profit before
share of results of joint ventures (1.9) 0.9 (1.0) (24.5) (234.4) (258.9)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Share of results of joint ventures 1.6 - 1.6 3.9 - 3.9
------------------------------------------ -------- --------- --------- -------- --------- ---------
Operating (loss) profit (0.3) 0.9 0.6 (20.6) (234.4) (255.0)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Finance costs (0.2) - (0.2) (3.3) - (3.3)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Finance income - - - 0.3 - 0.3
------------------------------------------ -------- --------- --------- -------- --------- ---------
(Loss) profit before tax from
discontinued operations (0.5) 0.9 0.4 (23.6) (234.4) (258.0)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Tax expense (1.7) - (1.7) (3.0) (27.0) (30.0)
------------------------------------------ -------- --------- --------- -------- --------- ---------
(Loss) profit after tax from discontinued
operations (2.2) 0.9 (1.3) (26.6) (261.4) (288.0)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Gain on sale of Oil & Gas Division
(see below) - 99.2 99.2 - - -
------------------------------------------ -------- --------- --------- -------- --------- ---------
Gain on sale of joint venture
(see below) - 6.0 6.0 - - -
------------------------------------------ -------- --------- --------- -------- --------- ---------
(Loss) profit for the period from
discontinued operations (2.2) 106.1 103.9 (26.6) (261.4) (288.0)
------------------------------------------ -------- --------- --------- -------- --------- ---------
Reclassification of foreign currency
translation reserve (103.4) -
------------------------------------------ -------- --------- --------- -------- --------- ---------
Other comprehensive (expense)
income from discontinued operations (1.3) 3.4
------------------------------------------ -------- --------- --------- -------- --------- ---------
Total net comprehensive expense
from discontinued operations (0.8) (284.6)
------------------------------------------ -------- --------- --------- -------- --------- ---------
The reconciliation from revenue to operating profit includes
cost of sales of GBP21.8m (2020: GBP272.6m), other operating income
of GBP0.3m (2020: GBP3.3m), selling & distribution costs of
GBP1.4m (2020: GBP18.1m), administrative expenses of GBP4.1m (2020:
GBP51.4m) and share of results of joint venture of GBP1.6m (2020:
GBP3.9m).
The gain on sale is largely attributable to the recycling of
cumulative foreign exchange gains and losses from the foreign
currency translation reserve to the income statement which is
recognised only at the time of sale. For the Oil & Gas
Division, excluding AMCO, the cumulative net foreign exchange gains
on retranslation of foreign operations recycled was GBP244.3m
offset by the cumulative net foreign exchange losses on net
investment hedges of GBP143.4m. In June 2021, GBP2.5m of cumulative
foreign exchange gains on retranslation of foreign operations was
recycled in respect of the AMCO disposal.
Year ended Year ended
31 December 31 December
2021 2020
GBPm GBPm
--------------------------------------------------- ------------ ------------
Cash flows from operating activities (16.3) 20.3
--------------------------------------------------- ------------ ------------
Cash flows from investing activities (0.2) 3.8
--------------------------------------------------- ------------ ------------
Cash flows from financing activities (1.1) (18.5)
--------------------------------------------------- ------------ ------------
Net (decrease) increase in cash & cash equivalents
from discontinued operations (17.6) 5.6
--------------------------------------------------- ------------ ------------
Details of the sale of Oil & Gas Division (excluding
AMCO)
Year ended
31 December
2021
GBPm
----------------------------------------------------------- ------------
Consideration received
----------------------------------------------------------- ------------
Cash received - initial settlement 275.3
----------------------------------------------------------- ------------
Cash received - completion accounts settlement 7.5
----------------------------------------------------------- ------------
Total disposal consideration 282.8
----------------------------------------------------------- ------------
Carrying amount of net assets sold (282.9)
----------------------------------------------------------- ------------
Costs of disposal (1.8)
----------------------------------------------------------- ------------
Gain on sale of Oil & Gas Division before reclassification
of foreign currency translation reserve and tax (1.9)
----------------------------------------------------------- ------------
Reclassification of foreign currency translation reserve 100.9
----------------------------------------------------------- ------------
Gain on sale of Oil & Gas Division before tax 99.0
----------------------------------------------------------- ------------
Tax credit on disposal 0.2
----------------------------------------------------------- ------------
Gain on sale of Oil & Gas Division after tax 99.2
----------------------------------------------------------- ------------
The carrying amount of assets and liabilities as at the date of
sale were as follows.
Period ended
1 February
2021
GBPm
----------------------------- ------------
Property, plant & equipment 117.3
----------------------------- ------------
Intangible assets 82.0
----------------------------- ------------
Investment in joint ventures 3.1
----------------------------- ------------
Inventories 107.6
----------------------------- ------------
Trade & other receivables 78.9
----------------------------- ------------
Cash & short-term deposits 16.1
----------------------------- ------------
Trade & other payables (48.8)
----------------------------- ------------
Leases (65.2)
----------------------------- ------------
Provisions (8.1)
----------------------------- ------------
Net assets 282.9
----------------------------- ------------
Details of the sale of AMCO joint venture
Year ended
31 December
2021
GBPm
--------------------------------------------------------- ------------
Consideration received
--------------------------------------------------------- ------------
Cash received 27.4
--------------------------------------------------------- ------------
Consideration adjustment - paid to CAT (3.4)
--------------------------------------------------------- ------------
Total disposal consideration 24.0
--------------------------------------------------------- ------------
Carrying amount of investment held (16.1)
--------------------------------------------------------- ------------
Costs of disposal* 0.2
--------------------------------------------------------- ------------
Gain on sale of joint venture before reclassification of
foreign currency translation reserve and tax 8.1
--------------------------------------------------------- ------------
Reclassification of foreign currency translation reserve 2.5
--------------------------------------------------------- ------------
Gain on sale of joint venture before tax 10.6
--------------------------------------------------------- ------------
Tax charge on disposal (4.6)
--------------------------------------------------------- ------------
Gain on sale of joint venture after tax 6.0
--------------------------------------------------------- ------------
(* Costs of disposal related to an unutilised prior year
provision for costs to sell.)
Earnings (loss) per share
Earnings (loss) per share from discontinued operations were as
follows.
2021 2020
pence pence
-------- ----- -------
Basic 40.1 (110.9)
-------- ----- -------
Diluted 39.8 (110.9)
-------- ----- -------
The earnings (loss) per share figures were derived by dividing
the net profit (loss) attributable to equity holders of the Company
from discontinued operations by the weighted average number of
ordinary shares, for both basic and diluted amounts, shown in note
7.
7. Earnings (loss) per share
Basic earnings (loss) per share amounts are calculated by
dividing net profit (loss) for the year attributable to equity
holders of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted earnings (loss) per
share is calculated by dividing the net profit (loss) attributable
to equity holders of the Company by the weighted average number of
ordinary shares outstanding during the year, adjusted for the
effect of dilutive share awards.
The following reflects the earnings used in the calculation of
earnings (loss) per share.
Restated
(note 1)
2021 2020
------------------------------------------------------ ----- ---------
Profit (loss) attributable to equity holders of
the Company
------------------------------------------------------ ----- ---------
Total operations* (GBPm) 258.5 (154.7)
------------------------------------------------------ ----- ---------
Continuing operations** (GBPm) 154.6 133.3
------------------------------------------------------ ----- ---------
Continuing operations before adjusting items** (GBPm) 184.8 187.6
------------------------------------------------------ ----- ---------
* Adjusted for a profit of GBP0.5m (2020: profit of GBP0.2m) in
respect of non-controlling interests for total operations.
** Adjusted for a profit of GBP0.5m (2020: profit of GBP0.2m) in
respect of non-controlling interests for continuing operations.
The following reflects the shares numbers used in the
calculation of earnings (loss) per share, and the difference
between the weighted average share capital for the purposes of the
basic and the diluted earnings (loss) per share calculations.
2021 2020
Shares Shares
million million
----------------------------------------------------- -------- --------
Weighted average number of ordinary shares for basic
earnings per share 259.3 259.5
----------------------------------------------------- -------- --------
Effect of dilution: employee share awards 1.7 2.2
----------------------------------------------------- -------- --------
Adjusted weighted average number of ordinary shares
for diluted earnings per share 261.0 261.7
----------------------------------------------------- -------- --------
The profit (loss) attributable to equity holders of the Company
used in the calculation of both basic and diluted earnings (loss)
per share from continuing operations before adjusting items is
calculated as follows.
Restated
(note 1)
2021 2020
GBPm GBPm
---------------------------------------------------------- ------ ---------
Net profit attributable to equity holders from continuing
operations** 154.6 133.3
---------------------------------------------------------- ------ ---------
Adjusting items net of tax (30.2) (54.3)
---------------------------------------------------------- ------ ---------
Net profit attributable to equity holders from continuing
operations before adjusting items 184.8 187.6
---------------------------------------------------------- ------ ---------
Restated
(note 1)
2021 2020
pence pence
------------------------------------------------- ----- ---------
Basic earnings (loss) per share:
------------------------------------------------- ----- ---------
Total operations* 99.7 (59.6)
------------------------------------------------- ----- ---------
Continuing operations** 59.6 51.4
------------------------------------------------- ----- ---------
Continuing operations before adjusting items** 71.3 72.3
------------------------------------------------- ----- ---------
Diluted earnings (loss) per share:
------------------------------------------------- ----- ---------
Total operations* 99.0 (59.6)
------------------------------------------------- ----- ---------
Continuing operations** 59.2 50.9
------------------------------------------------- ----- ---------
Continuing operations before adjusting items** 70.8 71.7
------------------------------------------------- ----- ---------
* Adjusted for a profit of GBP0.5m (2020: profit of GBP0.2m) in
respect of non-controlling interests for total operations.
** Adjusted for a profit of GBP0.5m (2020: profit of GBP0.2m) in
respect of non-controlling interests for continuing operations.
There have been 6,258 share awards (2020: 350,896) exercised
between the reporting date and the date of signing of these
financial statements. These were settled out of existing shares
held in trust.
Earnings (loss) per share from discontinued operations is
disclosed in note 6.
8. Dividends paid & proposed
2021 2020
GBPm GBPm
---------------------------------------------------- ---- ----
Declared & paid during the year
---------------------------------------------------- ---- ----
Equity dividends on ordinary shares
---------------------------------------------------- ---- ----
Final dividend for 2020: 0.00p (2019: 0.00p) - -
---------------------------------------------------- ---- ----
Interim dividend for 2021: 11.50p (2020: 0.00p) 29.8 -
---------------------------------------------------- ---- ----
29.8 -
---------------------------------------------------- ---- ----
Proposed for approval by Shareholders at the Annual
General Meeting
---------------------------------------------------- ---- ----
Final dividend for 2021: 12.30p (2020: 0.00p) 31.9 -
---------------------------------------------------- ---- ----
The current year dividend is in line with the capital allocation
policy announced in our 2020 Annual Report and Financial
Statements, under which the Group intends to distribute 33% of net
adjusted earnings by way of dividend. As a result dividend cover in
2021 is 3.0 times. In response to the Covid-19 pandemic, the Board
did not propose an interim or final dividend for 2020.
The proposed dividend is based on the number of shares in issue,
excluding treasury shares held, at the date that the financial
statements were approved and authorised for issue. The final
dividend may differ due to increases or decreases in the number of
shares in issue between the date of approval of this Annual Report
and Financial Statements and the record date for the final
dividend.
9. Property, plant & equipment and intangible assets
Restated
(note 1)
2021 2020
GBPm GBPm
-------------------------------------------------------- ---- ---------
Additions of property, plant & equipment and intangible
assets
-------------------------------------------------------- ---- ---------
- owned land & buildings 4.0 7.3
-------------------------------------------------------- ---- ---------
- owned plant & equipment 44.3 54.1
-------------------------------------------------------- ---- ---------
- right-of-use land & buildings 12.4 19.8
-------------------------------------------------------- ---- ---------
- right-of-use plant & equipment 8.9 7.8
-------------------------------------------------------- ---- ---------
- intangible assets 8.0 10.4
-------------------------------------------------------- ---- ---------
77.6 99.4
-------------------------------------------------------- ---- ---------
The above additions relate to the normal course of business and
do not include any additions made by way of business
combinations.
10. Business combinations
The Group completed the acquisition of 100% of the voting rights
of Motion Metrics on 30 November 2021 for an enterprise value of
CAD$150m (GBP88m), which represents initial equity value
consideration of GBP68m paid in cash and adoption of GBP20m of
vendor liabilities primarily relating to tax, settlement of an
employee growth participation plan and disposal costs.
Motion Metrics is a leading Canada-based global mining
technology business and is the market leading developer of
innovative Artificial Intelligence (AI) and 3D rugged Machine
Vision Technology used in mines worldwide. Its technology helps
miners increase safety, efficiency and sustainability of their
operations. As part of the agreement, Motion Metrics' Vancouver
headquarters will become Weir's global centre for excellence in AI
and Machine Vision Technology.
Motion Metrics applications are highly complementary to Weir's
product portfolio. It will join the ESCO Division and reporting
segment reflecting the early adoption of its technology in ground
engaging tools (G.E.T.) where ESCO is an established global leader.
Motion Metrics AI and Machine Vision capabilities are expected to
be leveraged across the whole mining value chain served by the Weir
Group.
The provisional fair values, which are subject to finalisation
within 12 months of acquisition, are disclosed in the table below.
There are certain intangible assets included in the GBP52.1m of
goodwill recognised that cannot be individually separated and
reliably measured due to their nature. These items include the
future growth of the business, synergies and an assembled
workforce.
2021
Motion Metrics provisional fair values GBPm
============================================================ ======
Property, plant & equipment - owned assets 0.6
------------------------------------------------------------ ------
Property, plant & equipment - right-of-use assets 0.2
------------------------------------------------------------ ------
Intangible assets
------------------------------------------------------------
Brand names 3.3
------------------------------------------------------------ ------
Intellectual property and trademarks 34.0
------------------------------------------------------------ ------
Purchased software 0.1
------
Inventories 2.2
------------------------------------------------------------ ------
Trade & other receivables 2.3
------------------------------------------------------------ ------
Income tax receivable 0.7
------------------------------------------------------------
Interest-bearing loans & borrowings (0.2)
------------------------------------------------------------ ------
Trade & other payables (1.6)
------------------------------------------------------------ ------
Income tax payable (0.5)
------------------------------------------------------------ ------
Provisions (20.0)
------------------------------------------------------------ ------
Deferred tax liabilities (5.3)
Provisional fair value of net assets 15.8
Goodwill arising on acquisition 52.1
------------------------------------------------------------ ------
Total consideration 67.9
------------------------------------------------------------ ------
Cash consideration 67.9
------------------------------------------------------------ ------
Contingent consideration -
------------------------------------------------------------ ------
Total consideration 67.9
------------------------------------------------------------ ------
The total net cash outflow on current year acquisitions was
as follows:
------------------------------------------------------------ ------
cash paid (67.9)
------------------------------------------------------------ ------
cash & cash equivalents acquired -
------------------------------------------------------------ ------
Total cash outflow (note 15) (67.9)
------------------------------------------------------------ ------
The gross amount and fair value of Motion Metrics trade
receivables amounts to GBP2.3m. It is expected that virtually all
the contractual amounts will be collected.
Motion Metrics contributed GBP0.6m to revenue and an operating
loss of GBP0.3m (before adjusting items) in the period from
acquisition to 31 December 2021. If the acquisition had occurred at
the start of 2021, the revenue and statutory profit for the year
from acquired operations would not have had a material impact on
the results disclosed in the Consolidated Income Statement and
therefore are not separately disclosed. Group exceptional
acquisition and integration costs totalled GBP2.8m in the year
(note 4).
Contingent consideration
As part of the purchase agreement a maximum of an additional
CAD$100m is payable by the Group contingent on Motion Metrics
exceeding specific revenue and EBITDA targets over the next three
years. Any balance which becomes payable would be split, with 80%
reflecting further consideration and 20% for a new employee bonus
plan. The entry point for any contingent payment would require
significant growth both in terms of revenue and EBITDA margin by
2024. While the Group expects Motion Metrics to grow as it
leverages the benefits of being partnered with ESCO, and the
opportunities within Minerals, the entry targets are considered
challenging. At present the probability of Motion Metrics exceeding
these targets in order to trigger a contingent payment is
considered uncertain, in part due to the relative infancy of the
business. As a result no contingent consideration has been recorded
at the acquisition date. This will be reassessed in future periods
as the business develops.
11. Provisions
Warranties
& contract Exceptional
claims Asbestos-related Employee-related items Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 31 December 2020 6.5 67.7 12.5 8.5 10.1 105.3
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Additions 8.2 1.4 12.4 7.7 3.3 33.0
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Acquisitions - - - 20.0 - 20.0
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Utilised (3.8) (8.0) (11.3) (23.4) (1.9) (48.4)
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Unutilised (1.3) - (0.4) (1.2) (0.6) (3.5)
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Exchange adjustment (0.2) 0.5 (0.8) (0.5) 0.1 (0.9)
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
At 31 December 2021 9.4 61.6 12.4 11.1 11.0 105.5
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Current 2021 9.2 7.6 6.9 10.8 2.0 36.5
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Non-current 2021 0.2 54.0 5.5 0.3 9.0 69.0
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
At 31 December 2021 9.4 61.6 12.4 11.1 11.0 105.5
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Current 2020 6.1 7.7 6.8 7.7 0.9 29.2
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
Non-current 2020 0.4 60.0 5.7 0.8 9.2 76.1
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
At 31 December 2020 6.5 67.7 12.5 8.5 10.1 105.3
-------------------- ----------- ---------------- ---------------- ----------- ----- ------
The impact of discounting is not material for any category of
provision.
Warranties & contract claims
Provision has been made in respect of actual warranty claims on
goods sold and services provided, and allowance has been made for
potential warranty claims based on past experience for goods and
services sold with a warranty guarantee. At 31 December 2021, the
warranties portion of the provision totalled GBP7.2m (2020:
GBP5.7m) for continuing operations. The majority of these costs
relate to claims which fall due within one year of the balance
sheet date and it is expected that all costs related to such claims
will have been incurred within five years of the balance sheet
date.
Provision has been made in respect of sales contracts entered
into for the sale of goods in the normal course of business where
the unavoidable costs of meeting the obligations under the
contracts exceed the economic benefits expected to be received from
the contracts and before allowing for future expected aftermarket
revenue streams. Provision is made immediately when it becomes
apparent that expected costs will exceed the expected benefits of
the contract. At 31 December 2021, the contract claims element,
which includes onerous provision, was GBP2.2m (2020: GBP0.8m), all
of which is expected to be incurred within one year of the balance
sheet date.
Asbestos-related claims
2021 2020
GBPm GBPm
======================================================== ==== ====
US asbestos-related provision - pre-1981 date of first
exposure 55.5 61.4
-------------------------------------------------------- ---- ----
US asbestos-related provision - post-1981 date of first
exposure 3.0 3.1
-------------------------------------------------------- ---- ----
US asbestos-related provision - total 58.5 64.5
-------------------------------------------------------- ---- ----
UK asbestos-related provision 3.1 3.2
-------------------------------------------------------- ---- ----
Total asbestos-related provision 61.6 67.7
-------------------------------------------------------- ---- ----
US asbestos-related provision
Certain of the Group's US-based subsidiaries are co-defendants
in lawsuits pending in the US in which plaintiffs are claiming
damages arising from alleged exposure to products previously
manufactured which contained asbestos. The dates of alleged
exposure currently range from the 1950s to the 1980s.
The Group has historically held comprehensive insurance cover
for cases of this nature and continues to do so for claims with a
date of first exposure (dofe) pre-1981. The expiration of one of
the Group's insurance policies in 2019 resulted in no further
insurance cover for claims with a post-1981 dofe. All claims are
directly administered by National Coordinating Counsel on behalf of
the Group's insurers who also meet associated defence costs. The
insurers, their legal advisers and in-house counsel agree and
execute the defence strategy between them.
A summary of the Group's US asbestos-related claim activity is
shown in the table below.
2021 2020
Number of open claims Number Number
====================== ====== ======
Opening 1,586 1,551
---------------------- ------ ------
New 656 528
---------------------- ------ ------
Dismissed (315) (309)
---------------------- ------ ------
Settled (162) (184)
---------------------- ------ ------
Closing 1,765 1,586
---------------------- ------ ------
A review of both the Group's expected liability for US
asbestos-related diseases and the adequacy of the Group's insurance
policies to meet future settlement and defence costs was completed
in conjunction with external advisers in 2020 as part of our
planned triennial actuarial update. This review was based on an
industry standard epidemiological decay model, and Weir's claims
settlement history. The 2020 review reflected higher levels of
claims, particularly relating to the 1970s and 1980s, and a longer
dofe period, but lower settlement values than the previous review
conducted in 2017. The actuarial model incorporates claims, with a
dofe pre- and post-1981, primarily relating to lung cancer and
mesothelioma and includes estimates relating to:
-- the number of future claims received;
-- settlement rates by disease type;
-- mean settlement values by disease type
-- ratio of defence costs to indemnity value; and
-- the profile of associated cash flows through to 2049.
The actuarial model in 2020 provided a range of potential
liability based on levels of probability from 10% to 90%, which, on
an undiscounted basis, equates to GBP53m-GBP133m. The mean
actuarial estimate of GBP91m represents the expected undiscounted
value over the range of reasonably possible outcomes. The provision
in the financial statements is based on the mean actuarial estimate
which is then adjusted each year to reflect expected settlements in
the model, discounting and restricting our estimate to ten years of
future claims.
2021 2020
================================= ========== ==========
Period of future claims provided 10 years 10 years
--------------------------------- ---------- ----------
Discount rate 2.6 % 2.1 %
--------------------------------- ---------- ----------
The period over which the provision can be reliably estimated is
judged to be ten years due to the inherent uncertainty resulting
from the changing nature of the US litigation environment detailed
below, and cognisant of the broad range of probability levels
included within the actuarial model. While claims may extend past
ten years and may result in a further outflow of economic benefits,
the Directors do not believe any obligation which may arise beyond
ten years can be reliably measured at this time. The effect of
extending the claims period by a further ten years is included in
the sensitivities below. The discount rate is set based on the
yield available at the balance sheet date denominated in the same
currency, and with a term broadly consistent to that of the
liabilities being provided for, with sensitivities to the discount
rate also included below.
In 2020 confirmation was also received from external advisers of
the insurance asset available and the estimated defence costs which
would be met by the insurer. An update to the insurance asset is
obtained annually and based on the profile of the claims in the
actuarial model, external advisors expect the insurance cover and
associated limits currently in place to be sufficient to meet the
settlement and associated costs until c.2028. Therefore, no cash
flows to or from the Group, related to claims with an exposure date
pre-1981, are expected until that time. Claims with an exposure
date post-1981 are estimated to incur cash outflows of less than
GBP0.4m per annum and are not insured currently or in the
future.
The table below represents the Directors' best estimate of the
future liability and corresponding insurance asset.
2021 2020
US asbestos-related provision GBPm GBPm
----------------------------------------- ----- -----
Gross provision 67.4 72.7
----------------------------------------- ----- -----
Effect of discounting (8.9) (8.2)
----------------------------------------- ----- -----
Discounted US asbestos-related provision 58.5 64.5
----------------------------------------- ----- -----
Insurance asset 42.2 52.4
----------------------------------------- ----- -----
Net US asbestos-related liability 16.3 12.1
----------------------------------------- ----- -----
The net provision and insurance asset are presented in the
financial statements as follows.
2021 2020
GBPm GBPm
------------------------------ ---- ----
Provisions - current 7.1 7.2
------------------------------ ---- ----
Provisions - non-current 51.4 57.3
------------------------------ ---- ----
Trade & other receivables 6.9 7.2
------------------------------ ---- ----
Non-current other receivables 35.3 45.2
------------------------------ ---- ----
There remains inherent uncertainty associated with estimating
future costs in respect of asbestos-related diseases. Actuarial
estimates of future indemnity and defence costs associated with
asbestos-related diseases are subject to significantly greater
uncertainty than actuarial estimates for other types of exposures.
This uncertainty results from factors that are unique to the
asbestos claims litigation and settlement process including but not
limited to:
i) the possibility of future state or federal legislation
applying to claims for asbestos-related diseases;
ii) the ability of the plaintiff's bar to develop and sustain
new legal theory and/or develop new populations of claimants;
iii) changes in focus of the plaintiff's bar;
iv) changes in the Group's defence strategy; and
v) changes in the financial condition of other co-defendants in
suits naming the Group and affiliated businesses.
As a result, there can be no guarantee that the assumptions used
to estimate the provision will result in an accurate prediction of
the actual costs that may be incurred.
In 2021 the number of claims received has exceeded those
included in the actuarial model, while settlement costs related to
claims received, predominantly in prior years, are below those
provided. These variations are to be expected from period to
period. Sensitivity analysis reflecting reasonably probable
scenarios has been conducted. The results of this analysis are
shown below.
2021
Estimated impact on the discounted US asbestos-related provision
of GBPm
----------------------------------------------------------------- ----
Increasing the number of projected future settled claims by
10% 5.5
----------------------------------------------------------------- ----
Increasing the estimated settlement value by 10% 5.5
----------------------------------------------------------------- ----
Increasing the basis of provision by ten years 5.2
----------------------------------------------------------------- ----
Decreasing the discount rate by 50bps 1.6
----------------------------------------------------------------- ----
Application of these sensitivities, on an individual basis,
would not lead to a material change in the provision.
The Group's US subsidiaries have been effective in managing the
asbestos litigation, in part, because the Group has access to
historical project documents and other business records going back
more than 50 years, allowing it to defend itself by determining if
legacy products were present at the location of the alleged
asbestos exposure and, if so, the timing and extent of their
presence. In addition, the Group has consistently and vigorously
defended claims that are without merit.
UK asbestos-related provision
In the UK, there are outstanding asbestos-related claims which
are not the subject of insurance cover. The extent of the UK
asbestos exposure involves a series of legacy employer's liability
claims which all relate to former UK operations and employment
periods in the 1950s to 1970s. In 1989 the Group's employer's
liability insurer (Chester Street Employers Association Ltd) was
placed into run-off which effectively generated an uninsured
liability exposure for all future long-tail disease claims with an
exposure period pre-dating 1 January 1972. All claims with a
disease exposure post 1 January 1972 are fully compensated via the
Government-established Financial Services Compensation Scheme. Any
settlement to a former employee whose service period straddles 1972
is calculated on a pro rata basis. The Group provides for these
claims based on management's best estimate of the likely costs
given past experience of the volume and cost of similar claims
brought against the Group.
The UK provision was reviewed and adjusted accordingly for
claims experience in the year, resulting in a provision of GBP3.1m
(2020: GBP3.2m).
Employee-related
Employee-related provisions arise from legal obligations in a
number of territories in which the Group operates, the majority of
which relate to compensation associated with periods of service. A
large proportion of the provision is for long service leave. The
outflow is generally dependent upon the timing of employees' period
of leave with the calculation of the majority of the provision
being based on criteria determined by the various
jurisdictions.
Exceptional items
The exceptional items provision relates to exceptional charges
included within note 4 where the cost is based on a reliable
estimate of the obligation.
The opening balance of GBP8.5m included GBP6.6m which related to
severance costs in Minerals and disposal costs related to Oil &
Gas. The remaining GBP1.9m related to onerous contract provisions
in Minerals.
Additions in the year total GBP7.7m, including cybersecurity
costs of GBP4.7m and acquisition and integration costs in relation
to Motion Metrics of GBP2.8m. The acquisition related balance of
GBP20.0m reflects vendor liabilities for Motion Metrics primarily
relating to tax, settlement of an employee growth participation
plan and disposal costs, of which GBP11.1m was cash settled in the
year.
The closing balance of GBP11.1m includes GBP8.9m for opening
balance sheet liabilities in Motion Metrics (GBP8.8m restructuring
taxes and GBP0.1m acquisition costs) which will be cash settled in
2022, cybersecurity costs of GBP0.4m and final Oil & Gas
disposal costs of GBP0.4m. The remaining balance of GBP1.4m relates
to prior year balances in Minerals for severance costs and onerous
contract provisions.
Other
Other provisions include environmental obligations, penalties,
duties due, legal claims and other exposures across the Group.
These balances typically include estimates based on multiple
sources of information and reports from third-party advisers. The
timing of outflows is difficult to predict as many of these will
ultimately rely on legal resolutions and the expected conclusion is
based on information currently available. Where certain outcomes
are unknown, a range of possible scenarios is calculated, with the
most likely being reflected in the provision.
12. Interest-bearing loans & borrowings
In June 2020, the Group completed the refinancing of its US$950m
Revolving Credit Facility (RCF) which was due to expire in
September 2021. This was replaced with a US$950m RCF with a
syndicate of 12 global banks and will mature in June 2023 with the
option to extend for up to a further two years. In 2020 the Group
also replaced its GBP300m term loan facility which was previously
maturing in December 2020, with a GBP200m facility due to mature in
March 2022, which was subsequently settled in 2021. The RCF
includes a link to the Group's sustainability goals and the
covenant terms remained unchanged.
In May 2021, the Group completed the issue of five-year US$800m
Sustainability-Linked Notes due to mature in May 2026 which
includes a target to reduce Scope 1 & Scope 2 CO(2) emissions
by 30% by December 2024, consistent with the Group's medium-term
KPIs announced in the 2020 Annual Report. The Notes will initially
bear interest at a rate of 2.20% per annum to be paid semi-annually
in May and November. The interest on the Notes will be linked to
achievement of Weir's 2024 Sustainability Performance Target
('SPT'). The interest rate applicable to the Notes will increase by
0.25% to 2.45% per annum from and including the last interest
payment date preceding 31 December 2024 if the Group does not
attain its SPT. As a result of the additional funding, the Group
took the decision to settle its GBP200m term loan facility, which
was due to mature in March 2022, with a charge to the Consolidated
Income Statement of the remaining unamortised costs of GBP0.8m.
At 31 December 2021, GBPnil (2020: GBP468.8m) was drawn under
the US$950m multi-currency revolving credit facility which is
disclosed net of unamortised issue costs of GBP3.0m (2020:
GBP5.1m).
At 31 December 2021, GBPnil (2020: GBP198.9m) was drawn under
the matured GBP200m term loan facility which is disclosed net of
unamortised issue costs of GBPnil (2020: GBP1.1m).
At 31 December 2021, a total of GBP583.6m (2020: GBP578.4m) was
outstanding under private placement which is disclosed net of
unamortised issue costs of GBP0.1m (2020: GBP0.3m).
At 31 December 2021, a total of GBP586.5m (2020: GBPnil) was
outstanding under Sustainability-Linked Notes which is disclosed
net of unamortised issue costs of GBP4.5m (2020: GBPnil).
13. Pensions & other post-employment benefit plans
2021 2020
GBPm GBPm
-------------- ---- -----
Net liability 56.7 160.8
-------------- ---- -----
The defined benefit pension deficit across the Group's legacy UK
and North American schemes decreased to GBP56.7m (2020: GBP160.8m)
primarily due to changes in market conditions, mainly the rise in
discount rates over the period, partially offset by an increase in
inflation expectations. In addition the results of the latest UK
Main Scheme triennial valuation as at 31 December 2020 led to
experience gains on scheme liabilities.
14. Derivative financial instruments
The Group enters into derivative financial instruments in the
normal course of business in order to hedge its exposure to foreign
exchange risk. Derivatives are only used for economic hedging
purposes and no speculative positions are taken. Derivatives are
recognised as held for trading and at fair value through profit and
loss unless they are designated in IFRS 9 compliant hedge
relationships.
The table below summarises the types of derivative financial
instrument included within each balance sheet category.
2021 2020
GBPm GBPm
----------------------------------------------------------- ----- ------
Included in non-current assets
Other forward foreign currency contracts - 0.1
----------------------------------------------------------- ----- ------
- 0.1
----------------------------------------------------------- ----- ------
Included in current assets
----------------------------------------------------------- ----- ------
Forward foreign currency contracts designated as cash
flow hedges - 0.2
----------------------------------------------------------- ----- ------
Forward foreign currency contracts designated as net
investment hedges - 4.3
----------------------------------------------------------- ----- ------
Other forward foreign currency contracts 7.1 11.5
----------------------------------------------------------- ----- ------
7.1 16.0
----------------------------------------------------------- ----- ------
Included in current liabilities
----------------------------------------------------------- ----- ------
Forward foreign currency contracts designated as cash
flow hedges (0.4) -
----------------------------------------------------------- ----- ------
Forward foreign currency contracts designated as net
investment hedges - (0.1)
----------------------------------------------------------- ----- ------
Cross-currency swaps designated as net investment
hedges - (0.9)
----------------------------------------------------------- ----- ------
Other forward foreign currency contracts (3.4) (17.9)
----------------------------------------------------------- ----- ------
(3.8) (18.9)
----------------------------------------------------------- ----- ------
Included in non-current liabilities
----------------------------------------------------------- ----- ------
Other forward foreign currency contracts (0.1) -
----------------------------------------------------------- ----- ------
(0.1) -
----------------------------------------------------------- ----- ------
Net derivative financial assets (liabilities) - continuing
operations 3.2 (2.8)
----------------------------------------------------------- ----- ------
Net derivative financial liabilities held for sale - (0.1)
----------------------------------------------------------- ----- ------
Net derivative financial assets (liabilities) - total
Group 3.2 (2.9)
----------------------------------------------------------- ----- ------
15. Additional cash flow information
2021 2020
Notes GBPm GBPm
------------------------------------------------------ ----- ------ -------
Total operations
------------------------------------------------------ ----- ------ -------
Net cash generated from operations
------------------------------------------------------ ----- ------ -------
Operating profit - continuing operations 256.6 228.0
------------------------------------------------------ ----- ------ -------
Operating profit (loss) - discontinued operations 6 0.6 (255.0)
------------------------------------------------------ ----- ------ -------
Operating profit (loss) - total operations 257.2 (27.0)
------------------------------------------------------ ----- ------ -------
Exceptional and other adjusting items 4 3.8 257.1
------------------------------------------------------ ------ -------
Amortisation of intangible assets 40.2 52.5
------------------------------------------------------ ----- ------ -------
Share of results of joint ventures (3.3) (5.5)
------------------------------------------------------ ----- ------ -------
Depreciation of property, plant & equipment 43.0 52.8
------------------------------------------------------ ----- ------ -------
Depreciation of right-of-use assets 27.6 41.9
------------------------------------------------------ ----- ------ -------
Impairment of property, plant & equipment - 0.2
------------------------------------------------------ ----- ------ -------
Grants received (0.3) (0.4)
------------------------------------------------------ ----- ------ -------
Gains on disposal of property, plant & equipment (4.3) (0.3)
------------------------------------------------------ ----- ------ -------
Funding of pension & post-retirement costs (2.7) (2.6)
------------------------------------------------------ ----- ------ -------
Employee share schemes 10.9 9.3
------------------------------------------------------ ----- ------ -------
Transactional foreign exchange 4.8 14.5
------------------------------------------------------ ----- ------ -------
Increase (decrease) in provisions 3.9 (7.6)
------------------------------------------------------ ----- ------ -------
Cash generated from operations before working capital
cash flows 380.8 384.9
------------------------------------------------------ ----- ------ -------
(Increase) decrease in inventories (84.9) 44.2
------------------------------------------------------ ----- ------ -------
(Increase) decrease in trade & other receivables
& construction contracts (61.7) 130.0
------------------------------------------------------ ----- ------ -------
Increase (decrease) in trade & other payables &
construction contracts 31.8 (194.1)
------------------------------------------------------ ----- ------ -------
Cash generated from operations before exceptional
cash items 266.0 365.0
------------------------------------------------------ ----- ------ -------
Additional pension contributions paid (7.8) (11.3)
------------------------------------------------------ ----- ------ -------
Exceptional and other adjusting cash items (8.6) (24.1)
------------------------------------------------------ ----- ------ -------
Exceptional cash items - acquired vendor liabilities (11.1) -
------------------------------------------------------ ----- ------ -------
Income tax paid (82.4) (63.4)
------------------------------------------------------ ----- ------ -------
Net cash generated from operating activities 156.1 266.2
------------------------------------------------------ ----- ------ -------
Cash flows from discontinued operations included above are
disclosed separately in note 6.
Exceptional and other adjusting items are detailed in note
4.
The following tables summarise the cash flows arising on
acquisitions (note 10) and disposals (note 6).
2021 2020
GBPm GBPm
---------------------------------------------------------- ----- -----
Acquisitions of subsidiaries
Acquisition of subsidiaries - cash paid 67.9 -
---------------------------------------------------------- ----- -----
Cash & cash equivalents acquired - -
---------------------------------------------------------- ----- -----
Acquisition of subsidiaries - current period acquisitions 67.9 -
---------------------------------------------------------- ----- -----
Total cash outflow relating to acquisitions 67.9 -
---------------------------------------------------------- ----- -----
Net cash inflow (outflow) arising on disposals
---------------------------------------------------------- ----- -----
Consideration received net of costs paid & cash disposed
of - Oil & Gas Division (excluding AMCO) 258.5 (2.1)
---------------------------------------------------------- ----- -----
Consideration received net of costs paid & cash disposed
of - AMCO Joint Venture 24.0 -
---------------------------------------------------------- ----- -----
Prior period disposals - settlement of final costs
and final completion adjustment - (4.7)
---------------------------------------------------------- ----- -----
Total cash inflow (outflow) relating to disposals 282.5 (6.8)
---------------------------------------------------------- ----- -----
2021 2020
GBPm GBPm
----------------------------------------------- ------ -----
Cash & cash equivalents comprise the following
----------------------------------------------- ------ -----
Cash & short-term deposits 564.4 351.7
----------------------------------------------- ------ -----
Bank overdrafts & short-term borrowings (64.4) (0.6)
----------------------------------------------- ------ -----
Cash & short-term deposits held for sale - 23.0
500.0 374.1
----------------------------------------------- ------ -----
2021 2020
GBPm GBPm
------------------------------------------------ ------- ---------
Net debt comprises the following
------------------------------------------------ ------- ---------
Cash & short-term deposits 564.4 351.7
------------------------------------------------ ------- ---------
Current interest-bearing loans & borrowings (523.9) (26.5)
------------------------------------------------ ------- ---------
Non-current interest-bearing loans & borrowings (812.3) (1,332.6)
------------------------------------------------ ------- ---------
Assets and liabilities held for sale - (44.0)
------------------------------------------------ ------- ---------
(771.8) (1,051.4)
------------------------------------------------ ------- ---------
Reconciliation of financing cash flows to movement in net
debt
Opening Closing Transferred
balance balance to assets/
at 31 at 31 liabilities Total
December Cash Additions/ Non-cash December held continuing
2020 movements acquisitions Disposals FX movements 2021 for sale operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Cash & cash
equivalents 374.1 150.1 - (16.1) (8.1) - 500.0 - 500.0
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Third-party
loans (1,252.6) 104.4 (0.2) - (26.3) - (1,174.7) - (1,174.7)
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Leases (179.4) 27.8 (20.6) 65.2 2.1 0.2 (104.7) - (104.7)
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Unamortised
issue
costs 6.5 5.1 - - - (4.0) 7.6 - 7.6
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Amounts
included
in gross
debt (1,425.5) 137.3 (20.8) 65.2 (24.2) (3.8) (1,271.8) - (1,271.8)
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Amounts
included
in net debt (1,051.4) 287.4 (20.8) 49.1 (32.3) (3.8) (771.8) - (771.8)
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Financing
derivatives (2.5) (10.6) - - - 14.5 1.4 - 1.4
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
Total
financing
liabilities* (1,428.0) 126.7 (20.8) 65.2 (24.2) 10.7 (1,270.4) - (1,270.4)
------------- --------- ---------- ------------ --------- ------ ---------- --------- ----------- -----------
(* Total financing liabilities comprise gross debt plus other
liabilities relating to financing activities.)
Opening Closing Transferred
balance balance to assets/
at 31 at 31 liabilities Total
December Cash Non-cash December held continuing
2019 movements Additions Disposals FX movements 2020 for sale operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Cash & cash
equivalents 272.1 117.2 - - (15.2) - 374.1 23.0 351.1
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Third-party
loans (1,244.5) (19.2) - - 11.1 - (1,252.6) - (1,252.6)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Leases (185.0) 43.4 (39.6) - 1.2 0.6 (179.4) (67.0) (112.4)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Unamortised
issue
costs 0.9 7.8 - - - (2.2) 6.5 - 6.5
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Amounts
included
in gross debt (1,428.6) 32.0 (39.6) - 12.3 (1.6) (1,425.5) (67.0) (1,358.5)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Amounts
included
in net debt (1,156.5) 149.2 (39.6) - (2.9) (1.6) (1,051.4) (44.0) (1,007.4)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Financing
derivatives (3.8) (5.1) - - - 6.4 (2.5) - (2.5)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
Total financing
liabilities* (1,432.4) 26.9 (39.6) - 12.3 4.8 (1,428.0) (67.0) (1,361.0)
--------------- --------- ---------- --------- --------- ------ ---------- --------- ------------ -----------
(* Total financing liabilities comprise gross debt plus other
liabilities relating to financing activities.)
16. Related party disclosure
The following table provides the total amount of significant
transactions which have been entered into by the Group with related
parties for the relevant financial year and outstanding balances at
the year end.
Sales to Sales to Purchases Purchases Amounts Amounts
related related from related from related owed to owed by
parties parties parties parties related related
- goods - services - goods - services parties parties
Related party GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----- -------- ----------- ------------- ------------- -------- --------
Joint ventures 2021 0.7 0.1 16.7 - - 1.3
-------------------- ----- -------- ----------- ------------- ------------- -------- --------
2020 5.9 0.1 19.3 0.3 - 0.2
-------------------------- -------- ----------- ------------- ------------- -------- --------
Group pension plans 2021 - - - - 5.9 -
-------------------- ----- -------- ----------- ------------- ------------- -------- --------
2020 - - - - 5.9 -
-------------------------- -------- ----------- ------------- ------------- -------- --------
17. Legal claims
The Company and certain subsidiaries are, from time to time,
parties to legal proceedings and claims which arise in the normal
course of business. Provisions have been made where the Directors
have assessed that a cash outflow is probable. All other claims are
believed to be remote or are not yet ripe.
18. Exchange rates
The principal exchange rates applied in the preparation of these
financial statements were as follows.
Average rate (per GBP) 2021 2020
----------------------- -------- --------
US Dollar 1.38 1.28
----------------------- -------- --------
Australian Dollar 1.83 1.86
----------------------- -------- --------
Euro 1.16 1.13
----------------------- -------- --------
Canadian Dollar 1.73 1.72
----------------------- -------- --------
Chilean Peso 1,043.54 1,015.14
----------------------- -------- --------
South African Rand 20.34 21.06
----------------------- -------- --------
Brazilian Real 7.42 6.61
----------------------- -------- --------
Russian Rouble 101.45 92.76
----------------------- -------- --------
Chinese Yuan 8.88 8.86
----------------------- -------- --------
Indian Rupee 101.70 95.12
----------------------- -------- --------
Closing rate (per GBP)
----------------------- -------- ------
US Dollar 1.35 1.37
----------------------- -------- ------
Australian Dollar 1.86 1.77
----------------------- -------- ------
Euro 1.19 1.12
----------------------- -------- ------
Canadian Dollar 1.71 1.7
----------------------- -------- ------
Chilean Peso 1,153.18 970.26
----------------------- -------- ------
South African Rand 21.57 20.04
----------------------- -------- ------
Brazilian Real 7.54 7.10
----------------------- -------- ------
Russian Rouble 101.62 101.33
----------------------- -------- ------
Chinese Yuan 8.60 8.92
----------------------- -------- ------
Indian Rupee 100.66 99.76
----------------------- -------- ------
The Group's operating profit before adjusting items from
continuing operations was denominated in the following
currencies.
Restated
(note 1)
2021 2020
GBPm GBPm
-------------------------- ------ ---------
US Dollar 131.1 161.5
-------------------------- ------ ---------
Australian Dollar 51.2 20.3
-------------------------- ------ ---------
Canadian Dollar 44. 52.8
-------------------------- ------ ---------
Chilean Peso 40.3 42.3
-------------------------- ------ ---------
Euro 27.4 40.4
-------------------------- ------ ---------
South African Rand 9.1 3.2
-------------------------- ------ ---------
Brazilian Real 6.7 6.3
-------------------------- ------ ---------
Chinese Yuan 6.0 7.5
-------------------------- ------ ---------
Indian Rupee 4.5 7.3
-------------------------- ------ ---------
Russian Rouble - 4.8
-------------------------- ------ ---------
UK Sterling (27.4) (55.4)
-------------------------- ------ ---------
Other 2.5 7.6
-------------------------- ------ ---------
Adjusted operating profit 296.2 298.6
-------------------------- ------ ---------
19. Events after the balance sheet date
Following the Russian invasion of Ukraine on 24 February 2022,
there exists uncertainty about the Group's ability to recover
assets in Russia and Ukraine, and to continue to trade with
customers in those countries. Net assets across the two countries
are c.2% of the total Group and revenues and operating profits are
less than 5% of the total Group. Given the small scale of these
operations relative to the overall Group we do not consider this
event to have any bearing on the Group's ability to continue as a
going concern or the Group's longer term viability.
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END
FR UUSRRUNUORRR
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