TIDMWEIR
RNS Number : 0467U
Weir Group PLC
28 July 2022
The Weir Group PLC interim results for the six months ended 30
June 2022
Record aftermarket orders and strong execution
New transformation programme to expand margins above 17%
Very strong demand for Weir mining equipment and spares
-- Production trends and commodity prices supporting record AM orders (1) +23%
-- Sustainable solutions driving OE demand; +18% (1) excl. prior year large one-off orders
-- Increased order book and robust opportunity pipeline looking forward
Strong execution and pricing power; H1 adjusted operating profit
of GBP168m, +15%
-- Revenues (1) +18%; Q2 revenue (1) +20% sequentially; positive price and volume growth
-- Input cost inflation mitigated; gross margins maintained
-- H1 operating margins (3) 15.3%; sequential margin expansion in Q2
Working capital build to support order book
-- Net debt to EBITDA of 2.0x
-- Free operating cash flow to increase through H2; inventory unwind expected
Launched business process transformation programme
-- GBP30m annualised run-rate savings by 2025
-- FY23 operating margin (3) target of 17% underpinned; margins (3) beyond 17% thereafter
Outlook: continue to expect strong growth in FY22 constant
currency revenue and profit
-- Operating profit towards the upper end of the range of current analysts' expectations*
-- Operating margin (3) expansion in line with prior guidance
-- 80-90% free operating cash conversion
As Constant
reported currency(1)
H1 2022 H1 2021 +/- +/-
==================================== ================== ================= ============ ============
Continuing Operations(2)
==================================== ================== ================= ============ ============
Orders(1) GBP1,282m GBP1,120m n/a +14%
==================================== ================== ================= ============ ============
Revenue GBP1,096m GBP900m +22% +18%
==================================== ================== ================= ============ ============
Adjusted operating profit(3,4) GBP168m GBP141m +19% +15%
==================================== ================== ================= ============ ============
Adjusted operating margin(3,4) 15.3% 15.6% -30bps -40bps
==================================== ================== ================= ============ ============
Adjusted profit before GBP143m GBP118m +20% n/a
tax(3,4)
==================================== ================== ================= ============ ============
Statutory profit before GBP126m GBP100m +26% n/a
tax(4)
==================================== ================== ================= ============ ============
Adjusted earnings per share(3,4) 40.5p 34.2p +18% n/a
==================================== ================== ================= ============ ============
Total Group
==================================== ================== ================= ============ ============
Statutory profit after GBP92m GBP181m -49% n/a
tax(4)
==================================== ================== ================= ============ ============
Statutory earnings per
share(4) 35.6p 69.9p -49% n/a
Free operating cash conversion(3,4) 29% 71% n/a n/a
==================================== ================== ================= ============
Dividend per share 13.5p 11.5p +17% n/a
==================================== ================== ================= ============ ============
Net debt(9) GBP961m GBP773m(8) -GBP188m n/a
==================================== ================== ================= ============ ============
(*Company compiled consensus from 8 June 2022, Group Operating
Profit range of GBP320m to GBP386m. For all other footnotes see
page 5.)
Jon Stanton, Chief Executive Officer said:
"Momentum continued to build through the first half as we won
record orders, executed strongly and made meaningful progress in
delivering our technology and sustainability roadmaps which
underpin our growth and long term strategy. Ore production
activities, the driver of our highly resilient aftermarket-focused
business, were extremely favourable as commodity prices were well
above incentive levels and customers ordered Weir solutions to
unlock higher production and productivity. We enter the second half
of the year with a strong order book and are managing through a
complex operating environment successfully. As a result, we
continue to expect to deliver strong growth in constant currency
revenue and profit this year.
Today we are excited to be announcing a programme to transform
our business processes capitalising on our now mining focused
platform. We expect to realise GBP30m annualised run-rate savings
by 2025, which will expand operating margins beyond 17% and
maximise value for all stakeholders as we execute on the multi
decade growth opportunity which lies ahead."
A webcast of the management presentation will begin at 08:00
(BST) on 28 July 2022 at www.investors.weir . A recording of the
webcast will also be available at www.investors.weir .
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
I am extremely proud of our performance through the first half
of 2022, with Weir teams across the globe capitalising on highly
favourable conditions in mining markets, executing strongly and
delivering for our customers. Together, we have navigated a complex
operating environment, delivered strong growth in revenue and
operating profit, and created momentum that we are carrying into
the second half of the year. We have delivered all this while
continuing to put safety first, with TIR improving 27% year-on-year
to 0.33. I would like to take this opportunity to thank my
colleagues for their commitment and passion, and to contributing to
the unique culture which makes Weir so special.
Following the sale of our Oil & Gas Division, 2022 marks our
first full year as a business focused solely on mining technology.
This is an inflection point for Weir. As we continue on the journey
to make mining smarter, more efficient and sustainable, the
benefits of focus are providing further opportunities for us to
optimise and grow our business.
This is evident in our current performance and in our ambition
to deliver further growth and margin expansion beyond 2023. It is
also evident in our technology roadmap, and in our challenging
sustainability targets that will enable the mining industry to
deliver the natural resources needed to reach net zero.
Record AM orders and strong operational execution
Through the first half, conditions in mining markets were
extremely favourable. Commodity prices across our main exposures of
copper, gold and iron ore were well above incentive levels, and
miners focused on maximising ore production, driving demand for our
mining expendables. While large mining projects were slow to
convert, we grew our installed base as customers ordered OE to
expand and de-bottleneck existing mines. We saw particularly strong
demand for our large mill circuit pumps, which have significant
productivity and efficiency benefits relative to alternative
solutions, and which will support future AM growth. Within
infrastructure markets, activity and demand were stable at high
levels.
Across mining markets demand was strong in all regions. Of note,
we saw strength in North America, driven by an increase in activity
in the Canadian oil sands, while in the US, miners sought to
upgrade equipment as part of a wider theme to modernise and improve
the efficiency of onshore assets. We also saw strong demand for
aftermarket spares for our core Warman(R) centrifugal pump range,
with year-on-year growth of over 20%, as miners maximised equipment
utilisation.
The operating environment through the period was complex, driven
by rising inflation, bottlenecks in global logistics channels and
Covid-19 related disruptions. We continue to manage these
complexities effectively and have passed through all input cost
inflation, maintaining our gross margins. From a Covid-19
perspective, we have mitigated the impact of absenteeism and
lockdowns, particularly during Q1, and the mandatory temporary
closure of our ESCO foundry in Xuzhou, China, during April. The
facility has since reopened and lost production volumes have been
recovered through an increase in production during May and June.
Our vertically integrated regional supply chain has protected us
from some of the challenges in global logistics channels, and we
have worked hard to ensure our customers have had continued access
to mission critical equipment and spare parts to keep mines
running.
The Group delivered strong order (1) growth with a 14%
improvement year-on-year. Excluding Russia, this would have been
17%.
Demand for AM was particularly strong, with constant currency
orders growing 23% relative to the prior year. This reflected
strong mining activity, the impact of year-on-year price increases
and, within ESCO, a contribution from our recent acquisitions.
With respect to OE, excluding the GBP36m Ferrexpo HPGR and
GBP32m Indonesia electric pump orders from the prior year
comparator, constant currency orders were up 18%. OE orders (1)
were also up 6% relative to the second half of 2021. Given the low
volume of large project activity, our OE performance was
particularly pleasing and demonstrates the Group's ability to grow
its installed base in a lower capex environment.
Strong execution is reflected in constant currency revenue
growth of 18%, with momentum building from Q1 to Q2 to deliver
sequential revenue growth of 20%. Operating profit (3,4) was 15%
ahead of the prior year on a constant currency basis and operating
margins (3,4) of 15.3% reflected strong operational delivery and
mitigation of inflationary pressures.
'We are Weir' framework
At the start of 2021, following the sale of the Oil & Gas
Division, we set out medium-term targets for the Group as a focused
mining technology leader. These were set around the four key
priorities of the "We are Weir" strategic framework, being People,
Customers, Technology and Performance.
These targets have evolved to become more ambitious, including
an update earlier this year to our FY23 margin target and the
introduction of free operating cash conversion targets. Earlier
this month we also updated our sustainability targets, including
new commitments for absolute reductions in scope 1, 2 and 3
emissions which we have submitted to the Science Based Targets
initiative ("SBTi") for validation.
Our strategic progress in H1 2022
Medium-term 2020 Benchmark(2) 2021 Progress(2) 2022 H1 Progress
targets
People Improving
TIR(5) * TIR of 0.41 * TIR of 0.45 * TIR of 0.33
Increasing
Employee
Net Promotor * eNPS of +42 * eNPS of +48 * eNPS of +48
Score
(eNPS)
----------- ------------- -------------------------------------------------- --------------------------------------------------
Customers Growing ahead
of our * Ore production(6) c.-3%; Group AM reve * Ore production(6) c. +3%; Group AM rev * Ore production(6) c. +3%; Group AM
markets nues(1) -6% enues(1) +5% revenues(1) +19%
through the
cycle
----------- ------------- -------------------------------------------------- --------------------------------------------------
Technology Increase R&D
as * R&D(4) : 1.3% of revenues * R&D: 1.7% of revenues * R&D: 2.0% of revenues
a percentage
of
revenues
* Integrated Solutions orders +3% * Integrated Solutions orders +32% * Integrated Solutions orders -39%
Growth in
sustainable
solutions
----------- ------------- -------------------------------------------------- --------------------------------------------------
Performance Operating
margin * Operating margin(3,4) of 14.9% * Operating margin(3) of 15.3% * Operating margin(3) of 15.3%
progression
* ROCE(4) of 12.2% * ROCE of 12.0% * ROCE of 12.4%
Expansion in
ROCE * n/a * 63% * 29%
Free
operating
cash * 12% reduction in tCO(2) e/GBPm to 84.4 * 15% reduction in tCO(2) e/GBPm to 81.0 * Data not reported at the half year
conversion
30% reduction
in tCO(2) e
per
GBPm revenue
by
2024 vs 2019
baseline(7)
----------- ------------- -------------------------------------------------- --------------------------------------------------
Delivering our full potential - new business process
transformation programme
As a focused mining technology company our potential for growth
and margin expansion are becoming ever clearer, and we have reached
an inflection point where we can drive more value by becoming
leaner and more efficient.
Our new transformation programme will achieve that by driving
lean philosophy across our end-to-end value chains, maximising use
of global business services for support functions and leveraging
the benefits of our recent investments in foundational systems.
The programme will deliver a GBP30m annualised run-rate cost
benefit by 2025, and ensure we have a scalable and efficient
platform that will support future growth. It will underpin our FY23
17% operating margin (3) target, and as the balance of the benefits
are realised, support margin expansion beyond 17% thereafter. The
cash cost to deliver the programme is expected to be up to
GBP45m.
Further details of the programme will be shared at a spotlight
capital market event in September.
Compelling growth opportunity: Demand for metals and mining
technology transition
The long term opportunities for the Group, in partnership with
the mining industry, are compelling. The macro trends of
urbanisation and population growth, coupled with the increasing
acceleration of the transition to cleaner energy, will drive
significant demand for more metals.
At the same time, the mining industry is on the cusp of a period
of unprecedented change. As the world drives towards net zero,
supply deficits are emerging in forward facing commodities with
planned production being insufficient to meet demand. Miners are
also navigating the challenges of declining ore grades and face
pressure to reduce their environmental footprint, and are
responding by accelerating production from existing assets,
reassessing capital investment plans, and adopting new
technologies.
This combination of factors plays to Weir's strengths. Ore
production and capital projects are growth drivers of the Group,
while making mining smarter, more efficient and sustainable creates
opportunities for innovation. Our technology strategy is therefore
critical, and we continue to increase investment in R&D,
looking at ways to use less energy and manage water consumption
through the mining process.
Underpinning our technology strategy is an increasing focus on
how digital capability and data can make mining more efficient.
Motion Metrics is an important element of that strategy. When we
acquired the business its core technology of G.E.T. tooth loss
detection was active on around 80 mines, leveraging the ESCO sales
network which has access to thousands of mines around the globe,
the potential to grow the business is significant. The initial
customer response to the proposition has been very positive, and
increasingly we see opportunities to deploy Motion Metrics
technology across other applications in the mine. Earlier in the
year we sold our first Motion Metrics eco-system, where a
combination of Motion Metrics products were packaged to provide a
whole mine solution for G.E.T. loss detection, boulder detection
and fragmentation measurement. The solution will improve mine
productivity and reduce energy consumption, improving the
sustainability and efficiency of the operation.
Interim dividend
With high levels of confidence in our strategy and future
prospects, the Board has today announced an interim dividend of
13.5 pence per share, up 17%, and in line with our capital
allocation policy of distributing a third of EPS through the
cycle.
Outlook
Conditions in mining markets are positive, with miners focused
on maximising production and the sector benefiting from long term
structural growth drivers. In infrastructure markets, while we now
expect some softening of demand in Europe, in North America which
is our largest geographical market by some margin, we expect demand
to be stable at high levels. While the operating environment
continues to be complex, we are executing strongly and are
effectively managing inflationary and logistics challenges.
We enter the second half of the year with a strong order book
and operating momentum, and we continue to expect to deliver strong
constant currency revenue and profit growth, with operating profit
towards the upper end of the range of current analysts'
expectations*. As previously outlined, we expect second half
operating margins to sequentially improve, reflecting higher
volumes and our continued focus on operational efficiencies, and
full year margins to show good progress towards our FY23 target. We
expect working capital levels will decrease in the second half, and
our full year cash conversion targets are unchanged.
Looking beyond the current year, notwithstanding some recent
softening, commodity prices are well above incentive levels, and
providing this continues, we expect mining production activity to
be stable at high levels. We expect our highly resilient
aftermarket focused business to continue to grow through the cycle,
benefiting from production trends, ore grade declines and
aftermarket demand from a growing installed base. We are confident
in delivering against our medium term targets, and we expect the
transformation programme we have announced today will deliver
further margin expansion beyond 2023.
(*Company compiled consensus from 8 June 2022, Group Operating
Profit range of GBP320m to GBP386m.)
Management changes
Ricardo Garib will retire as President of Weir Minerals with
effect from 31 December 2022 after 43 years' service. He will be
succeeded by Andrew Neilson, who is currently President of Weir
ESCO. Details of Andrew's successor will be announced in due
course.
Spotlight capital market events
-- Event 1 - Growth and transformation - UK afternoon of 27 September 2022
-- Event 2 - Making mining smarter, more efficient and
sustainable - Quarter four of 2022: Date TBC
Segmental analysis
Continuing operations(2) Minerals ESCO Unallocated Total Total Total
GBPm expenses OE AM
------------------------- -------- ------ ----------------- ------ ----- -----
Orders (constant
currency)
H1 2022 933 349 n/a 1,282 285 997
H1 2021 846 274 n/a 1,120 307 813
Variance:
- Constant currency 10% 27% 14% -7% 23%
------------------------- -------- ------ ----------------- ------ ----- -----
Revenue
H1 2022 782 314 n/a 1,096 214 882
H1 2021 (as reported) 663 237 n/a 900 187 713
Variance:
- As reported 18% 32% 22% 14% 24%
- Constant currency 16% 24% 18% 13% 19%
------------------------- -------- ------ ----------------- ------ ----- -----
Adjusted operating
profit(3)
H1 2022 135 51 (18) 168
H1 2021 (as reported)(4) 120 39 (18) 141
Variance:
- As reported 13% 30% 19%
- Constant currency 11% 21% 15 %
------------------------- -------- ------ ----------------- ------ ----- -----
Adjusted operating
margin(3)
H1 2022 17.3% 16.1% 15.3%
H1 2021 (as reported)(4) 18.0% 16.4% 15.6%
Variance:
- As reported (bps) -70 -30 -30
- Constant currency
(bps) -70 -40 -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 Interim
Financial Statements contained in this press release.
1. Restated at 2022 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 GBP151m (2021 restated: GBP123m).
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 GBP36m
(2021 restated: GBP94m).
4. 2020 and H1 2021 have been restated to reflect a change in
accounting treatment for Software as a Service (SaaS) arrangements
following the publication of an Agenda Decision during 2021 by the
International Financial Reporting Interpretations Committee.
Details of the restatements are provided in note 1 of the Interim
Financial Statements 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, 2020 and 2021 is based on 2021 average
exchange rates. Market based greenhouse gas emissions.
8. Net Debt at 31 December 2021.
9. Refer to note 1 of the Interim Financial Statements contained
in this press release for further details of alternative
performance measures.
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.
2022 First half summary
-- Record AM orders (1) +21%
-- OE orders (1) +17%, excluding Ferrexpo and Indonesian orders in the prior year
-- Strong execution with revenue (1) +16%; Q2 revenue (1) +22% sequentially
2022 First half operating review
The Division benefited from strong levels of mining activity,
with strong order momentum through the period culminating in record
AM orders in Q2. A focus on execution delivered year-on-year
revenue growth, while strong operating momentum delivered
quarter-on-quarter sequential improvement in both revenue and
operating margins. The Division maintained its gross margin,
mitigating the impact of inflationary pressures.
People
Colleagues across the Division continued to prioritise safety,
and this is reflected in a significant year-on-year reduction in
total incident rate (TIR) from 0.33 to 0.15. This performance was
particularly pleasing in the context of strong year-on-year revenue
growth, as we focused on delivering for our customers.
People development is a key priority, and during the period a
number of our future leaders completed the "Leadership in Mining"
programme, which we offer in partnership with the University of
Utah, and the "Mill Circuit University" training programme.
Customers
We continued to extend our service centre network, opening a new
facility in Almaty in Kazakhstan, while also making commitments to
build new facilities to support mining operations at Port Hedland,
Australia, and in the Tashkent region of Uzbekistan.
The new facility in Tashkent follows a GBP14m OE order, booked
in Q2, for a package of Warman(R) Pumps, Cavex(R) Cyclones and
Isogate(R) Valves for a new copper concentrator in the region.
Technology
Technology development in the period included innovative
upgrades and range extensions to our small and medium size
Enduron(R) screens portfolio. The new range went into the prototype
phase of development in late Q2, and is expected to have
significant efficiency benefits relative to alternatives in the
market. Furthermore, development continued on new alloys and
elastomers for hard rock slurry pumping applications.
We also signed partnership agreements with AVEVA and XMPro which
will support the Division's digital strategy, simplifying data
access for customers and giving them access to real-time decision
support.
Performance
We continue to drive a number of initiatives across the Division
to improve operational efficiency. Our roll-out of SAP continues to
progress well, our business in China transitioned from its previous
ERP system in Q2, and our business in India is scheduled to make
the transition in Q3.
From a footprint perspective, we opened a new facility in
Bangalore, India, which will drive cost and operational
efficiencies across our operations in the region, and in Q3, we are
scheduled to open our new rubber mixing facility in Malaysia.
2022 First half financial review
Constant currency GBPm H1 2022 H1 2021(1) Growth(1) H2 2021(1)
----------------------------- --------------- --------------- --------- ----------------
Orders OE 261 288 -10% 251
Orders AM 672 558 21% 588
Orders Total 933 846 10% 839
----------------------------- --------------- --------------- --------- ----------------
Revenue OE 197 175 13% 244
Revenue AM 585 499 17% 536
Revenue Total 782 674 16% 780
----------------------------- --------------- --------------- --------- ----------------
Adjusted operating profit(2) 135 121 11% 135
Adjusted operating margin(2) 17.3% 18.0% -70 bps 17.3%
----------------------------- --------------- --------------- --------- ----------------
Operating cash flow(2) 106 135 -21% 92
----------------------------- --------------- --------------- --------- ----------------
Book-to-bill 1.19 1.26 1.08
----------------------------- --------------- --------------- --------- ----------------
1. 2021 restated at 2022 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 Interim Financial
Statements contained in this press release further details of
alternative performance measures.
Orders increased by 10% on a constant currency basis to GBP933m
(2021: GBP846m) with a book-to-bill of 1.19 reflecting strong order
growth which will underpin future revenue. Orders in the prior year
included the GBP36m Ferrexpo HPGR and the GBP32m Indonesian
de-watering pumps orders. Excluding these from the prior year
comparator, orders were up 20%. As large project activity was slow
to convert, OE demand was driven by equipment for small brownfield
expansions and de-bottlenecking projects as miners sought to
maximise production from existing assets. AM orders were up 21%
year-on-year as commodity prices were well above incentive levels
and we saw the benefits of increased production, lower and harder
ore grades and increased equipment utilisation. Growth also
reflects year-on-year price increases and some forward purchasing
in Q1. AM orders represented 72% of total orders (2021: 66%). In
total, mining end markets accounted for 74% of total orders (2021:
76%).
Revenue was 16% higher on a constant current basis at GBP782m
(2021: GBP674m) reflecting positive mining trends and strong
execution as orders converted to revenue. Revenue grew through the
period, with Q2 revenue 22% higher on a sequential basis. Product
mix was broadly in line with the prior year, with OE representing
25% of revenue, compared to 26% last year.
Adjusted operating profit(2) increased 11% on a constant
currency basis to GBP135m (2021: GBP121m) as the Division benefited
from increased volumes and strong execution. In line with our
medium-term targets, R&D costs increased year-on-year, while
costs also include an adverse transactional FX impact. In the prior
year the Division benefited from temporary costs savings as
discretionary spend, such as travel, was at lower levels during the
Covid-19 pandemic, and also a one-off gain from the sale of a
property in China.
Adjusted operating margin(2) on a constant currency basis was,
as expected, at 17.3% (2021: 18.0%). Quarter-on-quarter, operating
margins grew sequentially through the period.
Operating cash flow(2) decreased by 21% to GBP106m (2021:
GBP135m), primarily reflecting a working capital outflow of GBP67m.
Inventory build was the primary driver of the movement, reflecting
order book growth and some supply chain and freight disruption.
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.
2022 First half summary
-- High levels of mining activity
-- Orders(1) +27% at record levels
-- Strong execution; Operating profit(1,2) +21% YoY
2022 First half operating review
The Division capitalised on high levels of activity in both
mining and infrastructure markets, gaining market share and
delivering strong year-on-year order growth. A focus on operational
execution delivered strong year-on-year growth in revenue and
operating profit, while operating momentum built through the period
with quarter-on-quarter sequential improvement in both revenue and
operating margins. The Division maintained its gross margin and
managed the impacts from a complex operating environment.
People
The Division continued to focus on safety, and excluding the
impact from acquisitions, made year-on-year progress with TIR
reducing from 0.95 to 0.91. During Q2, as part of their induction
to the Group, 110 employees from Carriere Industrial Supply (CIS)
went through Weir's proprietary Zero Harm training.
Customers
In April the Division acquired its longstanding distributor in
Eastern Canada, CIS, delivering on its strategy to have direct
channels to market in all major mining regions in the world. The
acquisition also brings expertise in mining attachments,
supplementing the strong organic focus we have in this area, and
leading underground capabilities.
Across our core range of G.E.T. products, we delivered positive
net conversions as we continue to grow our market share.
Technology
The successful functional integration of Motion Metrics
completed in Q1, with focus now fully transitioned to leveraging
the ESCO global sales network to drive growth. The sale of Motion
Metrics first eco-system solution represented a significant
milestone for the business.
The Division also made progress on the development and
implementation of a new digital supply chain tool, which is
expected to drive end-to-end efficiencies through its inbound and
outbound supply chains.
Performance
Earlier this month construction of the Division's new foundry in
Xuzhou, China, commenced. Production from the facility is scheduled
to start in late 2024.
The Division continued to drive operational efficiencies across
its foundry network, including realising the full year benefits
from the digital visualisation tools integrated into the facilities
last year.
2022 First half financial review
Constant currency GBPm H1 2022 H1 2021(1) Growth(1) H2 2021(1)
----------------------------- --------- ------------ --------- ----------
Orders OE 24 19 26% 18
Orders AM 325 255 27% 285
Orders Total 349 274 27% 303
----------------------------- --------- ------------ --------- ----------
Revenue OE 17 14 16% 20
Revenue AM 297 239 24% 268
Revenue Total 314 253 24% 288
----------------------------- --------- ------------ --------- ----------
Adjusted operating profit(2) 51 42 21% 46
Adjusted operating margin(2) 16.1% 16.5% -40 bps 16.2%
----------------------------- --------- ------------ --------- ----------
Operating cash flow(2) 25 38 -34% 48
----------------------------- --------- ------------ --------- ----------
Book-to-bill 1.11 1.08 1.05
----------------------------- --------- ------------ --------- ----------
1. 2021 restated at 2022 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 Interim Financial
Statements contained in this press release for further details of
alternative performance measures.
Orders increased 27% on a constant currency basis to GBP349m
(2021: GBP274m). This includes GBP20m of orders from the recent
acquisitions of Motion Metrics and Carriere Industrial Supply.
Order growth was driven by strong demand for mining expendables,
and also reflected year-on-year price increases and a small volume
of forward purchasing in Q1. The Division delivered a book-to-bill
of 1.11 as demand, particularly within mining markets, continued to
grow. AM represented 93% of orders (2021: 93%) in line with ESCO's
position as a provider of highly engineered expendables used in
abrasive applications in mining and infrastructure markets.
Revenue increased 24% on a constant currency basis to GBP314m
(2021: GBP253m). Mining represented 56% of revenues (2021: 57%) and
infrastructure was 32% (2021: 30%).
Adjusted operating profit (2) increased by 21% on a constant
currency basis to GBP51m (2021: GBP42m), as the Division benefited
from increased volumes. In line with expectations, R&D costs
increased year-on-year, while, the temporary closure of the China
foundry resulted in modest under-recoveries. In the prior year, the
Division benefited from temporary costs savings as discretionary
spend, such as travel, was at lower levels during the Covid-19
pandemic, and also the favourable phasing of price increases
relative to raw material purchase contract renewals.
Adjusted operating margin(2) of 16.1% was, as expected, adverse
40 bps on a constant currency basis (2021: 16.5%).
Quarter-on-quarter, operating margins grew sequentially through the
period.
Operating cash flow(2) decreased by 34% to GBP25m (2021:
GBP38m), primarily driven by a working capital outflow of GBP33m.
Inventory build was the primary driver, reflecting order book
growth.
GROUP FINANCIAL REVIEW
Continuing operations order input at GBP1,282m increased 14% on
a constant currency basis with strong growth in both operating
Divisions reflecting the highly favourable conditions in mining
markets. Minerals orders were up 10% as we saw record aftermarket
demand, while OE solutions performed well against a strong prior
year. ESCO orders were up 27% due to strong demand in mining
expendables and benefiting from the acquisitions of Motion Metrics
in late 2021 and Carriere Industrial Supply (CIS) in April 2022.
78% of orders related to aftermarket compared to 73% in the prior
year.
Continuing operations revenue of GBP1,096m increased 18% on a
constant currency basis. In Minerals revenue was 16% higher on a
constant currency basis at GBP782m (2021: GBP674m). ESCO increased
24% on a constant currency basis to GBP314m (2021: GBP253m).
Aftermarket accounted for 80% of revenues from continuing
operations, in line with the prior year. Reported revenues
increased 22%, benefiting from a foreign exchange translation
tailwind of GBP27m. Overall book-to-bill at 1.17 reflects the
phasing of orders and a strong order book which will underpin
future growth.
Continuing operations adjusted operating profit increased by
GBP27m (19%) to GBP168m on a reported basis (2021: GBP141m).
Excluding a GBP4m foreign currency translation tailwind, the
constant currency increase was GBP23m (15%). 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 2021 by the
International Financial Reporting Standards Interpretations
Committee, which led to a GBP3m reduction in the first half of
2021, with the full year impact being reflected in our 2021 Annual
Report and Financial Statements. Further details are provided in
note 1 of the Interim Financial Statements.
As explained further in the Divisional reviews, Minerals
adjusted operating profit increased by GBP14m on a constant
currency basis to GBP135m (2021: GBP121m) and ESCO's adjusted
operating profit increased by 21% on a constant currency basis to
GBP51m (2021: GBP42m). Unallocated costs of GBP18m are in line with
the prior year.
Continuing operations adjusted operating margin of 15.3% is, as
expected, down 40 bps versus last year on a constant currency basis
and down 30 bps as reported. This anticipated reduction is driven
by higher levels of transactional foreign exchange given high
currency volatility, increased travel costs close to pre-Covid
levels, an increase in R&D investment and the impact of some
one-off gains last year. These were offset by a slightly favourable
mix impact and strong operating leverage. R&D as a percentage
of sales was 2.0%, up from 1.7% at December 2021.
Continuing operations statutory operating profit for the period
of GBP151m was GBP29m favourable to the prior year, driven by the
increase in adjusted operating profit of GBP27m and a reduction in
adjusting items.
Continuing operations net finance costs were GBP25m (2021:
GBP22m) with the increase mainly due to increased net debt levels
and costs associated with the refinancing of our revolving credit
facility.
Continuing operations adjusted profit before tax was GBP143m
(2021: GBP118m), after a translational foreign exchange tailwind of
GBP3m. The statutory profit before tax from continuing operations
of GBP126m compares to GBP100m in 2021, the increase primarily due
to the increase in adjusted results.
Continuing operations adjusted tax charge for the year of GBP38m
(2021: GBP30m) on profit before tax from continuing operations
(before adjusting items) of GBP143m (2021: GBP118m) represents an
adjusted effective tax rate (ETR) of 26.4% (2021: 24.9%). The
increase mainly reflects the geographic mix of profits.
A tax credit of GBP4m has been recognised in relation to
continuing operations adjusting items (2021: GBP4m).
Continuing operations adjusting items reduced to GBP17m (2021:
GBP18m), primarily reflecting intangibles amortisation which
decreased by GBP1m to GBP17m (2021: GBP18m). Exceptional items
totalled GBP3m (2021: nil), with acquisition and integration costs
relating to Motion Metrics and CIS of GBP1m and initial costs of
GBP2m in respect of the wind down of operations in Russia. Other
adjusting items which relate solely to the Group's legacy US
asbestos-related provision in the period were a credit of GBP3m,
primarily due to an increase in discount rate assumption (2021:
nil).
Statutory profit for the period after tax from total operations
of GBP92m (2021: GBP181m) reflects the GBP17m increase in profit
from continuing operations but a decrease of GBP107m from
discontinued operations following the gain on sale of the Oil &
Gas Division in 2021. The gain on sale last year was mainly driven
by the recycling of cumulative net foreign exchange gains from the
foreign currency translation reserve to the income statement
(GBP103m).
Adjusted earnings per share from continuing operations increased
by 18% to 40.5p (2021: 34.2p). Statutory reported earnings per
share from total operations is 35.6p (2021: 69.9p), with the
increase in profit from continuing operations being offset by the
reduction in discontinued operations.
Acquisition of Carriere Industrial Supply Limited
The Group completed the acquisition of Carriere Industrial
Supply Limited (CIS) on 8 April 2022 for an enterprise value of
CAD$33m (GBP20m) less customary debt and working capital
adjustments, which resulted in initial cash consideration of GBP16m
and deferred consideration of GBP3m. CIS contributed GBP9m to
revenue and an operating profit of GBP1m (before adjusting items)
in the period from acquisition to 30 June 2022.
Cash flow and net debt
Cash generated from operations decreased by GBP40m to GBP100m
(2021: GBP140m) in the period, including a GBP14m benefit from
discontinued operations (2021: outflow of GBP14m). Cash generated
from continuing operations decreased by GBP54m as the impact from
higher operating profits was offset by an outflow of working
capital in the period of GBP112m (2021: GBP29m). This mainly
reflects an increase in inventory to support the higher order book
as well as some supply chain and freight disruption. As a result,
working capital as a percentage of sales increased to 32.4% from
24.4% in the prior year. Continuing operations utilised
non-recourse invoice discounting facilities of GBP21m (2021:
GBP12m) and suppliers chose to utilise supply chain financing
facilities of GBP50m (2021: GBP30m).
Net capital expenditure increased by GBP7m to GBP18m (2021:
GBP11m), with the prior year including GBP12m proceeds from the
sale of a property in China. Lease payments of GBP14m were in line
with prior year (2021: GBP14m), while the purchase of shares for
employee share plans increased by GBP5m to GBP20m (2021:
GBP15m).
Free operating cash conversion (refer to note 1 of the Interim
Financial Statements) was 29% (2021: 71%) as a result of the above
noted working capital outflow.
Free cash flow (refer to note 1 of the Interim Financial
Statements) from total operations was an outflow of GBP24m (2021:
inflow GBP45m). In addition to the movements noted above this was
impacted by an increase in tax payments of GBP5m reflecting a
higher tax charge, an increase in interest payments of GBP6m on
higher net debt and refinancing costs and a GBP5m decrease in
proceeds on settlement of derivative financial instruments.
Net debt increased by GBP188m to GBP961m (December 2021:
GBP773m) and includes GBP119m (December 2021: GBP105m) in respect
of IFRS 16: Leases. The increase includes adverse foreign exchange
translation of GBP92m in relation to our net investment hedging
strategy. The net investment hedging strategy is designed to
partially offset the impact of exchange on the translation of
foreign operations, which was a gain of GBP220m in the period. As a
result, the net impact of translation on net assets was positive in
the period. Other drivers of the increase in net debt include the
free cash outflow of GBP24m, the acquisition of CIS GBP15m, payment
of the final 2021 dividend GBP32m, lease movement of GBP6m and
exceptional items of GBP16m including settlement of opening balance
sheet liabilities for Motion Metrics, acquisition costs and
previously provided cyber incident related costs. Net debt to
EBITDA on a lender covenant basis was 2.0x (2021: 1.6x) compared to
a covenant level of 3.5x.
In April 2022, the Group successfully completed the refinancing
of its US$950m Revolving Credit Facility (RCF) which was due to
expire in June 2023. This was replaced with a US$800m RCF with a
syndicate of 11 global banks and will mature in April 2027 with the
option to extend for up to a further two years. The RCF includes a
link to the Group's sustainability goals, in line with the Group's
Sustainability Linked Notes, and the covenant terms are unchanged.
This refinancing action resulted in the Group having c.GBP630m of
immediately available committed facilities and cash balances at the
period end.
Pensions
The IAS 19 funding position across the Group's legacy UK and
North American schemes improved from a deficit of GBP57m at 31
December 2021 to a net surplus of GBP24m at 30 June 2022. This is
primarily due to a reduction in liabilities as a result of changes
in market conditions, driven by a significant rise in discount
rates. This is partially offset by net losses on the asset side
combined with experience losses and exchange rate movements . A
credit of GBP76m (2021: GBP51m) has been recognised in the
Consolidated Statement of Comprehensive Income.
Principal Risks and Uncertainties
The Board considers the Principal Risks and Uncertainties
affecting the business activities of the Group are:
Principal Risk Risk Trend from 2021 Annual Report
--------------------------- ----------------------------------
1. Political and Social Increased
--- ---------------------- ----------------------------------
2. Technology No change
--- ---------------------- ----------------------------------
3. Value Chain Excellence Increased
--- ---------------------- ----------------------------------
4. Safety, Health and No change
Wellbeing
--- ---------------------- ----------------------------------
5. People No change
--- ---------------------- ----------------------------------
6. Market Increased
--- ---------------------- ----------------------------------
7. Climate Decreased
--- ---------------------- ----------------------------------
8. Competition No change
--- ---------------------- ----------------------------------
9. Digital Strategy and No change
Roadmap
--- ---------------------- ----------------------------------
10. Information Security No change
and Cyber
--- ---------------------- ----------------------------------
11. Covid-19 Decreased
--- ---------------------- ----------------------------------
12. Ethics and Governance No change
--- ---------------------- ----------------------------------
Further details of the Group's policies on Principal Risks and
Uncertainties are contained within the Group's 2021 Annual Report,
a copy of which is available at www.annualreport. weir .
Enquiries:
Investors: Edward Pears +44(0)141 308 3725
------------------------------
Media: Sally Jones +44(0)141 308 3666
------------------------------
Citigate Dewe Rogerson: Kevin +44 (0) 207 638 9571
Smith Weir@citigatedewerogerson.com
Appendix 1 - 2021 / 2022 continuing operations (1) quarterly
order trends
Like-for-like
Reported growth growth(3)
-------------------
2021 2021 2021 2021 2022 2022 2021 2022 2022
Division Q1 Q2 Q3 Q4 Q1 Q2 Q4 Q1 Q2
------------------- ---- ---- ---- ---- ----- ---- ---- ----- ----
Original Equipment 66% 50% 71% 9% -18% -3% 9% -18% -3%
Aftermarket -1% 9% 16% 29% 23% 18% 29% 23% 18%
Minerals 15% 20% 30% 23% 9% 11% 23% 9% 11%
------------------- ---- ---- ---- ---- ----- ---- ---- ----- ----
Original Equipment 76% 17% 65% -9% -17% 98% -9% -17% 98%
Aftermarket -2% 31% 34% 40% 37% 19% 39% 31% 9%
ESCO 2 % 30% 36% 37% 32% 23% 36% 27% 13%
------------------- ---- ---- ---- ---- ----- ---- ---- ----- ----
Original Equipment 67% 48% 71% 8% -17% 2% 8% -17% 2%
Aftermarket -2% 14% 21% 32% 28% 18% 32% 26% 15%
Continuing
Ops 11% 22% 31% 26% 15% 14% 26% 14% 12%
------------------- ---- ---- ---- ---- ----- ---- ---- ----- ----
Book-to-bill 1.22 1.20 1.14 1.01 1.22 1.13 1.01 1.21 1.14
------------------- ---- ---- ---- ---- ----- ---- ---- ----- ----
Like-for-like
Quarterly orders (2) GBPm orders(2,3)
------------------- ----------------------------------- -----------------
2021 2021 2021 2021 2022 2022 2021 2022 2022
Division Q1 Q2 Q3 Q4 Q1 Q2 Q4 Q1 Q2
------------------- ----- ---- ---- ---- ---- ---- ----- ---- ----
Original Equipment 134 154 130 121 111 150 121 111 150
Aftermarket 256 302 268 320 315 357 320 315 357
Minerals 390 456 398 441 426 507 441 426 507
------------------- ----- ---- ---- ---- ---- ---- ----- ---- ----
Original Equipment 12 7 11 7 10 14 7 10 14
Aftermarket 124 131 135 150 170 155 149 163 142
ESCO 136 138 146 157 180 169 156 173 156
------------------- ----- ---- ---- ---- ---- ---- ----- ---- ----
Original Equipment 146 161 141 128 121 164 128 121 164
Aftermarket 380 433 403 470 485 512 469 478 499
Continuing
Ops 526 594 544 598 606 676 597 599 663
------------------- ----- ---- ---- ---- ---- ---- ----- ---- ----
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 June 2022 average exchange rates.
3. Like-for-like excludes the impact of Motion Metrics acquired
on 30 November 2021 and Carriere Industrial Supply Limited acquired
on 8 April 2022.
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHSED 30 JUNE 2022
Restated (note 1)
Year ended
31 December 6 months ended 30 6 months ended 30
2021 June 2022 June 2021
Adjusting Adjusting
items items
Statutory Adjusted (note Statutory Adjusted (note Statutory
results results 4) results results 4) results
GBPm Notes GBPm GBPm GBPm GBPm GBPm GBPm
================= =============== ===== ============ ============== ============ ============= ============== ============
Continuing
operations
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
1,933.6 Revenue 2 1,095.5 - 1,095.5 900.4 - 900.4
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Continuing
operations
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Operating
profit
before share of
results of
joint
254.9 ventures 166.5 (16.5) 150.0 140.3 (18.2) 122.1
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Share of
results
of joint
1.7 ventures 1.0 - 1.0 0.4 - 0.4
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Operating
256.6 profit 167.5 (16.5) 151.0 140.7 (18.2) 122.5
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
(52.7) Finance costs (25.5) - (25.5) (25.8) - (25.8)
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
5.6 Finance income 0.5 - 0.5 3.5 - 3.5
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Profit before
tax from
continuing
209.5 operations 142.5 (16.5) 126.0 118.4 (18.2) 100.2
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Tax (expense)
(54.4) credit 5 (37.6) 3.8 (33.8) (29.5) 4.1 (25.4)
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Profit for the
period from
continuing
155.1 operations 104.9 (12.7) 92.2 88.9 (14.1) 74.8
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
(Loss) profit
for the period
from
discontinued
103.9 operations - - - (0.5) 107.1 106.6
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Profit for the
259.0 period 104.9 (12.7) 92.2 88.4 93.0 181.4
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Attributable
to:
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Equity holders
258.5 of the Company 104.8 (12.7) 92.1 88.2 93.0 181.2
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Non-controlling
0.5 interests 0.1 - 0.1 0.2 - 0.2
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
259.0 104.9 (12.7) 92.2 88.4 93.0 181.4
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Earnings per
share 7
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Basic - total
99.7p operations 35.6p 69.9p
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Basic -
continuing
59.6p operations 40.5p 35.6p 34.2p 28.8p
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Diluted - total
99.0p operations 35.4p 69.4p
----------------- --------------- ----- ------------ -------------- ------------ ------------- -------------- ------------
Diluted -
continuing
59.2p operations 40.2p 35.4p 34.0p 28.6p
================= --------------- ----- ============ ============== ============ ============= ============== ============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 6 MONTHSED 30 JUNE 2022
Restated
(note
1)
6 months 6 months
Year ended ended ended
31 December 30 June 30 June
2021 2022 2021
GBPm GBPm GBPm
=================== ============================================ =================== ===================
259.0 Profit for the period 92.2 181.4
------------------- -------------------------------------------- ------------------- -------------------
Other comprehensive income
------------------- -------------------------------------------- ------------------- -------------------
Gains (losses) taken to equity on cash
(0.2) flow hedges 0.2 (0.1)
------------------- -------------------------------------------- ------------------- -------------------
Exchange gains (losses) on translation
(29.9) of foreign operations 220.3 (33.6)
------------------- -------------------------------------------- ------------------- -------------------
Reclassification of foreign currency
translation reserve on sale of discontinued
(103.4) operations - (103.4)
------------------- -------------------------------------------- ------------------- -------------------
Exchange (losses) gains on net investment
(18.2) hedges (117.2) 1.7
------------------- -------------------------------------------- ------------------- -------------------
Reclassification adjustments on cash
0.1 flow hedges (0.1) 0.1
------------------- -------------------------------------------- ------------------- -------------------
Tax relating to other comprehensive
expense to be reclassified in subsequent
- periods (0.1) -
------------------- -------------------------------------------- ------------------- -------------------
Items that are or may be reclassified
(151.6) to profit or loss in subsequent periods 103.1 (135.3)
------------------- -------------------------------------------- ------------------- -------------------
Other comprehensive income (expense)
not to be reclassified to profit or
loss in subsequent periods:
------------------- -------------------------------------------- ------------------- -------------------
96.3 Remeasurements on defined benefit plans 76.0 50.7
Tax relating to other comprehensive
(income) expense not to be reclassified
(21.1) in subsequent periods (18.9) (10.2)
------------------- -------------------------------------------- ------------------- -------------------
Items that will not be reclassified
75.2 to profit or loss in subsequent periods 57.1 40.5
------------------- -------------------------------------------- ------------------- -------------------
(76.4) Net other comprehensive income (expense) 160.2 (94.8)
------------------- -------------------------------------------- ------------------- -------------------
Total net comprehensive income for
182.6 the period 252.4 86.6
------------------- -------------------------------------------- ------------------- -------------------
Attributable to:
------------------- -------------------------------------------- ------------------- -------------------
182.5 Equity holders of the Company 251.7 86.3
------------------- -------------------------------------------- ------------------- -------------------
0.1 Non-controlling interests 0.7 0.3
------------------- -------------------------------------------- ------------------- -------------------
182.6 252.4 86.6
------------------- -------------------------------------------- ------------------- -------------------
Total net comprehensive income for
the year attributable to equity holders
of the Company
------------------- -------------------------------------------- ------------------- -------------------
183.3 Continuing operations 251.7 84.4
------------------- -------------------------------------------- ------------------- -------------------
(0.8) Discontinued operations - 1.9
------------------- -------------------------------------------- ------------------- -------------------
182.5 251.7 86.3
------------------- -------------------------------------------- ------------------- -------------------
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2022
Restated Restated
(note 1) (note 1)
31 December 30 June 30 June
2021 2022 2021
GBPm Notes GBPm GBPm
====================== ==================================== ===== ===================== ======================
ASSETS
---------------------- ------------------------------------ ----- --------------------- ----------------------
Non-current assets
---------------------- ------------------------------------ ----- --------------------- ----------------------
415.9 Property, plant & equipment 450.8 433.0
---------------------- ------------------------------------ ----- --------------------- ----------------------
1,308.9 Intangible assets 1,426.0 1,216.0
12.3 Investments in joint ventures 13.5 14.2
57.0 Deferred tax assets 29.6 55.8
---------------------- ------------------------------------ ----- --------------------- ----------------------
76.5 Other receivables 85.0 80.0
---------------------- ------------------------------------ ----- --------------------- ----------------------
- Retirement benefit plan assets 13 59.2 -
1,870.6 Total non-current assets 2,064.1 1,799.0
---------------------- ------------------------------------ ----- --------------------- ----------------------
Current assets
---------------------- ------------------------------------ ----- --------------------- ----------------------
516.5 Inventories 674.1 485.4
---------------------- ------------------------------------ ----- --------------------- ----------------------
505.7 Trade & other receivables 545.3 418.7
---------------------- ------------------------------------ ----- --------------------- ----------------------
7.1 Derivative financial instruments 14 7.4 8.3
---------------------- ------------------------------------ ----- --------------------- ----------------------
33.1 Income tax receivable 35.5 21.7
---------------------- ------------------------------------ ----- --------------------- ----------------------
564.4 Cash & short-term deposits 467.0 647.0
1,626.8 Total current assets 1,729.3 1,581.1
---------------------- ------------------------------------ ----- --------------------- ----------------------
3,497.4 Total assets 3,793.4 3,380.1
---------------------- ------------------------------------ ----- --------------------- ----------------------
LIABILITIES
---------------------- ------------------------------------ ----- --------------------- ----------------------
Current liabilities
---------------------- ------------------------------------ ----- --------------------- ----------------------
524.1 Interest-bearing loans & borrowings 323.6 524.2
---------------------- ------------------------------------ ----- --------------------- ----------------------
491.4 Trade & other payables 532.0 436.4
---------------------- ------------------------------------ ----- --------------------- ----------------------
3.8 Derivative financial instruments 14 10.4 3.6
---------------------- ------------------------------------ ----- --------------------- ----------------------
7.7 Income tax payable 4.3 -
---------------------- ------------------------------------ ----- --------------------- ----------------------
36.5 Provisions 28.6 25.0
1,063.5 Total current liabilities 898.9 989.2
---------------------- ------------------------------------ ----- --------------------- ----------------------
Non-current liabilities
---------------------- ------------------------------------ ----- --------------------- ----------------------
812.8 Interest-bearing loans & borrowings 1,104.3 801.3
---------------------- ------------------------------------ ----- --------------------- ----------------------
- Other payables 1.0 -
---------------------- ------------------------------------ ----- --------------------- ----------------------
0.1 Derivative financial instruments 14 0.4 0.1
---------------------- ------------------------------------ ----- --------------------- ----------------------
69.0 Provisions 65.6 71.1
---------------------- ------------------------------------ ----- --------------------- ----------------------
40.8 Deferred tax liabilities 30.0 30.3
---------------------- ------------------------------------ ----- --------------------- ----------------------
56.7 Retirement benefit plan deficits 13 34.8 103.6
---------------------- ------------------------------------ ----- --------------------- ----------------------
979.4 Total non-current liabilities 1,236.1 1,006.4
---------------------- ------------------------------------ ----- --------------------- ----------------------
2,042.9 Total liabilities 2,135.0 1,995.6
---------------------- ------------------------------------ ----- --------------------- ----------------------
1,454.5 NET ASSETS 1,658.4 1,384.5
---------------------- ------------------------------------ ----- --------------------- ----------------------
CAPITAL & RESERVES
---------------------- ------------------------------------ ----- --------------------- ----------------------
32.5 Share capital 32.5 32.5
---------------------- ------------------------------------ ----- --------------------- ----------------------
582.3 Share premium 582.3 582.3
---------------------- ------------------------------------ ----- --------------------- ----------------------
332.6 Merger reserve 332.6 332.6
---------------------- ------------------------------------ ----- --------------------- ----------------------
(5.3) Treasury shares (16.6) (6.4)
---------------------- ------------------------------------ ----- --------------------- ----------------------
0.5 Capital redemption reserve 0.5 0.5
---------------------- ------------------------------------ ----- --------------------- ----------------------
(206.5) Foreign currency translation reserve (104.0) (190.8)
---------------------- ------------------------------------ ----- --------------------- ----------------------
1.5 Hedge accounting reserve 1.5 1.6
---------------------- ------------------------------------ ----- --------------------- ----------------------
705.9 Retained earnings 818.0 620.8
---------------------- ------------------------------------ ----- --------------------- ----------------------
1,443.5 Shareholders' equity 1,646.8 1,373.1
---------------------- ------------------------------------ ----- --------------------- ----------------------
11.0 Non-controlling interests 11.6 11.4
---------------------- ------------------------------------ ----- --------------------- ----------------------
1,454.5 TOTAL EQUITY 1,658.4 1,384.5
---------------------- ------------------------------------ ----- --------------------- ----------------------
The financial statements were approved by the Board of Directors
and authorised for issue on 28 July 2022.
JON STANTON JOHN HEASLEY
Director Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHSED 30 JUNE 2022
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June 30 June
2021 2022 2021
GBPm Notes GBPm GBPm
====================== ======================================= ===== ====================== ======================
Total operations
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Cash flows from operating activities 15
---------------------- --------------------------------------- ----- ---------------------- ----------------------
266.0 Cash generated from operations 100.2 139.8
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Additional pension contributions
(7.8) paid (7.7) (5.9)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Exceptional and other adjusting
(8.6) cash items (7.2) (4.7)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Exceptional cash items - acquired
(11.1) vendor liabilities (8.9) -
---------------------- --------------------------------------- ----- ---------------------- ----------------------
(82.4) Income tax paid (40.2) (35.0)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Net cash generated from operating
156.1 activities 36.2 94.2
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Cash flows from investing activities
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Acquisitions of subsidiaries, net
(67.9) of cash acquired 15 (14.6) -
Purchases of property, plant &
(44.4) equipment (18.4) (21.1)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
(8.4) Purchases of intangible assets (2.6) (3.2)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Exceptional item - proceeds from
15.8 sale of property - -
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Other proceeds from sale of property,
plant & equipment and intangible
14.3 assets 2.7 13.0
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Disposals of discontinued operations,
net of cash disposed and disposal
258.5 costs 15 - 251.4
---------------------- --------------------------------------- ----- ---------------------- ----------------------
24.0 Disposals of joint ventures 15 - 27.4
---------------------- --------------------------------------- ----- ---------------------- ----------------------
2.6 Interest received 1.6 1.3
---------------------- --------------------------------------- ----- ---------------------- ----------------------
0.7 Dividends received from joint ventures 1.4 0.6
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Net cash (used in) generated from
195.2 investing activities (29.9) 269.4
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Cash flows from financing activities
794.1 Proceeds from borrowings 752.8 794.1
---------------------- --------------------------------------- ----- ---------------------- ----------------------
(903.4) Repayments of borrowings (863.5) (903.0)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
(27.8) Lease payments (14.0) (13.8)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Proceeds from settlement of derivative
10.6 financial instruments 0.2 5.3
(45.6) Interest paid (27.1) (20.6)
Dividends paid to equity holders
(29.8) of the Company 8 (31.8) -
Dividends paid to non-controlling
(0.4) interests (0.1) (0.2)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Purchase of shares for employee
(15.0) share plans (20.0) (15.0)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
(217.3) Net cash used in financing activities (203.5) (153.2)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Net (reduction) increase in cash
134.0 & cash equivalents (197.2) 210.4
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Cash & cash equivalents at the
beginning
374.1 of the year 500.0 374.1
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Foreign currency translation
(8.1) differences 31.1 (9.5)
---------------------- --------------------------------------- ----- ---------------------- ----------------------
Cash & cash equivalents at the
500.0 end of the year 15 333.9 575.0
---------------------- --------------------------------------- ----- ---------------------- ----------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHSED 30 JUNE 2022
Attributable
Foreign to equity
Capital currency Hedge holders Non-
Share Share Merger Treasury redemption translation accounting Retained of the 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 period
(restated
note 1) - - - - - - - 181.2 181.2 0.2 181.4
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Losses taken
to equity
on cash flow
hedges - - - - - - (0.1) - (0.1) - (0.1)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exchange (losses)
gains on
translation
of foreign
operations - - - - - (33.7) - - (33.7) 0.1 (33.6)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Reclassification
of exchange
gains on
discontinued
operations - - - - - (103.4) - - (103.4) - (103.4)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exchange gains
on net
investment
hedges - - - - - 1.7 - - 1.7 - 1.7
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Reclassification
adjustments
on cash flow
hedges - - - - - - 0.1 - 0.1 - 0.1
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Remeasurements
on defined
benefit plans - - - - - - - 50.7 50.7 - 50.7
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Tax relating
to other
comprehensive
income - - - - - - - (10.2) (10.2) - (10.2)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Total net
comprehensive
(expense)
income
for the year - - - - - (135.4) - 221.7 86.3 0.3 86.6
Cost of
share-based
payments
inclusive
of tax charge - - - - - - - 6.2 6.2 - 6.2
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Purchase of
shares for
employee share
plans - - - (15.0) - - - - (15.0) - (15.0)
Dividends
to
non-controlling
interests - - - - - - - - - (0.2) (0.2)
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Exercise of
share-based
payments - - - 15.4 - - - (15.4) - - -
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Restated at
30 June 2021 32.5 582.3 332.6 (6.4) 0.5 (190.8) 1.6 620.8 1,373.1 11.4 1,384.5
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE 6 MONTHSED 30 JUNE 2022
Attributable
Foreign to equity
Capital currency Hedge holders Non-
Share Share Merger Treasury redemption translation accounting Retained of the 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
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
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Profit for
the year - - - - - - - 92.1 92.1 0.1 92.2
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Gains taken
to equity
on cash flow
hedges - - - - - - 0.2 - 0.2 - 0.2
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Exchange gains
on translation
of foreign
operations - - - - - 219.7 - - 219.7 0.6 220.3
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Exchange losses
on net
investment
hedges - - - - - (117.2) - - (117.2) - (117.2)
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Reclassification
adjustments
on cash flow
hedges - - - - - - (0.1) - (0.1) - (0.1)
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Remeasurements
on defined
benefit plans - - - - - - - 76.0 76.0 - 76.0
Tax relating
to other
comprehensive
expense - - - - - - (0.1) (18.9) (19.0) - (19.0)
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Total net
comprehensive
(expense)
income for
the year - - - - - 102.5 - 149.2 251.7 0.7 252.4
Cost of
share-based
payments
inclusive
of tax charge - - - - - - - 3.4 3.4 - 3.4
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Dividends - - - - - - - (31.8) (31.8) - (31.8)
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
Purchase of
shares for
employee share
plans - - - (20.0) - - - - (20.0) - (20.0)
Dividends
to
non-controlling
interests - - - - - - - - - (0.1) (0.1)
Exercise of
share-based
payments - - - 8.7 - - - (8.7) - - -
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
At 30 June
2022 32.5 582.3 332.6 (16.6) 0.5 (104.0) 1.5 818.0 1,646.8 11.6 1,658.4
----------------- ------- --------- -------- ----------- -------------- ------------ --------------- ----------- --------------- --------------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE 6 MONTHSED 30 JUNE 2022
Attributable
Foreign to equity
Capital currency Hedge holders Non-
Share Share Merger Treasury redemption translation accounting Retained of the 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
(expense)
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)
Dividends
to
non-controlling
interests - - - - - - - - - (0.4) (0.4)
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
----------------- ------- --------- -------- ----------- -------------- ------------- --------------- ---------- --------------- --------------- -----------
Notes to the Interim Financial Statements
1. Accounting policies
Basis of preparation
These interim financial statements are for the 6 month period
ended 30 June 2022 and have been prepared on the basis of the
accounting policies set out in the Group's 2021 Annual Report and
in accordance with UK adopted IAS 34 "Interim Financial Reporting"
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
These interim financial statements are unaudited but have been
reviewed by the auditors and their report to the Company is set out
on page 47. The information shown for the year ended 31 December
2021 does not constitute statutory accounts as defined in Section
435 of the Companies Act 2006 and has been extracted from the
Group's 2021 Annual Report which has been filed with the Registrar
of Companies. The report of the auditors on the financial
statements contained within the Group's 2021 Annual Report was
unqualified and did not contain a statement under either Section
498(2) or Section 498(3) of the Companies Act 2006. These interim
financial statements should be read in conjunction with the annual
consolidated financial statements for the year ended 31 December
2021, which were prepared in accordance with UK-adopted
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
Significant changes in the financial position and performance of
the Group during the reporting period have been discussed in the
Chief Executive Officer's Review and the Group Financial Review.
The principal activities of the Group are described in note 2.
The Weir Group PLC is a limited company, limited by shares,
incorporated in Scotland, United Kingdom and is listed on the
London Stock Exchange.
These interim financial statements are presented in Sterling.
All values are rounded to the nearest 0.1 million pounds (GBPm)
except where otherwise indicated.
These interim financial statements were approved by the Board of
Directors on 28 July 2022.
Going concern
These interim financial statements have been prepared on the
going concern basis.
As discussed more fully in the Chief Executive Officer's review,
the Group has continued to strengthen during the period.
In spite of ongoing challenges around global logistics and
inflation, the continued impact of Covid-19 and sanctions impacting
Russia, our mining businesses have continued to be highly resilient
and profitable during the period. At June 2022, the Group has
c.GBP630m of immediately available committed facilities and cash
balances, combined with significant headroom in each of its
financial lender covenants of net debt to EBITDA and interest
cover.
Given current levels of macroeconomic uncertainty stemming from
Covid-19, inflation, the global supply chain crisis and
geopolitical risks, the Group performed financial modelling of
future cash flows, which cover a period of 12 months from the
approval of the 2022 interim financial statements. The financial
modelling included reverse stress testing which focused on the
level of downside risk which would be required for the Group to
breach its current lending facilities and related financial
covenants. The review indicated that the Group continues to have
sufficient headroom on both lending facilities and related
financial covenants. The circumstances which would lead to a breach
are not considered plausible.
The Directors, having considered all available relevant
information, have a reasonable expectation that the Group has
adequate resources to continue to operate as a going concern.
Climate change
As well as considering the impact of climate change across our
business model, the Directors have considered the impact on the
interim 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
A number of new or amended accounting standards became
applicable for the current reporting period as listed below:
i) Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
ii) Onerous Contracts - Cost of Fulfilling a Contract -
Amendments to IAS 37
iii) Annual Improvements to IFRS Standards 2018-2020
iv) Reference to the Conceptual Framework - Amendment to IFRS
3
The above amendments are not considered to have a material
impact on the consolidated financial statements of the Group.
Restatement
30 June 2021 Software as a Service
In the statutory financial statements for the year ended 31
December 2021 the Group revised its accounting policy in relation
to Software as a Service (SaaS) and related configuration and
customisation costs in response to the International Financial
Reporting Interpretations Committee (IFRIC) configuration or
customisation costs in a cloud computing arrangement (April 2021)
agenda decision which clarified the interpretation of the current
accounting standard.
In response to the IFRIC agenda decision the Group completed a
review of the costs which were no longer eligible to be capitalised
as intangible assets and this resulted in a reclassification to
operating expenditure and the reversal of previously accumulated
amortisation in the statutory financial statements for the year
ended 31 December 2021. This policy was applied retrospectively in
accordance with IAS 8 resulting in a restatement of prior year
financial statements. The tables below show the impact of the
restatement at 30 June 2021 on the applicable lines of the
Consolidated Balance Sheet, Consolidated Income Statement,
Consolidated Cash Flow Statement and earnings per share.
Restated Consolidated Balance Sheet (extract)
at 30 June 2021
As previously
reported SaaS adjustment Restated
GBPm GBPm GBPm
====================== ============================ ============================= ===========================
Non-current assets
---------------------- ---------------------------- ----------------------------- ---------------------------
Intangible assets 1,231.2 (15.2) 1,216.0
---------------------- ---------------------------- ----------------------------- ---------------------------
Current assets
---------------------- ---------------------------- ----------------------------- ---------------------------
Income tax receivable 20.8 0.9 21.7
---------------------- ---------------------------- ----------------------------- ---------------------------
Current liabilities
---------------------- ---------------------------- ----------------------------- ---------------------------
Income tax payable 2.0 (2.0) -
---------------------- ---------------------------- ----------------------------- ---------------------------
NET ASSETS 1,396.8 (12.3) 1,384.5
---------------------- ---------------------------- ----------------------------- ---------------------------
CAPITAL & RESERVES
---------------------- ---------------------------- ----------------------------- ---------------------------
Retained earnings 633.1 (12.3) 620.8
---------------------- ---------------------------- ----------------------------- ---------------------------
TOTAL EQUITY 1,396.8 (12.3) 1,384.5
---------------------- ---------------------------- ----------------------------- ---------------------------
Restated Consolidated Income Statement (extract)
for the 6 months ended 30 June 2021
Adjusted Statutory
results: Adjusted results: Statutory
as previously SaaS results: as previously SaaS results:
reported adjustment restated reported adjustment restated
GBPm GBPm GBPm GBPm GBPm GBPm
=========== ================= ================== ================= ================= ================== =================
Operating
profit
before
share of
results of
joint
ventures 142.9 (2.6) 140.3 124.0 (1.9) 122.1
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Operating
profit 143.3 (2.6) 140.7 124.4 (1.9) 122.5
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit
before tax
from
continuing
operations 121.0 (2.6) 118.4 102.1 (1.9) 100.2
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Tax expense (30.0) 0.5 (29.5) (25.8) 0.4 (25.4)
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit for
the year
from
continuing
operations 91.0 (2.1) 88.9 76.3 (1.5) 74.8
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Profit
(loss) for
the
year 90.5 (2.1) 88.4 182.9 (1.5) 181.4
----------- ----------------- ------------------ ----------------- ----------------- ------------------ -----------------
Restated Consolidated Cash Flow Statement (extract)
for the 6 months ended 30 June 2021
As previously
reported SaaS adjustment Restated
GBPm GBPm GBPm
========================= ============================= ============================= =============================
Cash flows from operating
activities
------------------------- ----------------------------- ----------------------------- -----------------------------
Cash generated from
operations 143.0 (3.2) 139.8
------------------------- ----------------------------- ----------------------------- -----------------------------
Net cash generated from
operating
activities 97.4 (3.2) 94.2
------------------------- ----------------------------- ----------------------------- -----------------------------
Cash flows from investing
activities
------------------------- ----------------------------- ----------------------------- -----------------------------
Purchases of intangible
assets (6.4) 3.2 (3.2)
------------------------- ----------------------------- ----------------------------- -----------------------------
Net cash (used in)
generated from
investing activities 266.2 3.2 269.4
------------------------- ----------------------------- ----------------------------- -----------------------------
As previously
reported Restated
2021 2021
pence pence
============================================== =========================== ===========================
Basic earnings per share:
---------------------------------------------- --------------------------- ---------------------------
Total operations* 70.5 69.9
---------------------------------------------- --------------------------- ---------------------------
Continuing operations* 29.4 28.8
---------------------------------------------- --------------------------- ---------------------------
Continuing operations before adjusting items* 35.0 34.2
---------------------------------------------- --------------------------- ---------------------------
Diluted earnings per share:
---------------------------------------------- --------------------------- ---------------------------
Total operations* 70.0 69.4
---------------------------------------------- --------------------------- ---------------------------
Continuing operations* 29.2 28.6
---------------------------------------------- --------------------------- ---------------------------
Continuing operations before adjusting items* 34.8 34.0
---------------------------------------------- --------------------------- ---------------------------
(*Adjusted for GBP0.2m in respect of non-controlling
interests.)
31 December 2021 business combinations
Following the acquisition of Motion Metrics during the year
ended 31 December 2021, the Group has continued to review the
opening balance sheet (OBS) position acquired. This exercise will
be finalised within 12 months of the acquisition date (30 November
2021) as part of the 2022 Annual Report. As part of this process to
date, the Group has identified the adjustments below which are
required to the opening balance sheet which was reported in the
2021 Annual Report. Further details are provided in note 10.
Restated Consolidated Balance Sheet (extract)
at 31 December 2021
As previously Adjustment
reported to OBS Restated
GBPm GBPm GBPm
=========================== ============================ ============================= ============================
Non-current assets
--------------------------- ---------------------------- ----------------------------- ----------------------------
Property, plant & equipment 415.3 0.6 415.9
--------------------------- ---------------------------- ----------------------------- ----------------------------
Intangible assets 1,308.3 0.6 1,308.9
Current assets
--------------------------- ---------------------------- ----------------------------- ----------------------------
Inventories 517.1 (0.6) 516.5
Income tax receivable 32.0 1.1 33.1
Current liabilities
--------------------------- ---------------------------- ----------------------------- ----------------------------
Interest-bearing loans &
borrowings 523.9 0.2 524.1
--------------------------- ---------------------------- ----------------------------- ----------------------------
Trade & other payables 490.6 0.8 491.4
--------------------------- ---------------------------- ----------------------------- ----------------------------
Income tax payable 7.6 0.1 7.7
--------------------------- ---------------------------- ----------------------------- ----------------------------
Non-current liabilities
--------------------------- ---------------------------- ----------------------------- ----------------------------
Interest-bearing loans &
borrowings 812.3 0.5 812.8
--------------------------- ---------------------------- ----------------------------- ----------------------------
Deferred tax liabilities 40.7 0.1 40.8
--------------------------- ---------------------------- ----------------------------- ----------------------------
NET ASSETS 1,454.5 - 1,454.5
--------------------------- ---------------------------- ----------------------------- ----------------------------
Use of estimates and judgements
The preparation of interim 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.
The areas of judgement and estimate identified in the
preparation of the consolidated financial statements for the year
ended 31 December 2021 continue to be relevant to the preparation
of these interim financial statements, with additional
consideration given to the following area.
Taxation (estimate)
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
Alternative performance measures
The reported interim 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 of
our 2021 Annual Report. 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 operating performance of the business from period to
period.
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 business as usual cash generation. 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. This is considered a helpful
measure of cash generation as it focuses on cash generated after
reflecting the cash flows required to support broader business
operating activities.
Free cash flow (FCF) is defined as free operating cash flow
further adjusted for net interest, income taxes, settlement of
derivative financial instruments, additional pension contributions
paid 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)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================= ========================= ============================= =============================
Operating cash flow (cash
generated
266.0 from operations) 100.2 139.8
----------------------------- ------------------------- ----------------------------- -----------------------------
Net capital expenditure
from purchase
& disposal of property,
plant &
(38.5) equipment and intangibles (18.3) (11.3)
----------------------------- ------------------------- ----------------------------- -----------------------------
(27.8) Lease payments (14.0) (13.8)
----------------------------- ------------------------- ----------------------------- -----------------------------
Dividends received from
0.7 joint ventures 1.4 0.6
----------------------------- ------------------------- ----------------------------- -----------------------------
Purchase of shares for
employee
(15.0) share plans (20.0) (15.0)
----------------------------- ------------------------- ----------------------------- -----------------------------
185.4 Free operating cash flow 49.3 100.3
----------------------------- ------------------------- ----------------------------- -----------------------------
(43.0) Net interest paid (25.5) (19.3)
----------------------------- ------------------------- ----------------------------- -----------------------------
(82.4) Income tax paid (40.2) (35.0)
----------------------------- ------------------------- ----------------------------- -----------------------------
Proceeds from settlement
of derivative
10.6 financial instruments 0.2 5.3
----------------------------- ------------------------- ----------------------------- -----------------------------
Additional pension
contributions
(7.8) paid (7.7) (5.9)
----------------------------- ------------------------- ----------------------------- -----------------------------
Non-controlling interest
(0.4) dividends (0.1) (0.2)
----------------------------- ------------------------- ----------------------------- -----------------------------
62.4 Free cash flow (24.0) 45.2
----------------------------- ------------------------- ----------------------------- -----------------------------
Free operating cash conversion
Free operating cash conversion is a 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.
This is considered to be a useful measure of the Group's efficiency
at generating cash from the operating results of its core
operations.
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
========================== ================================= ========================== ==========================
296.2 Continuing operations 167.5 140.7
-------------------------- --------------------------------- -------------------------- --------------------------
(0.3) Discontinued operations - (0.3)
-------------------------- --------------------------------- -------------------------- --------------------------
Adjusted operating profit - Total
295.9 Group 167.5 140.4
-------------------------- --------------------------------- -------------------------- --------------------------
185.4 Free operating cash flow 49.3 100.3
-------------------------- --------------------------------- -------------------------- --------------------------
Free operating cash conversion
63 % % 29 % 71 %
-------------------------- --------------------------------- -------------------------- --------------------------
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 GBP86.3m, deferred
consideration payable of GBP2.5m, and GBP4.7m 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 for the last twelve months, 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)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ =========================== ============================= ============================
Continuing operations
---------------------------- --------------------------- ----------------------------- ----------------------------
256.6 Operating profit 151.0 122.5
---------------------------- --------------------------- ----------------------------- ----------------------------
Adjusted for:
---------------------------- --------------------------- ----------------------------- ----------------------------
Exceptional and other
adjusting
4.7 items (note 4) (0.5) 0.2
---------------------------- --------------------------- ----------------------------- ----------------------------
Adjusting amortisation
34.9 (note 4) 17.0 18.0
---------------------------- --------------------------- ----------------------------- ----------------------------
296.2 Adjusted operating profit 167.5 140.7
---------------------------- --------------------------- ----------------------------- ----------------------------
5.3 Non-adjusting amortisation 3.0 1.9
---------------------------- --------------------------- ----------------------------- ----------------------------
Adjusted Earnings before
interest,
tax and amortisation
301.5 (EBITA) 170.5 142.6
---------------------------- --------------------------- ----------------------------- ----------------------------
Depreciation of owned
property,
43.0 plant & equipment 22.7 21.1
---------------------------- --------------------------- ----------------------------- ----------------------------
Depreciation of
right-of-use property,
27.6 plant & equipment 14.8 14.0
---------------------------- --------------------------- ----------------------------- ----------------------------
Adjusted Earnings before
interest,
tax, depreciation and
amortisation
372.1 (EBITDA) 208.0 177.7
---------------------------- --------------------------- ----------------------------- ----------------------------
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 the acquisition of Motion Metrics on 30 November 2021
and Carriere Industrial Supply Limited (CIS) on 8 April 2022 these
entities have been included in the ESCO segment. Motion Metrics is
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, while CIS is a premier
manufacturer and distributor of highly engineered wear parts and
aftermarket service provider to the Canadian mining industry.
The Chief Executive Officer assesses the performance of the
operating segments based on operating profit from continuing
operations before exceptional and other adjusting items ('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 2022 and
2021 is disclosed below.
Total continuing
Minerals ESCO operations
----------------------------------
Restated Restated Restated
(note (note (note
1) 1) 1)
30 June 30 June 30 June 30 June 30 June 30 June
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
============== =============== =============== =============== =============== ================ ================
Revenue
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Sales to
external
customers 782.0 663.1 313.5 237.3 1,095.5 900.4
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Inter-segment
sales - 0.1 1.2 0.9 1.2 1.0
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Segment
revenue 782.0 663.2 314.7 238.2 1,096.7 901.4
Eliminations (1.2) (1.0)
---------------- ----------------
1,095.5 900.4
---------------- ----------------
Sales to external customers - 2021 at 2022 average exchange rates
Sales to
external
customers 782.0 673.8 313.5 253.3 1,095.5 927.1
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Segment result
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Segment result
before share
of results of
joint
ventures 135.1 119.6 49.5 38.4 184.6 158.0
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Share of
results of
joint
ventures - - 1.0 0.4 1.0 0.4
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Segment result 135.1 119.6 50.5 38.8 185.6 158.4
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Unallocated
expenses (18.1) (17.7)
---------------- ----------------
Adjusted
operating
profit 167.5 140.7
---------------- ----------------
Adjusting
items (16.5) (18.2)
---------------- ----------------
Net finance
costs (25.0) (22.3)
---------------- ----------------
Profit before
tax from
continuing
operations 126.0 100.2
---------------- ----------------
Segment result - 2021 at 2022 average exchange rates
Segment result
before share
of results of
joint
ventures 135.1 121.2 49.5 41.2 184.6 162.4
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Share of
results of
joint
ventures - - 1.0 0.5 1.0 0.5
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Segment result 135.1 121.2 50.5 41.7 185.6 162.9
-------------- --------------- --------------- --------------- --------------- ---------------- ----------------
Unallocated
expenses (18.1) (17.8)
---------------- ----------------
Adjusted
operating
profit 167.5 145.1
---------------- ----------------
2. Segment information (continued)
Minerals ESCO Total Group
------------------------------------ ------------------------------------ ------------------------------------
Restated Restated Restated
(note (note (note
1) 1) 1)
30 June 30 June 30 June 30 June 30 June 30 June
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
============ ================= ================= ================= ================= ================= =================
Assets &
liabilities
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Intangible
assets 606.6 562.6 818.6 647.6 1,425.2 1,210.2
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Property,
plant &
equipment 297.5 298.2 142.5 122.1 440.0 420.3
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Working
capital
assets 905.7 695.6 310.5 212.4 1,216.2 908.0
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
1,809.8 1,556.4 1,271.6 982.1 3,081.4 2,538.5
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Investments
in joint
ventures - - 13.5 14.2 13.5 14.2
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Segment
assets 1,809.8 1,556.4 1,285.1 996.3 3,094.9 2,552.7
Unallocated
assets 698.5 827.4
----------------- -----------------
Total assets 3,793.4 3,380.1
----------------- -----------------
Working
capital
liabilities 449.9 373.7 140.9 90.6 590.8 464.3
------------ ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Segment
liabilities 449.9 373.7 140.9 90.6 590.8 464.3
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Unallocated
liabilities 1,544.2 1,531.3
----------------- -----------------
Total
liabilities 2,135.0 1,995.6
----------------- -----------------
Unallocated assets 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 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.
Geographical information
Geographical information in respect of revenue and non-current
assets for 2022 and 2021 is disclosed below. Revenues are allocated
based on the location to which the product is shipped.
Middle
Asia South East Europe
UK US Canada Pacific Australia America & Africa & FSU Total
===========
6 months
ended 30
June 2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========== ============ ========== ========== ========== ========== ======= ============ =========== ==========
Revenue
from
continuing
operations
Sales to
external
customers 14.5 190.6 160.6 135.2 133.8 235.8 131.6 93.4 1,095.5
----------- ------------ ---------- ---------- ---------- ---------- ------- ------------ ----------- ----------
Middle
Asia South East Europe
UK US Canada Pacific Australia America & Africa & FSU Total
===========
6 months
ended 30
June
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========== ============ ========== ========== ========== ========== ======= ============ =========== ==========
Revenue
from
continuing
operations
Sales to
external
customers 8.3 141.3 127.5 100.7 149.3 188.5 108.0 76.8 900.4
----------- ------------ ---------- ---------- ---------- ---------- ------- ------------ ----------- ----------
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
----------- ------------ ---------- ---------- ---------- ---------- ------- ------------ ----------- ----------
Total continuing
Minerals ESCO operations
Year ended 31 December 2021 GBPm GBPm GBPm
============================ =========================== ============================ =============================
Revenue
---------------------------- --------------------------- ---------------------------- -----------------------------
Sales to external customers 1,422.1 511.5 1,933.6
---------------------------- --------------------------- ---------------------------- -----------------------------
Inter-segment sales - 2.1 2.1
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment revenue 1,422.1 513.6 1,935.7
---------------------------- --------------------------- ---------------------------- -----------------------------
Eliminations (2.1)
-----------------------------
1,933.6
-----------------------------
Sales to external customers - 2021 at 2022
average exchange rates
---------------------------- -----------------------------
Sales to external customers 1,453.7 541.5 1,995.2
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment result
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment result before share
of
results of joint ventures 251.0 81.6 332.6
---------------------------- --------------------------- ---------------------------- -----------------------------
Share of results of joint
ventures - 1.7 1.7
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment result 251.0 83.3 334.3
---------------------------- --------------------------- ---------------------------- -----------------------------
Unallocated expenses (38.1)
-----------------------------
Adjusted operating profit 296.2
-----------------------------
Adjusting items (39.6)
-----------------------------
Net finance costs (47.1)
-----------------------------
Profit before tax from
continuing
operations 209.5
-----------------------------
Segment result - 2021 at
2022
average exchange rates
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment result before share
of
results of joint ventures 255.8 86.5 342.3
---------------------------- --------------------------- ---------------------------- -----------------------------
Share of results of joint
ventures - 1.8 1.8
---------------------------- --------------------------- ---------------------------- -----------------------------
Segment result 255.8 88.3 344.1
---------------------------- --------------------------- ---------------------------- -----------------------------
Unallocated expenses (38.1)
-----------------------------
Adjusted operating profit 306.0
-----------------------------
Minerals ESCO Total Group
===============================
Year ended 31 December 2021
(restated
note 1) GBPm GBPm GBPm
=============================== =========================== =========================== ===========================
Assets & liabilities
------------------------------- --------------------------- --------------------------- ---------------------------
Intangible assets 563.8 742.3 1,306.1
------------------------------- --------------------------- --------------------------- ---------------------------
Property, plant & equipment 280.1 124.3 404.4
------------------------------- --------------------------- --------------------------- ---------------------------
Working capital assets 773.2 238.4 1,011.6
------------------------------- --------------------------- --------------------------- ---------------------------
1,617.1 1,105.0 2,722.1
------------------------------- --------------------------- --------------------------- ---------------------------
Investments in joint ventures - 12.3 12.3
Segment assets 1,617.1 1,117.3 2,734.4
Unallocated assets 763.0
---------------------------
Total assets 3,497.4
---------------------------
Working capital liabilities 406.9 120.2 527.1
Segment liabilities 406.9 120.2 527.1
Unallocated liabilities 1,515.8
---------------------------
Total liabilities 2,042.9
---------------------------
The following disclosures are given in relation to continuing
operations.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
=========================== =============================== =========================== ===========================
An analysis of the Group's
revenue
is as follows:
--------------------------- ------------------------------- --------------------------- ---------------------------
386.9 Original equipment 202.4 187.0
--------------------------- ------------------------------- --------------------------- ---------------------------
1,366.6 Aftermarket parts 813.6 654.5
--------------------------- ------------------------------- --------------------------- ---------------------------
1,753.5 Sales of goods 1,016.0 841.5
--------------------------- ------------------------------- --------------------------- ---------------------------
Provision of services -
121.0 Aftermarket 68.3 58.9
--------------------------- ------------------------------- --------------------------- ---------------------------
Construction contracts -
Original
59.1 equipment 11.2 -
--------------------------- ------------------------------- --------------------------- ---------------------------
1,933.6 Revenue 1,095.5 900.4
--------------------------- ------------------------------- --------------------------- ---------------------------
Total continuing
Minerals ESCO operations
30 June 30 June 30 June 30 June 30 June 30 June
2022 2021 2022 2021 2022 2021
GBPm GBPm GBPm GBPm GBPm GBPm
============= =============== =============== ================ ================ ================= =================
Timing of
revenue
recognition
------------- --------------- --------------- ---------------- ---------------- ----------------- -----------------
At a point in
time 716.6 622.0 310.4 235.6 1,027.0 857.6
------------- --------------- --------------- ---------------- ---------------- ----------------- -----------------
Over time 65.4 41.2 4.3 2.6 69.7 43.8
------------- --------------- --------------- ---------------- ---------------- ----------------- -----------------
Segment
revenue 782.0 663.2 314.7 238.2 1,096.7 901.4
------------- --------------- --------------- ---------------- ---------------- ----------------- -----------------
Eliminations (1.2) (1.0)
----------------- -----------------
1,095.5 900.4
----------------- -----------------
3. Revenue & expenses
The following disclosures are given in relation to continuing
operations.
Restated (note 1)
Year ended
31 December 6 months ended 30 6 months ended 30
2021 June 2022 June 2021
Statutory Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results results items results results items results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================== ============== ============== =============== ============== ============== =============== ==============
A
reconciliation
of
revenue to
operating
profit is as
follows:
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
1,933.6 Revenue 1,095.5 - 1,095.5 900.4 - 900.4
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
(1,241.6) Cost of sales (692.4) (3.8) (696.2) (571.2) (1.5) (572.7)
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
692.0 Gross profit 403.1 (3.8) 399.3 329.2 (1.5) 327.7
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Other
operating
19.4 income 4.6 - 4.6 7.8 - 7.8
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Selling &
distribution
(218.9) costs (133.4) (0.1) (133.5) (101.6) - (101.6)
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Administrative
(237.6) expenses (107.8) (12.6) (120.4) (95.1) (16.7) (111.8)
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Share of
results of
1.7 joint ventures 1.0 - 1.0 0.4 - 0.4
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Operating
256.6 profit 167.5 (16.5) 151.0 140.7 (18.2) 122.5
------------------ -------------- -------------- --------------- -------------- -------------- --------------- --------------
Details of adjusting items are included in note 4.
4. Adjusting items
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================= ========================= ============================= =============================
Recognised in arriving at
operating
profit from continuing
operations
----------------------------- ------------------------- ----------------------------- -----------------------------
(34.9) Intangibles amortisation (17.0) (18.0)
----------------------------- ------------------------- ----------------------------- -----------------------------
Exceptional items
----------------------------- ------------------------- ----------------------------- -----------------------------
Acquisition and
integration related
(1.9) costs (1.3) -
----------------------------- ------------------------- ----------------------------- -----------------------------
Russia operations wind
- down (1.7) -
----------------------------- ------------------------- ----------------------------- -----------------------------
Cybersecurity incident
(4.7) response - -
----------------------------- ------------------------- ----------------------------- -----------------------------
Other restructuring and
rationalisation
6.3 activities 0.3 -
----------------------------- ------------------------- ----------------------------- -----------------------------
(0.3) Total Exceptional items (2.7) -
----------------------------- ------------------------- ----------------------------- -----------------------------
Other adjusting items
----------------------------- ------------------------- ----------------------------- -----------------------------
Asbestos-related
(4.4) provision 3.2 (0.2)
Total Other adjusting
(4.4) items 3.2 (0.2)
----------------------------- ------------------------- ----------------------------- -----------------------------
(39.6) Total adjusting items (16.5) (18.2)
----------------------------- ------------------------- ----------------------------- -----------------------------
Recognised in arriving at
operating
profit from discontinued
operations
Exceptional items
----------------------------- ------------------------- ----------------------------- -----------------------------
Onerous purchase
0.9 contracts - 0.9
----------------------------- ------------------------- ----------------------------- -----------------------------
0.9 Total Exceptional items - 0.9
----------------------------- ------------------------- ----------------------------- -----------------------------
0.9 Total adjusting items - 0.9
----------------------------- ------------------------- ----------------------------- -----------------------------
Continuing operations
Intangibles amortisation
Intangibles amortisation of GBP17.0m relates to acquisition
related assets and ongoing multi-year investment activities.
Exceptional items
Exceptional items in the period include GBP1.3m for acquisition
and integration related costs, of which GBP0.9m relates to the
acquisition of Carriere Industrial Supply Limited which completed
on 8 April 2022 (note 10). The majority of these costs relate to
adviser fees, due diligence and initial integration. The remaining
GBP0.4m expense relates to further Motion Metrics integration costs
following its acquisition on 30 November 2021. The prior year
exceptional included a charge of GBP2.8m for Motion Metrics
acquisition and integration costs and a credit GBP0.9m for an
accrual release in relation to ESCO integration costs. In total
acquisition and integration costs have resulted in a GBP2.8m
exceptional cash outflow in the 6 months to 30 June 2022, including
items expensed in the prior year.
In March 2022, the Group announced the suspension of its
business and operations in Russia and has since commenced the wind
down of those operations. As a result, an initial GBP1.7m
exceptional cost has been recognised in the period. This primarily
reflects severance costs of which GBP1.1m has been cash settled in
the period. In the ESCO Division, a potential business transfer to
local management is being considered, with no costs being
recognised in the period as this review continues.
The remaining credit of GBP0.3m relates to the reversal of
restructuring and rationalisation charges recognised in Peru and
China in prior years.
The Group incurred GBP4.7m of costs in the final quarter of 2021
as a direct result of the cybersecurity incident in September 2021.
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 resulted in a GBP2.2m exceptional cash
outflow in the year to 31 December 2021 and a further GBP2.2m cash
outflow in the period to 30 June 2022 in respect of the 2021
expense.
There were no exceptional items recognised in the prior period
to 30 June 2021.
Other adjusting items
A credit of GBP3.2m (June 2021: charge GBP0.2m) 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.
Discontinued operations
There are no financial results for the period to 30 June 2022
for discontinued operations following the disposal of these in
2021. An exceptional credit of GBP0.9m was recognised in the prior
period to 30 June 2021 as a result of a final adjustment to the
onerous purchase contracts provision.
5. Income tax expense
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================= ========================= ============================= =============================
(9.8) Continuing Group - UK (5.7) (2.0)
----------------------------- ------------------------- ----------------------------- -----------------------------
Continuing Group -
(44.6) Overseas (28.1) (23.4)
----------------------------- ------------------------- ----------------------------- -----------------------------
Income tax expense in the
Consolidated
Income Statement for
continuing
(54.4) operations (33.8) (25.4)
----------------------------- ------------------------- ----------------------------- -----------------------------
(6.1) Discontinued operations - (4.2)
----------------------------- ------------------------- ----------------------------- -----------------------------
Income tax expense in the
Consolidated
Income Statement for
(60.5) total operations (33.8) (29.6)
----------------------------- ------------------------- ----------------------------- -----------------------------
The total income tax expense is disclosed in the Consolidated
Income Statement as follows.
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================= ========================= ============================= =============================
Tax (expense) credit
----------------------------- ------------------------- ----------------------------- -----------------------------
- adjusted continuing
(63.8) operations (37.6) (29.5)
----------------------------- ------------------------- ----------------------------- -----------------------------
- adjusted discontinued
(1.7) operations - -
----------------------------- ------------------------- ----------------------------- -----------------------------
- exceptional and other
adjusting
(2.9) items (0.3) (4.2)
----------------------------- ------------------------- ----------------------------- -----------------------------
- adjusting intangibles
amortisation
7.9 and impairment 4.1 4.1
----------------------------- ------------------------- ----------------------------- -----------------------------
Total income tax
(expense) in the
Consolidated Income
Statement for
(60.5) total operations (33.8) (29.6)
----------------------------- ------------------------- ----------------------------- -----------------------------
The income tax expense included in the Continuing Group's share
of results of joint ventures is as follows.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm
============================= ============== =========================== =============================
(0.2) Joint ventures - (0.4)
----------------------------- -------------- --------------------------- -----------------------------
Tax charged within the 6 months ended 30 June 2022 has been
calculated by applying the effective rate of tax which is expected
to apply to the Group for the period ending 31 December 2022 using
rates substantively enacted by 30 June 2022 as required by IAS 34
'Interim Financial Reporting'.
The normalised rate of tax of 26.4% (restated for continuing
operations at 30 June 2021: 24.9%) has been calculated using the
full year projections and has been applied to profit before
exceptionals for the 6 months ended 30 June 2022.
Legislation to increase in the UK rate from 19% to 25% from
April 2023 was substantively enacted as part of Finance Bill 2021
(on 25 May 2021). As a result, at 30 June 2022, deferred tax
balances have been calculated at 19% or 25% depending upon when the
balance is expected to unwind.
Factors affecting current and future tax charges
The normalised tax rate was 0.1% below the Group's weighted
average rate of 26.5%. The Group considers its normalised tax rate
to be sustainable.
Unrecognised Deferred Tax
Included in the net Deferred Tax Liability of GBP0.4m is
GBP28.0m related to the US Group Deferred Tax Assets, determined on
a basis consistent with the approach adopted at year ended 31
December 2021 following the application of a model which estimates
the future forecast levels of US taxable income with reference to
the Group's five year strategic plan. Consistent with this
approach, US deferred tax assets totalling GBP53.0m are not
recognised but retained by the continuing US group, in connection
with the disposal of the US entities within the Oil & Gas
Division. The ongoing application of this model may result in
future changes to the amount of US deferred tax assets that are
unrecognised.
6. Discontinued operations
There are no financial results for the period to 30 June 2022 in
respect of discontinued operations following the disposal of the
Oil & Gas Division to Caterpillar Inc on 1 February 2021 and
Saudi Arabia-based joint venture, Arabian Metals Company to Olayan
Financing Company on 30 June 2021. The Group's 2021 Annual Report
(note 8) provides full disclosure on the two transactions.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net
profit for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding
during the year. Diluted earnings per share is calculated by
dividing the net profit 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 per share.
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
-------------------------- -------------------------------- --------------------------- ---------------------------
Profit attributable to equity
holders
of the Company
-------------------------- -------------------------------- --------------------------- ---------------------------
258.5 Total operations* (GBPm) 92.1 181.2
-------------------------- -------------------------------- --------------------------- ---------------------------
154.6 Continuing operations** (GBPm) 92.1 74.6
-------------------------- -------------------------------- --------------------------- ---------------------------
Continuing operations before
adjusting
184.8 items** (GBPm) 104.8 88.7
-------------------------- -------------------------------- --------------------------- ---------------------------
* Adjusted for a profit of GBP0.1m (2021: profit of GBP0.2m) in
respect of non-controlling interests for total operations.
** Adjusted for a profit of GBP0.1m (2021: profit of GBP0.2m) in
respect of non-controlling interests for continuing operations.
The following reflects the number of shares used in the
calculation of earnings per share, and the difference between the
weighted average share capital for the purposes of the basic and
the diluted earnings per share calculations.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
Shares Shares Shares
million million million
=========== ==================================== ============================ ============================
Weighted average number of ordinary
259.3 shares for basic earnings per share 258.7 259.3
----------- ------------------------------------ ---------------------------- ----------------------------
Effect of dilution: employee share
1.7 awards 1.8 1.8
----------- ------------------------------------ ---------------------------- ----------------------------
Adjusted weighted average number
of ordinary shares for diluted
261.0 earnings per share 260.5 261.1
----------- ------------------------------------ ---------------------------- ----------------------------
The profit attributable to equity holders of the Company used in
the calculation of both basic and diluted earnings per share from
continuing operations before adjusting items is calculated as
follows.
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm
=========================== =============================== =========================== ===========================
Net profit attributable to
equity
holders from continuing
154.6 operations** 92.1 74.6
--------------------------- ------------------------------- --------------------------- ---------------------------
30.2 Adjusting items net of tax 12.7 14.1
--------------------------- ------------------------------- --------------------------- ---------------------------
Net profit attributable to
equity
holders from continuing
operations
184.8 before adjusting items 104.8 88.7
--------------------------- ------------------------------- --------------------------- ---------------------------
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
pence pence
=========================== =============================== =========================== ===========================
Basic earnings per share:
--------------------------- ------------------------------- --------------------------- ---------------------------
99.7 Total operations* 35.6 69.9
--------------------------- ------------------------------- --------------------------- ---------------------------
59.6 Continuing operations** 35.6 28.8
--------------------------- ------------------------------- --------------------------- ---------------------------
Continuing operations before
adjusting
71.3 items** 40.5 34.2
--------------------------- ------------------------------- --------------------------- ---------------------------
Diluted earnings per share:
--------------------------- ------------------------------- --------------------------- ---------------------------
99.0 Total operations* 35.4 69.4
--------------------------- ------------------------------- --------------------------- ---------------------------
59.2 Continuing operations** 35.4 28.6
--------------------------- ------------------------------- --------------------------- ---------------------------
Continuing operations before
adjusting
70.8 items** 40.2 34.0
--------------------------- ------------------------------- --------------------------- ---------------------------
* Adjusted for a profit of GBP0.1m (2021: profit of GBP0.2m) in
respect of non-controlling interests for total operations.
** Adjusted for a profit of GBP0.1m (2021: profit of GBP0.2m) in
respect of non-controlling interests for continuing operations.
There have been 725 share awards (2021: nil) exercised between
the reporting date and the date of signing of these financial
statements. These were settled out of existing shares held in
trust.
8. Dividends paid & proposed
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ============================== =========================== ===========================
Declared & paid during the
year
---------------------------- ------------------------------ --------------------------- ---------------------------
Equity dividends on ordinary
shares
---------------------------- ------------------------------ --------------------------- ---------------------------
- Final dividend paid for 2021: 31.8 -
12.3p
(2020: nil)
---------------------------- ------------------------------ --------------------------- ---------------------------
29.8 Interim dividend paid for - -
2021:
11.5p (2020: nil)
---------------------------- ------------------------------ --------------------------- ---------------------------
31.9 Final dividend for 2021 - -
proposed
for approval by shareholders
at
the AGM (12.3p)
---------------------------- ------------------------------ --------------------------- ---------------------------
Interim dividend proposed for
2022:
- 13.5p (2021: 11.5p) 34.9 29.8
---------------------------- ------------------------------ --------------------------- ---------------------------
An interim dividend of 13.5p has been declared for 2022 (2021:
11.5p) in line with the capital allocation policy under which the
Group intends to distribute 33% of net adjusted earnings by way of
dividend.
The proposed interim 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 interim dividend may differ due to increases or decreases in
the number of shares in issue between the date of approval of this
Interim Report and Financial Statements and the record date for the
interim dividend.
9. Property, plant & equipment and intangible assets
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ============================ ============================ ============================
Additions of property, plant
&
equipment and intangible
assets
---------------------------- ---------------------------- ---------------------------- ----------------------------
4.0 - owned land & buildings 2.3 0.9
---------------------------- ---------------------------- ---------------------------- ----------------------------
44.3 - owned plant & equipment 18.0 21.1
---------------------------- ---------------------------- ---------------------------- ----------------------------
- right-of-use land &
12.4 buildings 17.8 6.9
---------------------------- ---------------------------- ---------------------------- ----------------------------
- right-of-use plant &
8.9 equipment 2.1 4.4
---------------------------- ---------------------------- ---------------------------- ----------------------------
8.0 - intangible assets 2.5 3.0
---------------------------- ---------------------------- ---------------------------- ----------------------------
77.6 42.7 36.3
---------------------------- ---------------------------- ---------------------------- ----------------------------
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
On 8 April 2022, the Group completed the acquisition of 100% of
the voting rights of Carriere Industrial Supply Limited (CIS) for
an enterprise value of CAD$32.5m (GBP20.2m). CIS is a
Canadian-based manufacturer and distributor of wear parts, and an
aftermarket service provider to the mining industry with exposure
across both surface and underground mining in Ontario and Quebec.
The acquisition has joined the ESCO Division and reporting segment
as CIS is already an established distributor of ESCO's core GET
products. This acquisition will maintain ESCO's leading core GET
presence in Ontario and provide opportunities to expand into
fabricated hardware and underground capabilities. Initial
consideration of GBP16.2m was paid on completion, with a further
deferred consideration of GBP2.5m payable reflecting
indemnification and working capital hold backs. The settlement of
the working capital hold back is expected to be in the second half
of the year subject to finalisation of the closing accounts
process, with the indemnification hold back payable in two
installments on the first and second anniversary of the acquisition
date.
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 GBP5.3m 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. An update to the provisional fair values including,
where appropriate, the recognition of separable intangible assets
will be provided in the 2022 Annual Report.
2022
Carriere Industrial Supply Limited provisional fair
values GBPm
======================================================== =============================
Property, plant & equipment - owned assets 3.6
-------------------------------------------------------- -----------------------------
Property, plant & equipment - right-of-use assets -
-------------------------------------------------------- -----------------------------
Intangible assets -
Inventories 10.6
-------------------------------------------------------- -----------------------------
Trade & other receivables 5.8
Cash & cash equivalents 1.6
Trade & other payables (7.6)
Deferred tax liabilities (0.6)
Provisional fair value of net assets 13.4
Goodwill arising on acquisition 5.3
-------------------------------------------------------- -----------------------------
Total consideration 18.7
-------------------------------------------------------- -----------------------------
Cash consideration 16.2
Deferred consideration 2.5
-------------------------------------------------------- -----------------------------
Total consideration 18.7
-------------------------------------------------------- -----------------------------
The total net cash outflow on current year acquisitions
was as follows:
-------------------------------------------------------- -----------------------------
Carriere Industrial Supply Limited
-------------------------------------------------------- -----------------------------
cash paid (16.2)
-------------------------------------------------------- -----------------------------
cash & cash equivalents acquired 1.6
Total cash outflow (note 15) (14.6)
-------------------------------------------------------- -----------------------------
The gross amount and fair value of CIS trade receivables amounts
to GBP5.8m. It is expected that virtually all the contractual
amounts will be collected.
CIS contributed GBP9.3m to revenue and an operating profit of
GBP1.3m (before adjusting items) in the period from acquisition to
30 June 2022. If the acquisition had occurred at the start of 2022
the revenue and statutory profit for the period 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 in relation to CIS were GBP0.9m in the period
(note 4) and are reported within Administrative expenses (note
3).
In November 2021, the Group completed the acquisition of 100% of
the voting rights of Motion Metrics, a leading Canada-based global
mining technology business with market leading development in
innovative Artificial Intelligence (AI) and 3D rugged Machine
Vision Technology. The Group purchased Motion Metrics for an
enterprise value of CAD$150m (GBP88m), which represented the
initial equity value consideration of GBP68m paid in cash and
GBP20m of vendor liabilities. The remaining GBP9m vendor
liabilities outstanding at 31 December 2021 have been cash settled
in the period to 30 June 2022. The acquisition is reported within
the ESCO segment.
The provisional opening balance sheet reported in the 2021
Annual Report has been updated based on the review performed to
date, as reflected in the table below. This has resulted in the
restatement of the balance sheet at 31 December 2021 as reflected
in note 1. The provisional fair values will be finalised within 12
months of the acquisition date (30 November 2021) and the final
opening balance sheet will be reported in the 2022 Annual
Report.
Adjustment Restated
As reported (note 1) (note 1)
2021 2021 2021
Motion Metrics
provisional fair
values GBPm GBPm GBPm
========================= ============================ ============================= ==============================
Property, plant &
equipment - owned
assets 0.6 (0.1) 0.5
------------------------- ---------------------------- ----------------------------- ------------------------------
Property, plant &
equipment - right-of-use
assets 0.2 0.7 0.9
------------------------- ---------------------------- ----------------------------- ------------------------------
Intangible assets
Brand names 3.3 3.3
------------------------- ---------------------------- ----------------------------- ------------------------------
Intellectual
property and
trademarks 34.0 0.1 34.1
------------------------- ---------------------------- ----------------------------- ------------------------------
Purchased software 0.1 0.1
Inventories 2.2 (0.6) 1.6
------------------------- ---------------------------- ----------------------------- ------------------------------
Trade & other receivables 2.3 2.3
------------------------- ---------------------------- ----------------------------- ------------------------------
Income tax receivable 0.7 1.1 1.8
Interest-bearing loans &
borrowings (0.2) (0.7) (0.9)
------------------------- ---------------------------- ----------------------------- ------------------------------
Trade & other payables (1.6) (0.8) (2.4)
Income tax payable (0.5) (0.1) (0.6)
------------------------- ---------------------------- ----------------------------- ------------------------------
Provisions (20.0) - (20.0)
------------------------- ---------------------------- ----------------------------- ------------------------------
Deferred tax liabilities (5.3) (0.1) (5.4)
Provisional fair value of
net assets 15.8 (0.5) 15.3
Goodwill arising on
acquisition 52.1 0.5 52.6
------------------------- ---------------------------- ----------------------------- ------------------------------
Total consideration 67.9 - 67.9
------------------------- ---------------------------- ----------------------------- ------------------------------
Cash consideration 67.9 - 67.9
Contingent consideration - - -
------------------------- ---------------------------- ----------------------------- ------------------------------
Total consideration 67.9 - 67.9
------------------------- ---------------------------- ----------------------------- ------------------------------
The total net cash
outflow on current
year acquisitions was as
follows:
cash paid (67.9) - (67.9)
------------------------- ---------------------------- ----------------------------- ------------------------------
cash & cash
equivalents
acquired - - -
Total cash outflow (note
15) (67.9) - (67.9)
------------------------- ---------------------------- ----------------------------- ------------------------------
Contingent consideration
As noted in the 2021 Annual Report, 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. In the period following
acquisition, the probability of Motion Metrics exceeding these
targets in order to trigger a contingent payment is still
considered uncertain, in part due to the relative infancy of the
business. As a result, no contingent consideration has been
recorded at the reporting date and this will continue to be
reassessed in future periods as the business develops.
Group exceptional acquisition and integration costs in relation
to Motion Metrics were GBP0.4m in the period (note 4) and are
reported within Administrative expenses (note 3).
11. Provisions
Warranties
& contract Exceptional
claims Asbestos-related Employee-related items Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
============ ================== ================== ================== ================== ================== ==================
At 31
December
2021 9.4 61.6 12.4 11.1 11.0 105.5
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Additions 2.2 0.6 7.0 3.0 0.9 13.7
Utilised (3.4) (3.7) (7.0) (12.8) (0.6) (27.5)
Unutilised (0.2) (5.8) - (0.3) (0.2) (6.5)
Exchange
adjustment 0.8 5.9 0.6 0.5 1.2 9.0
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 30 June
2022 8.8 58.6 13.0 1.5 12.3 94.2
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Current 8.8 8.2 8.0 1.4 2.2 28.6
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Non-current - 50.4 5.0 0.1 10.1 65.6
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 30 June
2022 8.8 58.6 13.0 1.5 12.3 94.2
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Current 5.8 7.5 6.8 2.4 2.5 25.0
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Non-current 0.1 55.0 5.6 1.0 9.4 71.1
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 30 June
2021 5.9 62.5 12.4 3.4 11.9 96.1
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Current 9.2 7.6 6.9 10.8 2.0 36.5
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Non-current 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
------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
The impact of discounting is only relevant for the
Asbestos-related category of provision, with higher discount rates
at 30 June 2022 resulting in a GBP5.8m reduction in the provision
which is reflected as unutilised above.
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 30 June 2022, the
warranties portion of the provision totalled GBP6.8m (2021:
GBP4.6m) for continuing operations. At 30 June 2022, all of these
costs relate to claims which fall due within one year of the
balance sheet date. Prior to this, some costs were non-current but
expected to be 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 30 June 2022, the contract claims element, which
includes onerous provision, was GBP2.0m (2021: GBP1.3m), all of
which is expected to be incurred within one year of the balance
sheet date.
Asbestos-related claims
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
=========== ================================= ============================ ============================
US asbestos-related provision -
55.5 pre-1981 date of first exposure 52.6 56.5
----------- --------------------------------- ---------------------------- ----------------------------
US asbestos-related provision -
3.0 post-1981 date of first exposure 2.9 2.9
----------- --------------------------------- ---------------------------- ----------------------------
US asbestos-related provision -
58.5 total 55.5 59.4
----------- --------------------------------- ---------------------------- ----------------------------
3.1 UK asbestos-related provision 3.1 3.1
----------- --------------------------------- ---------------------------- ----------------------------
61.6 Total asbestos-related provision 58.6 62.5
----------- --------------------------------- ---------------------------- ----------------------------
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 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. Further details
of this review, the resulting US asbestos-related provision and
insurance asset, judgements applied and relevant sensitivity
analysis is included in note 21 of our 2021 Annual Report and
Financial Statements.
In the 6 months to 30 June 2022 the US asbestos-related
provision was updated for changes in discount rate, period end FX
rates and adjusted in line with the actuarial model to reflect
expected settlements and the estimate of ten years of future
claims. The insurance asset was updated to reflect settlements in
the period. The table below represents the Directors' best estimate
of the future liability and corresponding insurance asset.
31 December 30 June
2021 2022 30 June 2021
US asbestos-related
GBPm provision GBPm GBPm
============================= ========================== ============================ =============================
67.4 Gross provision 71.6 69.0
----------------------------- -------------------------- ---------------------------- -----------------------------
(8.9) Effect of discounting (16.1) (9.6)
----------------------------- -------------------------- ---------------------------- -----------------------------
Discounted US
asbestos-related
58.5 provision 55.5 59.4
----------------------------- -------------------------- ---------------------------- -----------------------------
42.2 Insurance asset 40.9 47.2
----------------------------- -------------------------- ---------------------------- -----------------------------
Net US asbestos-related
16.3 liability 14.6 12.2
----------------------------- -------------------------- ---------------------------- -----------------------------
The insurance asset consists of GBP7.4m (2021: GBP6.8m)
presented within Trade & other receivables as a current asset,
and GBP33.5m (2021: GBP40.4m) as Other receivables within
non-current assets.
Since the latest triennial actuarial update conducted in 2020
the number of claims received has exceeded those included in the
actuarial model. While settlement costs related to claims received
through 2021 were below those provided, there has been an increase
in average settlement values in the first half of 2022. These
variations are to be expected from period to period and the
sensitivity analysis reflecting reasonably probable scenarios
conducted at 31 December 2021 is considered to still be
appropriate.
Ultimately, there is 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.
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
(2021: GBP3.1m).
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 GBP11.1m included GBP8.9m for opening
balance sheet liabilities in Motion Metrics, cybersecurity costs of
GBP0.4m and final Oil & Gas disposal costs of GBP0.4m. The
remaining opening balance of GBP1.4m relates to prior year balances
in Minerals for severance costs and onerous contract
provisions.
Additions of GBP3.0m in the period include GBP1.3m for
acquisition and integration costs in relation to Carriere
Industrial Supply Limited and Motion Metrics, and GBP1.7m for
redundancy and customer penalties related to initial wind down
actions associated with our Russian operations in the Minerals
Division. The utilisation in the period of GBP12.8m primarily
relates to the cash settlement of the majority of the opening
provision, including Motion Metrics acquisition vendor liabilities,
plus partial settlement of acquisition and integration costs and
Russia wind down costs.
The closing balance of GBP1.5m primarily relates to customer and
onerous lease contracts, the wind down of our Russian operations
and outstanding integration costs.
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
The Group utlises a number of sources of funding including
private placement debt, Sustainability-Linked Notes, revolving
credit facility and uncommitted facilities
In April 2022, the Group completed the refinancing of its
US$950m Revolving Credit Facility (RCF) which was due to expire in
June 2023. This was replaced with a US$800m RCF with a syndicate of
11 global banks and will mature in April 2027 with the option to
extend for up to a further two years. The RCF includes a link to
the Group's sustainability goals and the covenant terms are
unchanged.
At 30 June 2022, GBP359.1m (2021: GBPnil) was drawn under the
US$800m multi-currency revolving credit facility which is disclosed
net of unamortised issue costs of GBP2.6m (2021: GBP4.0m).
At 30 June 2022, a total of GBP164.2m (2021: GBP572.5m) was
outstanding under private placement which is disclosed net of
unamortised issue costs of GBPnil (2021: GBP0.2m).
At 30 June 2022, a total of GBP653.0m (2021: GBP579.7m) was
outstanding under Sustainability-Linked Notes which is disclosed
net of unamortised issue costs of GBP4.0m (2021: GBP4.7m).
The Group operates a notional cash pooling arrangement in which
individual balances are not offset for reporting purposes. Cash
& short-term deposits at 30 June 2022 includes GBP123.2m (2021:
GBP72.0m) that is part of this arrangement and both cash and
interest-bearing loans & borrowings are grossed up by this
amount.
13. Pensions & other post-employment benefit plans
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ===================== ============================ ===========================
- Plans in surplus 59.2 -
---------------------------- --------------------- ---------------------------- ---------------------------
(56.7) Plans in deficit (34.8) (103.6)
---------------------------- --------------------- ---------------------------- ---------------------------
(56.7) Net asset (liability) 24.4 (103.6)
---------------------------- --------------------- ---------------------------- ---------------------------
The IAS 19 funding position across the Group's legacy UK and
North American schemes improved from a deficit of GBP56.7m at 31
December 2021 to a net surplus of GBP24.4m at 30 June 2022. This is
primarily due to a reduction in liabilities due to changes in
market conditions, driven by a significant rise in discount rates
as well as updates to mortality assumptions and contributions paid
to the plans over the period. This is partially offset by net
losses on the asset side combined with experience losses and
exchange rate movements.
14. 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.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
Included in current
assets
----------------------------- ------------------------- ----------------------------- -----------------------------
Forward foreign currency
contracts
designated as cash flow
- hedges - 0.2
Cross currency swaps
designated
- as net investment hedges - 2.9
----------------------------- ------------------------- ----------------------------- -----------------------------
Other forward foreign
currency
7.1 contracts 7.4 5.2
----------------------------- ------------------------- ----------------------------- -----------------------------
7.1 7.4 8.3
----------------------------- ------------------------- ----------------------------- -----------------------------
Included in current
liabilities
----------------------------- ------------------------- ----------------------------- -----------------------------
Forward foreign currency
contracts
designated as cash flow
(0.4) hedges (0.2) (0.4)
----------------------------- ------------------------- ----------------------------- -----------------------------
Forward foreign currency
contracts
designated as net
- investment hedges (0.4) (0.3)
Other forward foreign
currency
(3.4) contracts (9.8) (2.9)
----------------------------- ------------------------- ----------------------------- -----------------------------
(3.8) (10.4) (3.6)
----------------------------- ------------------------- ----------------------------- -----------------------------
Included in non-current
liabilities
Other forward foreign
currency
(0.1) contracts (0.4) (0.1)
----------------------------- ------------------------- ----------------------------- -----------------------------
(0.1) (0.4) (0.1)
----------------------------- ------------------------- ----------------------------- -----------------------------
Net derivative financial
(liabilities)
3.2 assets - total Group (3.4) 4.6
----------------------------- ------------------------- ----------------------------- -----------------------------
Carrying amounts & fair values
Set out below is a comparison of carrying amounts and fair
values of all of the Group's financial instruments that are
reported in the financial statements.
Restated
(note
1)
Carrying Carrying Fair Carrying
amount Fair value amount value amount Fair value
31 December 31 December 30 June 30 June 30 June 30 June
2021 2021 2022 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Financial assets
-
total Group
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Derivative
financial
instruments
recognised
at fair value
through
7.1 7.1 profit or loss 7.4 7.4 5.2 5.2
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Derivative
financial
instruments in
designated
hedge accounting
- - relationships - - 3.1 3.1
Trade & other
receivables
excluding
statutory
assets,
prepayments
& construction
contract
507.5 507.5 assets 571.7 571.7 449.1 449.1
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Cash & short-term
564.4 564.4 deposits 467.0 467.0 647.0 647.0
1,079.0 1,079.0 1,046.1 1,046.1 1,104.4 1,104.4
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Financial
liabilities
- total Group
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Derivative
financial
instruments
recognised
at fair value
through
3.5 3.5 profit or loss 10.2 10.2 3.0 3.0
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Derivative
financial
instruments in
designated
hedge accounting
0.4 0.4 relationships 0.6 0.6 0.7 0.7
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Deferred
consideration
- - payable 2.5 2.5 - -
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Amortised cost:
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Fixed-rate
1,170.1 1,211.1 borrowings 817.2 796.7 1,147.3 1,213.2
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Floating-rate
(3.0) (3.0) borrowings 359.1 359.1 (4.0) (4.0)
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
105.4 105.4 Leases 118.5 118.5 110.2 110.2
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Bank overdrafts &
short-term
64.4 64.4 borrowings 133.1 133.1 72.0 72.0
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
Trade & other
payables
excluding
statutory
liabilities &
contract
410.5 410.5 liabilities 441.2 441.2 355.4 355.4
1,751.3 1,792.3 1,882.4 1,861.9 1,684.6 1,750.5
------------------- ------------------- ----------------- ----------------- ----------------- ------------------ ------------------
The Group operates a notional cash pooling arrangement in which
individual balances are not offset for reporting purposes. Cash
& short-term deposits at 30 June 2022 includes GBP123.2m (2021:
GBP72.0m) that is part of this arrangement and both cash and
interest-bearing loans & borrowings are grossed up by this
amount.
The Group enters into derivative financial instruments with
various counterparties, principally financial institutions with
investment grade credit ratings. The derivative financial
instruments are valued using valuation techniques with market
observable inputs including spot and forward foreign exchange
rates, interest rate curves, counterparty and own credit risk. The
fair value of cross currency swaps is calculated as the present
value of the estimated future cash flows based on spot foreign
exchange rates. The fair value of forward foreign currency
contracts is calculated as the present value of the estimated
future cash flows based on spot and forward foreign exchange
rates.
The fair value of borrowings is estimated by discounting future
cash flows using rates currently available for debt on similar
terms, credit risk and remaining maturities. The fair value of
lease liabilities is disclosed in line with the carrying value
which is estimated by discounting future cash flows using the rate
implicit in the lease or the Group's incremental borrowing rate.
The fair value of cash and short-term deposits, trade and other
receivables and trade and other payables approximates their
carrying amount due to the short-term maturities of these
instruments.
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level Quoted (unadjusted) prices in active markets for identical
1: assets or liabilities;
Level Other techniques for which all inputs that have a significant
2: effect on the recorded fair value are observable, either
directly or indirectly;
Level Techniques which use inputs which have a significant effect
3: on the recorded fair value that are not based on observable
market data.
For financial instruments that are recognised at fair value on a
recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period. The Group holds all financial instruments at
level 2 fair value measurement.
During the 6 months ended 30 June 2022 and the year ended 31
December 2021, there were no transfers between level 1 and level 2
fair value measurements and no transfers into or out of level 3
fair value measurements.
15. Additional cash flow information
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm Notes GBPm GBPm
============================= ================== ===== ============================= =============================
Total operations
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Net cash generated
from operations
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Operating profit -
continuing
256.6 operations 151.0 122.5
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Operating profit -
discontinued
0.6 operations 6 - 0.6
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Operating profit -
257.2 total operations 151.0 123.1
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Exceptional and
other adjusting
3.8 items 4 (0.5) (0.7)
Amortisation of
40.2 intangible assets 20.0 19.9
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Share of results
(3.3) of joint ventures (1.0) (2.0)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Depreciation of
property, plant
43.0 & equipment 22.7 21.1
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Depreciation of
right-of-use
27.6 assets 14.8 14.0
(0.3) Grants received - -
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Gains on disposal
of property,
(4.3) plant & equipment (0.5) (4.1)
Funding of pension
& post-retirement
(2.7) costs (1.7) (1.3)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Employee share
10.9 schemes 4.1 7.5
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Transactional
4.8 foreign exchange 4.9 2.6
----------------------------- ------------------ ----- ----------------------------- -----------------------------
(Decrease)
increase in
3.9 provisions (1.3) 1.1
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Cash generated
from operations
before working
capital cash
380.8 flows 212.5 181.2
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Increase in
(84.9) inventories (104.4) (45.4)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Decrease
(increase) in
trade
& other
receivables &
construction
(61.7) contracts 17.0 6.3
----------------------------- ------------------ ----- ----------------------------- -----------------------------
(Decrease)
increase in trade
& other payables &
construction
31.8 contracts (24.9) (2.3)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Cash generated
266.0 from operations 100.2 139.8
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Additional pension
contributions
(7.8) paid (7.7) (5.9)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Exceptional and
other adjusting
(8.6) cash items (7.2) (4.7)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Exceptional cash
items - acquired
(11.1) vendor liabilities (8.9) -
----------------------------- ------------------ ----- ----------------------------- -----------------------------
(82.4) Income tax paid (40.2) (35.0)
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Net cash generated
from operating
156.1 activities 36.2 94.2
----------------------------- ------------------ ----- ----------------------------- -----------------------------
Exceptional and other adjusting items are detailed in note
4.
The following tables summarise the cash flows arising on
acquisitions (note 10) and disposals.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ============================ ============================= ===========================
Acquisitions of subsidiaries
---------------------------- ---------------------------- ----------------------------- ---------------------------
Current period acquisitions
(see
(67.9) below) (14.6) -
Acquisition of subsidiaries
- cash
67.9 paid 16.2 -
---------------------------- ---------------------------- ----------------------------- ---------------------------
Cash & cash equivalents
- acquired (1.6) -
---------------------------- ---------------------------- ----------------------------- ---------------------------
Acquisition of subsidiaries
- current
67.9 period acquisitions 14.6 -
Total cash outflow on
current period
67.9 acquisitions 14.6 -
Total cash outflow relating
to
67.9 acquisitions 14.6 -
---------------------------- ---------------------------- ----------------------------- ---------------------------
Net cash inflow arising on
disposals
---------------------------- ---------------------------- ----------------------------- ---------------------------
Consideration received net
of costs
paid & cash disposed of -
Oil &
Gas Division (excluding
258.5 AMCO) - 251.4
---------------------------- ---------------------------- ----------------------------- ---------------------------
Consideration received net
of costs
paid & cash disposed of -
AMCO
24.0 Joint Venture - 27.4
---------------------------- ---------------------------- ----------------------------- ---------------------------
Total cash inflow relating
282.5 to disposals - 278.8
---------------------------- ---------------------------- ----------------------------- ---------------------------
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ============================= =========================== ============================
Cash & cash equivalents
comprise
the following
---------------------------- ----------------------------- --------------------------- ----------------------------
564.4 Cash & short-term deposits 467.0 647.0
---------------------------- ----------------------------- --------------------------- ----------------------------
Bank overdrafts & short-term
(64.4) borrowings (133.1) (72.0)
500.0 333.9 575.0
---------------------------- ----------------------------- --------------------------- ----------------------------
Restated
(note 1)
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
=========================== =============================== =========================== ===========================
Net debt comprises the
following
--------------------------- ------------------------------- --------------------------- ---------------------------
564.4 Cash & short-term deposits 467.0 647.0
--------------------------- ------------------------------- --------------------------- ---------------------------
Current interest-bearing loans
(524.1) & borrowings (323.6) (524.2)
--------------------------- ------------------------------- --------------------------- ---------------------------
Non-current interest-bearing
loans
(812.8) & borrowings (1,104.3) (801.3)
(772.5) (960.9) (678.5)
--------------------------- ------------------------------- --------------------------- ---------------------------
Reconciliation of financing cash flows to movement in net
debt
Restated
(note
1)
Opening
balance Closing
at 31 balance
December Cash Non-cash at 30
2021 movements Additions/acquisitions Disposals FX movements June 2022
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============= ================= ================== ====================== ================ ================== ================== ==================
Cash & cash
equivalents 500.0 (198.8) 1.6 - 31.1 - 333.9
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Third-party
loans (1,174.7) 108.0 - - (116.2) - (1,182.9)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Leases (105.4) 14.0 (20.1) - (7.0) - (118.5)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Unamortised
issue
costs 7.6 2.7 - - - (3.7) 6.6
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Amounts
included
in gross
debt (1,272.5) 124.7 (20.1) - (123.2) (3.7) (1,294.8)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Amounts
included
in net debt (772.5) (74.1) (18.5) - (92.1) (3.7) (960.9)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Financing
derivatives 1.4 (0.2) - - - (1.4) (0.2)
Other
liabilities
relating to
financing
activities 1.4 (0.2) - - - (1.4) (0.2)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
Total
financing
liabilities* (1,271.1) 124.5 (20.1) - (123.2) (5.1) (1,295.0)
------------- ----------------- ------------------ ---------------------- ---------------- ------------------ ------------------ ------------------
(* Total financing liabilities comprise gross debt plus other
liabilities relating to financing activities.)
Restated
(note
1)
Closing
Opening balance
balance at 31
at 30 Non-cash December
June 2021 Cash movements Additions Disposals FX movements 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============= ================= ================== ================== ================ ================== ================== =================
Cash & cash
equivalents 575.0 (76.4) - - 1.4 - 500.0
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Third-party
loans (1,152.2) 0.2 (0.2) - (22.5) - (1,174.7)
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Leases (110.2) 14.0 (9.2) - (0.2) 0.2 (105.4)
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Unamortised
issue
costs 8.9 0.4 - - - (1.7) 7.6
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Amounts
included
in gross
debt (1,253.5) 14.6 (9.4) - (22.7) (1.5) (1,272.5)
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Amounts
included
in net debt (678.5) (61.8) (9.4) - (21.3) (1.5) (772.5)
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Financing
derivatives 5.4 (5.3) - - - 1.3 1.4
Other
liabilities
relating to
financing
activities 5.4 (5.3) - - - 1.3 1.4
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
Total
financing
liabilities* (1,248.1) 9.3 (9.4) - (22.7) (0.2) (1,271.1)
------------- ----------------- ------------------ ------------------ ---------------- ------------------ ------------------ -----------------
(* 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 period and outstanding balances
at the period end.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 2022 30 June 2021
GBPm GBPm GBPm
============================ ============================ ============================ ============================
Sales of goods to related
parties
0.7 - joint ventures 0.7 0.3
---------------------------- ---------------------------- ---------------------------- ----------------------------
Sales of services to related
parties
0.1 - joint ventures 0.1 0.1
---------------------------- ---------------------------- ---------------------------- ----------------------------
Purchases of goods from
related
16.7 parties - joint ventures 11.8 7.4
Amounts owed to related
parties
5.9 - group pension plans 1.7 1.4
---------------------------- ---------------------------- ---------------------------- ----------------------------
Amounts owed by related
parties
1.3 - joint ventures - -
---------------------------- ---------------------------- ---------------------------- ----------------------------
17. Exchange rates
The principal exchange rates applied in the preparation of these
financial statements were as follows.
6 months 6 months
Year ended ended ended
31 December 30 June
2021 Average rate (per GBP) 2022 30 June 2021
=========================== ====================== =========================== ===========================
1.38 US Dollar 1.30 1.39
--------------------------- ---------------------- --------------------------- ---------------------------
1.83 Australian Dollar 1.81 1.80
--------------------------- ---------------------- --------------------------- ---------------------------
1.16 Euro 1.19 1.15
--------------------------- ---------------------- --------------------------- ---------------------------
1.73 Canadian Dollar 1.65 1.73
--------------------------- ---------------------- --------------------------- ---------------------------
1,043.54 Chilean Peso 1,073.60 998.75
--------------------------- ---------------------- --------------------------- ---------------------------
20.34 South African Rand 20.03 20.19
--------------------------- ---------------------- --------------------------- ---------------------------
7.42 Brazilian Real 6.61 7.47
8.88 Chinese Yuan 8.42 8.99
--------------------------- ---------------------- --------------------------- ---------------------------
101.70 Indian Rupee 98.98 101.75
--------------------------- ---------------------- --------------------------- ---------------------------
Closing rate (per GBP)
=========================== ====================== =========================== ===========================
1.35 US Dollar 1.22 1.38
--------------------------- ---------------------- --------------------------- ---------------------------
1.86 Australian Dollar 1.76 1.84
--------------------------- ---------------------- --------------------------- ---------------------------
1.19 Euro 1.16 1.16
--------------------------- ---------------------- --------------------------- ---------------------------
1.71 Canadian Dollar 1.57 1.71
--------------------------- ---------------------- --------------------------- ---------------------------
1,153.18 Chilean Peso 1,126.97 1,010.33
--------------------------- ---------------------- --------------------------- ---------------------------
21.57 South African Rand 19.81 19.76
--------------------------- ---------------------- --------------------------- ---------------------------
7.54 Brazilian Real 6.32 6.89
8.60 Chinese Yuan 8.16 8.91
--------------------------- ---------------------- --------------------------- ---------------------------
100.66 Indian Rupee 96.17 102.58
--------------------------- ---------------------- --------------------------- ---------------------------
Directors' Statement of Responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34 "Interim Financial Reporting",
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
a. an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
a. material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
A list of current directors is maintained on The Weir Group PLC
website which can be found at www.global.weir .
On behalf of the Board
John Heasley
Chief Financial Officer
28 July 2022
Independent review report to The Weir Group PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed The Weir Group PLC's condensed consolidated
interim financial statements (the "interim financial statements")
in the Interim Report of The Weir Group PLC for the 6 month period
ended 30 June 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Consolidated Balance Sheet as at 30 June 2022;
-- the Consolidated Income Statement and Consolidated Statement
of Comprehensive Income for the period then ended;
-- the Consolidated Cash Flow Statement for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
of The Weir Group PLC have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the Interim Report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the Interim Report, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report based on our review. Our
conclusion, including our Conclusions relating to going concern, is
based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
28 July 2022
Shareholder Information
The Board have declared an interim dividend of 13.5p for 2022
(2021: 11.5p).
Financial Calendar
Ex-dividend date for interim dividend
6 October 2022
Record date for interim dividend
7 October 2022
Shareholders on the register at this date will receive the
dividend
Interim dividend paid
4 November 2022
Our Interim Report will be available to download from The Weir
Group PLC website at www.global.weir immediately after the
management presentation.
Disclaimer
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.
Registered office and company number
1 West Regent Street
Glasgow
G2 1RW
Scotland
Registered in Scotland
Company number: SC002934
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END
IR RPMJTMTITMIT
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