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

(END) Dow Jones Newswires

July 28, 2022 02:00 ET (06:00 GMT)

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