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| Date/Time | Headline | Source |
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| 09-03-10 | AFX UK Focus |
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Reuters Messaging rm://jon.hopkins.reuters.com@reuters.net Keywords: MARKETS UK STOCKSNEWS/ COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. More |
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| 09-03-10 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 2635I
Weir Group PLC
09 March 2010
The Weir Group PLC
9 March 2010
THE WEIR GROUP PLC PRELIMINARY RESULTS 2009
Results for 53 weeks ended 1 January 2010
2009 2008 Change
Continuing Operations
Order input[1] £1,302m £1,595m -18%
Revenue £1,390m £1,354m +3%
Operating profit[2] £205m £185m +11%
Operating margin[2] 14.7% 13.7% +1.0%
Profit before tax[2] £187m £176m +6%
Cash from operations[2] £302m £214m +41%
Earnings per share[2] 64.1p 59.3p +8%
Dividend per share 21.0p 18.5p +14%
Net debt £119m £240m
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation. Reported operating profit,
profit before tax and earnings per share were £188m (2008: £168m); £170m (2008:
£160m) and 58.8p (2008: 53.8p) respectively.
HIGHLIGHTS
§ Resilient aftermarket contributed 54% of revenues;
§ Record operating profit benefiting from positive currency effect;
§ Margin benefiting from stronger aftermarket and cost management;
§ Exceptional free cash flow generation;
§ Net debt halved in the year;
§ Stabilisation of Minerals order input;
§ Stronger current trading driving a more positive outlook for Weir SPM;
§ Power & Industrial to benefit from record nuclear order book;
§ 2010 expectations upgraded.
Keith Cochrane, Chief Executive, commented:
"In a difficult global economic environment the Weir Group has again performed strongly in 2009, delivering an exceptional cash performance and making good progress against our key priorities.
We have an excellent platform for growth and a clear strategy to extend the Group's presence in three attractive markets with positive long-term fundamentals.
As we enter 2010 the Group is in robust financial health and well placed to capitalise on market opportunities. Although the pace and timing of global economic recovery remains uncertain and forward visibility limited, we are now targeting a broadly similar level of profitability to that achieved in 2009."
Contact details: The Weir Group PLC Available through UBS
Keith Cochrane, Chief Executive Tel. 020 7567 8000 (switchboard);
Helen Walker, Public Relations Manager (Mobile: 07789 032296)
Maitland Tel. 020 7379 5151
Suzanne Bartch (Mobile: 07769 710 335)
Rowan Brown
GENERAL OVERVIEW
We have delivered a strong set of results that demonstrate the quality and resilience of our business model. A higher proportion of aftermarket revenues, a growing contribution from emerging markets and effective cost base management largely mitigated the impact of reduced demand for original equipment products. An outstanding level of cash generation in the year coupled with our committed bank facilities and long dated fixed rate notes issued in January 2010 mean we start the year in a strong financial position.
Our South American Minerals operations delivered a record operating performance and we won a number of notable contracts in the Chinese nuclear new build and Middle East downstream oil and gas markets. We also retained our Canadian Naval Engineering contract for a further fifteen years. Positive emerging trends at Weir SPM were also evident towards the end of the year.
FINANCIAL HIGHLIGHTS
Order input in constant currency at £1,302m was 18% lower than the prior year in total and on a like for like basis after adjusting for prior year acquisitions and disposals. Original equipment orders were down 34% reflecting lower capital spending across most of our end markets while aftermarket orders held up well ending the year only 2% lower than 2008, with aftermarket orders represented 58% (2008: 48%) of total input. Each of the divisions reported lower input levels in 2009, with other Group companies input falling to £12m (2008: £76m).
Revenue in constant currency declined by 7%, reflecting a strong opening order book, offset by lower input levels over the year. Like for like revenues were similarly down 7% reflecting the impact of prior year acquisitions and disposals. Reported revenue grew by 3% to £1,390m (2008: £1,354m) with a net currency benefit of £145m, principally due to the weakening of sterling relative to the average US dollar, euro and Australian dollar rates. Aftermarket sales represented 54% (2008: 50%) of revenue and our exposure to emerging markets grew to 43% (2008: 40%) of revenues with stronger contributions from both South America and Africa. Revenues from other Group companies fell from £110m to £36m in part due to prior year disposals.
Operating profit from continuing operations before intangibles amortisation increased by 11% to £204.7m (2008: £185.0m) including a net foreign currency benefit of £29.4m. On a constant currency basis operating profits reduced by 5%, principally due to lower volumes at Weir SPM and one-off restructuring costs of £6.2m, partly offset by a net contribution from prior year acquisitions and disposals of £10.7m. The profit contribution from other Group companies was £6.8m (2008: £2.0m).
Operating margin in constant currency increased from 14.3% to 14.7%, reflecting the favourable impact of a higher proportion of aftermarket revenues and proactive management of the cost base.
Net finance costs increased to £17.7m (2008: £8.8m) due to an increase in pension scheme finance costs of £3.3m, one-off costs of £3.7m on cancellation of floating to fixed rate interest rate swaps (in advance of the issue of a series of fixed rate notes in January 2010) and reduced interest rate differential benefits from our US dollar balance sheet hedging programme.
Profit before tax from continuing operations before intangibles amortisation increased by 6% to £187.0m (2008: £176.2m). Reported profit before tax from continuing operations increased by 7% to £170.4m (2008: £159.5m) reflecting intangibles amortisation of £16.6m (2008: £16.7m).
Profit from discontinued operations of £5.2m (2008: £57.8m) relates to the release of certain warranty provisions in relation to prior year disposals and in 2008 included a gain of £55.1m on the sale of Strachan & Henshaw.
Tax charge for the year of £52.2m (2008: £51.8m) on profits before tax from continuing operations before intangibles amortisation of £187.0m (2008: £176.2m) represents an underlying effective tax rate of 27.9% (2008: 29.4%) reflecting a lower proportion of US profits which are taxed at a higher rate.
Earnings per share from continuing operations before intangibles amortisation increased by 8% to 64.1p (2008: 59.3p). Reported earnings per share including intangibles amortisation and discontinued operations were 61.2p (2008: 81.4p).
Cash generated from operations increased 41% to £302.3m (2008: £214.4m), principally driven by a net working capital inflow of £66.2m (2008: £9.0m outflow) and increased profitability. We benefited from an unusually high level of advance payments on major contracts and expect to see an associated unwind of around £30m in working capital during 2010. Overall working capital on a constant currency basis is now 10% of revenues (2008: 13%) Additional pension contributions of £11.1m (2008: £6.5m) were paid in the period principally in respect of the enhanced transfer offer to certain deferred members of the main UK scheme and agreed special contributions to the UK schemes. Capital expenditure reduced to £40.6m (2008: £53.3m) and settlement of derivative financial instruments resulted in cash outflows of £16.5m (2008: £4.2m). Net free cashflow after all financing costs, tax and dividends was £141.1m (2008: £60.7m). Taken together with the adverse impact of the translation of foreign currency borrowings of £18.9m (2008: £63.5m), net debt reduced by £120.7m to £119.2m (2008: £239.9m) reflecting a net debt/EBITDA ratio of 0.5 times (2008: 1.1 times).
Dividend - the Board is recommending a 14% increase in the full year dividend, with a final dividend of 16.20p (2008: 13.85p) making a total of 21.0p for the year (2008: 18.5p). If approved at the annual general meeting it will be paid on 3 June 2010 to shareholders on the register on 7 May 2010.
DIVISIONAL HIGHLIGHTS
MINERALS
2009 2008 Change
Order input[1] £718m £897m -20%
Revenue[1] £813m £825m -1%
Operating profit[1,2] £134m £130m +2%
Operating margin[1,2] 16.4% 15.8% +0.6%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
Despite the global economic downturn and associated decline in commodity prices, the Minerals division has continued to perform strongly benefiting from improved operating efficiencies, pro-active management of the cost base, resilient aftermarket and the continued development of the product portfolio. This performance demonstrates the resilience of the division's business model. During the year Weir Minerals Chile won an extensive service maintenance contract with Minera Escondida, the world's largest copper mine and Weir Minerals Netherlands was awarded a substantial order to supply Geho pumps to the Toromocho copper mine in Peru.
Order input decreased by 20% reflecting a 36% decline in original equipment and a 3% reduction in aftermarket orders, resulting in a higher proportion of aftermarket orders (58%) compared to the prior year (2008: 48%). Excluding the impact of the CH Warman acquisition, input was down 23% on a like for like basis. Order input trends reflect the division's broad geographic spread and commodity exposure. Input in our Netherlands business, which is largely driven by major greenfield mining development, was down 44% while our Andean business with a focus on copper mining achieved input growth of 10%. The success of integrating our 2007 acquisition Multiflo was evident with input for that business increasing by 51%. We experienced a significant reduction in orders for flue gas desulphurisation equipment, particularly in North America, pending clarification of proposed environmental legislation. Demand for products for the Canadian oil sands market remained strong with a range of follow-on orders booked in the year. The relative resilience of aftermarket orders reflected the decline in commodity production volumes offset to some extent by an absolute increase in the installed base.
Revenue decreased by 1% reflecting the strong opening order book, a full year contribution from the prior year CH Warman acquisition and more robust shorter cycle aftermarket input trends. Our global footprint continues to drive increasing exposure to emerging markets which represented 52% of revenues in 2009 (2008: 46%) with further good progress in both South America and Africa.
Operating profit increased by 2% reflecting a full year benefit from the CH Warman acquisition, now successfully integrated, and the impact of stronger operating margins offset by restructuring and one-off costs of £5.5m.
Operating margins improved to 16.4% reflecting a higher proportion of aftermarket sales and the success of our pro-active approach to downturn planning which resulted in tangible cost savings in operations, procurement and manufacturing. The division also benefited from further development of lean best practices in all of our facilities worldwide.
Capital expenditure totalled £29.7m (2008: £32.2m) and included the enhancement of the slurry pump range and a new state of the art foundry in Brasil. In addition, the culmination of two years of product development work by the Netherlands business has resulted in the launch of the Apexs pump, focused on mine dewatering applications, complementing the well established Geho pump range.
OIL & GAS
2009 2008 Change
Order input[1] £305m £332m -8%
Revenue[1] £299m £323m -7%
Operating profit[1,2] £52m £73m -29%
Operating margin[1,2] 17.4% 22.6% -5.2%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
During 2009, the North American upstream market experienced a substantial reduction in activity with lower demand for natural gas resulting in higher gas storage levels, reduced rig counts and reduced prices. There were a significant number of project opportunities in the downstream market. These were principally driven by expansion of refining capacity in the Middle East, although Middle East service operations were impacted by reduced production volumes. The division has performed well in these market conditions, taking swift and decisive action to manage costs while also driving greater operating efficiencies. During the year Weir Gabbioneta was awarded several major multi-million Euro contracts including orders for process pumps to OJSC Taneco refinery in Russia and for the major Qafco 5 ammonia project in Qatar.
Order input was 8% lower. Weir SPM was impacted by the difficult market through much of the year. This was mitigated by market share gains and improving demand in the final quarter such that input was only 9% lower at £145m (US$ 227m) (2008: £160m (US$250m)). These reductions were partly offset by our downstream business, Weir Gabbioneta, which performed strongly achieving good organic growth with input of £101m (2008: £90m).
Revenue decreased by 7%, broadly following the input trend. Weir SPM finished the year with revenues of £131m (US$206m) against the prior year's £176m (US$275m), a reduction of 26% which compared favourably with market trends and exceeded our prior expectations of revenue of around US$175m. Our revenue performance benefited from lean improvements giving rise to competitive lead times and new products quickly gaining traction. Weir Gabbioneta played a significant part in mitigating the lower volumes at Weir SPM with revenues increasing by 56% to £98m (2008: £63m).
Operating profit including joint ventures decreased by 29% reflecting the combination of Weir SPM backlog clearance in the first half of 2008 and lower Weir SPM volumes through much of 2009.
Operating margins were 17.4% (2008: 22.6%) reflecting the operating leverage effect of lower volumes at SPM partly offset by our actions to reduce costs at the beginning of 2009 in response to the severity of the downturn.
Capital expenditure totalled £7.1m (2008: £10.1m) and included six new service centres and high pressure pump test facilities for Weir SPM. On 5 March 2010 we further extended our geographic reach and service offering with the AUS$7m acquisition of Petroleum Certification Services, an Australian based specialist inspection and recertification business.
POWER & INDUSTRIAL
2009 2008 Change
Order input[1] £266m £289m -8%
Revenue[1] £242m £240m +1%
Operating profit[1,2] £23m £20m +16%
Operating margin[1,2] 9.5% 8.3% +1.2%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
The Power & Industrial division has made good progress in developing its presence in global power markets with a clear focus on the nuclear and hydro markets. Sales to emerging markets, especially China, are making a growing contribution. Improving operating margins reflect increased plant utilisation and further operational efficiencies. Our Canadian services business retained a CAD$600m 15 year contract to operate the Naval Engineering Test Establishment in Montreal providing a solid base load for that business going forward.
Order input declined by 8% with original equipment 18% lower and aftermarket in line with the prior year. This reflects the timing of large contract awards in the power markets with weaker industrial markets partly offset by increased power station life extension and service work. Overall the proportion of orders from the power sector continued to grow with some £33m of specialist valve input achieved from the Chinese nuclear new build programme scheduled for delivery in 2011 onwards. The strong power performance was offset by a decline in industrial and oil and gas orders from Canada and Europe reflecting weaker market conditions.
Revenue increased by 1%, withthe power sector increasing by 19% and now accounting for 56% of divisional revenues (2008: 48%). This reflects a strong opening order book and increased refurbishment and life extension support to power stations in Europe and North America. Oil and gas revenues declined 22% as a consequence of a general market downturn in new project activity. The proportion of the division's revenue generated from emerging markets increased to 21% compared to 20% in 2008.
Operating profit increased by 16% reflecting the flow through of the underlying margin improvement and early returns on the investment in people, technology and plant made in recent years.
Operating margins increased to 9.5% driven by increased operational efficiencies and lower product costs aided by our manufacturing capabilities and developing supply chain in China.
Capital expenditure was £3.7m (2008: £10.2m). Investment in our products and facilities continues to be critical to the future success of the division. Further investment has been made in the Suzhou facility to expand the range of products manufactured in China.
STRATEGY
The Weir Group, with its strong positions in very attractive end markets, extensive global presence and dedication to operational discipline has an excellent platform for growth. We will continue to extend the Group's position in the minerals, oil & gas and power sectors, all of which are high growth, long cycle markets with positive fundamentals. Our strategy will be delivered through sustainable organic growth complemented by skilfully integrated targeted acquisitions. We will invest in technology, infrastructure and people to grow market share and our installed base of original equipment. This will include broadening our competitive portfolio of products and added-value services, with the emphasis on those products that will provide a strong stream of aftermarket opportunities.
The immediate priority for 2010 is to extend operational excellence beyond the factory floor, into functional areas that have a direct impact on our ability to grow and support our continued drive for greater customer focus. With operational excellence prioritised throughout the business, we will generate growth through three key drivers. First, we will drive product sales through innovation and creativity. We will continue to take an innovative approach to the research, testing and development of new materials and products. Second, we will support collaboration in the form of co-operative alliances and cross-divisional initiatives to promote our total capability for customers in all end markets and to leverage off best practice across the Group. Third, we will exploit and strengthen our emerging markets footprint. There are significant opportunities for us to further internationalise more products through both our existing and expanding geographical network.
OUTLOOK
MINERALS
While project enquiry levels are up and major miners have announced planned increases in their 2010 capital expenditure levels, we remain cautious as to timing of conversion into original equipment orders. Furthermore, product lead times dictate any flow through to revenues will not be evident until later in 2010. These factors together with our lower opening order book mean that original equipment revenues are likely to be lower through the first part of 2010. Aftermarket sales have now stabilised and we would expect these to grow in line with underlying commodity production trends determined by commodity prices and global economic growth. Aftermarket sales will also benefit from a growing installed base of original equipment. The medium term outlook for the division remains positive reflecting growing emerging market demand for resources.
OIL & GAS
Although forward visibility is still limited, the immediate outlook for our upstream business is more positive than at the start of 2009. This is based on increases in rig counts since they bottomed in mid-2009 and higher demand for aftermarket products and services as the industry moves to harsher shale formations. We expect any recovery in our Middle East service operations to be slow. Our downstream order book provides a solid underpinning for 2010, although we anticipate a more challenging environment for new orders. The medium term outlook for upstream remains strong, with rig counts forecast to continue to rise, an increasing bias towards unconventional drilling and emerging interest in shale fracturing beyond North America.
POWER & INDUSTRIAL
We enter 2010 with a record order book and the division's financial performance in 2010 will benefit from a strong nuclear workload. Whilst we are cautious of the speed of recovery in industrial markets, the outlook for the global nuclear power market is becoming more positive, driven by environmental concerns combined with a growing demand for power particularly in Asia. At the same time, the need for life extension and refurbishment of existing power plants in the UK, Europe and North America will continue to grow given lead times for new build in these markets. Our global footprint, track record and nuclear expertise means we are well placed to benefit from these opportunities over the medium term.
GROUP
We have an excellent platform for growth and a clear strategy to extend the Group's presence in three markets with positive long-term fundamentals. Although the pace and timing of global economic recovery remains uncertain and forward visibility limited, we are now targeting a broadly similar level of profitability to that achieved in 2009.
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's financial position, business strategy, plans (including development plans and objectives relating to the Company'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 Company 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 Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company 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 Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past business and financial performance cannot be relied on as an indication of future performance.
AUDITED RESULTS
Consolidated Income Statement
for the 53 weeks ended 1 January 2010
53 weeks ended 1 January 2010 52 weeks ended 26 December 2008
Before exceptional Exceptional items & Total Before exceptional Exceptional items & Total
items & intangibles intangibles items & intangibles intangibles
amortisation amortisation (note amortisation amortisation (note
3) 3)
Notes £m £m £m £m £m £m
Continuing operations
Revenue 2 1,390.2 - 1,390.2 1,353.6 - 1,353.6
Continuing operations
Operating profit 200.1 (16.6) 183.5 180.6 (16.7) 163.9
Share of results of joint 4.6 - 4.6 4.4 - 4.4
ventures
Operating profit 204.7 (16.6) 188.1 185.0 (16.7) 168.3
Finance costs (18.7) - (18.7) (17.2) - (17.2)
Finance income 2.5 - 2.5 6.6 - 6.6
Other finance (costs) income - (1.5) - (1.5) 1.8 - 1.8
retirement benefits
Profit before tax from 187.0 (16.6) 170.4 176.2 (16.7) 159.5
continuing operations
Tax expense 4 (52.2) 5.4 (46.8) (51.8) 5.3 (46.5)
Profit for the period from 134.8 (11.2) 123.6 124.4 (11.4) 113.0
continuing operations
Profit for the period from 5 5.2 - 5.2 2.8 55.0 57.8
discontinued operations
Profit for the period 140.0 (11.2) 128.8 127.2 43.6 170.8
Attributable to
Equity holders of the Company 140.0 (11.2) 128.8 127.2 43.6 170.8
Earnings per share 6
Basic - total operations 61.2p 81.4p
Basic - continuing operations 64.1p 58.8p 59.3p 53.8p
Diluted - total operations 60.8p 80.9p
Diluted - continuing 63.6p 58.3p 59.0p 53.6p
operations
Consolidated Statement of Comprehensive Income
for the 53 weeks ended 1 January 2010
53 weeks ended 1 52 weeks ended 26
January 2010 December 2008
(as restated - note
1)
£m £m
Profit for the period 128.8 170.8
Other comprehensive income
Losses taken to equity on cash (0.5) (11.1)
flow hedges
Exchange (losses) gains on (51.2) 204.3
translation of foreign
operations
Exchange gains (losses) on net 38.3 (127.2)
investment hedges
Actuarial losses on defined (57.7) (62.0)
benefit plans
Reclassification adjustments
taken to the income statement
- on cash flow hedges 12.9 (5.5)
- exchange losses on disposal - (0.4)
of foreign operations -
discontinued operations
Tax relating to other 12.7 22.4
comprehensive income
Net other comprehensive income (45.5) 20.5
Total net comprehensive income 83.3 191.3
for the period
Attributable to
Equity holders of the Company 83.3 191.3
Consolidated Balance Sheet
at 1 January 2010
1 26 December 2008 28 December 2007
January (as restated - note 1) (as restated - note 1)
2010
Notes £m £m £m
ASSETS
Non-current assets
Property, plant & equipment 199.4 189.6 136.3
Investment property 4.2 4.5 4.8
Intangible assets 739.9 791.8 503.2
Investments in joint ventures 9.7 10.3 7.2
Deferred tax assets 28.7 20.8 3.1
Retirement benefit plan - - 37.4
surpluses
Derivative financial 10 0.3 8.1 1.2
instruments
Total non-current assets 982.2 1,025.1 693.2
Current assets
Inventories 235.3 269.6 173.5
Trade & other receivables 240.5 309.2 255.2
Construction contracts 25.9 30.6 32.8
Derivative financial 10 7.2 47.5 10.6
instruments
Income tax receivable 3.4 1.3 1.8
Cash & short-term deposits 57.0 74.1 54.2
Total current assets 569.3 732.3 528.1
Total assets 1,551.5 1,757.4 1,221.3
LIABILITIES
Current liabilities
Interest-bearing loans & 2.0 71.4 8.5
borrowings
Trade & other payables 336.3 353.6 257.8
Construction contracts 23.2 46.7 55.9
Derivative financial 10 16.8 90.6 11.8
instruments
Income tax payable 23.7 25.7 20.8
Provisions 33.8 30.5 22.8
Total current liabilities 435.8 618.5 377.6
Non-current liabilities
Interest-bearing loans & 174.2 242.6 217.0
borrowings
Derivative financial 10 31.0 70.1 5.1
instruments
Provisions 36.7 36.4 22.6
Deferred tax liabilities 60.4 63.0 51.0
Retirement benefit plan 9 71.0 29.9 8.6
deficits
Total non-current liabilities 373.3 442.0 304.3
Total liabilities 809.1 1,060.5 681.9
NET ASSETS 742.4 696.9 539.4
CAPITAL & RESERVES
Share capital 26.6 26.6 26.5
Share premium 38.0 38.0 37.7
Treasury shares (7.9) (7.9) (9.3)
Capital redemption reserve 0.5 0.5 0.5
Foreign currency translation 64.0 76.9 0.2
reserve
Hedge accounting reserve 0.6 (8.3) 3.5
Retained earnings 620.4 570.9 479.8
Shareholders equity 742.2 696.7 538.9
Non-controlling interest 0.2 0.2 0.5
TOTAL EQUITY 742.4 696.9 539.4
Consolidated Cash Flow Statement
for the 53 weeks ended 1 January 2010
53 weeks ended 1 52 weeks ended 26
January 2010 December 2008
Notes £m £m
Continuing operations
Cash flows from operating 11
activities
Cash generated from operations 302.3 214.4
Additional pension (11.1) (6.5)
contributions paid
Income tax paid (43.6) (49.0)
Net cash generated from 247.6 158.9
operating activities
Continuing operations
Cash flows from investing
activities
Acquisitions of subsidiaries 11 (0.1) (140.9)
Disposals of subsidiaries 11 (1.4) 80.6
Purchases of property, plant & 8 (40.6) (53.3)
equipment & intangible assets
Other proceeds from sale of 1.5 1.2
property, plant & equipment &
intangible assets
Interest received 2.5 6.2
Dividends received from joint 5.9 3.5
ventures
Net cash used in investing (32.2) (102.7)
activities
Continuing operations
Cash flows from financing
activities
Proceeds from issue of - 0.4
ordinary shares
Purchase of shares for LTIP (1.4) -
awards
Proceeds from borrowings 50.5 244.9
Repayments of borrowings (187.3) (238.7)
Settlement of derivative (16.5) (4.2)
financial instruments
Interest paid (18.7) (16.3)
Dividends paid to equity (39.2) (35.7)
holders of the Company
Net cash used in financing (212.6) (49.6)
activities
Net increase in cash & cash 2.8 6.6
equivalents from continuing
operations
Net decrease in cash & cash - (2.2)
equivalents from discontinued
operations - operating
activities
Net decrease in cash & cash - (0.3)
equivalents from discontinued
operations - investing
activities
Cash & cash equivalents at the 53.6 46.1
beginning of the period
Foreign currency translation (0.7) 3.4
differences
Cash & cash equivalents at the 11 55.7 53.6
end of the period
Consolidated Statement of Changes in Equity
for the 53 weeks ended 1 January 2010
Share capital Share premium Treasury shares Capital redemption Foreign currency Hedge accounting Retained earnings Attributable to Non-controlling Total equity
reserve translation reserve reserve equity holders of interest
the Company
£m £m £m £m £m £m £m £m £m £m
At 28 December 2007 (as 26.5 37.7 (9.3) 0.5 0.2 3.5 485.6 544.7 0.5 545.2
previously reported - note 1)
Impact of restatement (note 1) - - - - - - (5.8) (5.8) - (5.8)
At 28 December 2007 (as 26.5 37.7 (9.3) 0.5 0.2 3.5 479.8 538.9 0.5 539.4
restated - note 1)
Profit for the period - - - - - - 170.8 170.8 - 170.8
Losses taken to equity on cash - - - - - (11.1) - (11.1) - (11.1)
flow hedges
Exchange gains on translation - - - - 204.3 - - 204.3 - 204.3
of foreign operations
Exchange losses on net - - - - (127.2) - - (127.2) - (127.2)
investment hedges
Actuarial losses on defined - - - - - - (62.0) (62.0) - (62.0)
benefit plans
Reclassification adjustments
taken to the income statement
- on cash flow hedges - - - - - (5.5) - (5.5) - (5.5)
- exchange losses on disposal - - - - (0.4) - - (0.4) - (0.4)
of foreign operations -
discontinued operations
Tax relating to other - - - - - 4.8 17.6 22.4 - 22.4
comprehensive income
Total net comprehensive income - - - - 76.7 (11.8) 126.4 191.3 - 191.3
for the period
Acquisition of non-controlling - - - - - - - - (0.3) (0.3)
interest
Cost of share-based payments - - - - - - 1.8 1.8 - 1.8
net of tax
Dividends - - - - - - (35.7) (35.7) - (35.7)
Exercise of options & LTIP 0.1 0.3 1.4 - - - (1.4) 0.4 - 0.4
awards
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 570.9 696.7 0.2 696.9
restated - note 1)
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 581.8 707.6 0.2 707.8
previously reported - note 1)
Impact of restatement (note 1) - - - - - - (10.9) (10.9) - (10.9)
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 570.9 696.7 0.2 696.9
restated - note 1)
Profit for the period - - - - - - 128.8 128.8 - 128.8
Losses taken to equity on cash - - - - - (0.5) - (0.5) - (0.5)
flow hedges
Exchange losses on translation - - - - (51.2) - - (51.2) - (51.2)
of foreign operations
Exchange gains on net - - - - 38.3 - - 38.3 - 38.3
investment hedges
Actuarial losses on defined - - - - - - (57.7) (57.7) - (57.7)
benefit plans
Reclassification adjustments - - - - - 12.9 - 12.9 - 12.9
taken to the income statement
on cash flow hedges
Tax relating to other - - - - - (3.5) 16.2 12.7 - 12.7
comprehensive income
Total net comprehensive income - - - - (12.9) 8.9 87.3 83.3 - 83.3
for the period
Cost of share-based payments - - - - - - 2.8 2.8 - 2.8
net of tax
Dividends - - - - - - (39.2) (39.2) - (39.2)
Exercise of LTIP awards - - - - - - (1.4) (1.4) - (1.4)
At 1 January 2010 26.6 38.0 (7.9) 0.5 64.0 0.6 620.4 742.2 0.2 742.4
Notes to the Financial Statements
1. Basis of preparation
The preliminary results for the 53 weeks ended 1 January 2010 ("2009") have
been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union and applied in accordance with the
provisions of The Companies Act 2006. The accounting policies applied in
preparing these preliminary results are unchanged from those set out in the
Group's 2008 annual report except as described below.
In order to provide the users of the financial statements with a more
relevant presentation of the Group's underlying performance, profit for each
financial year has been analysed between:
i) profit before exceptional items and intangibles amortisation; and
ii) the effect of exceptional items and intangibles amortisation.
a. Exceptional items are material items of income and expense
which, because of the nature and infrequency of the events giving rise
to them, merit separate presentation to allow a better
understanding of the elements of the Group's financial performance for the
period and are presented on the face of the income statement to
facilitate comparisons with prior periods and assessment of trends
in financial performance.
b. Intangibles amortisation, including impairment, has been shown
separately to provide increased visibility over the impact of increased
acquisition activity on intangible assets.
Further analysis of the items included in the column "Exceptional items &
intangibles amortisation" is provided in note 3 to the financial statements.
While updating the valuation of the Group's retirement benefit plans for the
purposes of the Group's 2009 interim condensed financial statements the
qualified actuary who advises the Company identified an error in their model
used to calculate the actuarial valuation of the Group's UK retirement
benefit plans for the periods ended 28 December 2007 and 26 December 2008.
The impact of this was to understate the retirement benefit plan deficits on
a cumulative basis by £8.1m at 28 December 2007 and £15.2m at 26 December
2008. There was also a corresponding overstatement of net deferred tax
liabilities of £2.3m and £4.3m at those respective period ends. The impact on
the Consolidated Statement of Comprehensive Income was to increase actuarial
losses on defined benefit plans by £7.1m and to decrease tax on items taken
directly to equity by £2.0m in the 52 weeks ended 26 December 2008. There is
no material impact on the Consolidated Income Statement. The net impact was
to overstate Group net assets by £5.8m and £10.9m at 28 December 2007 and 26
December 2008 respectively. All affected balances and amounts have been
restated in these financial statements.
To this effect, the Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in Equity and
affected notes present restated comparative information for the 52 weeks
ended 26 December 2008. In addition, as required by IAS1, the Consolidated
Balance Sheet and affected notes also present restated comparative
information for the 52 weeks ended 28 December 2007.
IFRS7 (Amendment) Financial Instruments: Disclosures: Improving Disclosures
about Financial Instruments:The amended standard requires additional
disclosures about fair value measurement in the form of a three level fair
value hierarchy, by class, for all financial instruments recognised at fair
value. The amendments also clarify the requirements for liquidity risk
disclosures with respect to derivative transactions and assets used for
liquidity management. As permitted by the amended standard, comparative
information for the disclosures required by the amendments has not been
provided in this first year of implementation. The amended disclosures will
be presented in note 30 of the Group's 2009 annual report.
IFRS8 Operating Segments:In adopting IFRS8 the Group concluded that the
operating segments were the same as the business segments determined under
IAS14 "Segment Reporting". Details of these operating segments are disclosed
in note 2. The full disclosure requirements of IFRS8 and the related revised
comparative information will be presented in note 3 of the Group's 2009
annual report.
IAS1 (revised) Presentation of Financial Statements:The adoption of IAS1
(revised) has required the reconciliation of movements in equity, previously
disclosed in note 25 to the Group's 2008 annual report, to be presented as a
primary statement entitled, "Consolidated Statement of Changes in Equity". In
addition the Consolidated Statement of Recognised Income & Expense has been
replaced with the Consolidated Statement of Comprehensive Income. In addition
to some presentational changes this has resulted in a tax charge of £1.0m in
relation to the cost of share-based payments for the 52 weeks ended 26
December 2008 being reclassified from the former Consolidated Statement of
Recognised Income & Expense to the Consolidated Statement of Changes in
Equity.
IAS23 (revised) Borrowing Costs:In adopting IAS23 (revised) the Group has
amended its accounting policy and, from 1 January 2009, now capitalises
borrowing costs on qualifying assets. The implementation of this policy has
had no material impact on the Group's financial statements.
In addition to the above, the following standards and interpretations have
been adopted in these financial statements and have not had a material impact
on the Group's financial statements in the period of initial application.
IFRS2 (Amendment) Share-based Payment: Vesting Conditions and
Cancellations
IAS32 (Amendment) Financial instruments: Presentation: Puttable Financial
Instruments and Obligations Arising on Liquidation
IFRIC13 Customer Loyalty Programmes
IFRIC14 IAS19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
Improvements to IFRS
In May 2008, the International Accounting Standards Board issued an omnibus
of amendments to its standards, primarily with a view to removing
inconsistencies and to clarify wording. There are separate transitional
provisions for each standard. The adoption of the amendments did not have any
impact on the financial position or performance of the Group. Some of the key
amendments and their impact are detailed below.
IFRS8 Operating Segments:clarifies that segment assets and liabilities need
only be reported when those assets and liabilities are included in measures
that are used by the chief operating decision maker. On the basis that the
chief operating decision maker reviews segment assets and liabilities this
information will be presented in note 3 of the Group's 2009 annual report.
IAS7 Statement of Cash Flows:explicitly states that only expenditure that
results in recognising an asset can be classified as a cash flow from
investing activities. This amendment will impact the presentation in the cash
flow statement of the contingent consideration upon cash settlement in
relation to the acquisition of Weir SOS which was completed in 2008.
IAS36 Impairment of Assets:when discounted cash flows are used to estimate
"fair value less costs to sell" additional disclosure is required about the
discount rate, consistent with disclosures required when the discounted cash
flows are used to estimate "value in use". This amendment has no impact on
the Group because the recoverable amount of its cash generating units is
estimated using "value in use". The amendment also clarified that the largest
unit permitted for allocating goodwill acquired in a business combination is
the operating segment as defined in IFRS8 before aggregation for reporting
purposes. This amendment has no impact on the Group as the annual impairment
test is performed before aggregation.
The Group has also adopted the following standards which have been issued
with an effective date after the date of these financial statements.
IAS27 (Amendment) Consolidated and Separate Financial Statements:The adoption
of this standard has resulted in the separate disclosure of each item of
other comprehensive income in the Consolidated Statement of Changes in
Equity. In addition, minority interests are now referred to as
"non-controlling interests".
IFRS3 (revised) Business Combinations:IFRS3 (revised) is applied to business
combinations arising from 27 December 2008. This requires recognition of
subsequent changes in the fair value of contingent consideration in the
income statement rather than against goodwill. In addition, transaction costs
are required to be recognised immediately in the income statement. As there
have been no business combinations in the 53 weeks ended 1 January 2010 the
adoption of this standard has had no impact on the Group's financial
statements in the period of initial application.
These preliminary results for the 53 weeks ended 1 January 2010 do not
constitute statutory accounts as defined in Section 435 of The Companies Act
2006. They are extracted from the full statutory accounts, which were
approved by a Committee of the Board of Directors on 9 March 2010. A copy of
those full statutory accounts will be lodged with the Registrar of Companies
in due course. The report of the auditors on those financial statements is
unqualified and does not contain a statement under Section 498 (2) or Section
498 (3) of The Companies Act 2006 concerning accounting records or failure to
obtain necessary information and explanations.
2. Segment information
For management purposes the Group is organised into three operating divisions: Minerals, Oil & Gas and
Power & Industrial. These three divisions are organised and managed separately based on the key markets
served and each is treated as an operating segment and a reportable segment in accordance with IFRS8. The
operating and reportable segments were determined based on the reports reviewed by the Group Executive
which are used to make operational decisions.
The Minerals segment designs and manufactures pumps, hydrocyclones, valves and other complementary
equipment for the mining, flue gas desulphurisation and oil sands markets. The Oil & Gas segment
manufactures pumps and ancillary equipment and provides aftermarket support for the global upstream and
downstream oil and gas markets. The Power & Industrial segment designs, manufactures and provides
aftermarket support for rotating and flow control equipment to the global power generation and industrial
sectors.
All other segments, which are disclosed as Group companies, include the results of Liquid Gas Equipment
which supplies equipment to the liquefied petroleum gas marine and onshore markets. In 2008, it also
included the results of the Canadian distribution business and the Materials and Foundries businesses up to
the dates of disposal on 29 August, 2 and 3 October 2008 respectively. None of the businesses disposed of
were of a sufficient size to meet the definition of a discontinued operation under IFRS5.
The Group Executive assesses the performance of the operating segments based on operating profit from
continuing operations before exceptional items and intangibles amortisation, including impairment ("segment
result"). Finance income and expenditure are not allocated to segments as all treasury activity is managed
centrally by the Group treasury function.
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 provided to the Group Executive for the reportable segments for the 53 weeks ended
1 January 2010 and the 52 weeks ended 26 December 2008 is disclosed below.
Minerals Oil & Gas Power & Industrial Total continuing operations
2009 2008 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m £m £m
Revenue
Sales to external customers
- existing operations 734.5 697.2 287.1 271.7 242.0 222.8 1,263.6 1,191.7
- acquisitions* 78.8 45.2 11.9 8.2 - - 90.7 53.4
Sales to external customers 813.3 742.4 299.0 279.9 242.0 222.8 1,354.3 1,245.1
Inter-segment sales 2.3 2.5 5.6 0.7 2.8 7.4 10.7 10.6
Segment revenue 815.6 744.9 304.6 280.6 244.8 230.2 1,365.0 1,255.7
Group companies sales to
external customers
- ongoing operations 35.9 74.4
- other disposals* - 34.1
Group companies inter-segment - 2.6
sales
Eliminations (10.7) (13.2)
1,390.2 1,353.6
Sales to external customers -
at 2009 average exchange rates
- existing operations 734.5 772.8 287.1 313.1 242.0 240.1 1,263.6 1,326.0
- acquisitions* 78.8 52.6 11.9 9.7 - - 90.7 62.3
Sales to external customers 813.3 825.4 299.0 322.8 242.0 240.1 1,354.3 1,388.3
Group companies sales to
external customers
- ongoing operations 35.9 74.4
- other disposals* - 36.0
1,390.2 1,498.7
Result
Segment result
- existing operations 118.6 107.1 44.8 55.1 23.0 18.0 186.4 180.2
- acquisitions* 15.0 7.4 2.6 1.5 - - 17.6 8.9
133.6 114.5 47.4 56.6 23.0 18.0 204.0 189.1
Share of results of joint - - 4.6 4.4 - - 4.6 4.4
ventures
Segment result 133.6 114.5 52.0 61.0 23.0 18.0 208.6 193.5
Group companies
- ongoing operations 4.9 4.6
- other disposals* 1.9 (2.6)
Unallocated expenses (10.7) (10.5)
Operating profit before 204.7 185.0
exceptional items &
intangibles amortisation
Exceptional items & (16.6) (16.7)
intangibles amortisation
Net finance costs (16.2) (10.6)
Other finance (costs) income - (1.5) 1.8
retirement benefits
Profit before tax from 170.4 159.5
continuing operations
Segment result - at 2009
average exchange rates
- existing operations 118.6 121.0 44.8 65.6 23.0 19.9 186.4 206.5
- acquisitions* 15.0 9.4 2.6 2.0 - - 17.6 11.4
133.6 130.4 47.4 67.6 23.0 19.9 204.0 217.9
Share of results of joint - - 4.6 5.2 - - 4.6 5.2
ventures
Segment result 133.6 130.4 52.0 72.8 23.0 19.9 208.6 223.1
Group companies
- ongoing operations 4.9 4.6
- other disposals* 1.9 (2.6)
Unallocated expenses (10.7) (10.7)
204.7 214.4
* Acquisitions include Weir Warman, Weir Mesa and Weir SOS. The results of Weir SPM are no longer included
within "acquisitions" as Weir SPM was part of the Group for the whole of 2008. Other disposals include the
Materials and Foundries businesses and the Canadian distribution business for 2008.
There are no material revenues derived from a single external customer.
3. Exceptional items & intangibles amortisation
2009 2008
£m £m
Recognised in arriving at operating profit
from continuing operations
Intangibles amortisation (16.6) (14.4)
Impairment of intangibles - (2.3)
(16.6) (16.7)
Recognised in arriving at profit for the
period from discontinued operations
Exceptional items - 55.1
Intangibles amortisation - (0.1)
- 55.0
4. Income tax expense
2009 2008
£m £m
Group - UK (9.5) (12.9)
Group - overseas (37.3) (36.4)
Total income tax expense in the Consolidated (46.8) (49.3)
Income Statement
The total income tax expense is disclosed in
the consolidated income statement as follows
Tax expense - continuing operations before (52.2) (51.8)
exceptional items & intangibles amortisation
- intangibles 5.4 5.3
amortisation
- within profit - (2.8)
from discontinued operations
Total income tax expense in the Consolidated (46.8) (49.3)
Income Statement
The total income tax expense included in the
Group's share of results of joint ventures is
as follows
Joint ventures (0.8) (0.8)
5. Discontinued operations
During the 53 weeks ended 1 January 2010 there were no disposals of businesses
which were of a sufficient size to meet the definition of a discontinued operation
under IFRS5.
On 21 April 2008, the Group disposed of Weir Strachan & Henshaw for a net cash
consideration of £63.7m resulting in a gain on disposal of £55.1m after a tax
charge of £2.4m. The net liabilities disposed of amounted to £1.9m and direct
disposal costs and provisions amounted to £8.5m. Foreign exchange gains suspended
in equity on the retranslation of the overseas operations disposed of, amounting to
£0.4m, were recycled to the income statement as part of the gain on sale in
accordance with IAS21. In 2009, following the expiry of certain warranty periods,
an unutilised amount of £5.2m has been released to the income statement.
6. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
period attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted earnings
per share amounts are calculated by dividing the net profit attributable to
ordinary equity holders of the Company by the weighted average number of ordinary
shares outstanding during the period (adjusted for the effects of dilutive options
and other share awards).
The following reflects the profit and share data used in the calculation of
earnings per share.
2009 2008
Basic earnings per share
Profit attributable to equity holders of the
Company
128.8 170.8
- Total operations (£m)
123.6 113.0
- Continuing (£m)
134.8 124.4
- Continuing before exceptional items &
intangibles amortisation (£m)
Weighted average share capital (number of 210.3 209.9
shares, million)
Diluted earnings per share
Profit attributable to equity holders of the
Company
128.8 170.8
- Total operations (£m)
123.6 113.0
- Continuing (£m)
134.8 124.4
- Continuing before exceptional items &
intangibles amortisation (£m)
Weighted average share capital (number of 212.0 211.0
shares, million)
The difference between the weighted average share capital for the purposes of the
basic and the diluted earnings per share calculations is analysed as follows.
2009 2008
Shares Million Shares Million
Weighted average number of ordinary shares 210.3 209.9
for basic earnings per share
Effect of dilution: share options - 0.1
LTIP awards 1.7 0.6
conditional share - 0.4
award
Adjusted weighted average number of ordinary 212.0 211.0
shares for diluted earnings per share
The profit attributable to equity holders of the Company used in the calculation of
both basic and diluted earnings per share on continuing operations before
exceptional items and intangibles amortisation is calculated as follows.
2009 2008
£m £m
Net profit attributable to ordinary 123.6 113.0
shareholders from continuing operations
Exceptional items & intangibles amortisation 11.2 11.4
net of tax
Net profit attributable to ordinary 134.8 124.4
shareholders from continuing operations
before exceptional items & intangibles
amortisation
There have been no share options (2008: nil) exercised between the reporting date
and the date of signing of these financial statements.
7. Dividends paid & proposed
2009 2008
£m £m
Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2008: 13.85p (2007: 12.35p) 29.1 25.9
Interim dividend for 2009: 4.80p (2008: 4.65p) 10.1 9.8
39.2 35.7
Proposed for approval by shareholders at the annual
general meeting
Final dividend for 2009: 16.20p (2008: 13.85p) 34.1 29.1
The proposed dividend is based on the number of shares in issue, excluding treasury shares held, at
the date the financial statements were approved and authorised for issue. The final dividend may
differ due to increases or decreases in the number of shares in issue between the date of approval of
the report and financial statements and the record date for the final dividend.
8. Property, plant & equipment & intangible assets
2009 2008
£m £m
Purchases of property, plant & equipment & intangible
assets
- land & buildings 2.8 9.5
- plant & equipment 34.7 41.3
- intangible assets 3.1 2.5
40.6 53.3
Impairment of plant & equipment 1.0 2.8
Impairment of intangible assets - 2.3
The impairment of plant & equipment, for all respective periods, relates to specific assets in a
number of locations across the Group where associated product lines have been changed or updated to
reflect changing market conditions. The impairment of intangible assets in 2008 relates to previously
recognised development costs and reflects changing market outlook in respect of those specific
products.
9. Pensions & other post-employment benefit plans
2009 2008 2007
(as restated - note (as restated - note
1) 1)
£m £m £m
Plans in surplus - - 37.4
Plans in deficit (71.0) (29.9) (8.6)
(71.0) (29.9) 28.8
The net Group deficit for retirement benefit obligations at the period end was £71.0m (2008: £29.9m;
2007: net surplus of £28.8m) reflecting a reduction in bonds yields and the impact of updating
mortality assumptions partly offset by better than expected equity returns.
10. Derivative financial instruments
Set out in the table below is a summary of the types of derivative financial instruments included
within each balance sheet category.
2009 2008
£m £m
Included in non-current assets
Forward foreign currency contracts designated as cash 0.1 2.3
flow hedges
Other forward foreign currency contracts 0.2 5.8
0.3 8.1
Included in current assets
Forward foreign currency contracts designated as cash 2.3 5.4
flow hedges
Forward foreign currency contracts designated as net 0.4 0.8
investment hedges
Other forward foreign currency contracts 4.5 41.3
7.2 47.5
Included in current liabilities
Forward foreign currency contracts designated as cash 1.6 10.9
flow hedges
Forward foreign currency contracts designated as net - 1.4
investment hedges
Interest rate swaps designated as cash flow hedges 0.6 2.2
Cross currency swaps designated as net investment hedges 10.4 15.5
Other forward foreign currency contracts 4.2 60.6
16.8 90.6
Included in non-current liabilities
Forward foreign currency contracts designated as cash 0.1 3.0
flow hedges
Interest rate swaps designated as cash flow hedges - 3.5
Cross currency swaps designated as net investment hedges 30.7 61.3
Other forward foreign currency contracts 0.2 2.3
31.0 70.1
Net derivative financial liabilities 40.3 105.1
11. Additional cash flow information
2009 2008
£m £m
Continuing operations
Net cash generated from operations
Operating profit 188.1 168.3
Share of results of joint ventures (4.6) (4.4)
Depreciation & amortisation of property, plant & equipment 44.8 37.2
& intangible assets
Impairment of plant & equipment & intangible assets 1.0 5.1
Gains on disposal of property, plant & equipment (0.1) (0.1)
Defined benefit plan curtailments & settlements (3.7) 2.4
Funding of pension & post-retirement costs (2.1) (1.1)
Employee share schemes 1.6 2.8
Net foreign exchange including derivative financial 1.8 0.3
instruments
Increase in provisions 9.3 12.9
Decrease (increase) in inventories 30.8 (42.8)
Decrease (increase) in trade & other receivables & 68.2 (10.1)
construction contracts
(Decrease) increase in trade & other payables & (32.8) 43.9
construction contracts
Cash generated from operations 302.3 214.4
Additional pension contributions paid (11.1) (6.5)
Income tax paid (43.6) (49.0)
Net cash generated from operating activities 247.6 158.9
Acquisitions of subsidiaries
Current year acquisitions - (140.9)
Previous year acquisitions deferred consideration paid (0.1) -
(0.1) (140.9)
Disposals of subsidiaries
Discontinued operations disposals - 60.6
Other current year disposals 1.2 20.4
Previous year disposals (2.6) (0.4)
(1.4) 80.6
Cash and cash equivalents comprise the following
Cash & short-term deposits 57.0 74.1
Bank overdrafts & short-term borrowings (1.3) (20.5)
55.7 53.6
Reconciliation of net increase in cash & cash equivalents
to movement in net debt
Net increase in cash & cash equivalents from continuing 2.8 6.6
operations
Net decrease in cash & cash equivalents from discontinued - (2.5)
operations
Net decrease (increase) in debt 136.8 (6.2)
Change in net debt resulting from cash flows 139.6 (2.1)
Leases acquired - (0.6)
Loans acquired - (2.4)
Foreign currency translation differences (18.9) (63.5)
Change in net debt during the period 120.7 (68.6)
Net debt at the beginning of the period (239.9) (171.3)
Net debt at the end of the period (119.2) (239.9)
Net debt comprises the following
Cash & short-term deposits 57.0 74.1
Current interest-bearing loans & borrowings (2.0) (71.4)
Non-current interest-bearing loans & borrowings (174.2) (242.6)
(119.2) (239.9)
12. Related party disclosures
The following table provides the total amount of significant transactions which have been entered
into with related parties for the relevant financial year and outstanding balances at the period
end.
2009 2008
£m £m
Sales of goods to related parties - joint ventures 1.3 0.2
Purchases of goods from related parties - joint ventures 0.4 0.2
Amounts owed to related parties - group pension schemes 0.2 0.2
13. Legal claims
The Company and certain subsidiaries are, from time to time, parties to legal proceedings and
claims which arise in the normal course of business.
In 2004, an announcement was made to the London Stock Exchange in connection with the Group's
involvement in the UN sanctioned Oil for Food Programme. The Group continues to co-operate fully
with the on-going investigations by UK authorities in this connection. In addition, the Group is
subject to a claim relating to an action for damages arising from the UN Oil for Food Programme
which has been raised in the United States against just under 100 companies. This action will be
robustly defended.
To the extent not already provided for, the Directors do not anticipate that the outcome of these
proceedings and claims either individually or in aggregate will have a material adverse effect
upon the Group's financial position.
14. Exchange rates
The principal exchange rates applied in the preparation of these financial statements were as
follows.
2009 2008
Average rate (per £)
US dollar 1.57 1.85
Australian dollar 1.99 2.17
Euro 1.12 1.25
Canadian dollar 1.78 1.96
Closing rate (per £)
US dollar 1.61 1.46
Australian dollar 1.80 2.14
Euro 1.13 1.04
Canadian dollar 1.69 1.79
The Group's operating profit from continuing operations before exceptional items and intangibles
amortisation was denominated in the following currencies.
2009 2008
£m £m
US dollar 88.7 90.9
Australian dollar 20.5 22.3
Euro 51.7 38.0
Canadian dollar 8.6 14.7
Other 35.2 19.1
Operating profit from continuing operations before 204.7 185.0
exceptional items & intangibles amortisation
15. Events after the balance sheet date
On 11 January 2010, the Group issued the equivalent of US$250.0m of five year (US$110.0m) and
eight year (US$140.0m) fixed rate notes. Resulting from this, the Group repaid US$145.0m and
CAD$110.0m of its variable rate borrowings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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This news article is displayed preformatted as it may contain results tables
RNS Number : 2635I
Weir Group PLC
09 March 2010
The Weir Group PLC
9 March 2010
THE WEIR GROUP PLC PRELIMINARY RESULTS 2009
Results for 53 weeks ended 1 January 2010
2009 2008 Change
Continuing Operations
Order input[1] £1,302m £1,595m -18%
Revenue £1,390m £1,354m +3%
Operating profit[2] £205m £185m +11%
Operating margin[2] 14.7% 13.7% +1.0%
Profit before tax[2] £187m £176m +6%
Cash from operations[2] £302m £214m +41%
Earnings per share[2] 64.1p 59.3p +8%
Dividend per share 21.0p 18.5p +14%
Net debt £119m £240m
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation. Reported operating profit,
profit before tax and earnings per share were £188m (2008: £168m); £170m (2008:
£160m) and 58.8p (2008: 53.8p) respectively.
HIGHLIGHTS
§ Resilient aftermarket contributed 54% of revenues;
§ Record operating profit benefiting from positive currency effect;
§ Margin benefiting from stronger aftermarket and cost management;
§ Exceptional free cash flow generation;
§ Net debt halved in the year;
§ Stabilisation of Minerals order input;
§ Stronger current trading driving a more positive outlook for Weir SPM;
§ Power & Industrial to benefit from record nuclear order book;
§ 2010 expectations upgraded.
Keith Cochrane, Chief Executive, commented:
"In a difficult global economic environment the Weir Group has again performed strongly in 2009, delivering an exceptional cash performance and making good progress against our key priorities.
We have an excellent platform for growth and a clear strategy to extend the Group's presence in three attractive markets with positive long-term fundamentals.
As we enter 2010 the Group is in robust financial health and well placed to capitalise on market opportunities. Although the pace and timing of global economic recovery remains uncertain and forward visibility limited, we are now targeting a broadly similar level of profitability to that achieved in 2009."
Contact details: The Weir Group PLC Available through UBS
Keith Cochrane, Chief Executive Tel. 020 7567 8000 (switchboard);
Helen Walker, Public Relations Manager (Mobile: 07789 032296)
Maitland Tel. 020 7379 5151
Suzanne Bartch (Mobile: 07769 710 335)
Rowan Brown
GENERAL OVERVIEW
We have delivered a strong set of results that demonstrate the quality and resilience of our business model. A higher proportion of aftermarket revenues, a growing contribution from emerging markets and effective cost base management largely mitigated the impact of reduced demand for original equipment products. An outstanding level of cash generation in the year coupled with our committed bank facilities and long dated fixed rate notes issued in January 2010 mean we start the year in a strong financial position.
Our South American Minerals operations delivered a record operating performance and we won a number of notable contracts in the Chinese nuclear new build and Middle East downstream oil and gas markets. We also retained our Canadian Naval Engineering contract for a further fifteen years. Positive emerging trends at Weir SPM were also evident towards the end of the year.
FINANCIAL HIGHLIGHTS
Order input in constant currency at £1,302m was 18% lower than the prior year in total and on a like for like basis after adjusting for prior year acquisitions and disposals. Original equipment orders were down 34% reflecting lower capital spending across most of our end markets while aftermarket orders held up well ending the year only 2% lower than 2008, with aftermarket orders represented 58% (2008: 48%) of total input. Each of the divisions reported lower input levels in 2009, with other Group companies input falling to £12m (2008: £76m).
Revenue in constant currency declined by 7%, reflecting a strong opening order book, offset by lower input levels over the year. Like for like revenues were similarly down 7% reflecting the impact of prior year acquisitions and disposals. Reported revenue grew by 3% to £1,390m (2008: £1,354m) with a net currency benefit of £145m, principally due to the weakening of sterling relative to the average US dollar, euro and Australian dollar rates. Aftermarket sales represented 54% (2008: 50%) of revenue and our exposure to emerging markets grew to 43% (2008: 40%) of revenues with stronger contributions from both South America and Africa. Revenues from other Group companies fell from £110m to £36m in part due to prior year disposals.
Operating profit from continuing operations before intangibles amortisation increased by 11% to £204.7m (2008: £185.0m) including a net foreign currency benefit of £29.4m. On a constant currency basis operating profits reduced by 5%, principally due to lower volumes at Weir SPM and one-off restructuring costs of £6.2m, partly offset by a net contribution from prior year acquisitions and disposals of £10.7m. The profit contribution from other Group companies was £6.8m (2008: £2.0m).
Operating margin in constant currency increased from 14.3% to 14.7%, reflecting the favourable impact of a higher proportion of aftermarket revenues and proactive management of the cost base.
Net finance costs increased to £17.7m (2008: £8.8m) due to an increase in pension scheme finance costs of £3.3m, one-off costs of £3.7m on cancellation of floating to fixed rate interest rate swaps (in advance of the issue of a series of fixed rate notes in January 2010) and reduced interest rate differential benefits from our US dollar balance sheet hedging programme.
Profit before tax from continuing operations before intangibles amortisation increased by 6% to £187.0m (2008: £176.2m). Reported profit before tax from continuing operations increased by 7% to £170.4m (2008: £159.5m) reflecting intangibles amortisation of £16.6m (2008: £16.7m).
Profit from discontinued operations of £5.2m (2008: £57.8m) relates to the release of certain warranty provisions in relation to prior year disposals and in 2008 included a gain of £55.1m on the sale of Strachan & Henshaw.
Tax charge for the year of £52.2m (2008: £51.8m) on profits before tax from continuing operations before intangibles amortisation of £187.0m (2008: £176.2m) represents an underlying effective tax rate of 27.9% (2008: 29.4%) reflecting a lower proportion of US profits which are taxed at a higher rate.
Earnings per share from continuing operations before intangibles amortisation increased by 8% to 64.1p (2008: 59.3p). Reported earnings per share including intangibles amortisation and discontinued operations were 61.2p (2008: 81.4p).
Cash generated from operations increased 41% to £302.3m (2008: £214.4m), principally driven by a net working capital inflow of £66.2m (2008: £9.0m outflow) and increased profitability. We benefited from an unusually high level of advance payments on major contracts and expect to see an associated unwind of around £30m in working capital during 2010. Overall working capital on a constant currency basis is now 10% of revenues (2008: 13%) Additional pension contributions of £11.1m (2008: £6.5m) were paid in the period principally in respect of the enhanced transfer offer to certain deferred members of the main UK scheme and agreed special contributions to the UK schemes. Capital expenditure reduced to £40.6m (2008: £53.3m) and settlement of derivative financial instruments resulted in cash outflows of £16.5m (2008: £4.2m). Net free cashflow after all financing costs, tax and dividends was £141.1m (2008: £60.7m). Taken together with the adverse impact of the translation of foreign currency borrowings of £18.9m (2008: £63.5m), net debt reduced by £120.7m to £119.2m (2008: £239.9m) reflecting a net debt/EBITDA ratio of 0.5 times (2008: 1.1 times).
Dividend - the Board is recommending a 14% increase in the full year dividend, with a final dividend of 16.20p (2008: 13.85p) making a total of 21.0p for the year (2008: 18.5p). If approved at the annual general meeting it will be paid on 3 June 2010 to shareholders on the register on 7 May 2010.
DIVISIONAL HIGHLIGHTS
MINERALS
2009 2008 Change
Order input[1] £718m £897m -20%
Revenue[1] £813m £825m -1%
Operating profit[1,2] £134m £130m +2%
Operating margin[1,2] 16.4% 15.8% +0.6%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
Despite the global economic downturn and associated decline in commodity prices, the Minerals division has continued to perform strongly benefiting from improved operating efficiencies, pro-active management of the cost base, resilient aftermarket and the continued development of the product portfolio. This performance demonstrates the resilience of the division's business model. During the year Weir Minerals Chile won an extensive service maintenance contract with Minera Escondida, the world's largest copper mine and Weir Minerals Netherlands was awarded a substantial order to supply Geho pumps to the Toromocho copper mine in Peru.
Order input decreased by 20% reflecting a 36% decline in original equipment and a 3% reduction in aftermarket orders, resulting in a higher proportion of aftermarket orders (58%) compared to the prior year (2008: 48%). Excluding the impact of the CH Warman acquisition, input was down 23% on a like for like basis. Order input trends reflect the division's broad geographic spread and commodity exposure. Input in our Netherlands business, which is largely driven by major greenfield mining development, was down 44% while our Andean business with a focus on copper mining achieved input growth of 10%. The success of integrating our 2007 acquisition Multiflo was evident with input for that business increasing by 51%. We experienced a significant reduction in orders for flue gas desulphurisation equipment, particularly in North America, pending clarification of proposed environmental legislation. Demand for products for the Canadian oil sands market remained strong with a range of follow-on orders booked in the year. The relative resilience of aftermarket orders reflected the decline in commodity production volumes offset to some extent by an absolute increase in the installed base.
Revenue decreased by 1% reflecting the strong opening order book, a full year contribution from the prior year CH Warman acquisition and more robust shorter cycle aftermarket input trends. Our global footprint continues to drive increasing exposure to emerging markets which represented 52% of revenues in 2009 (2008: 46%) with further good progress in both South America and Africa.
Operating profit increased by 2% reflecting a full year benefit from the CH Warman acquisition, now successfully integrated, and the impact of stronger operating margins offset by restructuring and one-off costs of £5.5m.
Operating margins improved to 16.4% reflecting a higher proportion of aftermarket sales and the success of our pro-active approach to downturn planning which resulted in tangible cost savings in operations, procurement and manufacturing. The division also benefited from further development of lean best practices in all of our facilities worldwide.
Capital expenditure totalled £29.7m (2008: £32.2m) and included the enhancement of the slurry pump range and a new state of the art foundry in Brasil. In addition, the culmination of two years of product development work by the Netherlands business has resulted in the launch of the Apexs pump, focused on mine dewatering applications, complementing the well established Geho pump range.
OIL & GAS
2009 2008 Change
Order input[1] £305m £332m -8%
Revenue[1] £299m £323m -7%
Operating profit[1,2] £52m £73m -29%
Operating margin[1,2] 17.4% 22.6% -5.2%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
During 2009, the North American upstream market experienced a substantial reduction in activity with lower demand for natural gas resulting in higher gas storage levels, reduced rig counts and reduced prices. There were a significant number of project opportunities in the downstream market. These were principally driven by expansion of refining capacity in the Middle East, although Middle East service operations were impacted by reduced production volumes. The division has performed well in these market conditions, taking swift and decisive action to manage costs while also driving greater operating efficiencies. During the year Weir Gabbioneta was awarded several major multi-million Euro contracts including orders for process pumps to OJSC Taneco refinery in Russia and for the major Qafco 5 ammonia project in Qatar.
Order input was 8% lower. Weir SPM was impacted by the difficult market through much of the year. This was mitigated by market share gains and improving demand in the final quarter such that input was only 9% lower at £145m (US$ 227m) (2008: £160m (US$250m)). These reductions were partly offset by our downstream business, Weir Gabbioneta, which performed strongly achieving good organic growth with input of £101m (2008: £90m).
Revenue decreased by 7%, broadly following the input trend. Weir SPM finished the year with revenues of £131m (US$206m) against the prior year's £176m (US$275m), a reduction of 26% which compared favourably with market trends and exceeded our prior expectations of revenue of around US$175m. Our revenue performance benefited from lean improvements giving rise to competitive lead times and new products quickly gaining traction. Weir Gabbioneta played a significant part in mitigating the lower volumes at Weir SPM with revenues increasing by 56% to £98m (2008: £63m).
Operating profit including joint ventures decreased by 29% reflecting the combination of Weir SPM backlog clearance in the first half of 2008 and lower Weir SPM volumes through much of 2009.
Operating margins were 17.4% (2008: 22.6%) reflecting the operating leverage effect of lower volumes at SPM partly offset by our actions to reduce costs at the beginning of 2009 in response to the severity of the downturn.
Capital expenditure totalled £7.1m (2008: £10.1m) and included six new service centres and high pressure pump test facilities for Weir SPM. On 5 March 2010 we further extended our geographic reach and service offering with the AUS$7m acquisition of Petroleum Certification Services, an Australian based specialist inspection and recertification business.
POWER & INDUSTRIAL
2009 2008 Change
Order input[1] £266m £289m -8%
Revenue[1] £242m £240m +1%
Operating profit[1,2] £23m £20m +16%
Operating margin[1,2] 9.5% 8.3% +1.2%
[1] 2008 restated at 2009 average exchange rates
[2] Adjusted to exclude intangibles amortisation
The Power & Industrial division has made good progress in developing its presence in global power markets with a clear focus on the nuclear and hydro markets. Sales to emerging markets, especially China, are making a growing contribution. Improving operating margins reflect increased plant utilisation and further operational efficiencies. Our Canadian services business retained a CAD$600m 15 year contract to operate the Naval Engineering Test Establishment in Montreal providing a solid base load for that business going forward.
Order input declined by 8% with original equipment 18% lower and aftermarket in line with the prior year. This reflects the timing of large contract awards in the power markets with weaker industrial markets partly offset by increased power station life extension and service work. Overall the proportion of orders from the power sector continued to grow with some £33m of specialist valve input achieved from the Chinese nuclear new build programme scheduled for delivery in 2011 onwards. The strong power performance was offset by a decline in industrial and oil and gas orders from Canada and Europe reflecting weaker market conditions.
Revenue increased by 1%, withthe power sector increasing by 19% and now accounting for 56% of divisional revenues (2008: 48%). This reflects a strong opening order book and increased refurbishment and life extension support to power stations in Europe and North America. Oil and gas revenues declined 22% as a consequence of a general market downturn in new project activity. The proportion of the division's revenue generated from emerging markets increased to 21% compared to 20% in 2008.
Operating profit increased by 16% reflecting the flow through of the underlying margin improvement and early returns on the investment in people, technology and plant made in recent years.
Operating margins increased to 9.5% driven by increased operational efficiencies and lower product costs aided by our manufacturing capabilities and developing supply chain in China.
Capital expenditure was £3.7m (2008: £10.2m). Investment in our products and facilities continues to be critical to the future success of the division. Further investment has been made in the Suzhou facility to expand the range of products manufactured in China.
STRATEGY
The Weir Group, with its strong positions in very attractive end markets, extensive global presence and dedication to operational discipline has an excellent platform for growth. We will continue to extend the Group's position in the minerals, oil & gas and power sectors, all of which are high growth, long cycle markets with positive fundamentals. Our strategy will be delivered through sustainable organic growth complemented by skilfully integrated targeted acquisitions. We will invest in technology, infrastructure and people to grow market share and our installed base of original equipment. This will include broadening our competitive portfolio of products and added-value services, with the emphasis on those products that will provide a strong stream of aftermarket opportunities.
The immediate priority for 2010 is to extend operational excellence beyond the factory floor, into functional areas that have a direct impact on our ability to grow and support our continued drive for greater customer focus. With operational excellence prioritised throughout the business, we will generate growth through three key drivers. First, we will drive product sales through innovation and creativity. We will continue to take an innovative approach to the research, testing and development of new materials and products. Second, we will support collaboration in the form of co-operative alliances and cross-divisional initiatives to promote our total capability for customers in all end markets and to leverage off best practice across the Group. Third, we will exploit and strengthen our emerging markets footprint. There are significant opportunities for us to further internationalise more products through both our existing and expanding geographical network.
OUTLOOK
MINERALS
While project enquiry levels are up and major miners have announced planned increases in their 2010 capital expenditure levels, we remain cautious as to timing of conversion into original equipment orders. Furthermore, product lead times dictate any flow through to revenues will not be evident until later in 2010. These factors together with our lower opening order book mean that original equipment revenues are likely to be lower through the first part of 2010. Aftermarket sales have now stabilised and we would expect these to grow in line with underlying commodity production trends determined by commodity prices and global economic growth. Aftermarket sales will also benefit from a growing installed base of original equipment. The medium term outlook for the division remains positive reflecting growing emerging market demand for resources.
OIL & GAS
Although forward visibility is still limited, the immediate outlook for our upstream business is more positive than at the start of 2009. This is based on increases in rig counts since they bottomed in mid-2009 and higher demand for aftermarket products and services as the industry moves to harsher shale formations. We expect any recovery in our Middle East service operations to be slow. Our downstream order book provides a solid underpinning for 2010, although we anticipate a more challenging environment for new orders. The medium term outlook for upstream remains strong, with rig counts forecast to continue to rise, an increasing bias towards unconventional drilling and emerging interest in shale fracturing beyond North America.
POWER & INDUSTRIAL
We enter 2010 with a record order book and the division's financial performance in 2010 will benefit from a strong nuclear workload. Whilst we are cautious of the speed of recovery in industrial markets, the outlook for the global nuclear power market is becoming more positive, driven by environmental concerns combined with a growing demand for power particularly in Asia. At the same time, the need for life extension and refurbishment of existing power plants in the UK, Europe and North America will continue to grow given lead times for new build in these markets. Our global footprint, track record and nuclear expertise means we are well placed to benefit from these opportunities over the medium term.
GROUP
We have an excellent platform for growth and a clear strategy to extend the Group's presence in three markets with positive long-term fundamentals. Although the pace and timing of global economic recovery remains uncertain and forward visibility limited, we are now targeting a broadly similar level of profitability to that achieved in 2009.
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's financial position, business strategy, plans (including development plans and objectives relating to the Company'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 Company 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 Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company 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 Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past business and financial performance cannot be relied on as an indication of future performance.
AUDITED RESULTS
Consolidated Income Statement
for the 53 weeks ended 1 January 2010
53 weeks ended 1 January 2010 52 weeks ended 26 December 2008
Before exceptional Exceptional items & Total Before exceptional Exceptional items & Total
items & intangibles intangibles items & intangibles intangibles
amortisation amortisation (note amortisation amortisation (note
3) 3)
Notes £m £m £m £m £m £m
Continuing operations
Revenue 2 1,390.2 - 1,390.2 1,353.6 - 1,353.6
Continuing operations
Operating profit 200.1 (16.6) 183.5 180.6 (16.7) 163.9
Share of results of joint 4.6 - 4.6 4.4 - 4.4
ventures
Operating profit 204.7 (16.6) 188.1 185.0 (16.7) 168.3
Finance costs (18.7) - (18.7) (17.2) - (17.2)
Finance income 2.5 - 2.5 6.6 - 6.6
Other finance (costs) income - (1.5) - (1.5) 1.8 - 1.8
retirement benefits
Profit before tax from 187.0 (16.6) 170.4 176.2 (16.7) 159.5
continuing operations
Tax expense 4 (52.2) 5.4 (46.8) (51.8) 5.3 (46.5)
Profit for the period from 134.8 (11.2) 123.6 124.4 (11.4) 113.0
continuing operations
Profit for the period from 5 5.2 - 5.2 2.8 55.0 57.8
discontinued operations
Profit for the period 140.0 (11.2) 128.8 127.2 43.6 170.8
Attributable to
Equity holders of the Company 140.0 (11.2) 128.8 127.2 43.6 170.8
Earnings per share 6
Basic - total operations 61.2p 81.4p
Basic - continuing operations 64.1p 58.8p 59.3p 53.8p
Diluted - total operations 60.8p 80.9p
Diluted - continuing 63.6p 58.3p 59.0p 53.6p
operations
Consolidated Statement of Comprehensive Income
for the 53 weeks ended 1 January 2010
53 weeks ended 1 52 weeks ended 26
January 2010 December 2008
(as restated - note
1)
£m £m
Profit for the period 128.8 170.8
Other comprehensive income
Losses taken to equity on cash (0.5) (11.1)
flow hedges
Exchange (losses) gains on (51.2) 204.3
translation of foreign
operations
Exchange gains (losses) on net 38.3 (127.2)
investment hedges
Actuarial losses on defined (57.7) (62.0)
benefit plans
Reclassification adjustments
taken to the income statement
- on cash flow hedges 12.9 (5.5)
- exchange losses on disposal - (0.4)
of foreign operations -
discontinued operations
Tax relating to other 12.7 22.4
comprehensive income
Net other comprehensive income (45.5) 20.5
Total net comprehensive income 83.3 191.3
for the period
Attributable to
Equity holders of the Company 83.3 191.3
Consolidated Balance Sheet
at 1 January 2010
1 26 December 2008 28 December 2007
January (as restated - note 1) (as restated - note 1)
2010
Notes £m £m £m
ASSETS
Non-current assets
Property, plant & equipment 199.4 189.6 136.3
Investment property 4.2 4.5 4.8
Intangible assets 739.9 791.8 503.2
Investments in joint ventures 9.7 10.3 7.2
Deferred tax assets 28.7 20.8 3.1
Retirement benefit plan - - 37.4
surpluses
Derivative financial 10 0.3 8.1 1.2
instruments
Total non-current assets 982.2 1,025.1 693.2
Current assets
Inventories 235.3 269.6 173.5
Trade & other receivables 240.5 309.2 255.2
Construction contracts 25.9 30.6 32.8
Derivative financial 10 7.2 47.5 10.6
instruments
Income tax receivable 3.4 1.3 1.8
Cash & short-term deposits 57.0 74.1 54.2
Total current assets 569.3 732.3 528.1
Total assets 1,551.5 1,757.4 1,221.3
LIABILITIES
Current liabilities
Interest-bearing loans & 2.0 71.4 8.5
borrowings
Trade & other payables 336.3 353.6 257.8
Construction contracts 23.2 46.7 55.9
Derivative financial 10 16.8 90.6 11.8
instruments
Income tax payable 23.7 25.7 20.8
Provisions 33.8 30.5 22.8
Total current liabilities 435.8 618.5 377.6
Non-current liabilities
Interest-bearing loans & 174.2 242.6 217.0
borrowings
Derivative financial 10 31.0 70.1 5.1
instruments
Provisions 36.7 36.4 22.6
Deferred tax liabilities 60.4 63.0 51.0
Retirement benefit plan 9 71.0 29.9 8.6
deficits
Total non-current liabilities 373.3 442.0 304.3
Total liabilities 809.1 1,060.5 681.9
NET ASSETS 742.4 696.9 539.4
CAPITAL & RESERVES
Share capital 26.6 26.6 26.5
Share premium 38.0 38.0 37.7
Treasury shares (7.9) (7.9) (9.3)
Capital redemption reserve 0.5 0.5 0.5
Foreign currency translation 64.0 76.9 0.2
reserve
Hedge accounting reserve 0.6 (8.3) 3.5
Retained earnings 620.4 570.9 479.8
Shareholders equity 742.2 696.7 538.9
Non-controlling interest 0.2 0.2 0.5
TOTAL EQUITY 742.4 696.9 539.4
Consolidated Cash Flow Statement
for the 53 weeks ended 1 January 2010
53 weeks ended 1 52 weeks ended 26
January 2010 December 2008
Notes £m £m
Continuing operations
Cash flows from operating 11
activities
Cash generated from operations 302.3 214.4
Additional pension (11.1) (6.5)
contributions paid
Income tax paid (43.6) (49.0)
Net cash generated from 247.6 158.9
operating activities
Continuing operations
Cash flows from investing
activities
Acquisitions of subsidiaries 11 (0.1) (140.9)
Disposals of subsidiaries 11 (1.4) 80.6
Purchases of property, plant & 8 (40.6) (53.3)
equipment & intangible assets
Other proceeds from sale of 1.5 1.2
property, plant & equipment &
intangible assets
Interest received 2.5 6.2
Dividends received from joint 5.9 3.5
ventures
Net cash used in investing (32.2) (102.7)
activities
Continuing operations
Cash flows from financing
activities
Proceeds from issue of - 0.4
ordinary shares
Purchase of shares for LTIP (1.4) -
awards
Proceeds from borrowings 50.5 244.9
Repayments of borrowings (187.3) (238.7)
Settlement of derivative (16.5) (4.2)
financial instruments
Interest paid (18.7) (16.3)
Dividends paid to equity (39.2) (35.7)
holders of the Company
Net cash used in financing (212.6) (49.6)
activities
Net increase in cash & cash 2.8 6.6
equivalents from continuing
operations
Net decrease in cash & cash - (2.2)
equivalents from discontinued
operations - operating
activities
Net decrease in cash & cash - (0.3)
equivalents from discontinued
operations - investing
activities
Cash & cash equivalents at the 53.6 46.1
beginning of the period
Foreign currency translation (0.7) 3.4
differences
Cash & cash equivalents at the 11 55.7 53.6
end of the period
Consolidated Statement of Changes in Equity
for the 53 weeks ended 1 January 2010
Share capital Share premium Treasury shares Capital redemption Foreign currency Hedge accounting Retained earnings Attributable to Non-controlling Total equity
reserve translation reserve reserve equity holders of interest
the Company
£m £m £m £m £m £m £m £m £m £m
At 28 December 2007 (as 26.5 37.7 (9.3) 0.5 0.2 3.5 485.6 544.7 0.5 545.2
previously reported - note 1)
Impact of restatement (note 1) - - - - - - (5.8) (5.8) - (5.8)
At 28 December 2007 (as 26.5 37.7 (9.3) 0.5 0.2 3.5 479.8 538.9 0.5 539.4
restated - note 1)
Profit for the period - - - - - - 170.8 170.8 - 170.8
Losses taken to equity on cash - - - - - (11.1) - (11.1) - (11.1)
flow hedges
Exchange gains on translation - - - - 204.3 - - 204.3 - 204.3
of foreign operations
Exchange losses on net - - - - (127.2) - - (127.2) - (127.2)
investment hedges
Actuarial losses on defined - - - - - - (62.0) (62.0) - (62.0)
benefit plans
Reclassification adjustments
taken to the income statement
- on cash flow hedges - - - - - (5.5) - (5.5) - (5.5)
- exchange losses on disposal - - - - (0.4) - - (0.4) - (0.4)
of foreign operations -
discontinued operations
Tax relating to other - - - - - 4.8 17.6 22.4 - 22.4
comprehensive income
Total net comprehensive income - - - - 76.7 (11.8) 126.4 191.3 - 191.3
for the period
Acquisition of non-controlling - - - - - - - - (0.3) (0.3)
interest
Cost of share-based payments - - - - - - 1.8 1.8 - 1.8
net of tax
Dividends - - - - - - (35.7) (35.7) - (35.7)
Exercise of options & LTIP 0.1 0.3 1.4 - - - (1.4) 0.4 - 0.4
awards
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 570.9 696.7 0.2 696.9
restated - note 1)
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 581.8 707.6 0.2 707.8
previously reported - note 1)
Impact of restatement (note 1) - - - - - - (10.9) (10.9) - (10.9)
At 26 December 2008 (as 26.6 38.0 (7.9) 0.5 76.9 (8.3) 570.9 696.7 0.2 696.9
restated - note 1)
Profit for the period - - - - - - 128.8 128.8 - 128.8
Losses taken to equity on cash - - - - - (0.5) - (0.5) - (0.5)
flow hedges
Exchange losses on translation - - - - (51.2) - - (51.2) - (51.2)
of foreign operations
Exchange gains on net - - - - 38.3 - - 38.3 - 38.3
investment hedges
Actuarial losses on defined - - - - - - (57.7) (57.7) - (57.7)
benefit plans
Reclassification adjustments - - - - - 12.9 - 12.9 - 12.9
taken to the income statement
on cash flow hedges
Tax relating to other - - - - - (3.5) 16.2 12.7 - 12.7
comprehensive income
Total net comprehensive income - - - - (12.9) 8.9 87.3 83.3 - 83.3
for the period
Cost of share-based payments - - - - - - 2.8 2.8 - 2.8
net of tax
Dividends - - - - - - (39.2) (39.2) - (39.2)
Exercise of LTIP awards - - - - - - (1.4) (1.4) - (1.4)
At 1 January 2010 26.6 38.0 (7.9) 0.5 64.0 0.6 620.4 742.2 0.2 742.4
Notes to the Financial Statements
1. Basis of preparation
The preliminary results for the 53 weeks ended 1 January 2010 ("2009") have
been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union and applied in accordance with the
provisions of The Companies Act 2006. The accounting policies applied in
preparing these preliminary results are unchanged from those set out in the
Group's 2008 annual report except as described below.
In order to provide the users of the financial statements with a more
relevant presentation of the Group's underlying performance, profit for each
financial year has been analysed between:
i) profit before exceptional items and intangibles amortisation; and
ii) the effect of exceptional items and intangibles amortisation.
a. Exceptional items are material items of income and expense
which, because of the nature and infrequency of the events giving rise
to them, merit separate presentation to allow a better
understanding of the elements of the Group's financial performance for the
period and are presented on the face of the income statement to
facilitate comparisons with prior periods and assessment of trends
in financial performance.
b. Intangibles amortisation, including impairment, has been shown
separately to provide increased visibility over the impact of increased
acquisition activity on intangible assets.
Further analysis of the items included in the column "Exceptional items &
intangibles amortisation" is provided in note 3 to the financial statements.
While updating the valuation of the Group's retirement benefit plans for the
purposes of the Group's 2009 interim condensed financial statements the
qualified actuary who advises the Company identified an error in their model
used to calculate the actuarial valuation of the Group's UK retirement
benefit plans for the periods ended 28 December 2007 and 26 December 2008.
The impact of this was to understate the retirement benefit plan deficits on
a cumulative basis by £8.1m at 28 December 2007 and £15.2m at 26 December
2008. There was also a corresponding overstatement of net deferred tax
liabilities of £2.3m and £4.3m at those respective period ends. The impact on
the Consolidated Statement of Comprehensive Income was to increase actuarial
losses on defined benefit plans by £7.1m and to decrease tax on items taken
directly to equity by £2.0m in the 52 weeks ended 26 December 2008. There is
no material impact on the Consolidated Income Statement. The net impact was
to overstate Group net assets by £5.8m and
To this effect, the Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in Equity and
affected notes present restated comparative information for the 52 weeks
ended 26 December 2008. In addition, as required by IAS1, the Consolidated
Balance Sheet and affected notes also present restated comparative
information for the 52 weeks ended 28 December 2007.
IFRS7 (Amendment) Financial Instruments: Disclosures: Improving Disclosures
about Financial Instruments:The amended standard requires additional
disclosures about fair value measurement in the form of a three level fair
value hierarchy, by class, for all financial instruments recognised at fair
value. The amendments also clarify the requirements for liquidity risk
disclosures with respect to derivative transactions and assets used for
liquidity management. As permitted by the amended standard, comparative
information for the disclosures required by the amendments has not been
provided in this first year of implementation. The amended disclosures will
be presented in note 30 of the Group's 2009 annual report.
IFRS8 Operating Segments:In adopting IFRS8 the Group concluded that the
operating segments were the same as the business segments determined under
IAS14 "Segment Reporting". Details of these operating segments are disclosed
in note 2. The full disclosure requirements of IFRS8 and the related revised
comparative information will be presented in note 3 of the Group's 2009
annual report.
IAS1 (revised) Presentation of Financial Statements:The adoption of IAS1
(revised) has required the reconciliation of movements in equity, previously
disclosed in note 25 to the Group's 2008 annual report, to be presented as a
primary statement entitled, "Consolidated Statement of Changes in Equity". In
addition the Consolidated Statement of Recognised Income & Expense has been
replaced with the Consolidated Statement of Comprehensive Income. In addition
to some presentational changes this has resulted in a tax charge of £1.0m in
relation to the cost of share-based payments for the 52 weeks ended 26
December 2008 being reclassified from the former Consolidated Statement of
Recognised Income & Expense to the Consolidated Statement of Changes in
Equity.
IAS23 (revised) Borrowing Costs:In adopting IAS23 (revised) the Group has
amended its accounting policy and, from 1 January 2009, now capitalises
borrowing costs on qualifying assets. The implementation of this policy has
had no material impact on the Group's financial statements.
In addition to the above, the following standards and interpretations have
been adopted in these financial statements and have not had a material impact
on the Group's financial statements in the period of initial application.
IFRS2 (Amendment) Share-based Payment: Vesting Conditions and
Cancellations
IAS32 (Amendment) Financial instruments: Presentation: Puttable Financial
Instruments and Obligations Arising on Liquidation
IFRIC13 Customer Loyalty Programmes
IFRIC14 IAS19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
Improvements to IFRS
In May 2008, the International Accounting Standards Board issued an omnibus
of amendments to its standards, primarily with a view to removing
inconsistencies and to clarify wording. There are separate transitional
provisions for each standard. The adoption of the amendments did not have any
impact on the financial position or performance of the Group. Some of the key
amendments and their impact are detailed below.
IFRS8 Operating Segments:clarifies that segment assets and liabilities need
only be reported when those assets and liabilities are included in measures
that are used by the chief operating decision maker. On the basis that the
chief operating decision maker reviews segment assets and liabilities this
information will be presented in note 3 of the Group's 2009 annual report.
IAS7 Statement of Cash Flows:explicitly states that only expenditure that
results in recognising an asset can be classified as a cash flow from
investing activities. This amendment will impact the presentation in the cash
flow statement of the contingent consideration upon cash settlement in
relation to the acquisition of Weir SOS which was completed in 2008.
IAS36 Impairment of Assets:when discounted cash flows are used to estimate
"fair value less costs to sell" additional disclosure is required about the
discount rate, consistent with disclosures required when the discounted cash
flows are used to estimate "value in use". This amendment has no impact on
the Group because the recoverable amount of its cash generating units is
estimated using "value in use". The amendment also clarified that the largest
unit permitted for allocating goodwill acquired in a business combination is
the operating segment as defined in IFRS8 before aggregation for reporting
purposes. This amendment has no impact on the Group as the annual impairment
test is performed before aggregation.
The Group has also adopted the following standards which have been issued
with an effective date after the date of these financial statements.
IAS27 (Amendment) Consolidated and Separate Financial Statements:The adoption
of this standard has resulted in the separate disclosure of each item of
other comprehensive income in the Consolidated Statement of Changes in
Equity. In addition, minority interests are now referred to as
"non-controlling interests".
IFRS3 (revised) Business Combinations:IFRS3 (revised) is applied to business
combinations arising from 27 December 2008. This requires recognition of
subsequent changes in the fair value of contingent consideration in the
income statement rather than against goodwill. In addition, transaction costs
are required to be recognised immediately in the income statement. As there
have been no business combinations in the 53 weeks ended 1 January 2010 the
adoption of this standard has had no impact on the Group's financial
statements in the period of initial application.
These preliminary results for the 53 weeks ended 1 January 2010 do not
constitute statutory accounts as defined in Section 435 of The Companies Act
2006. They are extracted from the full statutory accounts, which were
approved by a Committee of the Board of Directors on 9 March 2010. A copy of
those full statutory accounts will be lodged with the Registrar of Companies
in due course. The report of the auditors on those financial statements is
unqualified and does not contain a statement under Section 498 (2) or Section
498 (3) of The Companies Act 2006 concerning accounting records or failure to
obtain necessary information and explanations.
2. Segment information
For management purposes the Group is organised into three operating divisions: Minerals, Oil & Gas and
Power & Industrial. These three divisions are organised and managed separately based on the key markets
served and each is treated as an operating segment and a reportable segment in accordance with IFRS8. The
operating and reportable segments were determined based on the reports reviewed by the Group Executive
which are used to make operational decisions.
The Minerals segment designs and manufactures pumps, hydrocyclones, valves and other complementary
equipment for the mining, flue gas desulphurisation and oil sands markets. The Oil & Gas segment
manufactures pumps and ancillary equipment and provides aftermarket support for the global upstream and
downstream oil and gas markets. The Power & Industrial segment designs, manufactures and provides
aftermarket support for rotating and flow control equipment to the global power generation and industrial
sectors.
All other segments, which are disclosed as Group companies, include the results of Liquid Gas Equipment
which supplies equipment to the liquefied petroleum gas marine and onshore markets. In 2008, it also
included the results of the Canadian distribution business and the Materials and Foundries businesses up to
the dates of disposal on 29 August, 2 and 3 October 2008 respectively. None of the businesses disposed of
were of a sufficient size to meet the definition of a discontinued operation under IFRS5.
The Group Executive assesses the performance of the operating segments based on operating profit from
continuing operations before exceptional items and intangibles amortisation, including impairment ("segment
result"). Finance income and expenditure are not allocated to segments as all treasury activity is managed
centrally by the Group treasury function.
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 provided to the Group Executive for the reportable segments for the 53 weeks ended
1 January 2010 and the 52 weeks ended 26 December 2008 is disclosed below.
Minerals Oil & Gas Power & Industrial Total continuing operations
2009 2008 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m £m £m
Revenue
Sales to external customers
- existing operations 734.5 697.2 287.1 271.7 242.0 222.8 1,263.6 1,191.7
- acquisitions* 78.8 45.2 11.9 8.2 - - 90.7 53.4
Sales to external customers 813.3 742.4 299.0 279.9 242.0 222.8 1,354.3 1,245.1
Inter-segment sales 2.3 2.5 5.6 0.7 2.8 7.4 10.7 10.6
Segment revenue 815.6 744.9 304.6 280.6 244.8 230.2 1,365.0 1,255.7
Group companies sales to
external customers
- ongoing operations 35.9 74.4
- other disposals* - 34.1
Group companies inter-segment - 2.6
sales
Eliminations (10.7) (13.2)
1,390.2 1,353.6
Sales to external customers -
at 2009 average exchange rates
- existing operations 734.5 772.8 287.1 313.1 242.0 240.1 1,263.6 1,326.0
- acquisitions* 78.8 52.6 11.9 9.7 - - 90.7 62.3
Sales to external customers 813.3 825.4 299.0 322.8 242.0 240.1 1,354.3 1,388.3
Group companies sales to
external customers
- ongoing operations 35.9 74.4
- other disposals* - 36.0
1,390.2 1,498.7
Result
Segment result
- existing operations 118.6 107.1 44.8 55.1 23.0 18.0 186.4 180.2
- acquisitions* 15.0 7.4 2.6 1.5 - - 17.6 8.9
133.6 114.5 47.4 56.6 23.0 18.0 204.0 189.1
Share of results of joint - - 4.6 4.4 - - 4.6 4.4
ventures
Segment result 133.6 114.5 52.0 61.0 23.0 18.0 208.6 193.5
Group companies
- ongoing operations 4.9 4.6
- other disposals* 1.9 (2.6)
Unallocated expenses (10.7) (10.5)
Operating profit before 204.7 185.0
exceptional items &
intangibles amortisation
Exceptional items & (16.6) (16.7)
intangibles amortisation
Net finance costs (16.2) (10.6)
Other finance (costs) income - (1.5) 1.8
retirement benefits
Profit before tax from 170.4 159.5
continuing operations
Segment result - at 2009
average exchange rates
- existing operations 118.6 121.0 44.8 65.6 23.0 19.9 186.4 206.5
- acquisitions* 15.0 9.4 2.6 2.0 - - 17.6 11.4
133.6 130.4 47.4 67.6 23.0 19.9 204.0 217.9
Share of results of joint - - 4.6 5.2 - - 4.6 5.2
ventures
Segment result 133.6 130.4 52.0 72.8 23.0 19.9 208.6 223.1
Group companies
- ongoing operations 4.9 4.6
- other disposals* 1.9 (2.6)
Unallocated expenses (10.7) (10.7)
204.7 214.4
* Acquisitions include Weir Warman, Weir Mesa and Weir SOS. The results of Weir SPM are no longer included
within "acquisitions" as Weir SPM was part of the Group for the whole of 2008. Other disposals include the
Materials and Foundries businesses and the Canadian distribution business for 2008.
There are no material revenues derived from a single external customer.
3. Exceptional items & intangibles amortisation
2009 2008
£m £m
Recognised in arriving at operating profit
from continuing operations
Intangibles amortisation (16.6) (14.4)
Impairment of intangibles - (2.3)
(16.6) (16.7)
Recognised in arriving at profit for the
period from discontinued operations
Exceptional items - 55.1
Intangibles amortisation - (0.1)
- 55.0
4. Income tax expense
2009 2008
£m £m
Group - UK (9.5) (12.9)
Group - overseas (37.3) (36.4)
Total income tax expense in the Consolidated (46.8) (49.3)
Income Statement
The total income tax expense is disclosed in
the consolidated income statement as follows
Tax expense - continuing operations before (52.2) (51.8)
exceptional items & intangibles amortisation
- intangibles 5.4 5.3
amortisation
- within profit - (2.8)
from discontinued operations
Total income tax expense in the Consolidated (46.8) (49.3)
Income Statement
The total income tax expense included in the
Group's share of results of joint ventures is
as follows
Joint ventures (0.8) (0.8)
5. Discontinued operations
During the 53 weeks ended 1 January 2010 there were no disposals of businesses
which were of a sufficient size to meet the definition of a discontinued operation
under IFRS5.
On 21 April 2008, the Group disposed of Weir Strachan & Henshaw for a net cash
consideration of £63.7m resulting in a gain on disposal of £55.1m after a tax
charge of £2.4m. The net liabilities disposed of amounted to £1.9m and direct
disposal costs and provisions amounted to £8.5m. Foreign exchange gains suspended
in equity on the retranslation of the overseas operations disposed of, amounting to
£0.4m, were recycled to the income statement as part of the gain on sale in
accordance with IAS21. In 2009, following the expiry of certain warranty periods,
an unutilised amount of £5.2m has been released to the income statement.
6. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
period attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted earnings
per share amounts are calculated by dividing the net profit attributable to
ordinary equity holders of the Company by the weighted average number of ordinary
shares outstanding during the period (adjusted for the effects of dilutive options
and other share awards).
The following reflects the profit and share data used in the calculation of
earnings per share.
2009 2008
Basic earnings per share
Profit attributable to equity holders of the
Company
128.8 170.8
- Total operations (£m)
123.6 113.0
- Continuing (£m)
134.8 124.4
- Continuing before exceptional items &
intangibles amortisation (£m)
Weighted average share capital (number of 210.3 209.9
shares, million)
Diluted earnings per share
Profit attributable to equity holders of the
Company
128.8 170.8
- Total operations (£m)
123.6 113.0
- Continuing (£m)
134.8 124.4
- Continuing before exceptional items &
intangibles amortisation (£m)
Weighted average share capital (number of 212.0 211.0
shares, million)
The difference between the weighted average share capital for the purposes of the
basic and the diluted earnings per share calculations is analysed as follows.
2009 2008
Shares Million Shares Million
Weighted average number of ordinary shares 210.3 209.9
for basic earnings per share
Effect of dilution: share options - 0.1
LTIP awards 1.7 0.6
conditional share - 0.4
award
Adjusted weighted average number of ordinary 212.0 211.0
shares for diluted earnings per share
The profit attributable to equity holders of the Company used in the calculation of
both basic and diluted earnings per share on continuing operations before
exceptional items and intangibles amortisation is calculated as follows.
2009 2008
£m £m
Net profit attributable to ordinary 123.6 113.0
shareholders from continuing operations
Exceptional items & intangibles amortisation 11.2 11.4
net of tax
Net profit attributable to ordinary 134.8 124.4
shareholders from continuing operations
before exceptional items & intangibles
amortisation
There have been no share options (2008: nil) exercised between the reporting date
and the date of signing of these financial statements.
7. Dividends paid & proposed
2009 2008
£m £m
Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2008: 13.85p (2007: 12.35p) 29.1 25.9
Interim dividend for 2009: 4.80p (2008: 4.65p) 10.1 9.8
39.2 35.7
Proposed for approval by shareholders at the annual
general meeting
Final dividend for 2009: 16.20p (2008: 13.85p) 34.1 29.1
The proposed dividend is based on the number of shares in issue, excluding treasury shares held, at
the date the financial statements were approved and authorised for issue. The final dividend may
differ due to increases or decreases in the number of shares in issue between the date of approval of
the report and financial statements and the record date for the final dividend.
8. Property, plant & equipment & intangible assets
2009 2008
£m £m
Purchases of property, plant & equipment & intangible
assets
- land & buildings 2.8 9.5
- plant & equipment 34.7 41.3
- intangible assets 3.1 2.5
40.6 53.3
Impairment of plant & equipment 1.0 2.8
Impairment of intangible assets - 2.3
The impairment of plant & equipment, for all respective periods, relates to specific assets in a
number of locations across the Group where associated product lines have been changed or updated to
reflect changing market conditions. The impairment of intangible assets in 2008 relates to previously
recognised development costs and reflects changing market outlook in respect of those specific
products.
9. Pensions & other post-employment benefit plans
2009 2008 2007
(as restated - note (as restated - note
1) 1)
£m £m £m
Plans in surplus - - 37.4
Plans in deficit (71.0) (29.9) (8.6)
(71.0) (29.9) 28.8
The net Group deficit for retirement benefit obligations at the period end was £71.0m (2008: £29.9m;
2007: net surplus of £28.8m) reflecting a reduction in bonds yields and the impact of updating
mortality assumptions partly offset by better than expected equity returns.
10. Derivative financial instruments
Set out in the table below is a summary of the types of derivative financial instruments included
within each balance sheet category.
2009 2008
£m £m
Included in non-current assets
Forward foreign currency contracts designated as cash 0.1 2.3
flow hedges
Other forward foreign currency contracts 0.2 5.8
0.3 8.1
Included in current assets
Forward foreign currency contracts designated as cash 2.3 5.4
flow hedges
Forward foreign currency contracts designated as net 0.4 0.8
investment hedges
Other forward foreign currency contracts 4.5 41.3
7.2 47.5
Included in current liabilities
Forward foreign currency contracts designated as cash 1.6 10.9
flow hedges
Forward foreign currency contracts designated as net - 1.4
investment hedges
Interest rate swaps designated as cash flow hedges 0.6 2.2
Cross currency swaps designated as net investment hedges 10.4 15.5
Other forward foreign currency contracts 4.2 60.6
16.8 90.6
Included in non-current liabilities
Forward foreign currency contracts designated as cash 0.1 3.0
flow hedges
Interest rate swaps designated as cash flow hedges - 3.5
Cross currency swaps designated as net investment hedges 30.7 61.3
Other forward foreign currency contracts 0.2 2.3
31.0 70.1
Net derivative financial liabilities 40.3 105.1
11. Additional cash flow information
2009 2008
£m £m
Continuing operations
Net cash generated from operations
Operating profit 188.1 168.3
Share of results of joint ventures (4.6) (4.4)
Depreciation & amortisation of property, plant & equipment 44.8 37.2
& intangible assets
Impairment of plant & equipment & intangible assets 1.0 5.1
Gains on disposal of property, plant & equipment (0.1) (0.1)
Defined benefit plan curtailments & settlements (3.7) 2.4
Funding of pension & post-retirement costs (2.1) (1.1)
Employee share schemes 1.6 2.8
Net foreign exchange including derivative financial 1.8 0.3
instruments
Increase in provisions 9.3 12.9
Decrease (increase) in inventories 30.8 (42.8)
Decrease (increase) in trade & other receivables & 68.2 (10.1)
construction contracts
(Decrease) increase in trade & other payables & (32.8) 43.9
construction contracts
Cash generated from operations 302.3 214.4
Additional pension contributions paid (11.1) (6.5)
Income tax paid (43.6) (49.0)
Net cash generated from operating activities 247.6 158.9
Acquisitions of subsidiaries
Current year acquisitions - (140.9)
Previous year acquisitions deferred consideration paid (0.1) -
(0.1) (140.9)
Disposals of subsidiaries
Discontinued operations disposals - 60.6
Other current year disposals 1.2 20.4
Previous year disposals (2.6) (0.4)
(1.4) 80.6
Cash and cash equivalents comprise the following
Cash & short-term deposits 57.0 74.1
Bank overdrafts & short-term borrowings (1.3) (20.5)
55.7 53.6
Reconciliation of net increase in cash & cash equivalents
to movement in net debt
Net increase in cash & cash equivalents from continuing 2.8 6.6
operations
Net decrease in cash & cash equivalents from discontinued - (2.5)
operations
Net decrease (increase) in debt 136.8 (6.2)
Change in net debt resulting from cash flows 139.6 (2.1)
Leases acquired - (0.6)
Loans acquired - (2.4)
Foreign currency translation differences (18.9) (63.5)
Change in net debt during the period 120.7 (68.6)
Net debt at the beginning of the period (239.9) (171.3)
Net debt at the end of the period (119.2) (239.9)
Net debt comprises the following
Cash & short-term deposits 57.0 74.1
Current interest-bearing loans & borrowings (2.0) (71.4)
Non-current interest-bearing loans & borrowings (174.2) (242.6)
(119.2) (239.9)
12. Related party disclosures
The following table provides the total amount of significant transactions which have been entered
into with related parties for the relevant financial year and outstanding balances at the period
end.
2009 2008
£m £m
Sales of goods to related parties - joint ventures 1.3 0.2
Purchases of goods from related parties - joint ventures 0.4 0.2
Amounts owed to related parties - group pension schemes 0.2 0.2
13. Legal claims
The Company and certain subsidiaries are, from time to time, parties to legal proceedings and
claims which arise in the normal course of business.
In 2004, an announcement was made to the London Stock Exchange in connection with the Group's
involvement in the UN sanctioned Oil for Food Programme. The Group continues to co-operate fully
with the on-going investigations by UK authorities in this connection. In addition, the Group is
subject to a claim relating to an action for damages arising from the UN Oil for Food Programme
which has been raised in the United States against just under 100 companies. This action will be
robustly defended.
To the extent not already provided for, the Directors do not anticipate that the outcome of these
proceedings and claims either individually or in aggregate will have a material adverse effect
upon the Group's financial position.
14. Exchange rates
The principal exchange rates applied in the preparation of these financial statements were as
follows.
2009 2008
Average rate (per £)
US dollar 1.57 1.85
Australian dollar 1.99 2.17
Euro 1.12 1.25
Canadian dollar 1.78 1.96
Closing rate (per £)
US dollar 1.61 1.46
Australian dollar 1.80 2.14
Euro 1.13 1.04
Canadian dollar 1.69 1.79
The Group's operating profit from continuing operations before exceptional items and intangibles
amortisation was denominated in the following currencies.
2009 2008
£m £m
US dollar 88.7 90.9
Australian dollar 20.5 22.3
Euro 51.7 38.0
Canadian dollar 8.6 14.7
Other 35.2 19.1
Operating profit from continuing operations before 204.7 185.0
exceptional items & intangibles amortisation
15. Events after the balance sheet date
On 11 January 2010, the Group issued the equivalent of US$250.0m of five year (US$110.0m) and
eight year (US$140.0m) fixed rate notes. Resulting from this, the Group repaid US$145.0m and
CAD$110.0m of its variable rate borrowings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGGFNRMGGZM
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| 28-01-10 | AFX UK Focus |
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Jan 28 (Reuters) - UK Engineers:
140P; keeps hold rating sell rating keeps buy rating rating hold rating (Bangalore Equities Newsroom; +91 80 4135 5800; within U.S. +1 646 223 8780)
COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. More |
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| Tue 22:53 | ||||
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Shares up 8% today on trading statement,probably the best performing share of the day.
Nice recovery 12 months ago these were ,£3 00 ish Its been a dificult year but Weir understand the market place, better than most Could be a takeover target ,with the £ worth a bag of smarties |
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Results due on Tuesday
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| 13-01-10 |
HOLD
Re: FT Today
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This is a good solid company reflected in this BB. The FT as usual seems to have summed it up well. A good long term holding for those of us who bought favourably last year as the yield is good. If you like to play the market I would suspect that the price is likely to fall back a bit now but I prefer to hold and maybe top up if the price does fall back.
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| 13-01-10 |
HOLD
FT Today
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This is what the FT says today. I'll be looking to buy on weakness.
Even as its customers see demand for their products foundering, Weir has been cushioned to some extent as production, in all but a few cases, has rolled on in the mining and oil and gas industries. In particular, the group’s exposure to the lucrative replacement and refurbishment end of the market, which has been resilient during the downturn, has partially assuaged investor concerns. Weir has also benefited from a healthy position in emerging markets, where demand has continued to rise. The realisation that Weir’s trading environment was not as badly affected as some had feared has helped carry its shares 79 per cent higher during the past six months, including an 11 per cent jump since the beginning of the year. However, with an expensive price/earnings ratio for 2010 of 16 times, the shares look to have all the positive sentiment already factored in. |
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The contents of the postings summarised here represents the opinions of the authors and not of Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
They have not been approved or issued by Interactive Investor Trading Limited.
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