REG - Weir Group PLC - Half-year Report
30/07/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240730:nRSd2906Ya&default-theme=true
RNS Number : 2906Y Weir Group PLC 30 July 2024
The Weir Group PLC interim results for the six months ended 30 June 2024
AM strength continuing and project outlook improving
FY operating profit and cash conversion guidance reiterated
Resilient demand for aftermarket spares and expendables
• High levels of activity in hard rock mining driving group AM
orders(1) +2%
• Strength of copper and gold markets more than offsetting mine
specific headwinds
• £31m AM order split between Q2 and Q4 on retention of multi-year
contract; all booked in Q2 in PY
Strong execution and delivery of Performance Excellence benefits
• Group adjusted operating margin(1,3) 17.8%, +180bps
• Cumulative Performance Excellence savings of £13m to date, on
track to deliver full year benefit
• Free operating cash conversion 68%, +17pp
FY outlook: Growing H2 order pipeline with operating profit and cash guidance
reiterated
• £53m greenfield contract awarded in July for an HPGR-led project
• Revenue toward the lower end of the current range of analysts'
expectations*
• Operating margin(3) expected to be c.18%, ahead of prior guidance
• Free operating cash conversion of 90% to 100%
H1 2024 H1 2023 As Constant currency(1) +/-
reported +/-
Continuing Operations(2)
Orders(1) £1,253m £1,275m n/a -2%
Revenue £1,207m £1,300m -7% -3%
Adjusted operating profit(3) £215m £212m +2% +8%
Adjusted operating margin(3) 17.8% 16.3% +150bps +180bps
Adjusted profit before tax(3) £193m £188m +3% n/a
Statutory profit before tax £165m £170m -3% n/a
Adjusted earnings per share(3) 53.6p 53.4p 0% n/a
Return on capital employed 17.9% 16.3% +160bps n/a
Total Group
Statutory profit after tax £117m £126m -7% n/a
Statutory earnings per share 45.3p 48.8p -7% n/a
Free operating cash conversion 68% 51% +17pp n/a
Dividend per share 17.9p 17.8p +1% n/a
Net debt(5) £738m £690m** -£48m n/a
(*Company compiled consensus from 12 July 2024, Group revenue range of
£2,596m to £2,758m.)
(**As of 31 December 2023. For all other footnotes see page 4.)
Jon Stanton, Chief Executive Officer said:
"Our performance in the first half of the year is another proof point along
the journey to deliver market leading through-cycle growth at sustainably
higher margins. The resilience of our aftermarket biased business model and
strong delivery of Performance Excellence benefits demonstrate the significant
upside potential in our equity case.
( )
Looking toward the full year, industry acceptance of our Redefined Mill
Circuit is building momentum, and
our pipeline of greenfield expansion projects is encouraging. Taken together
with continued execution of our Performance Excellence programme, we remain on
track to deliver our full year guidance for operating profit and cash
conversion."
( )
A webcast of the management presentation will begin at 08:00 (BST) on 30 July
2024 at (www.investors.weir (http://www.investors.weir/) ). A recording of
the webcast will also be available at (www.investors.weir
(http://www.investors.weir/) )
( )
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
Our performance in the first half of the year was resilient in the context of
current macro-economic uncertainty and geopolitical tension. We delivered
strong short-term progress while investing in longer-term strategic growth
opportunities, and once again met or exceeded our commitments to stakeholders
as a high quality mining focused group.
Overall we saw high levels of activity across the global mining sector, with
our resilient aftermarket biased business model delivering well against
elevated levels of mine specific challenges. More recent developments in the
conversion of our greenfield expansion pipeline illustrates the technology
shift now underway in mining. We executed strongly on our Performance
Excellence programme, delivering significant year-on-year growth in profit
margin, cash conversion and return on capital employed. We have line of sight
and remain on track to deliver our target of £60m of absolute savings in
2026.
We made progress against our strategic people initiatives. In an assessment of
the UK's 100 largest companies, CCLA Investment Management named Weir as the
'top improver' in its corporate mental health benchmark, and in July we
received accreditation as a Global Living Wage Employer from the Fair Wage
Network.
On technology, ESCO launched the next generation mining GET solution,
Nexsys(TM), providing a step change in productivity for our customers. We will
be showcasing Nexsys(TM) alongside our other market leading equipment at
MINExpo later this year. Minerals continues to make excellent progress with
the Redefined Mill Circuit solution and its digital offerings. Both
Synertrex(®) and Motion Metrics(TM) saw an encouraging level of new
installations in the period.
Overall, our performance across all metrics reflects the hard work and
dedication of Weir colleagues across the globe, and I'd like to thank them for
their commitment and contribution to our success.
Looking ahead, the opportunity to deliver compounding growth and margin
expansion is compelling. We anticipate our aftermarket focused business model
and strategic growth initiatives will drive revenue growth, while the
Performance Excellence transformation programme will establish a leaner, more
efficient operating model to drive value creation and returns. Together, these
factors give me great confidence that we will continue to deliver on our
ambition to outgrow our markets, expand our operating margins, convert our
earnings cleanly to cash, while remaining resilient and doing the right thing
for our people and the planet.
OE growth: Increased conversion potential of larger projects in our pipeline
Through the first half, the majority of our customers remained focused on
maximising production from existing assets. This included running equipment
harder, developing more complex and lower grade ore bodies and debottlenecking
and driving efficiency in existing processes.
As a result, Minerals activity in the first half of the year continued to be
dominated by small brownfield debottlenecking and sustainability related
projects, with only 3 orders received over £5m, and a large number of smaller
orders in line with our expected run rate.
The ESCO pipeline of capital attachments remains encouraging and we are
continuing to see strong demand for our technology-led solutions, although
customer approvals are slightly lagging last year at this stage.
As a result, OE constant currency orders declined by 13% year-on-year.
More encouragingly we see an improvement in the conversion potential of larger
greenfield projects in our pipeline, principally in Asia and Africa. We have
been awarded a £53m greenfield contract already in July for a high pressure
grinding rolls (HPGR) led project, while others are close to approval and
expected to be booked in the second half of this year. Notably, the
Enduron(®) large format HPGR is prominent in many of these greenfield
projects reflecting the growing reputation from its performance at recently
commissioned reference sites.
AM growth: Good levels of activity despite site specific challenges
Overall we saw good levels of activity across the global mining sector. Gold
and copper producers were very active, iron and oil sands stable, while nickel
and lithium producers remain under pressure from lower commodity prices.
Geographically, demand in most regions was ahead of the prior year with the
exception of Central and West Africa where activity levels were weak. Both
Minerals and ESCO saw an elevated level of mine specific headwinds, such as
the shutdowns in nickel and lithium operators in Australia, and in Panama and
Türkiye.
In infrastructure, demand was stable overall with solid activity in North
America and strong growth in dredge orders offsetting continued subdued demand
in Europe.
Against this backdrop, our aftermarket biased business model once again
demonstrated its highly resilient nature with orders up 2% in constant
currency terms as customer challenges in certain markets were more than offset
by strong growth elsewhere.
As previously indicated, the large annual recurring order usually received in
Minerals during the second quarter has been split this year between the second
and fourth quarter due to the timing of the contract renewal - the net effect
being c.£14m of aftermarket orders have shifted to the second half. In 2025,
the full annual order of around £31m is expected to be received in the second
quarter once again.
Revenue and margins: Strong execution across the business
Despite strong execution in the second quarter, revenue in the first half
declined 3% on a constant currency basis due to phasing of OE shipments, the
normalisation of demand from the Canadian oil sands market and the absence of
revenue from Russia following our exit. The Group's book-to-bill increased to
1.04.
Input costs through the first half were stable, with only minor headwinds from
raw material prices and freight availability. Wage inflation continues,
however at lower levels than our prior year comparator. Our market leading
positions and brands enabled us to capture annualised increases in price to
maintain or expand gross margins, though we expect the benefit of these to
normalise in the second half.
We made good progress in our Performance Excellence programme. Our Weir
Business Services are now deployed across the majority of our regions and we
completed a number of capacity optimisation projects, including the official
opening of our new ESCO foundry in Xuzhou and relocation of our rubber process
streams within the APAC region. Further to our plans to optimise our APAC
supply chain, we recently announced our intent to relocate our rubber spool
manufacturing from Australia to our existing operations in India.
On a constant currency basis adjusted operating profit grew by 8% and adjusted
operating margins were 17.8%, up 180bps on a constant currency basis. This
improvement reflects strong operational efficiency, a movement in Minerals
revenue mix towards AM, and incremental Performance Excellence benefits.
Returns: Continued growth in return on capital employed
Free operating cash conversion increased to 68% as a result of a strong
performance in working capital and a decrease in capital expenditures. Our
performance represents a significant 17 percentage point improvement on the
prior year. We remain firmly on track to deliver our full year guidance of 90%
to 100% free operating cash conversion.
As a result, we expect to further de-lever the balance sheet, leaving net debt
to EBITDA in the lower half of our guidance range of 0.5 to 1.5 times EBITDA
by the end of the year.
Return on capital employed (ROCE) for the 12 months to the end of June was
17.9%, an increase of 160bps relative to the same measurement point in the
prior year.
The Board has approved an interim dividend of 17.9 pence per share (2023:
17.8p). This is in line with our policy of distributing one third of adjusted
EPS and represents a 1% increase on the prior year. The interim dividend will
be paid on 1 November 2024 to Shareholders on the register on 4 October 2024.
Safety and sustainability: Focus on zero harm
On safety, while lost time injuries reduced by close to 50% overall, I am very
sad to report that one of our colleagues suffered a fatal incident earlier
this year. Our north star is, and will always be, the pursuit of zero harm -
returning every Weir employee home safely at the end of the working day is our
paramount focus. This accident was a stark reminder of the need to maintain a
relentless concentration on this objective. Overall the Group's total incident
rate(4) (TIR) increased slightly year-on-year to 0.35.
For the second year running, we achieved a place on the global environmental
non-profit Carbon Disclosure Project's (CDP) prestigious 'A List' for
leadership in corporate transparency and performance on climate change.
Retaining our 'A' rating reflects our commitment to making mining smart,
efficient and sustainable and our continued progress in executing our
sustainability strategy. We are continuing our work to build our avoided
emissions reporting beyond the Redefined Mill Circuit and are on track to
exceed our 2023 baseline.
Outlook: Full year operating profit and cash conversion guidance on track
Activity levels in our mining markets are positive. Customers are focused on
maximising ore production and on improving the efficiency and sustainability
of existing operations, which will continue to drive demand for our AM spares
and expendables and brownfield OE solutions.
In aftermarket we are expecting to see a step up in growth rates for orders in
the second half driven by the commissioning of new installed base, the
re-phasing of the Q2 multi-period order, and normalised comparatives for oil
sands.
We now see OE demand being supplemented by conversions in greenfield expansion
projects in the second half with a £53m contract award already received in
July and others potentially to follow. These orders will convert to revenue in
2025 and beyond and underpin our through-cycle growth ambitions.
Overall we are reiterating our full year guidance for constant currency growth
in operating profit. Revenue is now expected to be at the lower end of the
range of current analyst estimates. Operating margins are expected to be
c.18%, ahead of our previous guidance and supported by further progress on
Performance Excellence, with some of the mix and pricing benefits seen in the
first half expected to moderate.
We expect free operating cash conversion of between 90% and 100%, in line with
previous guidance with capex moving more in line with depreciation and further
improvements in working capital.
Further out, the fundamentals for our business are highly attractive. The
world is looking to our customers to provide the natural resources needed to
support the transition to a net zero economy. This in turn presents us an
opportunity to deliver innovative mining technology solutions necessary to
meet this challenge, underpinning our ambition to deliver through-cycle mid to
high single digit percentage revenue growth. Our commitment to continuous
improvement, embodied by the Performance Excellence programme, is well on
track to deliver compounding benefits and support margin expansion to 20% in
2026 and beyond. Our strong cash generation and balance sheet give us future
optionality to allocate capital to prioritise growth in total shareholder
returns.
Notes:
The Group financial highlights and Divisional financial reviews include a
mixture of GAAP measures and those which have been derived from our reported
results in order to provide a useful basis for measuring our operational
performance. Adjusted results are for continuing operations before adjusting
items as presented in the Consolidated Income Statement. Details of other
alternative performance measures are provided in note 2 of the Interim
Financial Statements contained in this press release.
1. 2023 restated at 2024 average exchange rates.
2. Continuing operations excludes the Oil & Gas Division which was
sold to Caterpillar Inc. in February 2021 and the Saudi Arabian joint venture
which was sold to Olayan Financing Company in June 2021.
3. Profit figures before adjusting items. Continuing operations
statutory operating profit was £188m (2023: £194m). Total operations
operating cash flow (cash generated from operations) excludes additional
pension contributions, exceptional and other adjusting cash items, and income
tax paid. Total operations net cash generated from operating activities was
£123m (2023: £109m).
4. As measured by Total Incident Rate (TIR) which represents the rate
of any incident that causes an employee, visitor, contractor, or anyone
working on behalf of Weir to require off-site medical treatment per 200,000
hours worked.
5. Refer to note 2 of the Interim Financial Statements contained in
this press release for further details of alternative performance measures.
DIVISIONAL REVIEW - MINERALS
Minerals is a global leader in products and integrated solutions for smart,
efficient and sustainable processing in mining markets.
2024 First half summary
• AM orders(1) +1%; ore production trends and installed base growth,
offset by split of large Q2 order
• AM revenue(1) stable; growth in underlying demand against strong
prior year comparator
• Operating profit margin(1,2) +160 bps; mix, efficiency and
Performance Excellence benefits
• Book-to-bill of 1.04
2024 First half strategic review
Minerals made strong strategic progress in the first half, further growing its
leadership position in the mill circuit, booking further orders for its
Redefined Mill Circuit technologies and making progress on key Performance
Excellence workstreams. Progress across all 4 pillars of the 'We are Weir'
strategic framework is outlined below.
People
Tragically one of our colleagues suffered a fatal incident earlier this year,
which was shocking to the team, and we are working harder than ever to achieve
zero harm and learn lessons to prevent this ever happening again. Minerals TIR
for the period was 0.24 (2023: 0.21).
Inclusion, diversity and equity remain a key focus, with improved gender
diversity across the Division.
Customer
The Division executed well on key strategic growth initiatives and during the
first half gained market share in our core mill circuit product categories. We
converted 100% of our competitive field trials for large mill circuit pumps
against a range of competitor solutions.
We also opened our new state-of-the-art service centre in Port Hedland,
located in the Pilbara region of Western Australia. The facility services
Enduron(®) HPGR, and our broader suite of products and services, along with
critical parts storage for our customers in the region. Its location is
strategically positioned to support customers and their operations across this
important iron ore region. Further activity in Australia included a first
order for our large format HPGR technology in a gold application, which will
also be supported from Port Hedland.
We saw strong levels of demand from mining customers across our product range,
including for our GEHO(®) positive displacement pumps where we received a
large order from a North American copper miner during the first half of the
year.
Technology
We are seeing very encouraging interest from customers for our Redefined Mill
Circuit, including Coarse Particle Flotation and Vertical Stirred Mill
technologies, which we access through our partnerships with Eriez and STM
respectively.
We developed our digital penetration by growing the number of sites digitally
enabled with our Synertrex® 2.0 platform, now being installed in c.80 sites
and made good progress in our integration of the Sentian AI platform, with
live trials now underway.
Research and development activity across our technology offerings included new
materials and polymers to support our core technology offerings, as well as
other advancements such as real-time stud wear detection for our HPGR
technology.
Performance
The Division's Performance Excellence work streams continue to progress at
pace, with key milestones being the roll out of our lean manufacturing
programme, Weir Integrating Network System (WINS), at a site level with this
driving improved manufacturing quality, as well as making further progress on
our capacity optimisation programme with site consolidations and relocations.
2024 First half financial review
Constant currency £m H1 2024 H1 2023(1) Growth(1) H2 2023(1)
Orders OE 225 255 -12% 244
Orders AM 682 674 1% 652
Orders Total 907 929 -2% 896
Revenue OE 218 251 -13% 283
Revenue AM 651 650 0% 685
Revenue Total 869 901 -4% 968
Adjusted operating profit(2) 170 162 5% 195
Adjusted operating margin(2) 19.6% 18.0% +160bps 20.2%
Operating cash flow(2) 151 131 15% 287
Book-to-bill 1.04 1.03 0.93
1. 2023 restated at 2024 average exchange rates except for operating cash
flow.
2. Profit figures before adjusting items. Operating cash flow (cash generated
from operations) excludes additional pension contributions, exceptional and
other adjusting cash items, and income tax paid. Refer to note 2 of the
Interim Financial Statements contained in this press release further details
of alternative performance measures.
Orders decreased by 2% on a constant currency basis to £907m (2023: £929m),
with book-to-bill of 1.04. OE orders decreased 12%, reflecting order phasing
with miners continuing to maximise production from existing assets with orders
for small brownfield expansions and debottlenecking projects. AM orders grew
1% reflecting volume growth in hard rock mining and a minor contribution from
pricing, partially offset, as expected, by the timing of multi-period orders
historically received in Q2. In the first half, AM orders represented 75% of
total orders (2023: 73%). In total, mining end markets accounted for 73% of
total orders (2023: 76%).
Revenue was 4% lower on a constant currency basis at £869m (2023: £901m) due
to phasing of the OE order book, a reduction in revenue from customers in the
Canadian oil sands and the absence of revenue from Russia, partially offset by
strong underlying mining markets and the annualised benefit of price
increases. Revenue growth was particularly strong in Australasia reflecting
the benefits of installed base growth. Product mix moved towards AM, which
represented 75% of revenue, up from 72% in the prior period.
Adjusted operating profit(2) increased 5% on a constant currency basis to
£170m (2023: £162m) as the Division grew its gross margins, with benefit
from incremental Performance Excellence savings and operational efficiencies.
Adjusted operating margin(2) on a constant currency basis was 19.6% (2023:
18.0%). The year-on-year improvement of 160bps reflects Performance Excellence
savings, the benefit of movement in revenue mix towards AM and strong
underlying efficiency gains.
Operating cash flow(2) increased by 15% to £151m (2023: £131m) reflecting
growth in operating profit, partially offset by a modest decrease in working
capital outflow to £55m (2023: £75m). Working capital movements reflect an
increase in inventory and debtors being offset by an increase in payables.
DIVISIONAL REVIEW - ESCO
ESCO is a global leader in Ground Engaging Tools (GET), attachments, and
artificial intelligence and machine vision technologies that optimise
productivity for customers in global mining and infrastructure markets.
2024 First half summary
• Orders(1) stable; robust demand from mining customers driving 2%
AM growth
• Revenue(1) stable; strong execution driving 14% operating
profit(1,2) growth
• Operating profit margin(1,2) +260bps; pricing, mix, and strong
operational efficiencies
• Book-to-bill of 1.02
2024 First half strategic review
ESCO made good strategic progress in the first half, achieving key technology
milestones and gaining market share in mining GET. Progress across all 4
pillars of the 'We are Weir' strategic framework is outlined below.
People
On safety, ESCO's TIR for the period was 0.82 (2023: 0.65). The division
continues to focus on safety and remains on a positive long-term trajectory
towards its ambition of zero harm.
We continued to make significant strides with respect to diversity, with
improvement in gender diversity at senior levels in the Division.
Customer
During the period ESCO made further progress across its strategic growth
initiatives. The number of mines using Motion Metrics(TM) AI-enabled vision
technology increased and the Division made excellent progress in growing
market share in core mining GET winning net 28 competitive major digger
conversions, highlighting the strength of ESCO's core GET products.
ESCO grew orders year-on-year in both Africa and the Middle East reflecting
demand for dredging products and our continued focus and momentum in these
regions.
Technology
The next generation of core GET, Nexsys™, was launched after several
thousand trial hours providing improved overall productivity for our
customers, allowing for longer bucket campaign cycles and improved GET wear
life.
We saw further progress with our proprietary ore characterisation technology,
with the latest phase of trials undertaken in the first half of the year.
Other technology investments include ongoing development of new series of
mining and construction attachments, supported by our latest materials and
composite developments.
Performance
The Division's new foundry in Xuzhou, China, opened in March with phased
ramp-up in production on plan with full production on site expected before the
end of the year.
The Division made good progress on its North American foundry optimisation
programme with strong performance across all sites driving manufacturing
efficiencies.
2024 First half financial review
Constant currency £m H1 2024 H1 2023(1) Growth(1) H2 2023(1)
Orders OE 28 34 -20% 26
Orders AM 318 312 2% 305
Orders Total 346 346 0% 331
Revenue OE 26 27 -4% 30
Revenue AM 312 314 -1% 316
Revenue Total 338 341 -1% 346
Adjusted operating profit(2) 65 57 14% 63
Adjusted operating margin(2) 19.3% 16.7% +260bps 18.2%
Operating cash flow(2) 70 53 32% 84
Book-to-bill 1.02 1.02 0.96
1. 2023 restated at 2024 average exchange rates except for operating cash
flow.
2. Profit figures before adjusting items. Operating cash flow (cash generated
from operations) excludes additional pension contributions, exceptional and
other adjusting cash items, and income tax paid. Refer to note 2 of the
Interim Financial Statements contained in this press release for further
details of alternative performance measures.
Orders were stable on a constant currency basis at £346m (2023: £346m). This
was driven by robust underlying demand from customers in mining driving
aftermarket growth, with infrastructure demand remaining at stable levels. At
92%, AM continues to account for the vast majority of the Division's orders
(2023: 90%). The Division's book-to-bill remained at 1.02. In total, mining
end markets accounted for 60% of total orders (2023: 61%).
Revenue was stable on a constant currency basis at £338m (2023: £341m). This
reflects strong execution and further price realisation with stable
infrastructure revenue.
Adjusted operating profit(2) increased by 14% on a constant currency basis to
£65m (2023: £57m) as the Division expanded its gross margins, benefiting
from annualised price realisation and further operating leverage.
Adjusted operating margin(2) on a constant currency basis was 19.3%, +260 bps
(2023: 16.7%), with the year-on-year improvement reflecting pricing benefits,
favourable product mix and strong operational efficiencies.
Operating cash flow(2) increased by 32% to £70m (2023: £53m), reflecting
growth in operating profit and a reduction in working capital outflow to £6m
(2023: £15m). Working capital movements reflect a modest increase in
inventory and modest reduction in receivables and payables.
GROUP FINANCIAL REVIEW
Constant currency(1) As reported
Continuing Operations £m H1 2024 H1 2023(1) Growth H1 2023 Growth
Orders OE 253 289 -13% n/a n/a
Orders AM 1,000 986 2% n/a n/a
Orders Total 1,253 1,275 -2% n/a n/a
Revenue OE 244 278 -12% 290 -15%
Revenue AM 963 964 0% 1,010 -5%
Revenue Total 1,207 1,242 -3% 1,300 -7%
Adjusted operating profit(2) 215 199 8% 212 2%
Adjusted operating margin(2) 17.8% 16.0% +180bps 16.3% +150bps
Book-to-bill 1.04 1.03 n/a n/a n/a
Total Group £m
Operating cash flow(2) 198 n/a n/a 173 14%
Free operating cash conversion 68% n/a n/a 51% +17pp
Net debt 738 n/a n/a 690(3) -£48m
1. 2023 restated at 2024 average exchange rates.
2. Profit figures before adjusting items. Operating cash flow (cash generated
from operations) excludes additional pension contributions, exceptional and
other adjusting cash items, and income tax paid. Refer to note 2 of the
Interim Financial Statements contained in this press release for further
details of alternative performance measures.
3. Net Debt at 31 December 2023.
Continuing operations order input at £1,253m decreased 2% on a constant
currency basis. Minerals orders were down 2%, with AM growth up 1% reflecting
growth in demand from customers in hard rock mining and a minor contribution
from pricing partially offset by the timing of multi-period orders
historically received in Q2. OE orders decreased, reflecting order phasing
with miners continuing to maximise production from existing assets. ESCO
orders were stable, with robust underlying demand in mining driving
aftermarket growth and increased demand for dredging products. 80% of orders
from continuing operations related to aftermarket compared to 77% in the prior
year.
Continuing operations revenue of £1,207m decreased 3% on a constant
currency basis, with a strong prior year comparator which was boosted by
higher OE deliveries, the last revenue from Russia and a strong oil sands
performance. In Minerals revenue was 4% lower on a constant currency
basis at £869m (2023: £901m). ESCO revenue was stable on a constant
currency basis at £338m (2023: £341m). Aftermarket accounted for 80% of
revenues from continuing operations, up from 78% in the prior year. Reported
revenues decreased 7%, largely driven by a foreign exchange translation
headwind of £58m. Overall book-to-bill at 1.04 reflects the continued
strength in orders as we executed on our strong opening order book.
Continuing operations adjusted operating profit increased by £3m, 2%, to
£215m on a reported basis (2023: £212m). Excluding a £13m foreign currency
translation headwind, the constant currency increase was £16m, 8%.
As explained further in the Divisional reviews, Minerals adjusted operating
profit increased by 5% on a constant currency basis to £170m (2023: £162m)
and ESCO's adjusted operating profit increased by 14% on a constant currency
basis to £65m (2023: £57m). Corporate costs of £20m (2023: £20m) are in
line with prior year.
Continuing operations adjusted operating margin of 17.8% is up 180bps versus
last year on a constant currency basis and up 150bps as reported. This
increase is driven by further Performance Excellence savings, strong operating
efficiencies as well as product mix moving slightly towards AM (78% to 80%)
for continuing operations. R&D as a percentage of sales was 2.1%, up from
1.8% at June 2023, meeting our target of 2% of revenue as we continue to
invest in our technology strategy.
Continuing operations statutory operating profit for the period of £188m was
£6m adverse to the prior year, driven by the increase in adjusting items of
£10m, a result of progress towards our Performance Excellence initiatives.
Continuing operations net finance costs were £22m (2023: £24m) with the
decrease mainly due to the non-repeat of term loan costs, and lower RCF usage
and facility.
Continuing operations adjusted profit before tax was £193m (2023: £188m),
after a translational foreign exchange headwind of £13m. The statutory profit
before tax from continuing operations of £165m compares to £170m in 2023,
the decrease being due to higher adjusting items.
Continuing operations adjusted tax charge for the year of £54m (2023:
£50m) on profit before tax from continuing operations (before adjusting
items) of £193m (2023: £188m) represents an adjusted effective tax rate
(ETR) of 28.2% (2023: 26.3%). The increase in ETR mainly reflects the
geographic mix of profits.
A tax credit of £7m has been recognised in relation to continuing operations
adjusting items (2023: £6m).
Continuing operations adjusting items increased to £28m (2023: £18m).
Intangibles amortisation decreased by £1m to £12m (2023: £13m). Exceptional
items totalled £15m (2023: £1m), with costs relating to our Performance
Excellence programme of £14m and the remainder being legacy legal claims and
integration costs partially offset by a small credit for the reversal of
provisions in respect of the wind down of operations in Russia as working
capital recoveries continue. Other adjusting items which relate solely to the
Group's legacy asbestos-related provisions in the period were £1m (2023:
£4m), with the reduction primarily due to the change in discount rates year
on year.
Statutory profit for the period after tax from total operations of £117m
(2023: £126m) reflects a £9m decrease in profit from continuing
operations.
Adjusted earnings per share from continuing operations increased to 53.6p
(2023: 53.4p). Statutory reported earnings per share from total operations is
45.3p (2023: 48.8p).
Cash flow and net debt
Cash generated from operations increased by £25m to £198m (2023: £173m) in
the period due to a combination of higher operating profits and a reduced
outflow from working capital in the period of £71m (2023: £88m). Working
capital as a percentage of sales at 24% was in line with the prior year,
slightly up on the December 2023 result of 21%. Continuing operations
utilised non-recourse invoice discounting facilities of £27m (2023: £40m)
compared to £33m at December 2023. This is largely utilising facilities
provided by our customers to receive payment on reasonable terms in certain
geographies where custom dictates extended payment terms. Suppliers chose to
utilise supply chain financing facilities of £39m (2023: £41m) versus £32m
at December 2023.
Net capital expenditure reduced by £6m to £30m (2023: £36m), with the
decrease due to the completion of our new ESCO foundry in China, which opened
in March 2024. Lease payments reduced to £15m (2023: £16m), while the
purchase of shares for employee share plans decreased by £8m to £7m (2023:
£15m) with the H2 amount expected to be in line with the prior year.
Free operating cash conversion (refer to note 2 of the Interim Financial
Statements) was 68% (2023: 51%) as a result of the increased cash generated
from operations and a reduced working capital outflow, including the impact of
timing of share purchases for employee awards which is split between H1 and H2
in 2024.
Free cash flow (refer to note 2 of the Interim Financial Statements) from
total operations was an inflow of £53m (2023: £24m).
Net debt increased by £48m to £738m (December 2023: £690m) and includes
£133m (December 2023: £117m) in respect of IFRS 16 'Leases'. Drivers of the
increase in net debt include payment of the final 2023 dividend of £54m,
lease movement of £16m, exceptional items of £16m which include Performance
Excellence costs, plus adverse translational foreign exchange and non-cash
movements of £12m. These are partially offset by the free cash inflow of
£53m. Net debt to EBITDA on a lender covenant basis was 1.2x (December 2023:
1.1x) compared to a covenant level of 3.5x.
As a result of strong cash generation in 2023, the Group reduced its
multi-currency revolving credit facility (RCF) by US$200m to US$600m in
February 2024. In March 2024, the Group exercised the option to extend its RCF
by one year which will now mature in April 2029. The RCF includes a link to
the Group's sustainability goals and the covenant terms are unchanged. Overall
these actions extended the average tenor of the Group's debt financing and
there remains in place more than £750m of immediately available liquidity.
Pensions
The IAS 19 funding position across the Group's legacy UK and North American
schemes increased from a net surplus of £2m at 31 December 2023 to a net
surplus of £10m at 30 June 2024. This is primarily due to a c.£4m increase
in the surplus in the UK Main plan where gains driven by higher UK discount
rates and changes in demographic assumptions were partly offset by net losses
in UK assets and experience losses resulting from UK inflation, coupled with a
reduction in the deficit on our main US schemes of c.£3m mainly from higher
US discount rates. In total, a credit of £7m (2023: charge of £17m) has been
recognised in the Consolidated Statement of Comprehensive Income.
The strength of the funding position of the UK main scheme has resulted in
additional pension cash contributions reducing to £nil in 2024 (2023: £6m).
Additional pension contributions of c.£3m are expected in relation to other
schemes during H2.
Principal Risks and Uncertainties
The Board considers the Principal Risks and Uncertainties affecting the
business activities of the Group are:
Principal Risk Risk Trend from 2023 Annual Report
1. Political and Social No change
2. Technology No change
3. Value Chain Excellence No change
4. Safety, Health and Wellbeing No change
5. People No change
6. Climate Increased
7. Market No change
8. Digital No change
9. Ethics and Governance No change
10. Information Security and Cyber No change
11. Competition No change
Further details of the Group's policies on Principal Risks and Uncertainties
are contained within the Group's 2023 Annual Report, a copy of which is
available at www.annualreport.weir (www.annualreport.weir) .
Enquiries:
Investors: Philip Carlisle +44 (0)141 308 3617
Media: Sally Jones +44 (0)141 308 3666
Citigate Dewe Rogerson: Kevin Smith +44 (0) 207 638 9571
Weir@citigatedewerogerson.com
Appendix 1 - 2023/2024 continuing operations(1) quarterly order trends
Reported organic growth
Division 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2
Original Equipment 20% -12% -10% -15% -9% -15%
Aftermarket 5% 5% 1% 2% 4% -1%
Minerals 9% 0% -2% -3% 0% -5%
Original Equipment 39% 40% 21% 69% -16% -23%
Aftermarket -9% -4% -5% -2% 5% -1%
ESCO -6% 0% -3% 2% 3% -4%
Original Equipment 22% -8% -8% -10% -9% -16%
Aftermarket 0% 2% -1% 1% 4% -1%
Continuing Ops 4% 0% -2% -2% 1% -4%
Book-to-bill 1.04 1.01 0.94 0.94 1.11 0.97
Quarterly orders(2) £m
Division 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2
Original Equipment 129 126 125 119 118 107
Aftermarket 317 357 322 330 329 353
Minerals 446 483 447 449 447 460
Original Equipment 14 20 13 13 12 16
Aftermarket 159 153 151 154 167 151
ESCO 173 173 164 167 179 167
Original Equipment 143 146 138 132 130 123
Aftermarket 476 510 473 484 496 504
Continuing Ops 619 656 611 616 626 627
Appendix 2 - 2024 continuing operations(1) order bridges (as reported)
Q1 Q2 H1
Group orders OE AM Total OE AM Total OE AM Total
(£m)
2023 - as reported 151 506 657 150 529 679 301 1,035 1,336
Organic -9% 4% 1% -16% -1% -4% -13% 2% -2%
Structure 0% 0% 0% 0% 0% 0% 0% 0% 0%
Currency -5% -6% -6% -2% -3% -3% -3% -5% -4%
Total -14% -2% -5% -18% -4% -7% -16% -3% -6%
2024 - as reported 130 495 625 123 505 628 253 1,000 1,253
Q1 Q2 H1
Minerals orders (£m) OE AM Total OE AM Total OE AM Total
2023 - as reported 137 340 477 129 374 503 266 714 980
Organic -9% 4% 0% -15% -1% -5% -12% 1% -2%
Structure 0% 0% 0% 0% 0% 0% 0% 0% 0%
Currency -5% -8% -7% -2% -4% -3% -3% -5% -5%
Total -14% -4% -7% -17% -5% -8% -15% -4% -7%
2024 - as reported 118 328 446 107 354 461 225 682 907
Q1 Q2 H1
ESCO orders OE AM Total OE AM Total OE AM Total
(£m)
2023 - as reported 14 166 180 21 155 176 35 321 356
Organic -16% 5% 3% -23% -1% -4% -20% 2% 0%
Structure 0% 0% 0% 0% 0% 0% 0% 0% 0%
Currency -3% -4% -4% -1% -1% -1% -2% -3% -3%
Total -19% 1% -1% -24% -2% -5% -22% -1% -3%
2024 - as reported 12 167 179 16 151 167 28 318 346
1. Continuing operations excludes the Oil & Gas Division which was sold to
Caterpillar Inc. in February 2021 and the Saudi Arabian joint venture which
was sold to Olayan Financing Company in June 2021.
2. Restated at June 2024 average exchange rates.
CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2024
Year ended 31 December 2023 6 months ended 30 June 2024 6 months ended 30 June 2023
Statutory results Adjusted results Adjusting items (note 5) Statutory results Adjusted results Adjusting items Statutory results
(note 5)
£m Notes £m £m £m £m £m £m
Continuing operations
2,636.0 Revenue 3 1,207.2 - 1,207.2 1,299.8 - 1,299.8
365.9 Operating profit before share of results of joint ventures 214.0 (27.7) 186.3 210.3 (17.6) 192.7
2.5 Share of results of joint ventures 1.4 - 1.4 1.3 - 1.3
368.4 Operating profit 215.4 (27.7) 187.7 211.6 (17.6) 194.0
(66.4) Finance costs (33.7) - (33.7) (31.1) - (31.1)
18.7 Finance income 11.4 - 11.4 7.4 - 7.4
320.7 Profit before tax from continuing operations 193.1 (27.7) 165.4 187.9 (17.6) 170.3
(90.8) Tax (expense) credit 6 (54.4) 7.1 (47.3) (49.5) 5.9 (43.6)
229.9 Profit for the period from continuing operations 138.7 (20.6) 118.1 138.4 (11.7) 126.7
(1.3) Loss for the period from discontinued operations 7 - (0.9) (0.9) - (0.4) (0.4)
228.6 Profit for the period 138.7 (21.5) 117.2 138.4 (12.1) 126.3
Attributable to:
227.9 Equity holders of the Company 138.4 (21.5) 116.9 138.1 (12.1) 126.0
0.7 Non-controlling interests 0.3 - 0.3 0.3 - 0.3
228.6 138.7 (21.5) 117.2 138.4 (12.1) 126.3
Earnings per share 8
88.2p Basic - total operations 45.3p 48.8p
88.7p Basic - continuing operations 53.6p 45.7p 53.4p 48.9p
87.7p Diluted - total operations 45.1p 48.4p
88.2p Diluted - continuing operations 53.4p 45.4p 53.1p 48.5p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 6 MONTHS ENDED 30 JUNE 2024
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
228.6 Profit for the period 117.2 126.3
Other comprehensive income (expense)
(0.4) Losses taken to equity on cash flow hedges (0.3) (0.1)
(0.8) Cost of hedging taken to equity on fair value hedges - -
(159.1) Exchange losses on translation of foreign operations (18.1) (151.5)
27.6 Exchange (losses) gains on net investment hedges (6.0) 25.3
0.5 Reclassification adjustments on cash flow hedges (0.2) 0.4
0.1 Reclassification adjustments on fair value hedges 0.2 -
0.1 Tax credit relating to above items 0.1 -
(132.0) Items that are or may be reclassified to profit or loss in subsequent periods (24.3) (125.9)
Other comprehensive income (expense) not to be reclassified to profit or loss
in subsequent periods:
(28.2) Remeasurements on defined benefit plans 6.6 (17.0)
7.1 Tax (charge) credit relating to above item (1.6) 4.3
(21.1) Items that will not be reclassified to profit or loss in subsequent periods 5.0 (12.7)
(153.1) Net other comprehensive expense (19.3) (138.6)
75.5 Total net comprehensive income (expense) for the period 97.9 (12.3)
Attributable to:
76.1 Equity holders of the Company 97.5 (11.6)
(0.6) Non-controlling interests 0.4 (0.7)
75.5 97.9 (12.3)
Total net comprehensive income (expense) for the year attributable to equity
holders of the Company
77.4 Continuing operations 98.4 (11.2)
(1.3) Discontinued operations (0.9) (0.4)
76.1 97.5 (11.6)
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2024
31 December 2023 30 June 2024 30 June 2023
£m Notes £m £m
ASSETS
Non-current assets
490.5 Property, plant & equipment 504.4 461.0
1,316.0 Intangible assets 1,304.5 1,324.0
12.2 Investments in joint ventures 12.9 14.8
111.3 Deferred tax assets 91.9 74.7
53.8 Other receivables 48.7 69.2
30.1 Retirement benefit plan assets 14 33.9 38.7
- Derivative financial instruments 15 - 0.1
2,013.9 Total non-current assets 1,996.3 1,982.5
Current assets
608.1 Inventories 616.3 684.7
526.2 Trade & other receivables 548.2 518.8
7.9 Derivative financial instruments 15 3.8 5.9
29.4 Income tax receivable 45.8 43.7
707.2 Cash & short-term deposits 651.9 626.9
1,878.8 Total current assets 1,866.0 1,880.0
3,892.7 Total assets 3,862.3 3,862.5
LIABILITIES
Current liabilities
286.2 Interest-bearing loans & borrowings 13 302.1 259.3
581.3 Trade & other payables 543.1 557.4
6.4 Derivative financial instruments 15 5.6 7.1
1.9 Income tax payable 5.8 2.1
47.6 Provisions 12 45.4 42.0
923.4 Total current liabilities 902.0 867.9
Non-current liabilities
1,111.1 Interest-bearing loans & borrowings 13 1,087.5 1,209.7
0.6 Other payables - -
2.3 Derivative financial instruments 15 - -
80.7 Provisions 12 77.3 56.4
46.9 Deferred tax liabilities 30.9 35.7
28.0 Retirement benefit plan deficits 14 24.3 29.6
1,269.6 Total non-current liabilities 1,220.0 1,331.4
2,193.0 Total liabilities 2,122.0 2,199.3
1,699.7 NET ASSETS 1,740.3 1,663.2
CAPITAL & RESERVES
32.5 Share capital 32.5 32.5
582.3 Share premium 582.3 582.3
332.6 Merger reserve 332.6 332.6
(29.0) Treasury shares (31.1) (20.1)
0.5 Capital redemption reserve 0.5 0.5
(238.7) Foreign currency translation reserve (262.9) (233.7)
1.4 Hedge accounting reserve 1.2 2.2
1,008.2 Retained earnings 1,075.5 956.9
1,689.8 Shareholders' equity 1,730.6 1,653.2
9.9 Non-controlling interests 9.7 10.0
1,699.7 TOTAL EQUITY 1,740.3 1,663.2
The financial statements were approved by the Board of Directors and
authorised for issue on 30 July 2024.
JON STANTON BRIAN PUFFER
Director Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2024
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m Notes £m £m
Total operations
Cash flows from operating activities 16
525.5 Cash generated from operations 197.8 172.9
(9.3) Additional pension contributions paid - (7.7)
(18.0) Exceptional and other adjusting cash items (16.1) (5.2)
(103.9) Income tax paid (59.1) (51.1)
394.3 Net cash generated from operating activities 122.6 108.9
Cash flows from investing activities
(6.9) Acquisitions of subsidiaries, net of cash acquired 11,16 (1.0) (1.0)
(79.1) Purchases of property, plant & equipment, net of grants received (26.4) (33.8)
(7.6) Purchases of intangible assets (4.0) (3.5)
4.2 Other proceeds from sale of property, plant & equipment and intangible 0.8 1.0
assets
(0.4) Disposals of discontinued operations, net of cash disposed and disposal costs 16 (1.8) (0.4)
15.1 Interest received 9.9 6.3
4.1 Dividends received from joint ventures - 1.7
(70.6) Net cash used in investing activities (22.5) (29.7)
Cash flows from financing activities
512.6 Proceeds from borrowings 40.0 510.6
(627.6) Repayments of borrowings (90.3) (529.6)
(31.0) Lease payments (15.4) (15.7)
(0.2) Settlement of external debt of subsidiary on acquisition - -
(0.5) Settlement of derivative financial instruments (0.7) (0.2)
(55.0) Interest paid (42.2) (30.6)
(95.9) Dividends paid to equity holders of the Company 9 (53.7) (49.9)
(0.9) Dividends paid to non-controlling interests (0.6) (0.7)
(24.0) Purchase of shares for employee share plans (7.0) (15.0)
(322.5) Net cash used in financing activities (169.9) (131.1)
1.2 Net (decrease) increase in cash & cash equivalents (69.8) (51.9)
477.5 Cash & cash equivalents at the beginning of the year 447.4 477.5
(31.3) Foreign currency translation differences (6.0) (32.1)
447.4 Cash & cash equivalents at the end of the period 16 371.6 393.5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHS ENDED 30 JUNE 2024
Share capital Share premium Merger reserve Treasury shares Capital redemption reserve Foreign currency translation reserve Hedge accounting reserve Retained earnings Attributable to equity holders of the Company Non- controlling interests Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 31 December 2022 32.5 582.3 332.6 (14.3) 0.5 (108.5) 1.9 899.5 1,726.5 11.4 1,737.9
Profit for the period - - - - - - - 126.0 126.0 0.3 126.3
Losses taken to equity on cash flow hedges - - - - - - (0.1) - (0.1) - (0.1)
Exchange losses on translation of foreign operations - - - - - (150.5) - - (150.5) (1.0) (151.5)
Exchange gains on net investment hedges - - - - - 25.3 - - 25.3 - 25.3
Reclassification adjustments on cash flow hedges - - - - - - 0.4 - 0.4 - 0.4
Remeasurements on defined benefit plans - - - - - - - (17.0) (17.0) - (17.0)
Tax credit relating to above items - - - - - - - 4.3 4.3 - 4.3
Total net comprehensive (expense) income for the period - - - - - (125.2) 0.3 113.3 (11.6) (0.7) (12.3)
Cost of share-based payments inclusive of tax charge - - - - - - - 3.2 3.2 - 3.2
Dividends - - - - - - - (49.9) (49.9) - (49.9)
Purchase of shares for employee share plans - - - (15.0) - - - - (15.0) - (15.0)
Dividends to non-controlling interests - - - - - - - - - (0.7) (0.7)
Exercise of share-based payments - - - 9.2 - - - (9.2) - - -
At 30 June 2023 32.5 582.3 332.6 (20.1) 0.5 (233.7) 2.2 956.9 1,653.2 10.0 1,663.2
Share capital Share premium Merger reserve Treasury shares Capital redemption reserve Foreign currency translation reserve Hedge accounting reserve Retained earnings Attributable to equity holders of the Company Non- controlling interests Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 31 December 2023 32.5 582.3 332.6 (29.0) 0.5 (238.7) 1.4 1,008.2 1,689.8 9.9 1,699.7
Profit for the period - - - - - - - 116.9 116.9 0.3 117.2
Losses taken to equity on cash flow hedges - - - - - - (0.3) - (0.3) - (0.3)
Exchange (losses) gains on translation of foreign operations - - - - - (18.2) - - (18.2) 0.1 (18.1)
Exchange losses on net investment hedges - - - - - (6.0) - - (6.0) - (6.0)
Reclassification adjustments on cash flow hedges - - - - - - (0.2) - (0.2) - (0.2)
Reclassification adjustments on fair value hedges - - - - - - 0.2 - 0.2 - 0.2
Remeasurements on defined benefit plans - - - - - - - 6.6 6.6 - 6.6
Tax credit (charge) relating to above items - - - - - - 0.1 (1.6) (1.5) - (1.5)
Total net comprehensive (expense) income for the period - - - - - (24.2) (0.2) 121.9 97.5 0.4 97.9
Cost of share-based payments inclusive of tax charge - - - - - - - 4.0 4.0 - 4.0
Dividends - - - - - - - (53.7) (53.7) - (53.7)
Purchase of shares for employee share plans - - - (7.0) - - - - (7.0) - (7.0)
Dividends to non-controlling interests - - - - - - - - - (0.6) (0.6)
Exercise of share-based payments - - - 4.9 - - - (4.9) - - -
At 30 June 2024 32.5 582.3 332.6 (31.1) 0.5 (262.9) 1.2 1,075.5 1,730.6 9.7 1,740.3
Share capital Share premium Merger reserve Treasury shares Capital redemption reserve Foreign currency translation reserve Hedge accounting reserve Retained earnings Attributable to equity holders of the Company Non- controlling interests Total equity
£m £m £m £m £m £m £m £m £m £m £m
At 31 December 2022 32.5 582.3 332.6 (14.3) 0.5 (108.5) 1.9 899.5 1,726.5 11.4 1,737.9
Profit for the year - - - - - - - 227.9 227.9 0.7 228.6
Losses taken to equity on cash flow hedges - - - - - - (0.4) - (0.4) - (0.4)
Cost of hedging taken to equity on fair value hedges - - - - - - (0.8) - (0.8) - (0.8)
Exchange losses on translation of foreign operations - - - - - (157.8) - - (157.8) (1.3) (159.1)
Exchange gains on net investment hedges - - - - - 27.6 - - 27.6 - 27.6
Reclassification adjustments on cash flow hedges - - - - - - 0.5 - 0.5 - 0.5
Reclassification adjustments on fair value hedges - - - - - - 0.1 - 0.1 - 0.1
Remeasurements on defined benefit plans - - - - - - - (28.2) (28.2) - (28.2)
Tax credit relating to above items - - - - - - 0.1 7.1 7.2 - 7.2
Total net comprehensive (expense) income for the year - - - - - (130.2) (0.5) 206.8 76.1 (0.6) 75.5
Cost of share-based payments inclusive of tax credit - - - - - - - 7.1 7.1 - 7.1
Dividends - - - - - - - (95.9) (95.9) - (95.9)
Purchase of shares for employee share plans - - - (24.0) - - - - (24.0) - (24.0)
Dividends paid to non-controlling interests - - - - - - - - - (0.9) (0.9)
Exercise of share-based payments - - - 9.3 - - - (9.3) - - -
At 31 December 2023 32.5 582.3 332.6 (29.0) 0.5 (238.7) 1.4 1,008.2 1,689.8 9.9 1,699.7
1. Accounting policies
Basis of preparation
These interim financial statements are for the 6 month period ended 30 June
2024 and have been prepared on the basis of the accounting policies set out in
the Group's 2023 Annual Report and in accordance with UK-adopted IAS 34
'Interim financial reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority.
These interim financial statements are unaudited but have been reviewed by the
auditors and their report to the Company is set out on page 49. The
information shown for the year ended 31 December 2023 does not constitute
statutory accounts as defined in Section 435 of the Companies Act 2006 and has
been extracted from the Group's 2023 Annual Report which has been filed with
the Registrar of Companies. The report of the auditors on the financial
statements contained within the Group's 2023 Annual Report was unqualified and
did not contain a statement under either Section 498(2) or Section 498(3) of
the Companies Act 2006. These interim financial statements should be read in
conjunction with the annual consolidated financial statements for the year
ended 31 December 2023, which were prepared in accordance with UK-adopted
International Accounting Standards in conformity with the requirements of the
Companies Act 2006.
Significant changes in the financial position and performance of the Group
during the reporting period have been discussed in the Chief Executive
Officer's Review and the Group Financial Review. The principal activities of
the Group are described in note 3.
The Weir Group PLC is a limited company, limited by shares, incorporated in
Scotland, United Kingdom and is listed on the London Stock Exchange.
These interim financial statements are presented in Sterling. All values are
rounded to the nearest 0.1 million pounds (£m) except where otherwise
indicated.
These interim financial statements were approved by the Board of Directors on
30 July 2024.
Going concern
These interim financial statements have been prepared on the going concern
basis.
As discussed more fully in the Chief Executive Officer's Review, the Group
continued to make excellent progress against our 2026 ambitions announced
during our capital markets event last year. We executed strongly on our
Performance Excellence program, delivering significant year on year growth in
profit, cash conversion, and return on capital employed, while also expanding
operating margins.
As discussed in the Group Financial Review, as a result of strong cash
generation in 2023, the Group reduced its multi-currency revolving credit
facility (RCF) by US$200m to US$600m in February 2024. In March 2024, the
Group exercised the option to extend its RCF by one year which will now mature
in April 2029. Following these actions the Group retains substantial levels of
liquidity over the medium-term.
While mining markets continue to show strength, there remains macroeconomic
and geopolitical uncertainty. Recognising these uncertainties, the Group
performed financial modelling of future cash flows, which cover a period of 12
months from the approval of the 2024 interim financial statements. The
financial modelling included reverse stress testing which focused on the level
of downside risk which would be required for the Group to breach its current
lending facilities and related financial covenants. The review indicated that
the Group continues to have sufficient headroom on both lending facilities and
related financial covenants. The circumstances which would lead to a breach
are not considered plausible.
The Directors, having considered all available relevant information, have a
reasonable expectation that the Group has adequate resources to continue to
operate as a going concern.
Climate change
As well as considering the impact of climate change across our business model,
the Directors have considered the impact on the interim financial statements
in accordance with the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations. These considerations focused on similar areas to those
disclosed in the 2023 Annual Report. There has not been a material impact on
the financial reporting judgements and estimates arising from our
considerations, consistent with our assessment that climate change is not
expected to have a detrimental impact on the viability of the Group in the
medium-term.
New accounting standards, amendments and interpretations
A number of new or amended accounting standards became applicable for the
current reporting period as listed below:
i. Amendments to IAS 1 'Presentation of financial statements' on
classification of
liabilities;
ii. Amendments to IAS 1 'Presentation of financial statements' on
non-current liabilities with
covenants;
iii. Amendments to IFRS 16 'Leases' Lease Liability in a Sale and Leaseback;
and
iv. Amendment to IAS 7 and IFRS 7 - Supplier finance.
The above are not considered to have a material impact on the consolidated
financial statements of the Group.
Use of estimates and judgements
The preparation of interim financial statements, in conformity with IFRS,
requires management to make judgements that affect the application of
accounting policies and estimates that impact the reported amounts of assets,
liabilities, income and expense.
Management bases these judgements on a combination of past experience,
professional expert advice and other evidence that is relevant to each
individual circumstance. Actual results may differ from these judgements and
the resulting estimates, which are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the year in which the estimate is
revised.
The areas of judgement and estimate identified in the preparation of the
consolidated financial statements for the year ended 31 December 2023
continue to be relevant to the preparation of these interim financial
statements, with additional consideration given to the following area.
Taxation (estimate)
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual profit or loss.
2. Alternative performance measures
The reported interim financial statements of The Weir Group PLC have been
prepared in accordance with UK-adopted International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to those
companies reporting under those standards. In measuring our performance, the
financial measures that we use include those which have been derived from our
reported results in order to eliminate factors which we believe distort
period-on-period comparisons. These are considered alternative performance
measures. This information, along with comparable GAAP measurements, is useful
to investors in providing a basis for measuring our operational performance.
Our management uses these financial measures, along with the most directly
comparable GAAP financial measures, in evaluating our performance and value
creation. Alternative performance measures should not be considered in
isolation from, or as a substitute for, financial information in compliance
with GAAP. Alternative performance measures as reported by the Group may not
be comparable with similarly titled amounts reported by other companies.
Below we set out our definitions of alternative performance measures and
provide reconciliations to relevant GAAP measures.
Adjusted results and adjusting items
The Consolidated Income Statement presents Statutory results, which are
provided on a GAAP basis, and Adjusted results (non-GAAP), which are
management's primary area of focus when reviewing the performance of the
business. Adjusting items represent the difference between Statutory results
and Adjusted results and are defined within the accounting policies section of
our 2023 Annual Report. The accounting policy for Adjusting items should be
read in conjunction with this note. Details of each adjusting item are
provided in note 5. We consider this presentation to be helpful as it allows
greater comparability of the operating performance of the business from period
to period.
EBITDA
EBITDA is operating profit from continuing operations, before exceptional
items, other adjusting items, intangibles amortisation, and excluding
depreciation of owned assets and right-of-use assets. EBITDA is a widely used
measure of a company's profitability of its operations before any effects of
indebtedness, taxes or costs required to maintain its asset base. EBITDA is
used in conjunction with other GAAP and non-GAAP financial measures to assess
our operational performance. A reconciliation of EBITDA to the closest
equivalent GAAP measure, operating profit, is provided.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Continuing operations
368.4 Operating profit 187.7 194.0
Adjusted for:
64.9 Exceptional and other adjusting items (note 5) 15.3 4.6
25.5 Adjusting amortisation (note 5) 12.4 13.0
458.8 Adjusted operating profit 215.4 211.6
12.2 Non-adjusting amortisation 6.5 6.2
471.0 Adjusted earnings before interest, tax and amortisation (EBITA) 221.9 217.8
39.9 Depreciation of owned property, plant & equipment 22.7 20.4
31.6 Depreciation of right-of-use property, plant & equipment 15.7 15.8
542.5 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) 260.3 254.0
Operating cash flow (cash generated from operations)
Operating cash flow excludes additional pension contributions, exceptional and
other adjusting cash items and income tax paid. This is a useful measure to
view or assess the underlying cash generation of the business from its
operating activities. A reconciliation to the GAAP measure 'Net cash generated
from operating activities' is provided in the Consolidated Cash Flow
Statement.
Free operating cash flow and free cash flow
Free operating cash flow (FOCF) is defined as operating cash flow (cash
generated from operations), adjusted for net capital expenditure, lease
payments, dividends received from joint ventures and purchase of shares for
employee share plans. FOCF provides a useful measure of the cash flows
generated directly from the operational activities after taking into account
other cash flows closely associated with maintaining daily operations.
Free cash flow (FCF) is defined as FOCF further adjusted for net interest,
income taxes, settlement of derivative financial instruments, additional
pension contributions and non-controlling interest dividends. FCF reflects an
additional way of viewing our available funds that we believe is useful to
investors as it represents cash flows that could be used for repayment of
debt, dividends, exceptional and other adjusting items, or to fund our
strategic initiatives, including acquisitions, if any.
The reconciliation of operating cash flows (cash generated from operations) to
FOCF and subsequently FCF is as follows.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
525.5 Operating cash flow (cash generated from operations) 197.8 172.9
(82.5) Net capital expenditure from purchase & disposal of property, plant & (29.6) (36.3)
equipment and intangibles
(31.0) Lease payments (15.4) (15.7)
4.1 Dividends received from joint ventures - 1.7
(24.0) Purchase of shares for employee share plans (7.0) (15.0)
392.1 Free operating cash flow (FOCF) 145.8 107.6
(39.9) Net interest paid (32.3) (24.3)
(103.9) Income tax paid (59.1) (51.1)
(0.5) Settlement of derivative financial instruments (0.7) (0.2)
(9.3) Additional pension contributions paid - (7.7)
(0.9) Dividends paid to non-controlling interests (0.6) (0.7)
237.6 Free cash flow (FCF) 53.1 23.6
Free operating cash conversion
Free operating cash conversion is a non-GAAP key performance measure defined
as free operating cash flow divided by adjusted operating profit on a total
Group basis. The measure is used by management to monitor the Group's ability
to generate cash relative to operating profits.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
458.8 Adjusted operating profit 215.4 211.6
392.1 Free operating cash flow 145.8 107.6
85% Free operating cash conversion % 68% 51%
Working capital as a percentage of sales
Working capital as a percentage of sales is calculated based on working
capital as reflected below, divided by revenue for the last 12 months, as
included in the Consolidated Income Statement. It is a measure used by
management to monitor how efficiently the Group is managing its investment in
working capital relative to revenue growth.
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Working capital as included in the Consolidated Balance Sheet
53.8 Other receivables 48.7 69.2
608.1 Inventories 616.3 684.7
526.2 Trade & other receivables 548.2 518.8
(0.8) Derivative financial instruments (note 15) (1.8) (1.1)
(581.3) Trade & other payables (543.1) (557.4)
(0.6) Other payables - -
605.4 668.3 714.2
Adjusted for:
(57.5) Insurance contract assets (52.5) (68.5)
12.3 Interest accruals 2.1 4.2
1.6 Deferred consideration 0.6 1.0
(43.6) (49.8) (63.3)
561.8 Working capital 618.5 650.9
H2 revenue as reported in the prior year 1,336.2 1,376.6
H1 revenue as reported 1,207.2 1,299.8
2,636.0 Revenue 2,543.4 2,676.4
21% Working capital as a percentage of sales 24% 24%
Net debt
Net debt is a widely used liquidity metric calculated by taking cash and cash
equivalents less total current and non-current debt. A reconciliation of net
debt to cash and short-term deposits and interest-bearing loans and borrowings
is provided in note 16. It is a useful measure used by management and
investors when monitoring the capital management of the Group. Net debt,
excluding lease liabilities and converted at the exchange rates used in the
preparation of the Consolidated Income Statement, is also the basis for
covenant reporting.
3. Segment information
Continuing operations includes two operating Divisions: Minerals and ESCO.
These two Divisions are organised and managed separately based on the key
markets served and each is treated as an operating segment and a reportable
segment under IFRS 8 'Operating segments'. The operating and reportable
segments were determined based on the reports reviewed by the Chief Executive
Officer, which are used to make operational decisions.
The Minerals segment is a global leader in engineering, manufacturing and
service processing technology used in abrasive, high-wear mining applications.
Its differentiated technology is also used in infrastructure and general
industrial markets. The ESCO segment is a global leader in the provision of
Ground Engaging Tools (GET) for large mining machines. It operates
predominantly in mining and infrastructure markets where its highly engineered
technology improves productivity through extended wear life, increased safety
and reduced energy consumption.
Following the acquisition of Sentiantechnologies AB (SentianAI) on 21 November
2023 the entity has been included in the Minerals segment. SentianAI is a
developer of innovative cloud-based Artificial Intelligence solutions to the
mining industry.
The Chief Executive Officer assesses the performance of the operating segments
based on operating profit from continuing operations before exceptional and
other adjusting items ('segment result'). Finance income and expenditure and
associated interest-bearing liabilities and financing derivative financial
instruments are not allocated to segments as all treasury activity is managed
centrally by the Group Treasury function. The amounts provided to the Chief
Executive Officer with respect to assets and liabilities are measured in a
manner consistent with that of the financial statements. The assets are
allocated based on the operations of the segment and the physical location of
the asset. The liabilities are allocated based on the operations of the
segment.
Transfer prices between business segments are set on an arm's length basis, in
a manner similar to transactions with third parties.
The segment information for the reportable segments for 2024 and 2023 is
disclosed below.
Minerals ESCO Total continuing operations
30 June 2024 30 June 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023
£m £m £m £m £m £m
Revenue
Sales to external customers 869.4 950.0 337.8 349.8 1,207.2 1,299.8
Inter-segment sales - 0.1 0.7 1.6 0.7 1.7
Segment revenue 869.4 950.1 338.5 351.4 1,207.9 1,301.5
Eliminations (0.7) (1.7)
1,207.2 1,299.8
Sales to external customers - 2023 at 2024 average exchange rates
Sales to external customers 869.4 901.3 337.8 340.9 1,207.2 1,242.2
Segment result
Segment result before share of results of joint ventures 170.0 173.3 63.7 57.2 233.7 230.5
Share of results of joint ventures - - 1.4 1.3 1.4 1.3
Segment result 170.0 173.3 65.1 58.5 235.1 231.8
Corporate expenses (19.7) (20.2)
Adjusted operating profit 215.4 211.6
Adjusting items (27.7) (17.6)
Net finance costs (22.3) (23.7)
Profit before tax from continuing operations 165.4 170.3
Segment result - 2023 at 2024 average exchange rates
Segment result before share of results of joint ventures 170.0 161.9 63.7 55.7 233.7 217.6
Share of results of joint ventures - - 1.4 1.2 1.4 1.2
Segment result 170.0 161.9 65.1 56.9 235.1 218.8
Corporate expenses (19.7) (20.2)
Adjusted operating profit 215.4 198.6
Minerals ESCO Total continuing operations
Year ended 31 December 2023 £m £m £m
Revenue
Sales to external customers 1,937.4 698.6 2,636.0
Inter-segment sales 0.1 2.5 2.6
Segment revenue 1,937.5 701.1 2,638.6
Eliminations (2.6)
2,636.0
Sales to external customers - 2023 at 2024 average exchange rates
Sales to external customers 1,868.8 686.4 2,555.2
Segment result
Segment result before share of results of joint ventures 375.7 119.4 495.1
Share of results of joint ventures - 2.5 2.5
Segment result 375.7 121.9 497.6
Corporate expenses (38.8)
Adjusted operating profit 458.8
Adjusting items (90.4)
Net finance costs (47.7)
Profit before tax from continuing operations 320.7
Segment result - 2023 at 2024 average exchange rates
Segment result before share of results of joint ventures 357.7 117.2 474.9
Share of results of joint ventures - 2.5 2.5
Segment result 357.7 119.7 477.4
Corporate expenses (38.4)
Adjusted operating profit 439.0
Total continuing Minerals ESCO Total continuing operations
operations
31 December 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023
£m £m £m £m £m £m £m
Timing of revenue recognition
2,510.5 At a point in time 826.6 883.0 328.3 345.0 1,154.9 1,228.0
128.1 Over time 42.8 67.1 10.2 6.4 53.0 73.5
2,638.6 Segment revenue 869.4 950.1 338.5 351.4 1,207.9 1,301.5
(2.6) Eliminations (0.7) (1.7)
2,636.0 1,207.2 1,299.8
Geographical information
Geographical information in respect of 2024 and 2023 is disclosed below.
Revenues are allocated based on the location to which the product is shipped.
Year ended 31 December 2023 6 months ended 30 June 2024 6 months ended 30 June 2023
£m £m £m
Revenue by geography
23.9 UK 7.3 12.1
412.4 US 200.6 209.8
420.8 Canada 191.9 210.1
347.4 Asia Pacific 144.8 167.5
412.4 Australasia 218.6 196.9
576.3 South America 259.1 284.7
317.4 Middle East & Africa 131.5 151.9
125.4 Europe & FSU 53.4 66.8
2,636.0 Revenue 1,207.2 1,299.8
Year ended 31 December 2023 6 months ended 30 June 2024 6 months ended 30 June 2023
£m £m £m
An analysis of the Group's revenue is as follows:
552.3 Original equipment 231.6 247.6
1,864.3 Aftermarket parts 873.5 933.0
2,416.6 Sales of goods 1,105.1 1,180.6
160.7 Provision of services - aftermarket 87.3 75.5
54.3 Construction contracts - original equipment 12.9 41.7
4.4 Subscription services 1.9 2.0
2,636.0 Revenue 1,207.2 1,299.8
Minerals ESCO Total Group
30 June 2024 30 June 2023 30 June 2024 30 June 2023 30 June 2024 30 June 2023
£m £m £m £m £m £m
Assets & liabilities
Intangible assets 563.0 562.9 741.5 761.1 1,304.5 1,324.0
Property, plant & equipment 320.4 301.9 174.6 149.0 495.0 450.9
Working capital assets 875.9 906.5 282.6 294.8 1,158.5 1,201.3
1,759.3 1,771.3 1,198.7 1,204.9 2,958.0 2,976.2
Investments in joint ventures - - 12.9 14.8 12.9 14.8
Segment assets 1,759.3 1,771.3 1,211.6 1,219.7 2,970.9 2,991.0
Corporate assets 891.4 871.5
Total assets 3,862.3 3,862.5
Working capital liabilities 462.6 467.6 120.7 122.5 583.3 590.1
Segment liabilities 462.6 467.6 120.7 122.5 583.3 590.1
Corporate liabilities 1,538.7 1,609.2
Total liabilities 2,122.0 2,199.3
Corporate assets primarily comprise cash and short-term deposits,
asbestos-related insurance asset, Trust Owned Life Insurance policy
investments, derivative financial instruments, income tax receivable, deferred
tax assets and elimination of intercompany assets as well as those assets
which are used for general head office purposes. Corporate liabilities
primarily comprise interest-bearing loans and borrowings and related interest
accruals, derivative financial instruments, income tax payable, provisions,
deferred tax liabilities, elimination of intercompany liabilities and
retirement benefit deficits as well as liabilities relating to general head
office activities.
Year ended 31 December 2023 Minerals ESCO Total Group
£m £m £m
Assets & liabilities
Intangible assets 567.9 748.0 1,315.9
Property, plant & equipment 312.3 168.4 480.7
Working capital assets 844.9 288.1 1,133.0
1,725.1 1,204.5 2,929.6
Investments in joint ventures - 12.2 12.2
Segment assets 1,725.1 1,216.7 2,941.8
Corporate assets 950.9
Total assets 3,892.7
Working capital liabilities 476.6 129.9 606.5
Segment liabilities 476.6 129.9 606.5
Corporate liabilities 1,586.5
Total liabilities 2,193.0
4. Revenue & expenses
The following disclosures are given in relation to continuing operations.
Year ended 31 December 2023 6 months ended 30 June 2024 6 months ended 30 June 2023
Statutory results Adjusted results Adjusting items Statutory results Adjusted results Adjusting items Statutory results
£m £m £m £m £m £m £m
A reconciliation of revenue to operating profit is as follows:
2,636.0 Revenue 1,207.2 - 1,207.2 1,299.8 - 1,299.8
(1,642.7) Cost of sales (731.5) (0.9) (732.4) (818.5) 5.4 (813.1)
993.3 Gross profit 475.7 (0.9) 474.8 481.3 5.4 486.7
5.9 Other operating income 4.4 - 4.4 3.2 0.4 3.6
(293.8) Selling & distribution costs (144.9) 0.1 (144.8) (144.2) (1.0) (145.2)
(339.5) Administrative expenses (121.2) (26.9) (148.1) (130.0) (22.4) (152.4)
2.5 Share of results of joint ventures 1.4 - 1.4 1.3 - 1.3
368.4 Operating profit 215.4 (27.7) 187.7 211.6 (17.6) 194.0
Details of adjusting items are included in note 5.
5. Adjusting items
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Recognised in arriving at operating profit from continuing operations
(25.5) Intangibles amortisation (12.4) (13.0)
Exceptional items
7.7 Russia operations wind down 0.3 7.1
(28.8) Performance Excellence programme (14.4) (7.8)
(0.7) Acquisition and integration related costs (0.1) (0.3)
0.1 Other restructuring and rationalisation activities - -
- Legal claims (0.5) -
(21.7) Total exceptional items (14.7) (1.0)
Other adjusting items
(43.2) Asbestos-related provision (0.6) (3.6)
(43.2) Total other adjusting items (0.6) (3.6)
(90.4) Total adjusting items (27.7) (17.6)
Continuing operations
Intangibles amortisation
Intangibles amortisation of £12.4m (2023: £13.0m) is in respect of
acquisition related assets.
Exceptional items
Exceptional items in the period include a net charge of £14.4m in relation to
the Group's ongoing Performance Excellence programme. This three-year
programme aims to transform the way we work with more agile and efficient
business processes, with a focus on customer and service-delivery. The
programme includes capacity optimisation, lean processes and global business
services. Costs of £13.0m have been recognised under the functional
transformation pillar as costs associated with establishing Weir Business
Services, of which £12.2m has been cash settled in the period. Also within
Performance Excellence, £1.4m has been recognised under the capacity
optimisation pillar for costs associated with the relocation of facilities,
service centre restructuring and transfer of certain manufacturing operations
across the USA and Australia, of which £3.5m has been cash settled in the
period (including provided amounts brought forward).
During the period an exceptional credit of £0.3m has been recognised in
relation to previously impaired receivables balances relating to the wind down
of Russia operations in 2022.
Legacy legal claims and acquisition and integration related costs led to a
total charge of £0.6m in the period.
Other adjusting items
A charge of £0.6m (2023: £3.6m) has been recorded primarily in respect of
movements in the US asbestos-related liability and associated insurance asset
that relate to legacy products sold by a US-based subsidiary of the Group.
Further details of this are included in note 12.
Discontinued operations
A charge of £0.9m has been recognised in the period in relation to the gain
on sale of discontinued operations (note 7). This relates to the finalisation
of certain tax indemnities under the sale and purchase agreement for the Oil
& Gas Division, which was disposed of in 2021.
6. Income tax expense
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
12.1 Continuing Group - UK (1.0) (6.3)
(102.9) Continuing Group - Overseas (46.3) (37.3)
(90.8) Income tax expense in the Consolidated Income Statement for total operations (47.3) (43.6)
The total income tax expense is disclosed in the Consolidated Income Statement
as follows.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Tax (expense) credit
(110.9) - adjusted continuing operations (54.4) (49.5)
19.2 - exceptional and other adjusting items 3.6 3.1
0.9 - adjusting intangibles amortisation and impairment 3.5 2.8
(90.8) Total income tax expense in the Consolidated Income Statement for total (47.3) (43.6)
operations
The income tax expense included in continuing operations' share of results of
joint ventures is as follows.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
(0.6) Joint ventures - -
Tax charged within the 6 months ended 30 June 2024 has been calculated by
applying the effective rate of tax which is expected to apply to the Group for
the year ending 31 December 2024 using rates substantively enacted by 30 June
2024 as required by IAS 34 'Interim financial reporting'.
The normalised rate of tax of 28.2% (June 2023: 26.3%) has been calculated
using the full year projections and has been applied to profit before
adjusting items for the 6 months ended 30 June 2024.
Legislation to increase the UK corporation tax rate from 19% to 25% from April
2023 was substantively enacted as part of Finance Bill 2021 (on 25 May 2021).
As a result, at 30 June 2024, deferred tax balances have been calculated at
25%.
Factors affecting current and future tax charges
The normalised tax rate was 0.8% above the Group's weighted average rate of
27.4%. The Group considers its normalised tax rate to be sustainable.
Unrecognised deferred tax
Included in the net deferred tax asset of £61.0m (June 2023: £39.0m) is
£62.1m (June 2023: £52.0m) related to the US Group net deferred tax assets,
determined on a basis consistent with the approach adopted at year ended 31
December 2023 following the application of a model which estimates the future
forecast levels of US taxable income with reference to the Group's five-year
strategic plan. Consistent with this approach, US deferred tax assets
totalling £10.1m (June 2023: £7.7m) are not recognised but retained by the
continuing US group. The ongoing application of this model may result in
future changes to the amount of US deferred tax assets that are unrecognised.
Pillar Two
On 20 June 2023, the government of the United Kingdom, where The Weir Group
PLC is incorporated, substantively enacted the Pillar Two income taxes
legislation effective from 1 January 2024. The Group has applied the temporary
exception issued by the IASB in May 2023 from the accounting requirements for
deferred taxes in IAS 12. Accordingly, the Group neither recognises nor
discloses information about deferred tax assets and liabilities related to
Pillar Two income taxes.
The Group has analysed its eligibility for the Transitional Country by Country
Reporting Safe Harbours on a jurisdiction by jurisdiction basis for the period
to 30 June 2024. Based on the outcome of this analysis the Group does not have
a material Pillar Two top-up tax. The Group is aware that the rules and
guidance in relation to Pillar Two continue to evolve and we are working
alongside tax specialists in order to continually assess the impact of the
Pillar Two income taxes legislation on future financial performance. As a
result of this changing landscape, there is a possibility that top-up taxes
may arise at some point in the future.
7. Discontinued operations
In the current period, a charge of £0.9m (2023: £0.4m) has been recognised
in relation to the finalisation of certain tax indemnities under the sale and
purchase agreement for the Oil & Gas Division, which was disposed of in
2021. Total current year investing cash outflows from discontinued operations
related to these charges are £1.8m (2023: £0.4m).
For full disclosure of the disposal of the Oil & Gas Division refer to
note 8 of Group's 2021 Annual Report and Financial Statements.
Loss per share
Loss per share from discontinued operations were as follows.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
pence pence pence
(0.5) Basic (0.4) (0.1)
(0.5) Diluted (0.3) (0.1)
The loss per share figures were derived by dividing the net loss attributable
to equity holders of the Company from discontinued operations by the weighted
average number of ordinary shares, for both basic and diluted amounts, shown
in note 8.
8. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue after deducting the own shares held by
employee share ownership trusts and treasury shares. Diluted earnings per
share is calculated by dividing the net profit attributable to equity holders
of the Company by the weighted average number of ordinary shares outstanding
during the year, adjusted for the effect of dilutive share awards.
The following reflects the earnings used in the calculation of earnings per
share.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Profit attributable to equity holders of the Company
227.9 Total operations(1) 116.9 126.0
229.2 Continuing operations(1) 117.8 126.4
299.5 Continuing operations before adjusting items(1) 138.4 138.1
The following reflects the share numbers used in the calculation of earnings
per share, and the difference between the weighted average share capital for
the purposes of the basic and the diluted earnings per share calculations.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
Shares Shares Shares
million
million million
258.4 Weighted average number of ordinary shares for basic earnings per share 258.0 258.4
1.4 Effect of dilution: employee share awards 1.4 1.8
259.8 Adjusted weighted average number of ordinary shares for diluted earnings per 259.4 260.2
share
The profit attributable to equity holders of the Company used in the
calculation of both basic and diluted earnings per share from continuing
operations before adjusting items is calculated as follows.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
229.2 Net profit attributable to equity holders from continuing operations(1) 117.8 126.4
70.3 Adjusting items net of tax 20.6 11.7
299.5 Net profit attributable to equity holders from continuing operations before 138.4 138.1
adjusting items
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
pence pence pence
Basic earnings per share:
88.2 Total operations(1) 45.3 48.8
88.7 Continuing operations(1) 45.7 48.9
115.9 Continuing operations before adjusting items(1) 53.6 53.4
Diluted earnings per share:
87.7 Total operations(1) 45.1 48.4
88.2 Continuing operations(1) 45.4 48.5
115.3 Continuing operations before adjusting items(1) 53.4 53.1
1 Adjusted for a profit of £0.3m (2023: £0.3m) in
respect of non-controlling interests for both total and continuing operations.
( )
There have been no share awards (2023: no share awards) exercised between the
reporting date and the date of signing of these interim financial statements.
( )
9. Dividends paid & proposed
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Declared & paid during the year
Equity dividends on ordinary shares
49.9 Final dividend paid for 2023: 20.8p (2022: 19.3p) 53.7 49.9
46.0 Interim dividend paid for 2023: 17.8p (2022: 13.5p) - -
53.6 Final dividend for 2023 proposed for approval by shareholders at the AGM - -
(20.8p)
- Interim dividend proposed for 2024: 17.9p (2023: 17.8p) 46.2 46.0
An interim dividend of 17.9p has been declared for 2024 (2023: 17.8p) in line
with the capital allocation policy under which the Group intends to distribute
33% of earnings from continuing operations before adjusting items by way of
dividend.
The proposed interim dividend is based on the number of shares in issue,
excluding treasury shares held, at the date that the financial statements were
approved and authorised for issue. The final interim dividend may differ due
to increases or decreases in the number of shares in issue between the date of
approval of this Interim Report and Financial Statements and the record date
for the interim dividend.
10. Property, plant & equipment and intangible assets
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Additions of property, plant & equipment and intangible assets
3.1 - owned land & buildings 1.3 0.4
83.6 - owned plant & equipment 25.7 34.2
25.8 - right-of-use land & buildings 25.9 20.2
7.5 - right-of-use plant & equipment 3.3 3.5
7.6 - intangible assets 4.0 3.5
127.6 60.2 61.8
The above additions relate to the normal course of business and do not include
any additions made by way of business combinations. There have been no
material disposals or transfers within the period.
11. Business combinations
SentianTechnologies AB
On 21 November 2023, the Group completed the acquisition of 100% of the voting
rights of SentianTechnologies AB (SentianAI) for an enterprise value of
SEK87.3m (£6.7m). SentianAI is a Swedish-based developer of innovative
cloud-based Artificial Intelligence (AI) solutions for the mining industry.
The acquisition has joined the Minerals Division and SentianAI's technology
will integrate with Minerals' existing product lines, and expand the
Division's digital capabilities. Initial consideration of £6.1m was paid on
completion, with a further deferred consideration of £0.6m recognised,
payable 15 months after the date of acquisition.
As part of the ongoing assessment of the provisional fair values of the
opening balance sheet acquired, an immaterial fair value adjustment has been
made to an intangible asset with a corresponding amendment to goodwill. The
provisional fair values are subject to finalisation within 12 months of
acquisition. As such, the provisional fair values will be finalised during the
second half and reported in the 2024 Annual Report.
Included in the sale and purchase agreement of SentianAI, a maximum of an
additional SEK23.7m (£1.9m) is payable by the Group contingent on SentianAI
exceeding specific revenue and EBITDA margin targets over the next three years
and meeting non-financial targets by the end of 2026. The entry point for any
contingent payment would require significant growth in terms of revenue and
EBITDA margin by 2026. While the Group expects SentianAI to grow as it
leverages the benefits of being partnered with Minerals, and the opportunities
within ESCO, the entry targets are considered challenging. At present the
probability of SentianAI exceeding the revenue and EBITDA margin targets in
order to trigger a contingent payment is considered uncertain, in part due to
the relative infancy of the business. As a result no contingent consideration
has been recorded at the balance sheet date in both the current and prior
period. This will be reassessed in future periods as the business develops.
Carriere Industrial Supply Limited
On 8 April 2022, the Group completed the acquisition of 100% of the voting
rights of Carriere Industrial Supply Limited (CIS) for an enterprise value of
CAD$32.5m (£20.2m). Initial consideration of £16.2m was paid on completion,
with a further deferred consideration of £2.5m recognised reflecting
indemnification and working capital hold backs. The Group settled the final
£1.0m tranche of the £2.5m deferred consideration in April 2024.
Motion Metrics
The Group completed the acquisition of 100% of the voting rights of Motion
Metrics on 30 November 2021. As part of the purchase agreement a maximum of an
additional CAD$100m is payable by the Group contingent on Motion Metrics
exceeding specific revenue and EBITDA targets over the first three years
following acquisition. Any balance that becomes payable would be split, with
80% reflecting further consideration and 20% for a new employee bonus plan.
The entry point for any contingent payment would require significant growth
both in terms of revenue and EBITDA margin through the remainder of the
assessment period in 2024. Progress has been made towards these targets and,
while the Group expects Motion Metrics to continue to grow as it leverages the
benefits of being partnered with ESCO and the opportunities within Minerals,
the entry targets are considered challenging. Due to commercial sensitivity
these targets are not disclosed. At present, the probability of Motion Metrics
exceeding these targets in order to trigger a contingent payment is considered
to remain uncertain, in part due to the relative infancy of the business. As a
result, no contingent consideration has been recorded at the balance sheet
date in both the current and prior periods.
12. Provisions
Warranties & contract claims Asbestos-related Employee-related Exceptional items Other Total
£m £m £m £m £m £m
At 31 December 2023 9.6 78.7 12.1 15.7 12.2 128.3
Additions 3.2 2.1 8.3 15.3 2.0 30.9
Utilised (2.6) (6.0) (7.3) (16.1) (2.0) (34.0)
Unutilised (0.5) (1.9) - (0.3) - (2.7)
Exchange adjustment (0.1) 0.7 (0.3) (0.1) - 0.2
At 30 June 2024 9.6 73.6 12.8 14.5 12.2 122.7
Current 9.6 9.8 9.2 14.5 2.3 45.4
Non-current - 63.8 3.6 - 9.9 77.3
At 30 June 2024 9.6 73.6 12.8 14.5 12.2 122.7
Current 12.8 8.3 7.7 9.9 3.3 42.0
Non-current - 41.8 3.9 0.2 10.5 56.4
At 30 June 2023 12.8 50.1 11.6 10.1 13.8 98.4
Current 9.6 11.2 8.4 15.7 2.7 47.6
Non-current - 67.5 3.7 - 9.5 80.7
At 31 December 2023 9.6 78.7 12.1 15.7 12.2 128.3
The impact of discounting is only relevant for the Asbestos-related category
of provision, with higher discount rates at 30 June 2024 resulting in a
£1.8m reduction in the provision which is included within unutilised above.
Warranties & contract claims
Provision has been made in respect of actual warranty claims on goods sold and
services provided, and allowance has been made for potential warranty claims
based on past experience for goods and services sold with a warranty
guarantee. At 30 June 2024, the warranties portion of the provision totalled
£6.9m (2023: £9.2m). At 30 June 2024, all of these costs relate to claims
that fall due within one year of the balance sheet date.
Provision has been made in respect of sales contracts entered into for the
sale of goods in the normal course of business where the unavoidable costs of
meeting the obligations under the contracts exceed the economic benefits
expected to be received from the contracts and before allowing for future
expected aftermarket revenue streams. Provision is made immediately when it
becomes apparent that expected costs will exceed the expected benefits of the
contract. At 30 June 2024, the contract claims element, which includes
onerous provision, was £2.7m (2023: £3.6m), all of which is expected to be
incurred within one year of the balance sheet date.
Asbestos-related claims
31 December 2023 30 June 2024 30 June 2023
£m £m £m
67.4 US asbestos-related provision - pre-1981 date of first exposure 63.3 45.0
8.8 US asbestos-related provision - post-1981 date of first exposure 8.5 2.6
76.2 US asbestos-related provision - total 71.8 47.6
2.5 UK asbestos-related provision 1.8 2.5
78.7 Total asbestos-related provision 73.6 50.1
US asbestos-related provision
A US-based subsidiary of the Group is co-defendant in lawsuits pending in the
US in which plaintiffs are claiming damages arising from alleged exposure to
products previously manufactured which contained asbestos. The dates of
alleged exposure currently range from the 1950s to the 1990s.
The Group has historically held comprehensive insurance cover for cases of
this nature and its subsidiary continues to do so for claims with a date of
first exposure (dofe) pre-1981. The expiration of one of the Group's insurance
policies in 2019 resulted in no further insurance cover for claims with a
post-1981 dofe. The remaining insurance cover is expected to expire in 2025.
All claims are directly administered by National Coordinating Counsel on
behalf of the insurers who also meet associated defence costs. The insurers,
their legal advisers and in-house counsel agree and execute the defence
strategy between them.
A review of the US subsidiary's expected liability for US asbestos-related
diseases and the adequacy of the insurance policies to meet future settlement
and defence costs was completed in conjunction with external advisers in 2023
as part of a planned triennial actuarial review. This review was based on an
industry standard epidemiological decay model, and the subsidiary's claims
settlement history. Consistent with recent claims experience, the 2023 review
reflected a higher levels of claims, particularly relating to the 1970s and
1980s. Further details of this review, the resulting US asbestos-related
provision and insurance asset and judgements applied is included in our 2023
Annual Report and Financial Statements.
In the 6 months to 30 June 2024 the US asbestos-related provision was updated
for changes in discount rate, period end exchange rates and adjusted in line
with the actuarial model to reflect expected settlements and the estimate of
ten years of future claims plus cash flows for a further six years. The
insurance asset was updated to reflect settlements in the period. The table
below represents the Directors' best estimate of the future liability and
corresponding insurance asset.
31 December 2023 30 June 2024 30 June 2023
£m £m £m
US asbestos-related provision
101.5 Gross provision 99.2 62.2
(25.3) Effect of discounting (27.4) (14.6)
76.2 Discounted US asbestos-related provision 71.8 47.6
14.9 Insurance asset 9.5 24.6
61.3 Net US asbestos-related liability 62.3 23.0
The insurance asset consists of £8.9m (2023: £7.2m) presented within Trade
and other receivables as a current asset, and £0.6m (2023: £17.4m) as Other
receivables within non-current assets.
There remains inherent uncertainty associated with estimating future costs in
respect of asbestos-related diseases. Actuarial estimates of future indemnity
and defence costs associated with asbestos-related diseases are subject to
significantly greater uncertainty than actuarial estimates for other types of
exposures. This uncertainty results from factors that are unique to the
asbestos claims litigation and settlement process including but not limited
to:
i) the possibility of future state or federal legislation
applying to claims for asbestos-related diseases;
ii) the ability of the plaintiff's bar to develop and
sustain new legal theory and/or develop new populations of claimants;
iii) changes in focus of the plaintiff's bar;
iv) changes in defence strategy; and
v) changes in the financial condition of other co-defendants
in suits naming the US subsidiary.
As a result, there can be no guarantee that the assumptions used to estimate
the provision will result in an accurate prediction of the actual costs that
may be incurred.
There are a number of uncertain factors involved in the estimation of the
provision and variations in case numbers and settlements are to be expected
from period-to-period. Following the triennial update of our asbestos model in
2023, we will continue to monitor the number of claims received, the
settlement rate of claims received and the value of settlements in comparison
to the updated model. However, if current case numbers and average settlement
values were to continue, this may lead to the insurance asset being eroded as
early as 2025.
Sensitivity analysis reflecting reasonably probable scenarios has been
performed and is included in our 2023 Annual Report and Financial Statements.
The Group's US subsidiary has been effective in managing the asbestos
litigation, in part, because it has access to historical project documents and
other business records going back more than 50 years, allowing it to defend
itself by determining if legacy products were present at the location of the
alleged asbestos exposure and, if so, the timing and extent of their presence.
In addition, the US subsidiary has consistently and vigorously defended claims
that are without merit.
UK asbestos-related provision
In the UK, there are outstanding asbestos-related claims that are not the
subject of insurance cover. The extent of the UK asbestos exposure involves a
series of legacy employer's liability claims that all relate to former UK
operations and employment periods in the 1950s to 1970s. In 1989, the Group's
employer's liability insurer (Chester Street Employers Association Ltd) was
placed into run-off, which effectively generated an uninsured liability
exposure for all future long-tail disease claims with an exposure period
pre-dating 1 January 1972. All claims with a disease exposure post 1 January
1972 are fully compensated via the Government-established Financial Services
Compensation Scheme. Any settlement to a former employee whose service period
straddles 1972 is calculated on a pro rata basis. The Group provides for these
claims based on management's best estimate of the likely costs given past
experience of the volume and cost of similar claims brought against
the Group.
The UK provision was reviewed and adjusted accordingly for claims experience
in the year, resulting in a provision of £1.8m (2023: £2.5m).
Employee-related
Employee-related provisions arise from legal obligations in a number of
territories in which the Group operates, the majority of which relate to
compensation associated with periods of service. A large proportion of the
provision is for long service leave. The outflow is generally dependent upon
the timing of employees' period of leave with the calculation of the majority
of the provision being based on criteria determined by the various
jurisdictions.
Exceptional items
The exceptional items provision relates to exceptional charges included within
note 5 where the cost is based on a reliable estimate of the obligation.
The opening balance of £15.7m includes £14.2m relating to Performance
Excellence initiatives, of which £7.1m relates to capacity optimisation costs
and £7.1m to functional transformation, £1.3m related to wind down of Russia
operations, and £0.2m relating to other smaller provisions.
Additions of £15.3m in the period mainly include £14.7m of costs related to
the Group's Performance Excellence programme. A further £0.5m in the Minerals
Division relates to a provision created for legacy legal claims, and £0.1m in
ESCO relating to integration costs. The utilisation in the period of £16.1m
primarily relates to the cash settlement of costs associated with the
Performance Excellence programme of £15.7m.
The closing balance of £14.5m includes £12.9m in relation to the Group's
Performance Excellence programme, of which £4.9m relates to capacity
optimisation costs and £8.0m to functional transformation, £1.1m related to
the wind down of our Russian operations and £0.5m for legacy legal claims.
Other
Other provisions include environmental obligations, penalties, duties due,
legal claims and other exposures across the Group. These balances typically
include estimates based on multiple sources of information and reports from
third-party advisers. The timing of outflows is difficult to predict as many
of them will ultimately rely on legal resolutions and the expected conclusion
is based on information currently available. Where certain outcomes are
unknown, a range of possible scenarios is calculated, with the most likely
being reflected in the provision.
13. Interest-bearing loans & borrowings
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Current
259.8 Bank overdrafts 280.3 233.4
26.4 Lease liabilities 21.8 25.9
286.2 302.1 259.3
Non-current
97.7 Bank loans 47.6 193.4
922.3 Fixed-rate notes 929.1 923.9
91.1 Lease liabilities 110.8 92.4
1,111.1 1,087.5 1,209.7
The Group operates a notional cash pooling arrangement in which individual
balances are not offset for reporting purposes. Cash and short-term deposits
at 30 June 2024 includes £280.3m (2023: £230.1m) that is part of this
arrangement and both cash and interest-bearing loans and borrowings are
grossed up by this amount.
The Group utilises a number of sources of funding including
Sustainability-Linked Notes, revolving credit facility, term loan, commercial
paper and uncommitted facilities.
In February 2024, the Group chose to reduce its US$800m multi-currency
revolving credit facility by US$200m.
Subsequently in March 2024, the Group exercised the option to extend its
US$600m multi-currency revolving credit facility by one year which will now
mature in April 2029. Remaining unamortised issue costs of £2.1m plus an
additional £0.4m will amortise over the remaining term of the facility.
At 30 June 2024, £47.6m (2023: £193.4m) was drawn under the multi-currency
revolving credit facility which is disclosed net of unamortised issue costs of
£2.4m (2023: £2.6m).
At 30 June 2024, a total of £929.1m (2023: £923.9m) was outstanding under
Sustainability-Linked Notes which is disclosed net of unamortised issue costs
of £3.7m (2023: £5.2m).
14. Pensions & other post-employment benefit plans
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
30.1 Plans in surplus 33.9 38.7
(28.0) Plans in deficit (24.3) (29.6)
2.1 Net asset 9.6 9.1
The IAS 19 funding position across the Group's legacy UK and North American
schemes increased from a net surplus of £2.1m at 31 December 2023 to a net
surplus of £9.6m at 30 June 2024. This is primarily due to a £38m reduction
in liabilities driven by an increase in discount rates in both the UK and US
offset by losses on assets of £31m.
15. Derivative financial instruments
The Group enters into derivative financial instruments in the normal course of
business in order to hedge its exposure to foreign exchange risk. Derivatives
are only used for economic hedging purposes and no speculative positions are
taken. Derivatives are recognised as held for trading and at fair value
through profit and loss unless they are designated in IFRS 9 'Financial
Instruments' compliant hedge relationships.
The table below summarises the types of derivative financial instrument
included within each balance sheet category.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Included in non-current assets
- Forward foreign currency contracts designated as cash flow hedges - 0.1
- - 0.1
Included in current assets
0.6 Forward foreign currency contracts designated as cash flow hedges 0.3 0.8
- Forward foreign currency contracts designated as fair value hedges 0.6 -
7.3 Other forward foreign currency contracts 2.9 5.1
7.9 3.8 5.9
Included in current liabilities
(0.5) Forward foreign currency contracts designated as cash flow hedges (0.8) (0.6)
- Forward foreign currency contracts designated as fair value hedges (1.5) -
(5.9) Other forward foreign currency contracts (3.3) (6.5)
(6.4) (5.6) (7.1)
Included in non-current liabilities
(2.3) Forward foreign currency contracts designated as fair value hedges - -
(2.3) - -
(0.8) Net derivative financial liabilities (1.8) (1.1)
Carrying amounts & fair values
Financial assets and liabilities (with the exception of derivative financial
instruments) are initially recognised at fair value net of transaction costs.
Subsequently they are recognised at either fair value or amortised cost.
Derivative financial instruments are initially recognised at fair value and
subsequently remeasured at fair value.
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: Other techniques for which all inputs that have a significant effect on the
recorded fair value are observable, either directly or indirectly;
Level 3: Techniques which use inputs which have a significant effect on the recorded
fair value that are not based on observable market data.
Set out below is a comparison of carrying amounts and fair values of all of
the Group's financial instruments that are reported in the financial
statements.
Carrying amount Fair value Carrying amount Fair value Carrying amount Fair value
31 December 2023 31 December 2023 30 June 2024 30 June 2024 30 June 2023 30 June 2023
£m £m £m £m £m £m
Financial assets
7.3 7.3 Derivative financial instruments recognised at fair value through profit or 2.9 2.9 5.1 5.1
loss
0.6 0.6 Derivative financial instruments in designated hedge accounting relationships 0.9 0.9 0.9 0.9
508.5 508.5 Trade & other receivables excluding statutory assets, prepayments & 530.6 530.6 519.0 519.0
construction contract assets
707.2 707.2 Cash & short-term deposits 651.9 651.9 626.9 626.9
1,223.6 1,186.3 1,186.3 1,151.9 1,151.9
Financial liabilities
5.9 5.9 Derivative financial instruments recognised at fair value through profit or 3.3 3.3 6.5 6.5
loss
2.8 2.8 Derivative financial instruments in designated hedge accounting relationships 2.3 2.3 0.6 0.6
1.6 1.6 Deferred consideration payable 0.6 0.6 1.0 1.0
Amortised cost:
922.3 895.9 Fixed-rate borrowings 929.1 906.6 923.9 859.6
97.7 97.7 Floating-rate borrowings 47.6 47.6 193.4 193.4
117.5 n/a Leases 132.6 n/a 118.3 n/a
259.8 259.8 Bank overdrafts 280.3 280.3 233.4 233.4
457.6 457.6 Trade & other payables excluding statutory liabilities & contract 421.5 421.5 438.7 438.7
liabilities
1,865.2 1,817.3 1,915.8
The Group operates a notional cash pooling arrangement in which individual
balances are not offset for reporting purposes. Cash and short-term deposits
at 30 June 2024 includes £280.3m (2023: £230.1m) that is part of this
arrangement and both cash and interest-bearing loans and borrowings are
grossed up by this amount.
Assets and liabilities recognised at amortised cost:
The fair value of fixed-rate borrowings has been assessed as a level 1 fair
value measurement as the full balance is calculated using quoted market
prices. All other financial assets and liabilities carried at cost require
level 2 fair value measurement for disclosure purposes. The fair value of
floating rate borrowings approximates the carrying value due to the variable
nature of the interest terms. The carrying amount of lease liabilities is
estimated by discounting future cash flows using the rate implicit in the
lease or the Group's incremental borrowing rate. The fair value of cash and
short-term deposits, trade and other receivables and trade and other payables
approximates their carrying amount due to the short-term maturities of these
instruments.
Assets and liabilities recognised at fair value:
The Group enters into derivative financial instruments with various
counterparties, principally financial institutions with investment grade
credit ratings. The derivative financial instruments are valued using
valuation techniques with market observable inputs including spot and forward
foreign exchange rates, interest rate curves, counterparty and own credit
risk. The fair value of cross-currency swaps is calculated as the present
value of the estimated future cash flows based on spot and forward foreign
exchange rates. The fair value of forward foreign currency contracts is
calculated as the present value of the estimated future cash flows based on
spot and forward foreign exchange rates.
For financial instruments that are recognised at fair value on a recurring
basis, the Group determines whether transfers have occurred between levels in
the hierarchy by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of
each reporting period. The Group holds all financial instruments recognised at
fair value at level 2 with the exception of contingent consideration which is
a level 3 fair value measurement. The current fair value of contingent
consideration is nil and further detail regarding the basis of valuation is
included in note 11. During the 6 months ended 30 June 2024 and the year
ended 31 December 2023, there were no transfers between level 1 and level 2
fair value measurements and no transfers into or out of level 3 fair value
measurements.
16. Additional cash flow information
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m Notes £m £m
Total operations
Net cash generated from operations
368.4 Operating profit - continuing operations 187.7 194.0
(1.3) Operating loss - discontinued operations 7 (0.9) -
367.1 Operating profit 186.8 194.0
66.2 Exceptional and other adjusting items 5 16.2 4.6
37.7 Amortisation of intangible assets 18.9 19.2
(2.5) Share of results of joint ventures (1.4) (1.3)
39.9 Depreciation of property, plant & equipment 22.7 20.4
31.6 Depreciation of right-of-use assets 15.7 15.8
0.9 Impairment of property, plant & equipment - 0.9
(0.5) Grants received - -
(0.4) Gains on disposal of property, plant & equipment (0.1) (0.5)
(1.1) Funding of pension & post-retirement costs - (0.5)
7.0 Employee share schemes 5.3 4.2
9.2 Transactional foreign exchange 3.9 1.3
(1.5) Increase (decrease) in provisions 0.5 2.4
553.6 Cash generated from operations before working capital cash flows 268.5 260.5
42.0 (Increase) decrease in inventories (18.0) (33.9)
15.2 (Increase) decrease in trade & other receivables & construction (20.4) 8.0
contracts
(85.3) Decrease in trade & other payables & construction contracts (32.3) (61.7)
525.5 Cash generated from operations 197.8 172.9
(9.3) Additional pension contributions paid - (7.7)
(18.0) Exceptional and other adjusting cash items (16.1) (5.2)
(103.9) Income tax paid (59.1) (51.1)
394.3 Net cash generated from operating activities 122.6 108.9
The following tables summarise the cash flows arising on acquisitions (note
11) and disposals (note 7).
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Acquisitions of subsidiaries
6.1 Acquisition of subsidiaries - cash paid - -
(0.2) Cash & cash equivalents acquired - -
5.9 Total cash outflow on current period acquisitions - -
1.0 Prior period acquisitions - deferred consideration paid 1.0 1.0
6.9 Total cash outflow relating to acquisitions 1.0 1.0
Net cash outflow arising on disposals
0.4 Prior period disposals 1.8 0.4
0.4 Total cash outflow relating to disposals 1.8 0.4
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Cash & cash equivalents comprise the following
707.2 Cash & short-term deposits 651.9 626.9
(259.8) Bank overdrafts & short-term borrowings (280.3) (233.4)
447.4 371.6 393.5
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
Net debt comprises the following
707.2 Cash & short-term deposits 651.9 626.9
(286.2) Current interest-bearing loans & borrowings (note 13) (302.1) (259.3)
(1,111.1) Non-current interest-bearing loans & borrowings (note 13) (1,087.5) (1,209.7)
(690.1) (737.7) (842.1)
Reconciliation of financing cash flows to movement in net debt
Opening balance at 31 December 2023 Cash movements Additions/acquisitions FX Non-cash movements Closing balance at 30 June 2024
£m £m £m £m £m £m
Cash & cash equivalents 447.4 (69.8) - (6.0) - 371.6
Third-party loans (1,026.8) 50.0 - (6.0) - (982.8)
Leases (117.5) 15.4 (31.4) 0.9 - (132.6)
Unamortised issue costs 6.8 0.3 - - (1.0) 6.1
Amounts included in gross debt (1,137.5) 65.7 (31.4) (5.1) (1.0) (1,109.3)
Amounts included in net debt (690.1) (4.1) (31.4) (11.1) (1.0) (737.7)
Financing derivatives (2.3) 0.7 - - 0.7 (0.9)
Total financing liabilities(1) (1,139.8) 66.4 (31.4) (5.1) (0.3) (1,110.2)
( )
Opening balance at 30 June 2023 Cash movements Additions/acquisitions FX Non-cash movements Closing balance at 31 December 2023
£m £m £m £m £m £m
Cash & cash equivalents 393.5 52.9 0.2 0.8 - 447.4
Third-party loans (1,125.1) 96.2 (0.2) 2.3 - (1,026.8)
Leases (118.3) 15.3 (14.3) - (0.2) (117.5)
Unamortised issue costs 7.8 - - - (1.0) 6.8
Amounts included in gross debt (1,235.6) 111.5 (14.5) 2.3 (1.2) (1,137.5)
Amounts included in net debt (842.1) 164.4 (14.3) 3.1 (1.2) (690.1)
Financing derivatives - 0.3 - - (2.6) (2.3)
Total financing liabilities(1) (1,235.6) 111.8 (14.5) 2.3 (3.8) (1,139.8)
1 Total financing liabilities comprise gross debt
plus other liabilities relating to financing activities.
17. Related party disclosure
The following table provides the total amount of significant transactions
which have been entered into by the Group with related parties for the
relevant financial period and outstanding balances at the period end.
Year ended 6 months ended 6 months ended
31 December 2023 30 June 2024 30 June 2023
£m £m £m
0.9 Sales of goods to related parties - joint ventures 0.4 0.4
0.1 Sales of services to related parties - joint ventures 0.1 0.1
19.2 Purchases of goods from related parties - joint ventures 9.2 10.5
3.8 Amounts owed to related parties - joint ventures 6.0 5.0
1.6 Amounts owed to related parties - group pension plans 1.8 1.4
0.4 Amounts owed by related parties - joint ventures 0.3 0.1
18. Legal claims
The Company and certain subsidiaries are, from time-to-time, party to legal
proceedings and claims that arise in the normal course of business. Provisions
have been made where the Directors have assessed that a cash outflow is
probable. All other claims are believed to be remote or are not yet ripe.
19. Exchange rates
The principal exchange rates applied in the preparation of these financial
statements were as follows.
Year ended 6 months ended 6 months ended
31 December 2023 Average rate (per £) 30 June 2024 30 June 2023
1.24 US Dollar 1.27 1.23
1.87 Australian Dollar 1.92 1.82
1.15 Euro 1.17 1.14
1.68 Canadian Dollar 1.72 1.66
1,044.69 Chilean Peso 1,189.70 993.99
22.94 South African Rand 23.69 22.44
6.21 Brazilian Real 6.43 6.26
8.81 Chinese Yuan 9.13 8.54
102.66 Indian Rupee 105.30 101.35
Closing rate (per £)
1.28 US Dollar 1.26 1.27
1.87 Australian Dollar 1.89 1.91
1.15 Euro 1.18 1.16
1.69 Canadian Dollar 1.73 1.68
1,124.43 Chilean Peso 1,192.23 1,020.41
23.30 South African Rand 23.05 23.91
6.19 Brazilian Real 7.03 6.09
9.06 Chinese Yuan 9.19 9.22
105.96 Indian Rupee 105.41 104.25
Directors' Statement of Responsibilities
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with UK-adopted International Accounting Standard
34 'Interim Financial Reporting', and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
a. an indication of important events that have occurred during the first
six months and their impact on the condensed set of financial statements, and
a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
b. material related-party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
A list of current directors is maintained on The Weir Group PLC website which
can be found at www.global.weir (www.global.weir) .
On behalf of the Board
Brian Puffer
Chief Financial Officer
30 July 2024
Independent review report to The Weir Group PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed The Weir Group PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim Report of The
Weir Group PLC for the 6 month period ended 30 June 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Consolidated Balance Sheet as at 30 June 2024;
• the Consolidated Income Statement and Consolidated
Statement of Comprehensive Income for the period then ended;
• the Consolidated Cash Flow Statement for the period
then ended;
• the Consolidated Statement of Changes in Equity for
the period then ended; and
• the explanatory notes to the interim financial
statements.
The interim financial statements included in the Interim Report of The Weir
Group PLC have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Interim Report, including the interim
financial statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Report based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
30 July 2024
Shareholder Information
The Board has approved an interim dividend of 17.9p for 2024 (2023: 17.8p).
Financial Calendar
Ex-dividend date for interim dividend
3 October 2024
Record date for interim dividend
4 October 2024
Shareholders on the register at this date will receive the dividend
Interim dividend paid
1 November 2024
Our Interim Report will be available shortly to download from The Weir Group
PLC website at www.global.weir (http://www.global.weir)
Disclaimer
This information includes 'forward-looking statements'. All statements other
than statements of historical fact included in this presentation, including,
without limitation, those regarding The Weir Group PLC's (the "Group")
financial position, business strategy, plans (including development plans and
objectives relating to the Group's products and services) and objectives of
management for future operations, are forward-looking statements. These
statements contain the words "anticipate", "believe", "intend", "estimate",
"expect" and words of similar meaning. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of the Group to be
materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group will operate
in the future. These forward-looking statements speak only as at the date of
this document. The Group expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Group's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based. Past business and financial performance cannot be relied
on as an indication of future performance.
Registered office and company number
1 West Regent Street
Glasgow
G2 1RW
Scotland
Registered in Scotland
Company number: SC002934
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR RLMLTMTATBBIRecent news on Weir
See all newsREG - Weir Group PLC - Director/PDMR Shareholding
AnnouncementREG - Weir Group PLC - Weir awarded £25m contract
AnnouncementREG - Weir Group PLC - Director/PDMR Shareholding
AnnouncementREG - Weir Group PLC - Weir awarded £53m redefined flowsheet contract
AnnouncementREG - Weir Group PLC - Half-year Report
Announcement