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
orders1 +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 margin1,3 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 margin3 expected to be c.18%, ahead of prior
guidance
• Free
operating cash conversion of 90% to 100%
|
|
H1 2024
|
H1 2023
|
As
reported
+/-
|
Constant currency1
+/-
|
|
Continuing Operations2
|
|
|
|
|
|
Orders1
|
£1,253m
|
£1,275m
|
n/a
|
-2%
|
|
Revenue
|
£1,207m
|
£1,300m
|
-7%
|
-3%
|
|
Adjusted operating
profit3
|
£215m
|
£212m
|
+2%
|
+8%
|
|
Adjusted operating
margin3
|
17.8%
|
16.3%
|
+150bps
|
+180bps
|
|
Adjusted profit before
tax3
|
£193m
|
£188m
|
+3%
|
n/a
|
|
Statutory profit before
tax
|
£165m
|
£170m
|
-3%
|
n/a
|
|
Adjusted earnings per
share3
|
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 debt5
|
£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.
A recording of the webcast will also be available
at 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, NexsysTM, providing
a step change in productivity for our customers. We will be
showcasing NexsysTM 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
MetricsTM 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 rate4
(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
orders1 +1%; ore production trends and installed base
growth, offset by split of large Q2 order
• AM
revenue1 stable; growth in underlying demand against
strong prior year comparator
• Operating
profit margin1,2 +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
20231
|
Growth1
|
H2
20231
|
|
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 profit2
|
170
|
162
|
5%
|
195
|
|
Adjusted operating
margin2
|
19.6%
|
18.0%
|
+160bps
|
20.2%
|
|
Operating cash
flow2
|
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 profit2
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 margin2
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 flow2 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
•
Orders1 stable; robust demand from mining customers
driving 2% AM growth
•
Revenue1 stable; strong execution driving 14% operating
profit1,2 growth
• Operating
profit margin1,2 +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 MetricsTM 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
20231
|
Growth1
|
H2
20231
|
|
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 profit2
|
65
|
57
|
14%
|
63
|
|
Adjusted operating
margin2
|
19.3%
|
16.7%
|
+260bps
|
18.2%
|
|
Operating cash
flow2
|
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 profit2
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 margin2
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 flow2 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
currency1
|
As
reported
|
|
Continuing Operations £m
|
H1 2024
|
H1
20231
|
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 profit2
|
215
|
199
|
8%
|
212
|
2%
|
|
Adjusted operating
margin2
|
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
flow2
|
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
|
6903
|
-£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.
|
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
|
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 & equipment and
intangibles
|
(29.6)
|
(36.3)
|
|
(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
operations
|
|
Minerals
|
ESCO
|
Total continuing
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 operations
|
(47.3)
|
(43.6)
|
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
operations1
|
116.9
|
126.0
|
|
229.2
|
Continuing
operations1
|
117.8
|
126.4
|
|
299.5
|
Continuing operations before
adjusting items1
|
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
million
|
|
Shares
million
|
Shares
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 share
|
259.4
|
260.2
|
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 operations1
|
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 adjusting
items
|
138.4
|
138.1
|
|
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
operations1
|
45.3
|
48.8
|
|
88.7
|
Continuing
operations1
|
45.7
|
48.9
|
|
115.9
|
Continuing operations before
adjusting items1
|
53.6
|
53.4
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
87.7
|
Total
operations1
|
45.1
|
48.4
|
|
88.2
|
Continuing
operations1
|
45.4
|
48.5
|
|
115.3
|
Continuing operations before
adjusting items1
|
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 loss
|
2.9
|
2.9
|
5.1
|
5.1
|
|
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 & construction contract
assets
|
530.6
|
530.6
|
519.0
|
519.0
|
|
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 loss
|
3.3
|
3.3
|
6.5
|
6.5
|
|
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
liabilities
|
421.5
|
421.5
|
438.7
|
438.7
|
|
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 contracts
|
|
(20.4)
|
8.0
|
|
(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
liabilities1
|
(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
liabilities1
|
(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.
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
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
