Annual Financial Report

The Weir Group PLC

2011 Annual Report and 2012 Annual General Meeting

The following documents have today been posted or otherwise made available to shareholders:

1.  Annual Report and Financial Statements for the 52 weeks ended 30 December 2011 (the "2011 Annual Report")

2. Notice of 2012 Annual General Meeting

3. Form of Proxy for the 2012 Annual General Meeting

In accordance with Listing Rule 9.6.1 a copy of each of these documents has been uploaded to the National Storage Mechanism and will be available for viewing shortly at www.hemscott.com/nsm.do.

The  Company's 2012 Annual General Meeting will be  held at the Hilton Glasgow Hotel, William Street, Glasgow on Wednesday 9 May 2012, commencing at 2.30pm.

The documents are also available on the Company's website at www.weir.co.uk and in hard copy to shareholders upon request to Investor Relations, The Weir Group PLC, Clydesdale Bank Exchange, 20 Waterloo Street, Glasgow G2 6DB

The Company's preliminary results announcement of 29 February 2012 contained a management report as well as the audited financial statements which were prepared in accordance with the applicable accounting standards.  The 2011 Annual Report submitted to the National Storage Mechanism today also contains information regarding the Company's principal risks and uncertainties, related party transactions and a responsibility statement relating to the content of the 2011 Annual Report; an extract of this information is provided below as required under paragraph 6.3.5 of the DTR, however this material should be read in conjunction with and is not a substitute for reading the full 2011 Annual Report. Page numbers and cross-references in the following appendices refer to page numbers and cross-references in the 2011 Annual Report.

ADDITIONAL INFORMATION REQUIRED BY DISCLOSURE AND TRANSPARENCY RULE 6.3.5

Principal risks & uncertainties

The Weir Group is committed to identifying and managing the full spectrum of risks faced across its global operations, many of which have the potential to adversely impact its operational, financial and reputational performance.

To support this approach, the Group operates a rigorous and transparent risk management framework which promotes the use of quality risk information in the development of strategy and decision-making. The risk and control framework is described in detail in the Corporate Governance report.

The Group has identified the following principal risks which could have a material impact on the business.

RISK	POTENTIAL IMPACT	MITIGATION
Environmental, health & safety
Our principal environmental, health and safety (EHS) risks relate to the potential for a serious environmental incident, serious injury and fatal accidents in the workplace and regulatory action for non-compliance with statutory requirements.	Failure to manage these risks could result in a serious deterioration of the Group's safety performance or an environmental regulatory breach which could lead to: fines and penalties;   loss of key customers;   exclusion from market sectors deemed important for future growth; and   damage to reputation.	The Group is committed to a zero accident workplace and the highest environmental standards. During 2011, Weir has established the EHS excellence committee to drive improvement in the environmental, health and safety agenda. A programme of external audits of EHS performance has begun from which global standards will be developed and improvement plans created and implemented. In addition, initiatives to address the most common accident types have been developed and the implementation in 2012 of a Weir behavioural safety system will further reduce the risk of incidents.
Technology & innovation
The Group's growth and success depends not only on its ability to innovate and ensure the continuous improvement of its existing product portfolio, but also its ability to develop and produce new and enhanced products in a cost effective and timely manner to meet customer demands.	Failure of the Group to drive innovation and continue to ensure the development of attractive, sustainable products and solutions has the potential to give rise to customer dissatisfaction, loss of market share and/or competitors developing superior Weir product substitutes.	To remain competitive, the Group invests continuously in its research and development, manufacturing, marketing, customer service support and distribution networks. During 2011, the Group established the Weir Advanced Research Centre (WARC) in conjunction with the University of Strathclyde, tasked with supporting new product innovation and delivering enhancements to the Group's existing product range. The Group maintains the highest manufacturing and quality standards which include regular dialogue with customers to ensure that their requirements are met through the Group's key account management process. It also takes appropriate action to ensure that its cost base remains competitive and margins are protected through its global procurement activities.
Compliance & corruption
As the business grows in size and geographical scope, the potential for fraudulent and dishonest activity by our suppliers, customers and employees increases.	Potential impacts include fines, penalties, regulatory scrutiny, reputational damage and imprisonment.	The Group has a central legal and compliance function which assists and monitors all Group businesses. The recent appointments of in-house counsel has strengthened internal resource in the Americas and Asia-Pacific. The Group's internal audit activities have been expanded to incorporate regular review of the anti-bribery and corruption assurance framework. In addition, the Group's Code of Conduct provides a clear framework within which all employees have to operate to maintain the Group's high standards of doing business. In 2011, online training modules on the Code were completed by staff, with a self-certification process ensuring compliance. Face to face presentations on the Code and UK Bribery Act were also carried out across the business.
Acquisitions
The continued pursuit of our growth plans through a blend of organic growth initiatives and acquisitions brings with it a degree of risk, the most significant being that a poorly executed acquisition fails to deliver the anticipated benefits.	While the Group identifies expected synergies, cost savings and growth opportunities prior to completing any acquisitions, these benefits may not always be achieved or be achieved within the anticipated timescales. Furthermore, the Group could find itself liable for past acts or omissions of the acquired business without any adequate right of redress.	The Group operates a strategic planning process to review its corporate strategy with market and competitive position assessments driving the acquisition agenda. In addition, the Group implements a rigorous due diligence process and ensures clear financial targets are in place. The Group implements an internal 100 day plan to ensure that the integration process is actioned with the minimum of disruption.
Key suppliers & delivery
The Group's ability to meet customer delivery schedules is dependent on a number of factors including sufficient manufacturing capacity, access to raw materials, inventory control, sufficient trained and equipped employees, engineering expertise and the appropriate planning and scheduling of the manufacturing process. Many of the contracts it enters into require long lead times and therefore contain clauses in relation to on-time delivery. In addition, the Group is dependent on the continued availability and effective management of subcontractors and other service providers.	Failure to deliver in accordance with customer expectation could subject the Group to financial penalties, damage customer relationships and, as a result, impact on the Group's financial performance. In addition, failure of a supplier or availability of scarce raw materials could result in the Group incurring additional costs in sourcing an alternative.	Manufacturing scheduling and planning is subject to stringent internal assurance processes to optimise each business unit's order book. The effect of this is to maximise capacity and minimise reworking costs and delays in delivery times. This is complemented by the use of the Group's Manufacturing Resource Planning systems, together with the slotting and scheduling achieved through the Weir Production System. The Group seeks to develop long-term relationships with its subcontractors and the Group's procurement function is responsible for establishing robust supplier relationships. In addition, the procurement function conducts a regular review of strategically important suppliers.
Global & economic conditions
The Group is exposed to global growth trends and continued weakness in the global economy and banking sectors may trigger a subsequent downturn in customer demand.	Failure to successfully anticipate any future market downturns and not execute our developed mitigation strategies effectively could adversely affect Group revenues, profitability and cash flows.	As part of our strategic planning process the Group utilises extensive market intelligence to closely monitor the stability of and opportunities within all our markets. The Group continues to maintain proactive downturn plans with identified trigger points, enabling a quick response to deteriorating market conditions.
Commodity prices
The Group is exposed to volatility in commodity prices.	An inability to respond to input price volatility could have a potential impact on the Group's operating results, revenue and cash flows.	The Group closely monitors commodity inputs and adapts a range of mechanisms to protect margins including back to back contractual terms, indexation agreements with customers and hedging of certain commodity input prices.
Dependency risk
The Group generates a material proportion of its profits from Weir SPM, its Texas based well service pump business. Market, operational and technological developments may adversely affect the position of Weir SPM.	Its high proportional contribution to the Group and changes to the demand for hydraulic fracturing equipment in its end markets could have a significant impact on the Group's profits and free cashflow.	The Group closely monitors the leading indicators impacting Weir SPM's end markets and, together with Weir SPM's flexible business model and continued investment in new product offerings, will ensure that Weir SPM can react to changes in demand. Over time organic and acquisitive growth of other operations in the Group is expected to dilute the dependency on Weir SPM.
Employees
The future success of the Group depends on the skills and efforts of its employees across all of its businesses and the ability to retain and develop these individuals. In addition, the success of Group acquisitions will depend on the ability to retain management personnel of acquired companies.	If it is unable to attract and retain excellent talent, the Group may not be able to effectively implement its business strategies.	The Group constantly reviews its remuneration packages to ensure they remain competitive and has also established in 2011 a management and leadership development framework to ensure present and future capability and facilitate effective succession planning. The Group's employee development programmes are explained in more detail on pages 60 to 62.
Legal
Manufacturing companies are, from time to time, exposed to personal injury claims and class actions or other litigation resulting from injuries sustained at work, including asbestosis or other health problems associated from working in industries that used asbestos in the 20th century.	The Group has insurance cover for certain claims but not for all potential claims. The number and size of the claims is dependent on the number of third parties that are still in existence and can be included in such actions. Both of these can change over time and as a result the Group's exposure could increase.	The Group has internal policies and procedures for monitoring these risks, managing and mitigating against these liabilities and to ensure that there is regular reporting to the Board on any changes or developments.
Low-cost competition
Increasing competitive threat from low-cost markets which are using total "cost innovation" in product design, supply chain and low labour costs to gain a competitive advantage.	Failure to build on our emerging market presence and realise growth through the delivery of innovative and creative product solutions may result in our existing customer base switching to low-cost suppliers, leading to a reduction in market share.	The Group has an established and growing global footprint to ensure proximity to customers and consistent quality of service coupled with continued product innovation to provide technological differentiation and barriers to entry. The Group continues to drive operational excellence across all plants with a continued focus on the key areas of lean, on time delivery, global sourcing and other procurement and supply chain initiatives and the Weir Production System, all of which contribute to the delivery of enhanced operational efficiencies.

Directors statement of responsibilities

The following statement is repeated here solely for the purpose of complying with DTR 6.3.5.  This statement relates to and is extracted from page 43 of the 2011 Annual Report and is signed for and on behalf of the Board by Alan Mitchelson, Secretary.  Responsibility is for the full 2011 Annual Report and not the extracted information presented in this announcement or the preliminary results announcement.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the Company financial statements in accordance with UK Accounting Standards and applicable law.

In preparing those financial statements, the directors are required to:
· Select suitable accounting policies and then apply them consistently.
· Make judgements and estimates that are reasonable and prudent.
· State that the Group financial statements have complied with IFRS as adopted by the European Union, subject to any material departures being disclosed and explained.
· State for the Company financial statements whether the applicable UK Accounting Standards have been followed, subject to any material departures being disclosed and explained.

The directors confirm that they have complied with the above requirements in preparing the financial statements.

Each of the directors, as at the date of this report, confirms to the best of his knowledge that:
· The financial statements give a true and fair view of the assets, liabilities, financial position and profit of the Group.
· The directors report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the 2006 Act and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Appendix C - Related Party Transactions

The following statements regarding related party transactions are set out on page 112 of the 2011 Annual Report.  The following is extracted in full and unedited form from the 2011 Annual Report.  

Related party disclosures
The following table provides the total amount of significant transactions which have been entered into with related parties for the relevant financial year and outstanding balances at the period end.
								Sales to related parties - goods			Sales to related parties - services						Purchases from related parties - goods					Amounts owed to related parties
Related party								£m			£m						£m					£m
Joint ventures	2011							0.7			-						2.4					-
	2010							0.6			0.2						0.1					-
Group pension plans	2011							-			-						-					1.5
	2010							-			-						-					0.2
Contributions to the Group pension plans are disclosed in note 24.
Terms & conditions of transactions with related parties
Sales to and from related parties are made at normal market prices.  Outstanding balances at the period end are unsecured and settlement occurs in cash.  There have been no guarantees provided or received for any related party balances.  For the 52 weeks ended 30 December 2011, the Group has not raised any provision for doubtful debts relating to amounts owed by related parties as the payment history has been excellent (2010: £nil).  This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Compensation of key management personnel																		2011					2010
																		£m					£m
Short-term employee benefits																		6.6					4.9
Share-based payments																		2.0					1.6
																		8.6					6.5
Key management comprises the Board and the Group Executive. Further details of the Board remuneration can be found in the Remuneration report on pages 44 to 53.

---

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: The Weir Group PLC via Thomson Reuters ONE

HUG#1598946