Final Results
Weir Group PLC
20 March 2002
Wednesday, 20th March 2002
For immediate release
THE WEIR GROUP PLC PRELIMINARY RESULTS 2001
Results for 52 weeks ended 28th December 2001
Highlights
Group Results Continuing operations3
2001 2001
Turnover £915.2M +4% £901.1M +10%
Operating Profit 1 £67.2M -8% £70.2M No change
Pre-Tax Profit 1 £60.1M -2% £63.1M +5%
Earnings per share 1 23.3p +2%
Dividend 11.6p +5%
Order Intake2 £722.0M No change £710.0M +9%
(2001 exchange rates)
1: Excludes goodwill amortisation and exceptionals.
2: Excludes Associates and Joint Ventures
3: Excludes discontinued operations.
The Chairman of The Weir Group, Sir Ron Garrick commented: 'Despite difficult
market conditions, Group results for 2001, prior to exceptional items, were
broadly similar to last year and, once again, cash generation was excellent.
'Results from continuing operations were encouraging with good increases in
order input, turnover and pre-tax profit, excluding goodwill amortisation and
exceptionals.
'The prospects for many of our markets remain uncertain but I expect the Group
to continue to perform satisfactorily in 2002, whilst creating a strong platform
for growth whenever economic conditions improve.'
Enquiries:
The Weir Group PLC Available through UBS Warburg
Sir Ron Garrick, Chairman Tel. 020 7567 8000
(switchboard);
Mark Selway, Chief Executive
Helen Walker, Public (Mobile: 07789 032296)
Relations Manager
The Maitland Consultancy Tel. 020 7379 5151
Angus Maitland
Suzanne Bartch (Mobile: 07769 710 335)
THE WEIR GROUP PLC PRELIMINARY RESULTS FOR 2001
RESULTS FOR THE 52 WEEKS TO 28TH DECEMBER 2001
Summary of results
The results from continuing operations were encouraging. Turnover increased by
10% to £901.1m (£817.2m: 2000) and pre tax profit at £63.1m was 5% ahead of the
previous year (£60.2m: 2000). Order input from continuing operations, excluding
Associates and Joint Ventures, was 9% ahead at £710m (£653m: 2000).
Cash generation was excellent with cash flow from operations of £70m, a £4m
increase over last year. Net debt fell to £66m at the year-end, a £29m reduction
on the previous year (£95m: 2000). The Group's balance sheet remains strong with
a debt to equity gearing ratio of 23% and an interest cover ratio for the year
of 9.5 times.
Group turnover in 2001 increased by 4% to £915m and the pre tax profit excluding
goodwill amortisation and exceptionals was broadly similar to last year at
£60.1m (£61.2: 2000).
There were three separate items classified as exceptional in 2001, affecting
both the pre and after tax results. The pre tax charges arose as a result of our
withdrawal from four UK businesses (£14.9m) and the need to create a provision
for the future clean up costs for an environmental issue in the USA (£4.1m). An
exceptional tax credit of £8.4m resulted in net exceptional charges of £10.6m,
after tax, for the year.
Including these pre tax exceptional charges of £19m and goodwill amortisation of
£6.5m, pre tax profit amounted to £34.7m (£56.8m : 2000).
With an effective tax rate of 22% for the year, earnings per share prior to
exceptionals and goodwill amortisation were 23.3p (22.9p: 2000). Earnings per
share were 14.9p (20.7p: 2000).
The Board is recommending a final dividend of 8.45p per share making a total
distribution for the year of 11.6p (11p: 2000).
Review of results
In summary, results from Engineering Products were down compared with last year
as a result of difficult market conditions but both Engineering Services and
Associates and Joint Ventures produced improved results.
An analysis of the continuing operations of the business units shows the
following:
Engineering Products turnover grew 5% to £564.9m in 2001 (£535.8m: 2000).
Operating margins fell to 8.3% (9.5%: 2000), due to reduced volumes in our Clear
Liquid pump operations and increased competition in most product areas.
Engineering Services turnover was £149.9m, 13% above the £132.6m achieved in
2000. Operating profits of £13.9m were up 18.9% (£11.7m: 2000) and operating
margins improved to 9.3%, against 8.8% in 2000.
Weir's share of turnover from Associates and Joint Ventures at £186.3m grew by
36% over 2000. Operating profits increased 37% from £8.5m to £11.7m while
margins were similar to the previous year at 6.3% (6.2%: 2000).
Pensions
As a result of the decline of interest rates, the fall in world stock markets
and the cumulative effect of the change in the tax regime which removed the
right of UK pension funds to reclaim tax credits on dividends, the Group's
defined benefit plans had an aggregate deficit of £28m compared to a surplus of
£57m at the end of 2001.
The Board has decided to implement the new accounting standard, FRS17, with
effect from 1st January 2002. As a result, the charge for pensions in 2002 will
increase by £3m and there will be a reduction in shareholder funds of £29m.
Strategy and Prospects
Mark Selway was appointed Group Chief Executive in June 2001 and in the second
half of the year he conducted a major strategic review of Group operations.
This has led to the creation of a new worldwide senior management organisation.
Also a number of promising initiatives are now being pursued to reduce costs and
working capital. Much of 2002 will be required to progress these initiatives
with the full benefit expected in 2003. The review also confirmed there was
considerable scope for growth from existing core products and with a strong
balance sheet, there are good opportunities for making acquisitions to
strengthen existing market positions. The Group will continue to focus resources
on core products for which significant market positions can be established;
where that is not possible, divestments will be considered.
In 2002, the prospects for many of our markets remain uncertain. The Group
performed well in difficult conditions in the second half of 2001 and we expect
to continue to perform satisfactorily in the current year. With the initiatives
in hand to unlock the Group's potential we shall also be creating a strong
platform for growth whenever economic conditions improve.
THE WEIR GROUP RESULTS
Summary of results
AUDITED RESULTS
Consolidated Profit and Loss Account
for the 52 weeks ended 28th December 2001
Before
Exceptional Exceptional
Items Items Total Total
52 weeks to 52 weeks to 52 weeks to 52 weeks to
28th December 28th December 28th December 29th December
2001 2001 2001 2000
Notes £'000 £'000 £'000 £'000
Turnover 1
Group - Continuing Operations 714,806 - 714,806 680,313
- Discontinued 14,137 - 14,137 65,623
Operations
728,943 - 728,943 745,936
Share of - Joint Ventures 10,091 - 10,091 8,044
- Associates 176,214 - 176,214 128,872
915,248 - 915,248 882,852
Operating Profit 1, 2
Group - Continuing Operations 58,528 (4,110) 54,418 61,419
- Discontinued (2,996) - (2,996) 2,942
Operations
- Goodwill amortisation (6,486) - (6,486) (6,705)
49,046 (4,110) 44,936 57,656
Share of - Joint Ventures 2,470 - 2,470 1,123
- Associates 9,227 - 9,227 7,391
60,743 (4,110) 56,633 66,170
Exceptional Items 2
(Loss)/profit on disposal and closure of - (14,850) (14,850) 2,317
discontinued operations
Interest and Other Income
- Group (7,188) - (7,188) (11,459)
- Joint Ventures 22 - 22 (10)
- Associates 54 - 54 (192)
(7,112) - (7,112) (11,661)
Profit on Ordinary Activities Before 1 53,631 (18,960) 34,671 56,826
Tax
Tax on profit on ordinary 3 13,075 (8,408) 4,667 15,276
activities
Profit on Ordinary Activities After 40,556 (10,552) 30,004 41,550
Tax
Minority 16 - 16 74
interest
Profit Attributable to The Weir Group 40,540 (10,552) 29,988 41,476
PLC
Dividends 4 23,478 - 23,478 22,079
Transfer to reserves 17,062 (10,552) 6,510 19,397
Earnings per Share 14.9p 20.7p
Earnings per Share Excluding Goodwill Amortisation and 23.3p 22.9p
Exceptional Items
Diluted Earnings Per Share 14.8p 20.7p
Notes to the Preliminary Results
1. Turnover and Profit on Ordinary Activities Before Tax
Turnover and profit on ordinary activities before tax were contributed as
follows:
Turnover Turnover Profit Profit
52 weeks to 52 weeks to 52 weeks to 52 weeks to
28th December 29th December 28th December 29th December
2001 2000 2001 2000
£'000 £'000 £'000 £'000
Engineering Products:
Group - continuing - excluding 564,885 535,829 47,074 50,845
exceptionals
- operating - - (4,110) -
exceptional item
- discontinued 10,834 50,221 (2,576) 3,206
575,719 586,050 40,388 54,051
Share of Joint Venture 1,126 815 2 10
Share of Associate 13 507 28 37
576,858 587,372 40,418 54,098
Engineering Services:
Group - continuing 149,921 132,612 13,930 11,711
- discontinued 3,303 15,402 (420) (264)
153,224 148,014 13,510 11,447
Share of Joint Ventures 8,965 7,229 2,468 1,113
Share of Associates 176,201 128,365 9,199 7,354
338,390 283,608 25,177 19,914
Segmental Totals
Group 728,943 734,064 53,898 65,498
Joint Ventures and Associates 186,305 136,916 11,697 8,514
Goodwill amortisation - Engineering - - (6,486) (6,415)
Products
Unallocated costs - - (2,476) (2,252)
*Exchange adjustment - Group - 11,872 - 825
915,248 882,852 56,633 66,170
Non operating exceptional items - Engineering - - (14,850) 2,317
Products
Interest and other income - - (7,112) (11,661)
915,248 882,852 34,671 56,826
*For comparative purposes 2000 figures have been restated at the 2001 closing
exchange rates.
2. Exceptional Items
52 weeks to 52 weeks to
28th December 29th December
2001 2000
£'000 £'000
Operating exceptional item:
Provision in respect of Weir Floway's contribution to future environmental 4,110 -
clean-up costs
This provision has been based on independent expert advice on the current known
facts and represents management's best estimate of Weir Floway's share of the
costs of the clean up programme. The actual costs when incurred may be higher or
lower than this estimate.
Non operating exceptional items:
Losses on closure of discontinued - Net costs of closure 9,591 -
operations
- Goodwill written off on closure 2,456 -
- Goodwill previously deducted directly 1,834 -
from reserves
13,881 -
Loss/(profit) on disposal of discontinued operation 969 (2,317)
14,850 (2,317)
The losses on closure of discontinued operations relates to the closures of
Tooling Products Limited, G Perry & Sons Limited and to the Manchester operation
of Strachan & Henshaw Limited which were announced on 5th July 2001. The results
of these businesses to 5th July 2001 have been shown in the profit and loss
account as 'discontinued' and prior year figures have been restated accordingly.
The loss on disposal of discontinued operation relates to the disposal of Weir
Systems Limited which was completed on 29th June 2001. The results of Weir
Systems Limited for the six months to the date of disposal have been shown in
the profit and loss account as 'discontinued' and prior year figures have been
restated accordingly. The comparative figure for the 52 weeks to 29th December
2000 reflects the profit on disposal of Darchem Engineering Limited. The results
of Darchem Engineering Limited for 2000 to the date of disposal on 22nd December
2000 are shown in the profit and loss account as 'discontinued'.
Notes to the Preliminary Results
3. Tax
Before On Exceptional -
exceptional exceptional previous year
items items adjustments Total Total
52 weeks to 52 weeks to 52 weeks to 52 weeks to 52 weeks to
28th December 2001 28th December 28th December 28th December 29th December
2001 2001 2001 2000
£'000 £'000 £'000 £'000 £'000
Group - United Kingdom 3,137 (2,110) (4,007) (2,980) 3,922
Group - Overseas 6,850 (1,644) (647) 4,559 8,789
Joint 307 - - 307 148
Ventures
Associates 2,781 - - 2,781 2,417
Profit and Loss Account tax 13,075 (3,754) (4,654) 4,667 15,276
charge
In the 52 weeks to 29th December 2000 there was no tax on
exceptional items.
4. Dividends
52 weeks to 52 weeks to
28th December 29th December
2001 2000
£'000 £'000
Ordinary
shares:
Interim 3.15p per 12.5p share (2000: 3.0p) 6,373 6,010
Proposed final 8.45p per 12.5p share (2000: 8.0p) 17,105 16,069
23,478 22,079
The directors recommend payment of a final dividend of 8.45p per ordinary share
for 2001 (2000: 8.0p) which with the interim dividend of 3.15p per ordinary
share (2000: 3.0p) will make a total distribution for the year of 11.6p per
ordinary share (2000: 11.0p). Subject to the approval of shareholders at the
annual general meeting, payment will be made on 7th June 2002 to ordinary
shareholders on the register at close of business on 3rd May 2002.
5. Basis of Preparation
The preliminary results for the 52 weeks to 28th December 2001 do not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. These
statements have been prepared on the basis of the accounting policies set out in
the Group's 2000 Annual Report and Accounts, except as noted below, and were
approved by the board of directors on 20th March 2002. Full accounts with an
unqualified audit report will be lodged with the Registrar in due course.
Financial statements for the 52 weeks to 29th December 2000 are abridged
statements; full accounts with an unqualified audit report have been lodged with
the Registrar.
6. Accounting Standards
FRS 17 'Retirement Benefits' and FRS 18 'Accounting Policies' have been adopted
in the preliminary results for the 52 weeks to 28th December 2001.
Implementation of FRS 17 in 2001 introduces certain disclosure requirements in
the notes to the accounts and has no effect Implementation of FRS 18 has no
effect on the 2001 financial results.
Consolidated Balance Sheet
as at 28th December 2001
2001 2000
£'000 £'000
Fixed Assets
Intangible - goodwill 115,150 124,988
assets
Tangible assets 116,029 127,250
Investments
Joint Ventures - share of gross assets 9,629 8,727
- share of gross liabilities 3,683 3,060
5,946 5,667
Associates 20,895 18,303
Other 567 428
27,408 24,398
Total Fixed Assets 258,587 276,636
Current
Assets
Stocks 114,624 113,048
Debtors 211,138 244,400
Cash at bank and in hand 99,209 96,244
424,971 453,692
Creditors falling due within one year
Borrowings 15,581 23,553
Other creditors 194,759 209,326
210,340 232,879
Net Current Assets 214,631 220,813
Total Assets Less Current Liabilities 473,218 497,449
Less
Creditors falling due after more than one year
Loans 147,338 165,826
Obligations under finance 1,968 1,564
leases
Provisions for Liabilities and 30,177 42,314
Charges
Deferred Income
Grants not yet credited to profit 276 494
Minority interest 422 447
293,037 286,804
Capital and Reserves
Called up share capital 25,300 25,078
Share premium account 15,791 11,432
Capital redemption reserve 531 531
Profit and loss account 251,415 249,763
293,037 286,804
Consolidated Cash Flow Statement
for the 52 weeks ended 28th December 2001
2001 2000
£'000 £'000 £'000 £'000
Cash inflow from operating
activities
- funds generated by operations 69,872 81,217
- decrease (increase) in working capital 3,844 (10,377)
- cash spent on exceptional closure costs (2,610) -
- cash spent on exceptional reorganisation (1,047) (5,132)
costs
70,059 65,708
Dividends received from joint ventures 1,156 911
Dividends received from associates 4,361 3,948
Returns on investments and servicing (8,474) (10,540)
of finance
Taxation (5,043) (5,997)
Capital expenditure and financial investment (10,232) (13,565)
Acquisitions and disposals
- acquisitions - Warman - 3,659
- acquisitions - Others (3,837) (4,647)
- disposals (1,047) 30,278
(4,884) 29,290
Equity dividends paid (22,442) (21,007)
Cash inflow before liquid resources and 24,501 48,748
financing
Management of liquid (13,069) (59,666)
resources
Financing
- issue of shares 3,933 1,246
- new loans 9,495 74,000
- debt repaid (21,731) (55,648)
- foreign exchange hedging (1,340) -
(9,643) 19,598
Increase in cash 1,789 8,680
Reconciliation of Net Cash Flow to Movement in Net Debt
2001 2000
£'000 £'000
Increase in cash 1,789 8,680
Cash flow from debt repaid 21,731 55,648
Cash flow from new loans (9,495) (74,000)
Cash flow from management of liquid 13,069 59,666
resources
Change in Net Debt Resulting From Cash 27,094 49,994
Flows
Loans - (acquired) disposed of (11) 111
Leases - inceptions (841) (1,180)
Exchange 2,805 2,518
Movement in Net Debt During the Year 29,047 51,443
Net debt at 30th December 2000 (95,018) (146,461)
Net Debt at 28th December 2001 (65,971) (95,018)
Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities
2001 2000
£'000 £'000
Operating profit 44,936 57,656
Depreciation, goodwill amortisation and grant credits 25,662 28,603
Surplus on disposal of tangible assets and (1,263) (1,655)
investments
Pension prepayments (3,118) (2,894)
Provision movements 3,655 (493)
Funds generated by operations 69,872 81,217
(Increase) decrease in stocks (5,107) 9,417
Decrease (increase) in debtors 26,063 (37,021)
(Decrease) increase in creditors (17,112) 17,227
Decrease (increase) in working capital 3,844 (10,377)
Closure of companies:
Charge for year (9,591) -
Loss on disposal of tangible assets 1,484 -
Decrease in working capital 5,497 -
Cash spent on exceptional closure costs (2,610) -
Exceptional Warman reorganisation
costs:
Accelerated depreciation - 295
Provision movements (1,047) (5,427)
Cash spent on exceptional Warman reorganisation costs (1,047) (5,132)
Net Cash Inflow from Operating 70,059 65,708
Activities
Statement of Total Recognised Gains and
Losses
2001 2000
£'000 £'000
Profit excluding share of profit for joint ventures and 21,303 35,729
associates
Share of joint ventures' profit 2,185 965
Share of associates' profit 6,500 4,782
Profit attributable to The Weir Group PLC 29,988 41,476
Exchange differences on foreign currency net (6,422) 66
investments
Tax thereon (1,142) (1,512)
Total Recognised Gains 22,424 40,030
Reconciliation of Movements in Shareholders'
Funds
2001 2000
£'000 £'000
Total recognised gains 22,424 40,030
Dividends (23,478) (22,079)
Other movements
New share capital subscribed 4,581 1,368
Cost of issuing shares (648) (122)
Goodwill reinstated on disposal 3,354 8,839
and closures
Net addition to shareholders' funds 6,233 28,036
Opening shareholders' funds 286,804 258,768
Closing Shareholders' Funds 293,037 286,804
Shareholders' funds are entirely attributable to equity interests.
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