Final Results

RNS Number : 4915C

Weir Group PLC

08 March 2011

 



The Weir Group PLC

8 March 2011

THE WEIR GROUP PLC PRELIMINARY RESULTS 2010

RECORD PERFORMANCE AND MARGIN IMPROVEMENT

The Weir Group PLC, a global engineering solutions provider to the mining, oil & gas and power markets, today reports its preliminary results for the 52 week period ended 31 December 2010

Continuing Operations	2010	2009	Change
Order input(*1)	£1,904m	£1,366m	+39%
Revenue	£1,635m	£1,390m	+18%
Operating profit(*2)	£310m	£205m	+51%
Operating margin(*2)	18.9%	14.7%	+4.2pts
Profit before tax(*2)	£295m	£187m	+58%
Cash from operations	£275m	£302m	-9%
Earnings per share(*2)	100.4p	64.1p	+57%
Dividend per share	27.0p	21.0p	+29%
Return on Capital Employed(*3)	32.4%	24.4%	+8.0pts
Net debt	£284m	£119m

*1. 2009 restated at 2010 average exchange rates

*2. Adjusted to exclude intangibles amortisation.  Reported operating profit, profit before tax and earnings per share were £292m (2009: £188m); £277m (2009: £170m) and 94.3p (2009: 58.8p) respectively.

*3. Continuing operations EBIT divided by average net assets excluding pension deficit

HIGHLIGHTS

§ Original equipment input up 54% on a like for like basis;

§ Strong aftermarket contributed 58% of revenues;

§ Operating profit up 51%;

§ Record margins benefiting from aftermarket mix and operating leverage;

§ Good progress made on strategic initiatives including five value enhancing acquisitions;

§ Full year dividend increased 29% reflecting confidence in outlook;

§ US$40m investment plan to expand upstream oil & gas capacity.

Keith Cochrane, Chief Executive, commented:

"Weir delivered an exceptional performance in 2010, demonstrating great agility in responding to improving conditions in our upstream oil and gas and mining markets.

During the year we made good progress in moving forward our strategic agenda, including five acquisitions which broaden our product portfolio and further increase our exposure to high-growth emerging markets. The Group is well on track to achieve its ambition to double 2009 profits by 2014.

Weir enters 2011 in excellent financial health, with a record order book, a clear strategy and plans to drive future growth.  We are confident the Group will deliver good progress this year."

Contact details:  The Weir Group PLC		Available through UBS
Keith Cochrane, Chief Executive		Tel. [phone] (switchboard);
Victoria Ferrier, Head of Investor Relations		(Mobile: [phone])
Helen Walker, Public Relations Manager		(Mobile: [phone])
Maitland		Tel. [phone]
Suzanne Bartch		(Mobile: [phone])
Rowan Brown		(Mobile: [phone])

Note to Editors: Print quality images are available to download at http://www.newscast.co.uk

GENERAL OVERVIEW

The Weir Group has been repositioned as a leading global engineering solutions provider, focused on the mining, oil & gas and power markets.  This focus, together with a growing emerging market presence and continued commitment to operational excellence, has contributed to these record results.

Actions taken over the last two years have ensured the Group has the flexibility to respond to changing market conditions.  Two of the Group's three end markets saw a strong recovery in 2010, ahead of previous expectations.  The oil and gas shale markets in North America bounced back, benefiting from the increasing use of hydraulic fracturing.  Global mineral markets largely recovered, driven principally by China's growing demand for commodities which in turn led to increased production volumes.  In contrast, the Group's third end market, power and industrial, remained subdued.

Weir has also made good progress against the strategic priorities set last year, positioning the Group to continue to deliver above market growth.  Each division has launched new products and the benefits of greater cross divisional collaboration are already evident. Weir's emerging markets footprint continues to grow including the expansion of existing activities in South America, India and China. All of this activity continues to be underpinned by an ongoing focus on operational excellence and the development of initiatives to enhance functional capabilities.

The Group's growth plans were also supported by a number of complementary acquisitions and alliances which broaden its product portfolio and strengthen its global footprint and growth prospects, particularly in emerging markets. During the year, PCS (Australia), Linatex (Malaysia), BDK (India), American Hydro (USA) and YES (Spain) joined the Group adding annualised revenues of £151m and operating profits of £15.5m and the integration of each is progressing well. Joint ventures and alliances were established with partners including KHD (Germany), MHI (Japan) and Shengli Highland (China).

FINANCIAL HIGHLIGHTS

Order input in constant currency at £1,904m was 39% higher than the prior year and 36% higher on a like-for-like basis after adjusting for current year acquisitions.  Original equipment orders were up 58% (54% like-for-like) reflecting significantly increased capital expenditure driven by demand in upstream oil and gas and mining markets.  Aftermarket orders were up 27% (24% like-for-like) as oil and gas and commodity production levels increased and represented 54% (2009: 59%) of total input.

Revenue grew by 18% to £1,635m, with a net currency benefit of £63.8m principally due to the weakening of sterling relative to the Australian dollar, Canadian dollar and South African rand.  In constant currency terms, revenue increased by 12% reflecting strong input during the year offset by the lower opening order book.  Excluding the impact of current year acquisitions, like-for-like revenues in constant currency were up 10%.  Aftermarket sales represented 58% (2009: 54%) of revenue and exposure to emerging markets was 39% (2009: 43%) of revenues, due to proportionately higher growth in North American upstream Oil and Gas operations.  Revenues from other Group companies fell to £26m (2009: £36m).

Operating profit from continuing operations before intangibles amortisation increased by 51% to £309.7m (2009: £204.7m) including a net foreign currency benefit of £8.6m.  On a constant currency basis, operating profit increased by 45% to £309.7m (2009: £213.3m) driven by the growth in upstream Oil and Gas and Minerals aftermarket revenues.  Acquisitions contributed operating profits of £3.4m in the period, offset by one-off restructuring and acquisition transaction costs of £11.0m (2009: £6.2m).  The profit contribution from other Group companies was £3.5m (2009: £6.8m).  EBITDA increased by 47% to £344.0m (2009: £233.9m).

Operating margin increased from 14.7% to 18.9% reflecting the favourable impact of significant growth in aftermarket revenues and the benefit of operating leverage. 

Net finance costs reduced to £15.0m (2009: £17.7m) due to prior year one-off costs of £3.7m on cancellation of floating-to-fixed rate interest rate swaps and reduced interest rate differential benefits from the US dollar balance sheet hedging programme. Underlying interest has remained flat on increased levels of net debt due to the higher cost on fixed private placement borrowings offset by reduced losses from interest rate swap hedges and a lower volume of forward currency contracts.

Profit before tax from continuing operations before intangibles amortisation increased by 58% to £294.7m (2009: £187.0m).  Reported profit before tax from continuing operations increased by 62% to £276.5m (2009: £170.4m) after intangibles amortisation of £18.2m (2009: £16.6m).

Tax charge for the year of £82.8m (2009: £52.2m) on profit before tax from continuing operations before intangibles amortisation represents an underlying effective tax rate of 28.1% (2009: 27.9%) reflecting a higher proportion of US profit which is taxed at a higher rate.

Loss from discontinued operations As previously announced, breaches of UN sanctions on Oil for Food programme contracts awarded between 2000 and 2002 resulted in the payment by the Group of a confiscation order of £13.9m and related fine of £3.0m.  The business involved was sold in 2007 and these costs, along with £1.7m of related legal and professional fees, offset by the release of £5.0m of provisions and accruals, are shown as a loss from discontinued operations.  In 2009, a profit of £5.2m was recognised in respect of prior periods disposals.

Earnings per share from continuing operations before intangibles amortisation increased by 57% to 100.4p (2009: 64.1p).  Reported earnings per share including intangibles amortisation, exceptional items and discontinued operations was 87.9p (2009: 61.2p) reflecting the intangibles amortisation of £12.8m net of tax and the exceptional loss on discontinued operations of £13.6m.

Cash generated from operations before working capital movements increased by 45% to £342.3m (2009: £236.1m). Working capital performance was adversely affected by the unwind of the unusually high level of advance payments received on major contracts in 2009 which together with investment to support growth resulted in a net working capital outflow of £67.4m compared to a net inflow of £66.2m in 2009.  As a result net cash generated from operations reduced by 9% from £302.3m to £274.9m.  Capital expenditure increased from £40.6m in 2009 to £50.9m, reflecting an increase in attractive investment opportunities available across the Group.  Free cash flow from continuing operations was £79.9m (2009: £141.1m).  Exceptional payments of £18.6m were made in respect of the Oil for Food settlement attributable to discontinued operations. The cumulative effect of cash spent on acquisitions and disposals of £204.1m, acquired debt of £15.8m and non-cash movements of £5.8m resulted in a year end net debt position of £283.6m (2009: £119.2m) reflecting a net debt/EBITDA ratio of 0.8 times (2009: 0.5 times) demonstrating substantial financial headroom.

Dividend The Board is recommending a 29% increase in the full year dividend, with a final dividend of 21p (2009: 16.2p) making a total of 27p for the year (2009: 21p).  If approved at the annual general meeting it will be paid on 2 June 2011 to shareholders on the register on 6 May 2011.

DIVISIONAL HIGHLIGHTS

MINERALS

Weir Minerals is the global leader in the provision of slurry handling equipment and associated aftermarket for abrasive high wear applications used in mining, oil sands and flue gas desulphurisation markets.

	2010	2009	Change
Order input(*1)	£984m	£782m	+26%
Revenue(*1)	£901m	£879m	+3%
Operating profit(*1,*2)	£175m	£141m	+24%
Operating margin(*1,*2)	19.4%	16.0%	+3.4pts
*1. 2009 restated at 2010 average exchange rates
*2. Adjusted to exclude intangibles amortisation

As market conditions improved, underpinned by strong demand for commodities, particularly from emerging markets, and rising commodity prices, global ore production increased by 10%, supporting the Minerals division in delivering another record financial performance. Input benefitted from improving capital expenditure trends and a higher proportion of aftermarket revenues as commodity production volumes increased. During the year, Weir Minerals Canada won the division's largest ever order to provide three large dewatering barge systems and Weir Minerals Chile was successful in extending its presence into the mill circuit spools market with a number of significant contract wins totalling US$18m. The division also made good strategic progress launching a new range of slurry pumps featuring patent protected design enhancements and driving increased sales of ancillary products.  The Weir Minerals Linatex integration is progressing well and the targeted synergy savings to be delivered by year end 2012 have been increased by US$5m to US$10-US$15m.

Order input increased 26% to £984m (2009: £782m) reflecting a 32% and 21% increase in original equipment and aftermarket orders respectively. Original equipment orders represented 43% of total order input (2009: 41%).  On a like-for-like basis, ignoring the impact of the Linatex acquisition which contributed £28m, order input was up 22%.  All regions showed growth benefiting from a broader product portfolio and exposure to a wide range of commodities.  Emerging markets accounted for 51% of input, up from 49% in 2009.  Notable slurry pump contracts were won in the Philippines (nickel), Brasil (iron ore) and Mongolia (copper) while ancillary product orders were up 38% in the year.  Aftermarket input benefited from a restocking effect in the early part of the year, higher activity levels in the mining and oil sands markets and growing service support revenues as the division extended its service footprint.

Revenue increased by 3% to £901m (2009: £879m) including a £27m first contribution from Linatex. Like-for-like revenues remained flat reflecting a lower opening order book, offset by strong growth in shorter cycle aftermarket revenues in Australia, Canada, South America and Africa and a pickup in the last quarter in original equipment sales which accounted for 39% (2009: 47%) of annual divisional revenue.

Operating profit increased by 24% to £174.5m (2009: £140.5m) and included £1.9m from Linatex offset by £8.3m of restructuring and acquisition costs. This strong underlying improvement reflects the increased aftermarket mix, improved operating efficiencies and raw material pricing benefits in the early part of the year.

Operating margin improved to 19.4% (2009: 16.0%) reflecting a higher proportion of aftermarket sales and, in the second half, the impact of the Linatex acquisition and associated one-off costs.

Capital expenditure was £30.2m (2009: £29.7m) with significant investment in South America and Asia. Research and development spend rose 42% to £8.2m.  During the year, Multiflo moved to a AUD$9m purpose-built facility in Queensland Australia, consolidating four sites into one and doubling capacity.  In early 2011, an assembly centre and test stand for GEHO pump products was opened in Taicang in China.  The division's emerging markets presence was extended with a number of new service centres being opened in the year including in Africa, Indonesia and Russia.

OIL & GAS

Weir Oil & Gas designs and manufactures high pressure well service pumps and related flow control equipment focused on unconventional oil and gas markets and highly engineered centrifugal pumps for use in the refining industry. Weir Oil & Gas Services provides comprehensive engineering services focused on the upstream oil & gas sector.

	2010	2009	Change
Order input(*1)	£626m	£318m	+97%
Revenue(*1)	£462m	£308m	+50%
Operating profit(*1,*2)	£117m	£53m	+122%
Operating margin(*1,*2)	25.4%	17.2%	+8.2pts
*1. 2009 restated at 2010 average exchange rates
*2. Adjusted to exclude intangibles amortisation

During 2010, the North American upstream market experienced a rebound in activity.  A substantial increase in on-shore horizontal drilling was supported by a move to oil and liquid rich shale formations and significant additional investment in the development of existing and new shale fields utilising more intensive fracturing techniques.  The division's upstream businesses (Weir SPM and Weir Mesa) significantly increased their already leading market share positions through operational leverage, an extensive service footprint and continued investment in facilities.  Weir SPM's competitive position was also enhanced by the launch of the new Destiny triplex pump, which provides improved reliability, higher output and pressure loads, and a longer uninterrupted service operation. Further manufacturing and service capacity is being added to support the current and future needs of the upstream operations.  As expected customer activity in downstream markets remained at low levels and to reflect current market conditions restructuring at Weir Gabbioneta is now underway. In contrast in the second half the division's Middle East services markets rebounded from their 2009 lows.

Order input increased by 97% to £626m (2009: £318m).  The upstream businesses order input grew 215% to a record £476m (US$736m), benefiting from improved market conditions, a move to harsher shale environments and market share gains. Growth accelerated in the second half driven by a surge in demand for original equipment as utilisation levels increased and customers expanded fleet capacity, placing forward orders for 2011 and 2012.  The replacement cycle has also been shortened by the increasing operational intensity of longer cycle, higher pressure applications.  Good progress was also made by the Middle East service operations with higher input principally due to opportunities arising in Iraq. These increases were partly offset by the downstream operations, which experienced a soft market and increased competition, causing input to fall 15% to £82m in 2010 (2009: £97m).

Revenue increased 50% to £462m (2009: £308m). The upstream businesses revenues increased to £303m (US$469m), up 116% on 2009. In particular they benefited from their ability to respond quickly to changing market conditions, investments in increased capacity and an expansion of service centre footprint.

Operating profit including joint ventures increased by 122% to £117.4m (2009: £53.0m). The positive market environment in upstream, along with strong operational leverage were the primary drivers of this record performance.

Operating margin was 25.4% (2009: 17.2%) reflecting the operating leverage effect of higher volumes at the upstream business units and continued strong aftermarket revenues across the division.

Capital expenditure increased to £17.2m (2009: £7.1m) as the division continued to invest for growth.  During the year, Weir SPM added to its machining capacity at the Fort Worth facility and expanded its service network, including a new service centre in Brasil.  Engineering resources were doubled and overall spending on research and development increased by 65% to £4.8m. In March 2010, PCS was acquired for £3.9m providing a platform for growth in the Australian market. The division has also recently committed to significantly increase manufacturing and service capacity at Weir SPM's Fort Worth plant with a planned investment of US$40m (£26m) over 18 months.

POWER & INDUSTRIAL

Weir Power & Industrial designs, manufactures and provides aftermarket support for specialist and critical-service rotating and flow control equipment, focused on the global power markets.

	2010	2009	Change
Order input(*1)	£268m	£254m	+6%
Revenue(*1)	£246m	£231m	+6%
Operating profit(*1,*2)	£26m	£24m	+11%
Operating margin(*1,*2)	10.7%	10.3%	+0.4pts
*1. 2009 restated at 2010 average exchange rates
*2. Adjusted to exclude intangibles amortisation

Demand for original equipment for the conventional power market remained strong in Asia but was weak in Europe and North America.  The nuclear market remained active and significant orders were secured from Westinghouse for the supply of specialist butterfly valves for the first nuclear stations to be built in the US in 25 years.  As the demand for power from renewable energy sources continued to increase worldwide the division expanded its exposure to these fast growing markets with the acquisitions of American Hydro and Ynfiniti Engineering Services (YES).   In addition, in October 2010 the acquisition of BDK was completed extending the division's emerging market footprint and product portfolio and providing a substantial low cost manufacturing capability. A positive first contribution was made by the acquisitions and restructuring of the Canadian service operation was completed to improve its market position and profitability.

Order input grew by 6% to £268m (2009: £254m) but fell 1% before the impact of current year acquisitions which contributed £18m of input in their part-year of ownership. Nuclear input at £83m (2009: £83m) benefited from new orders weighted to the second half from China, the US and Europe. However, this has been more than offset by the postponement of outages at a number of power stations in Europe and North America. In addition poor market conditions in the industrial sector have particularly affected product and service businesses in Canada and the UK. Positive input trends were evident at both Weir BDK and Weir American Hydro. Overall, the proportion of orders from the power sector increased to 61% (2009: 55%).

Revenue increased by 6% to £246m (2009: £231m), growing 3% on a like-for-like basis. This reflects a strong opening order book, weak aftermarket and increased deliveries of original equipment products to the Chinese nuclear market. Weir American Hydro and Weir BDK contributed revenues of £8m in the part-year of ownership.

Operating profit increased by £2.6m to £26.3m including a £1.0m contribution from the current year acquisitions and costs of £2.6m, relating to the restructuring of the Canadian service operations and other integration and acquisition related costs.

Operating margin rose to 10.7% (2009: 10.3%). This increase reflects manufacturing efficiencies, benefits from the developing low cost supply chain and the positive impact of higher margin acquisitions offset by one-off costs.

Capital expenditure of £3.4m (2009: £3.7m) was invested in the division's facilities to further improve operating efficiency and capability.  Overall spending on research and development increased by 79% to £1.8m due to new product development initiatives aligned to the division's target growth markets of nuclear power and renewable energy.

BOARD CHANGES

Legal & Commercial Director, Alan Mitchelson has indicated his intention to retire from the Board prior to the 2012 annual general meeting.

STRATEGY

Weir will continue to extend its strong position in the minerals, oil and gas and power sectors, all of which are high growth, long cycle markets with positive fundamentals.  The Group will continue to broaden its competitive portfolio of products and added-value services, with the emphasis on those products that will provide a strong stream of aftermarket opportunities.

In 2011 Weir will continue to drive operational excellence and focus on the Group's three strategic pillars of innovation, collaboration and increased global capability. These growth drivers, together with a number of key functional initiatives, will strengthen Weir's competitive position and enable the Group to grow faster than its end markets. The integration of recent acquisitions will be completed and, where necessary, resources added to secure growth. Specifically, the Group is committed to significantly increasing manufacturing and service capacity at Weir SPM's Fort Worth plant and develop Weir BDK's manufacturing capabilities. These initiatives will enable each business to take full advantage of the opportunities in their fast growing markets.

OUTLOOK

MINERALS

Weir Minerals is well positioned for further growth, with positive market conditions across the mining and oil sands markets expected to continue through 2011. Increases in capital expenditure have been announced by a number of customers which has resulted in  increased project enquiries and engineering studies with a number of "mega-projects" likely to get underway in 2011/12 principally across South America and the Asia-Pacific regions.  It is anticipated that this will translate into further original equipment order growth.  A more modest growth in aftermarket orders is expected given the 2010 restocking effect and forecast commodity production volume trends. Together with a strong opening order book and a full year Linatex contribution, it is expected that 2011 revenue and operating profit will be higher than 2010 with operating margins reflecting a higher proportion of original equipment revenue compared to the prior year.  The growing installed base provides future aftermarket opportunities while long term market fundamentals remain strong, driven by urbanisation in emerging markets and high demand for raw materials.

OIL & GAS

The upstream businesses enter 2011 with a record order book providing much greater forward visibility than in previous years. Current forecasts indicate that the average North American horizontal rig count will continue to grow in 2011 with a further shift towards oil drilling. As a result it is anticipated that 2011 upstream revenues and operating profits will grow ahead of our previous expectations. However, given the surge in original equipment orders in the last five months of 2010 for delivery in 2011 and 2012, a more normalised level of input is anticipated in 2011.  Moderate growth is forecast in the Middle East in 2011, underpinned by improved operating conditions in Iraq.  The division's downstream operations will be impacted by a weaker opening order book, restructuring actions and an anticipated continued challenging environment for new orders.  The medium term outlook for upstream remains positive as growth in the North American onshore oil and gas sector continues, operating intensity increases and as interest in shale fracturing beyond North America develops.

POWER & INDUSTRIAL

An improved financial performance is expected in 2011 as the division benefits from a substantial nuclear workload, the now completed Canadian restructuring and a full year contribution from the 2010 acquisitions. Input trends will be impacted by the timing of new nuclear orders, with fewer prospects expected to come to market in 2011 before a pickup in 2012.  Whilst the outlook for the global power markets remains positive the division remains cautious as to recovery of general industrial markets.  An active new build nuclear programme continues in China with a growing number of opportunities emerging elsewhere in the world.  In addition, the lack of new build coal plants in Europe and North America will add impetus to other power sources, such as biomass conversions and new gas-fired plants.  As the global push for low carbon power generation drives growth in renewable energy markets this sector will become increasingly important for the division.

SUMMARY

The Group enters 2011 in excellent financial health, with a record opening order book and an excellent platform for future growth.  In the current year capital expenditure will be in the region of £100m with significant investment in the Group's upstream Oil & Gas businesses to position them to take full advantage of the opportunities in their fast growing markets.

The Group is confident of delivering good progress in 2011.

Over the medium term, the Group is well placed. It has strong positions in three growing sectors with positive medium term fundamentals and an emerging markets bias. It also has a resilient business model that focuses on the sale of original equipment products to provide a growing installed base for more profitable and resilient aftermarket sales. 

The Group is well on track to achieve its ambition to double 2009 profits by 2014. 

This information includes 'forward-looking statements'.  All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the Weir Group's financial position, business strategy, plans (including development plans and objectives relating to the Company's products and services) and objectives of management for future operations, are forward-looking statements. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past business and financial performance cannot be relied on as an indication of future performance.

AUDITED RESULTS
Consolidated Income Statement
for the 52 weeks ended 31 December 2010
		52 weeks ended 31 December 2010			53 weeks ended 1 January 2010
		Before exceptional items & intangibles amortisation	Exceptional items & intangibles amortisation (note 3)	Total	Before exceptional items & intangibles amortisation	Exceptional items & intangibles amortisation (note 3)	Total
	Notes	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	2	1,635.0	-	1,635.0	1,390.2	-	1,390.2
Continuing operations
Operating profit before share of results of joint ventures		305.1	(18.2)	286.9	200.1	(16.6)	183.5
Share of results of joint ventures		4.6	-	4.6	4.6	-	4.6
Operating profit		309.7	(18.2)	291.5	204.7	(16.6)	188.1
Finance costs		(14.9)	-	(14.9)	(18.7)	-	(18.7)
Finance income		1.5	-	1.5	2.5	-	2.5
Other finance costs - retirement benefits		(1.6)	-	(1.6)	(1.5)	-	(1.5)
Profit before tax from continuing operations		294.7	(18.2)	276.5	187.0	(16.6)	170.4
Tax expense	4	(82.8)	5.4	(77.4)	(52.2)	5.4	(46.8)
Profit for the period from continuing operations		211.9	(12.8)	199.1	134.8	(11.2)	123.6
(Loss) profit for the period from discontinued operations	5	-	(13.6)	(13.6)	5.2	-	5.2
Profit for the period		211.9	(26.4)	185.5	140.0	(11.2)	128.8
Attributable to
Equity holders of the Company		211.5	(26.4)	185.1	140.0	(11.2)	128.8
Non-controlling interests		0.4	-	0.4	-	-	-
		211.9	(26.4)	185.5	140.0	(11.2)	128.8
Earnings per share	6
Basic - total operations				87.9p			61.2p
Basic - continuing operations		100.4p		94.3p	64.1p		58.8p
Diluted - total operations				86.9p			60.8p
Diluted - continuing operations		99.2p		93.2p	63.6p		58.3p
Consolidated Statement of Comprehensive Income
for the 52 weeks ended 31 December 2010
						52 weeks ended 31 December 2010	53 weeks ended 1 January 2010
						£m	£m
Profit for the period						185.5	128.8
Other comprehensive income
Losses taken to equity on cash flow hedges						(0.2)	(0.5)
Exchange gains (losses) on translation of foreign operations						56.9	(51.2)
Exchange (losses) gains on net investment hedges						(17.3)	38.3
Actuarial losses on defined benefit plans						(3.4)	(57.7)
Reclassification adjustments taken to the income statement on cash flow hedges						(0.1)	12.9
Tax relating to other comprehensive income						1.5	12.7
Net other comprehensive income						37.4	(45.5)
Total net comprehensive income for the period						222.9	83.3
Attributable to
Equity holders of the Company						222.5	83.3
Non-controlling interests						0.4	-
						222.9	83.3
Consolidated Balance Sheet
at 31 December 2010
						31 December 2010	1 January 2010
					Notes	£m	£m
ASSETS
Non-current assets
Property, plant & equipment						259.7	199.4
Investment property						3.9	4.2
Intangible assets						957.8	739.9
Investments in joint ventures						10.3	9.7
Deferred tax assets						27.1	28.7
Derivative financial instruments					11	0.6	0.3
Total non-current assets						1,259.4	982.2
Current assets
Inventories						310.2	235.3
Trade & other receivables						353.3	240.5
Construction contracts						16.2	25.9
Derivative financial instruments					11	9.2	7.2
Income tax receivable						0.4	3.4
Cash & short-term deposits						84.0	57.0
Total current assets						773.3	569.3
Total assets						2,032.7	1,551.5
LIABILITIES
Current liabilities
Interest-bearing loans & borrowings						6.3	2.0
Trade & other payables						409.9	336.3
Construction contracts						21.8	23.2
Derivative financial instruments					11	20.9	16.8
Income tax payable						30.1	23.7
Provisions						41.5	33.8
Total current liabilities						530.5	435.8
Non-current liabilities
Interest-bearing loans & borrowings						361.3	174.2
Other payables						12.0	-
Derivative financial instruments					11	27.5	31.0
Provisions						38.5	36.7
Deferred tax liabilities						76.2	60.4
Retirement benefit plan deficits					10	65.0	71.0
Total non-current liabilities						580.5	373.3
Total liabilities						1,111.0	809.1
NET ASSETS						921.7	742.4
CAPITAL & RESERVES
Share capital						26.6	26.6
Share premium						38.0	38.0
Treasury shares						(6.8)	(7.9)
Capital redemption reserve						0.5	0.5
Foreign currency translation reserve						103.8	64.0
Hedge accounting reserve						0.4	0.6
Retained earnings						758.8	620.4
Shareholders equity						921.3	742.2
Non-controlling interests						0.4	0.2
TOTAL EQUITY						921.7	742.4
Consolidated Cash Flow Statement
for the 52 weeks ended 31 December 2010
						52 weeks ended 31 December 2010	53 weeks ended 1 January 2010
					Notes	£m	£m
Continuing operations
Cash flows from operating activities					12
Cash generated from operations						274.9	302.3
Additional pension contributions paid						(9.3)	(11.1)
Income tax paid						(72.4)	(43.6)
Net cash generated from operating activities						193.2	247.6
Continuing operations
Cash flows from investing activities
Acquisitions of subsidiaries					12	(203.4)	(0.1)
Disposals of subsidiaries					12	(0.7)	(1.4)
Purchases of property, plant & equipment & intangible assets					8	(50.9)	(40.6)
Other proceeds from sale of property, plant & equipment						2.9	1.5
Interest received						1.6	2.5
Dividends received from joint ventures						4.2	5.9
Net cash used in investing activities						(246.3)	(32.2)
Continuing operations
Cash flows from financing activities
Purchase of shares for LTIP awards						-	(1.4)
Proceeds from borrowings						356.3	50.5
Repayments of borrowings						(190.8)	(187.3)
Settlement of derivative financial instruments						(13.4)	(16.5)
Interest paid						(10.8)	(18.7)
Dividends paid to non-controlling interests						(0.2)	-
Dividends paid to equity holders of the Company						(46.7)	(39.2)
Net cash generated from (used in) financing activities						94.4	(212.6)
Net increase in cash & cash equivalents from continuing operations						41.3	2.8
Net decrease in cash & cash equivalents from discontinued operations - operating activities						(18.6)	-
Cash & cash equivalents at the beginning of the period						55.7	53.6
Foreign currency translation differences						1.1	(0.7)
Cash & cash equivalents at the end of the period					12	79.5	55.7

Consolidated Statement of Changes in Equity
for the 52 weeks ended 31 December 2010
	Share capital	Share premium	Treasury shares	Capital redemption reserve	Foreign currency translation reserve	Hedge accounting reserve	Retained earnings	Attributable to equity holders of the Company	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 26 December 2008	26.6	38.0	(7.9)	0.5	76.9	(8.3)	570.9	696.7	0.2	696.9
Profit for the period	-	-	-	-	-	-	128.8	128.8	-	128.8
Losses taken to equity on cash flow hedges	-	-	-	-	-	(0.5)	-	(0.5)	-	(0.5)
Exchange losses on translation of foreign operations	-	-	-	-	(51.2)	-	-	(51.2)	-	(51.2)
Exchange gains on net investment hedges	-	-	-	-	38.3	-	-	38.3	-	38.3
Actuarial losses on defined benefit plans	-	-	-	-	-	-	(57.7)	(57.7)	-	(57.7)
Reclassification adjustments taken to the income statement on cash flow hedges	-	-	-	-	-	12.9	-	12.9	-	12.9
Tax relating to other comprehensive income	-	-	-	-	-	(3.5)	16.2	12.7	-	12.7
Total net comprehensive income for the period	-	-	-	-	(12.9)	8.9	87.3	83.3	-	83.3
Cost of share-based payments net of tax	-	-	-	-	-	-	2.8	2.8	-	2.8
Dividends	-	-	-	-	-	-	(39.2)	(39.2)	-	(39.2)
Exercise of LTIP awards	-	-	-	-	-	-	(1.4)	(1.4)	-	(1.4)
At 1 January 2010	26.6	38.0	(7.9)	0.5	64.0	0.6	620.4	742.2	0.2	742.4
Profit for the period	-	-	-	-	-	-	185.1	185.1	0.4	185.5
Losses taken to equity on cash flow hedges	-	-	-	-	-	(0.2)	-	(0.2)	-	(0.2)
Exchange gains on translation of foreign operations	-	-	-	-	56.9	-	-	56.9	-	56.9
Exchange losses on net investment hedges	-	-	-	-	(17.3)	-	-	(17.3)	-	(17.3)
Actuarial losses on defined benefit plans	-	-	-	-	-	-	(3.4)	(3.4)	-	(3.4)
Reclassification adjustments taken to the income statement on cash flow hedges	-	-	-	-	-	(0.1)	-	(0.1)	-	(0.1)
Tax relating to other comprehensive income	-	-	-	-	0.2	0.1	1.2	1.5	-	1.5
Total net comprehensive income for the period	-	-	-	-	39.8	(0.2)	182.9	222.5	0.4	222.9
Cost of share-based payments net of tax	-	-	-	-	-	-	3.3	3.3	-	3.3
Dividends	-	-	-	-	-	-	(46.7)	(46.7)	(0.2)	(46.9)
Exercise of LTIP awards	-	-	1.1	-	-	-	(1.1)	-	-	-
At 31 December 2010	26.6	38.0	(6.8)	0.5	103.8	0.4	758.8	921.3	0.4	921.7

Notes to the Group Financial Statements
1. Accounting policies
Basis of preparation
The preliminary results for the 52 weeks ended 31 December 2010 ("2010") have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and applied in accordance with the provisions of The Companies Act 2006.  The accounting policies applied in preparing these preliminary results are unchanged from those set out in the Group's 2009 annual report except as described below.
In order to provide the users of the financial statements with a more relevant presentation of the Group's underlying performance, profit for each financial year has been analysed between:
i) profit before exceptional items and intangibles amortisation; and
ii) the effect of exceptional items and intangibles amortisation.
a) Exceptional items are material items of income and expense which, because of the nature and infrequency of the events giving rise to them, merit separate presentation to allow a better understanding of the elements of the Group's financial performance for the period and are presented on the face of the income statement to facilitate comparisons with prior periods and assessment of trends in financial performance.
b) Intangibles amortisation, including impairment, has been shown separately to provide increased visibility over the impact of increased acquisition activity on intangible assets.
Further analysis of the items included in the column "Exceptional items & intangibles amortisation" is provided in note 3 to the financial statements.
Improvements to IFRS
In April 2009, the International Accounting Standards Board issued an omnibus of amendments to its standards, primarily with a view to removing inconsistencies and to clarify wording. There are separate transitional provisions for each standard. The adoption of the amendments did not have any impact on the financial position or performance of the Group. One of the key amendments and its impact is detailed below.
IAS38 Intangible assets: states that if an intangible acquired in a business combination is identifiable only with another intangible asset, the acquirer may recognise the group of intangibles as a single asset provided the individual assets have similar useful lives. This has had no impact on the recognition of intangible assets in relation to the current year acquisitions as each of the intangible assets recognised on acquisition were separately identifiable.
In addition to the above, the following standards and interpretations have been adopted in these financial statements and have not had a material impact on the Group's financial statements in the period of initial application.
IAS39 Eligible Hedged Items (amendment to IAS39 Financial Instruments: Recognition and measurement)
IFRS2 Group Cash-settled Share-based Payment Transactions (amendments to IFRS2 Share-based Payments)
IFRIC16 Hedges of a Net Investment in a Foreign Operation
IFRIC18 Transfers of Assets from Customers
These preliminary results for the 52 weeks ended 31 December 2010 do not constitute statutory accounts as defined in Section 435 of The Companies Act 2006. They are extracted from the full statutory accounts, which were approved by a Committee of the Board of Directors on 8 March 2011. A copy of those full statutory accounts will be lodged with the Registrar of Companies in due course. The report of the auditors on those financial statements is unqualified and does not contain a statement under Section 498 (2) or Section 498 (3) of The Companies Act 2006 concerning accounting records or failure to obtain necessary information and explanations.
2. Segment information
For management purposes, the Group is organised into three operating divisions: Minerals, Oil & Gas and Power & Industrial. These three divisions are organised and managed separately based on the key markets served and each is treated as an operating segment and a reportable segment in accordance with IFRS8. The operating and reportable segments were determined based on the reports reviewed by the Group Executive which are used to make operational decisions.
The Minerals segment designs and manufactures pumps, hydrocyclones, valves and other complementary equipment for the mining, flue gas desulphurisation and oil sands markets. The Oil & Gas segment manufactures pumps and ancillary equipment and provides aftermarket support for the global upstream and downstream oil and gas markets. The Power & Industrial segment designs, manufactures and provides aftermarket support for rotating and flow control equipment to the global power generation and industrial sectors. All other segments, which are disclosed as Group companies, include the results of Liquid Gas Equipment which supplies equipment to the liquefied petroleum gas marine and onshore markets.
The Group Executive assesses the performance of the operating segments based on operating profit from continuing operations before exceptional items and intangibles amortisation, including impairment ("segment result"). Finance income and expenditure are not allocated to segments as all treasury activity is managed centrally by the Group treasury function.
Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with third parties.
In 2010, in conjunction with the acquisition of American Hydro, the decision was taken to restructure our Canadian operations in order to better align the business activities of existing operations with the new acquisition as well as to meet developments in the Canadian marketplace. Accordingly, the segment information in respect of the 53 weeks ended 1 January 2010 has been restated. The impact of this restatement was to reduce Power & Industrial sales to external customers by £13.5m and to increasing Oil & Gas and Minerals sales to external customers by £8.2m and £5.3m respectively. Segment result increased in Power & Industrial and Oil & Gas by £0.4m and £0.7m respectively and reduced by £1.1m in Minerals.
The segment information for the reportable segments for the 52 weeks ended 31 December 2010 and the 53 weeks ended 1 January 2010 is disclosed below.
	Minerals		Oil & Gas		Power & Industrial		Total continuing operations
		2009		2009		2009		2009
	2010	Restated	2010	Restated	2010	Restated	2010	Restated
	£m	£m	£m	£m	£m	£m	£m	£m
Revenue
Sales to external customers	901.4	818.6	461.7	307.2	246.0	228.5	1,609.1	1,354.3
Inter-segment sales	1.8	1.9	7.5	5.6	3.5	2.8	12.8	10.3
Segment revenue	903.2	820.5	469.2	312.8	249.5	231.3	1,621.9	1,364.6
Group companies sales to external customers							25.9	35.9
Eliminations							(12.8)	(10.3)
							1,635.0	1,390.2
Sales to external customers - at 2010 average exchange rates
Sales to external customers	901.4	878.5	461.7	308.4	246.0	231.2	1,609.1	1,418.1
Group companies sales to external customers							25.9	35.9
							1,635.0	1,454.0
Result
Segment result before share of results of joint ventures	174.5	132.5	112.8	48.1	26.3	23.4	313.6	204.0
Share of results of joint ventures	-	-	4.6	4.6	-	-	4.6	4.6
Segment result	174.5	132.5	117.4	52.7	26.3	23.4	318.2	208.6
Group companies							3.5	6.8
Unallocated expenses							(12.0)	(10.7)
Operating profit before exceptional items & intangibles amortisation							309.7	204.7
Exceptional items & intangibles amortisation							(18.2)	(16.6)
Net finance costs (excluding other finance costs)							(13.4)	(16.2)
Other finance costs - retirement benefits							(1.6)	(1.5)
Profit before tax from continuing operations							276.5	170.4
Segment result - at 2010 average exchange rates
Segment result before share of results of joint ventures	174.5	140.5	112.8	47.9	26.3	23.7	313.6	212.1
Share of results of joint ventures	-	-	4.6	5.1	-	-	4.6	5.1
Segment result	174.5	140.5	117.4	53.0	26.3	23.7	318.2	217.2
Group companies							3.5	6.8
Unallocated expenses							(12.0)	(10.7)
Operating profit before exceptional items & intangibles amortisation							309.7	213.3
There are no material revenues derived from a single external customer.
3. Exceptional items & intangibles amortisation
							2010	2009
							£m	£m
Recognised in arriving at operating profit from continuing operations
Intangibles amortisation							(18.2)	(16.6)
Recognised in arriving at loss for the period from discontinued operations
Exceptional items (note 5)							(13.6)	-
4. Income tax expense
							2010	2009
							£m	£m
Group - UK							(9.4)	(9.5)
Group - overseas							(68.0)	(37.3)
Total income tax expense in the Consolidated Income Statement							(77.4)	(46.8)
The total income tax expense is disclosed in the Consolidated Income Statement as follows.
Tax expense - continuing operations before exceptional items & intangibles amortisation							(82.8)	(52.2)
- intangibles amortisation							5.4	5.4
Total income tax expense in the Consolidated Income Statement							(77.4)	(46.8)
The total income tax expense included in the Group's share of results of joint ventures is as follows.
Joint ventures							(0.8)	(0.8)
5. Discontinued operations
There were no disposals of businesses during the 52 weeks ended 31 December 2010. During the 53 weeks ended 1 January 2010 there were no disposals of businesses which were of a sufficient size to meet the definition of a discontinued operation under IFRS5.
In December 2010, the Group pleaded guilty to two charges of breaching UN sanctions in connection with a number of Oil for Food programme contracts awarded between 2000 and 2002.  This resulted in a confiscation order of £13.9m and a fine of £3.0m.  Since the business involved was sold in 2007, these costs, along with £1.7m of related legal and professional fees, offset by the release of £5.0m of provisions and accruals, are shown as a loss from discontinued operations.
In 2009, a profit of £5.2m (net of tax of £nil) was recognised in respect of prior periods disposals. This related to the release of an unutilised provision following the expiry of certain warranty periods.
(Losses) earnings per share from discontinued operations were as follows.
							2010	2009
							pence	pence
Basic							(6.5p)	2.5p
Diluted							(6.4p)	2.5p
These (losses) earnings per share figures were derived by dividing the net loss attributable to equity holders of the Company from discontinued operations of £13.6m (2009: profit of £5.2m) by the weighted average number of ordinary shares for both basic and diluted amounts shown in note 6.
6. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the period attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period (adjusted for the effects of dilutive share awards).
The following reflects the profit and share data used in the calculation of earnings per share.
							2010	2009
Basic earnings per share
Profit attributable to equity holders of the Company
Total operations * (£m)							185.1	128.8
Continuing operations * (£m)							198.7	123.6
Continuing operations before exceptional items & intangibles amortisation * (£m)							211.5	134.8
Weighted average share capital (number of shares, million)							210.6	210.3
Diluted earnings per share
Profit attributable to equity holders of the Company
Total operations * (£m)							185.1	128.8
Continuing operations * (£m)							198.7	123.6
Continuing operations before exceptional items & intangibles amortisation * (£m)							211.5	134.8
Weighted average share capital (number of shares, million)							213.1	212.0
The difference between the weighted average share capital for the purposes of the basic and the diluted earnings per share calculations is analysed as follows.
							2010	2009
							Shares Million	Shares    Million
Weighted average number of ordinary shares for basic earnings per share							210.6	210.3
Effect of dilution: LTIP awards							2.5	1.7
Adjusted weighted average number of ordinary shares for diluted earnings per share							213.1	212.0
The profit attributable to equity holders of the Company used in the calculation of both basic and diluted earnings per share on continuing operations before exceptional items and intangibles amortisation is calculated as follows.
							2010	2009
							£m	£m
Net profit attributable to equity holders from continuing operations *							198.7	123.6
Exceptional items & intangibles amortisation net of tax							12.8	11.2
Net profit attributable to equity holders from continuing operations before exceptional items & intangibles amortisation *							211.5	134.8
* Adjusted for £0.4m (2009: £nil) in respect of non-controlling interests.
There have been no LTIP awards (2009: nil) exercised between the reporting date and the date of signing of these financial statements.
7. Dividends paid & proposed
							2010	2009
							£m	£m
Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2009: 16.20p (2008: 13.85p)							34.1	29.1
Interim dividend for 2010:  6.00p (2009: 4.80p)							12.6	10.1
							46.7	39.2
Proposed for approval by shareholders at the annual general meeting
Final dividend for 2010: 21.00p (2009: 16.20p)							44.3	34.1
The proposed dividend is based on the number of shares in issue, excluding treasury shares held, at the date the financial statements were approved and authorised for issue. The final dividend may differ due to increases or decreases in the number of shares in issue between the date of approval of the report and financial statements and the record date for the final dividend.
8. Property, plant & equipment & intangible assets
							2010	2009
							£m	£m
Purchases of property, plant & equipment & intangible assets
- land & buildings							3.4	2.8
- plant & equipment							42.8	34.7
- intangible assets							4.7	3.1
							50.9	40.6
Impairment of plant & equipment							0.2	1.0
The impairment of plant & equipment, for all respective periods, relates to specific assets in a number of locations across the Group where associated product lines have been changed or updated to reflect changing market conditions.
9. Business combinations
There were no business combinations during the 53 weeks ended 1 January 2010. During the 52 weeks ended 31 December 2010, the Group acquired five businesses of which Linatex was the most significant. The disclosures in this note present Linatex separately from the other business combinations on the basis that Linatex is considered to be individually material.
On 17 September 2010, following receipt of regulatory approvals, the Group finalised the acquisition of 100% of the voting shares of the Linatex group of companies ("Linatex"), a global provider of wear-resistant products to the mining and sand and aggregate industries, based in Kuala Lumpur, Malaysia, for a total cash consideration of £111.7m. Costs associated with the acquisition amounting to £0.8m have been charged to the income statement in the 52 weeks ended 31 December 2010.
On 5 March 2010, the Group acquired 100% of the voting shares of Petroleum Certification Services ("PCS"), an Australian based specialist certification and testing business. On 11 October 2010, the Group acquired the valves business of BDK Engineering Industries Limited ("BDK"), a family owned business based in Hubli, Karnataka, India, which manufactures valves for the oil and gas, petrochemical and power markets. On 18 November 2010, the Group acquired 100% of the voting shares of American Hydro Corporation ("American Hydro"), a manufacturer of high-efficiency turbine components for hydro-electric power generation based in York, Pennsylvania. On 21 December 2010, the Group acquired 76% of the voting shares of wind power maintenance specialist, Ynfiniti Engineering Services SL ("YES") based in Madrid, Spain. YES provides operating and maintenance services to the growing installed base of wind turbines. Costs associated with these acquisitions amounting to £1.8m have been charged to the income statement in the 52 weeks ended 31 December 2010.
The YES acquisition was structured as an initial 76% purchase with the remaining 24% being subject to a put and call option exercisable between 2014 and 2016 and based upon an EBITDA multiple of profits in the two years preceding the exercise of the option. The most likely range of possible outcomes is between €6m and €22m. The contingent consideration recognised at the acquisition date has been estimated at £12.0m (€14m). This is based on an assessment of the probability of the possible outcomes discounted to net present value. Any difference from this estimate will ultimately be taken to the Consolidated Income Statement. The maximum amount of the contingent consideration is unlimited.
The fair values of the identifiable assets and liabilities at the relevant dates of acquisition are as follows
						Linatex	Other	Total
						2010	2010	2010
						£m	£m	£m
Property, plant & equipment						28.4	8.6	37.0
Intangible assets						71.7	35.5	107.2
Inventories						15.5	6.1	21.6
Trade & other receivables						12.0	12.4	24.4
Construction contract assets						-	3.0	3.0
Cash & cash equivalents						3.1	-	3.1
Interest-bearing loans & borrowings						(15.8)	-	(15.8)
Trade & other payables						(13.3)	(6.4)	(19.7)
Construction contract liabilities						-	(3.9)	(3.9)
Provisions						(2.4)	(4.7)	(7.1)
Income tax						(1.7)	(0.4)	(2.1)
Deferred tax						(16.9)	0.1	(16.8)
Fair value of net assets						80.6	50.3	130.9
Goodwill arising on acquisition						31.1	55.5	86.6
Total consideration						111.7	105.8	217.5
Cash consideration						111.7	95.5	207.2
Settlement of pre-existing relationship balances						-	(0.8)	(0.8)
Contingent consideration						-	12.0	12.0
Net amount recoverable on business combinations						-	(0.9)	(0.9)
Total consideration						111.7	105.8	217.5
The cash outflow on acquisition was as follows
Cash & cash equivalents acquired						3.1	-	3.1
Cash paid						(111.7)	(95.5)	(207.2)
Settlement of pre-existing relationship balances						-	0.8	0.8
Net cash outflow						(108.6)	(94.7)	(203.3)
The fair values on acquisition of the above business combinations are provisional, with the exception of PCS, due to the timing of the transactions and will be finalised during the following financial year. The fair value of the trade receivables amounts to £21.8m. The gross amount of trade receivables is £23.4m. None of the trade receivables have been impaired. From the date of acquisition Linatex contributed £27.2m to the 2010 revenue of the Group and £1.5m to the 2010 profit for the period from continuing operations of the Group. The combined continuing operations revenue and profit of the Group, assuming that Linatex, BDK, American Hydro, YES and PCS had been acquired at the start of 2010, would have been £1,745.7m and £206.1m respectively.
Included in the £86.6m of goodwill recognised above are certain intangible assets that cannot be individually separated and reliably measured from the acquiree due to their nature. These items include anticipated business growth, synergies and an assembled workforce. The amount of goodwill which is expected to be deductible for tax purposes is £55.5m.
10. Pensions & other post-employment benefit plans
							2010	2009
							£m	£m
Plans in deficit							65.0	71.0
The net Group deficit for retirement benefit obligations at the period end was £65.0m (2009:  £71.0m) reflecting equity / bond market performance and yield movements.
11. Derivative financial instruments
Set out in the table below is a summary of the types of derivative financial instruments included within each balance sheet category.
							2010	2009
							£m	£m
Included in non-current assets
Forward foreign currency contracts designated as cash flow hedges							0.4	0.1
Other forward foreign currency contracts							0.2	0.2
							0.6	0.3
Included in current assets
Forward foreign currency contracts designated as cash flow hedges							0.9	2.3
Forward foreign currency contracts designated as net investment hedges							0.2	0.4
Other forward foreign currency contracts							8.1	4.5
							9.2	7.2
Included in current liabilities
Forward foreign currency contracts designated as cash flow hedges							0.5	1.6
Interest rate swaps designated as cash flow hedges							-	0.6
Cross currency swaps designated as net investment hedges							12.2	10.4
Other forward foreign currency contracts							8.2	4.2
							20.9	16.8
Included in non-current liabilities
Forward foreign currency contracts designated as cash flow hedges							0.6	0.1
Cross currency swaps designated as net investment hedges							26.8	30.7
Other forward foreign currency contracts							0.1	0.2
							27.5	31.0
Net derivative financial liabilities							38.6	40.3
12. Additional cash flow information
							2010	2009
							£m	£m
Continuing operations
Net cash generated from operations
Operating profit							291.5	188.1
Share of results of joint ventures							(4.6)	(4.6)
Depreciation & amortisation of property, plant & equipment & intangible assets							52.3	44.8
Impairment of plant & equipment							0.2	1.0
Losses (gains) on disposal of property, plant & equipment							0.1	(0.1)
Defined benefit plans curtailments & settlements							-	(3.7)
Funding of pension & post-retirement costs							(1.8)	(2.1)
Employee share schemes							3.0	1.6
Net foreign exchange including derivative financial instruments							(0.5)	1.8
Increase in provisions							2.1	9.3
(Increase) decrease in inventories							(39.9)	30.8
(Increase) decrease in trade & other receivables & construction contracts							(61.8)	68.2
Increase (decrease) in trade & other payables & construction contracts							34.3	(32.8)
Cash generated from operations							274.9	302.3
Additional pension contributions paid							(9.3)	(11.1)
Income tax paid							(72.4)	(43.6)
Net cash generated from operating activities							193.2	247.6
Acquisitions of subsidiaries
Current period acquisitions (note 9)							(203.3)	-
Previous periods acquisitions deferred consideration paid							(0.1)	(0.1)
							(203.4)	(0.1)
Disposals of subsidiaries
Other current period disposals							-	1.2
Previous periods disposals							(0.7)	(2.6)
							(0.7)	(1.4)
Cash and cash equivalents comprise the following
Cash & short term deposits							84.0	57.0
Bank overdrafts & short-term borrowings							(4.5)	(1.3)
							79.5	55.7
Reconciliation of net increase in cash & cash equivalents to movement in net debt
Net increase in cash & cash equivalents from continuing operations							41.3	2.8
Net decrease in cash & cash equivalents from discontinued operations - operating activities							(18.6)	-
Net (increase) decrease in debt							(165.5)	136.8
Change in net debt resulting from cash flows							(142.8)	139.6
Lease inceptions							(0.2)	-
Leases acquired							(0.3)	-
Loans acquired							(15.5)	-
Foreign currency translation differences							(5.6)	(18.9)
Change in net debt during the period							(164.4)	120.7
Net debt at the beginning of the period							(119.2)	(239.9)
Net debt at the end of the period							(283.6)	(119.2)
Net debt comprises the following
Cash & short-term deposits							84.0	57.0
Current interest-bearing loans & borrowings							(6.3)	(2.0)
Non-current interest-bearing loans & borrowings							(361.3)	(174.2)
							(283.6)	(119.2)
13. 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.
							2010	2009
							£m	£m
Sales of goods to related parties - joint ventures							0.6	1.3
Sales of services to related parties - joint ventures							0.2	-
Purchases of goods from related parties - joint ventures							0.1	0.4
Amounts owed to related parties - group pension plans							0.2	0.2
14. Legal claims
The company and certain subsidiaries are, from time to time, parties to legal proceedings and claims which arise in the normal course of business.
The Company is subject to a claim relating to a civil action for damages arising from the UN Oil for Food Programme which has been raised in the United States against just under 100 companies. This action will be robustly defended.
To the extent not already provided for, the directors do not anticipate that the outcome of these proceedings and claims, either individually or in aggregate, will have a material adverse effect upon the Group's financial position.
15. Exchange rates
The principal exchange rates applied in the preparation of these financial statements were as follows.
							2010	2009
Average rate (per £)
US dollar							1.55	1.57
Australian dollar							1.68	1.99
Euro							1.17	1.12
Canadian dollar							1.59	1.78
Brazilian real							2.72	3.11
Chilean peso							788.31	873.57
South African rand							11.32	13.08
Closing rate (per £)
US dollar							1.56	1.61
Australian dollar							1.52	1.80
Euro							1.17	1.13
Canadian dollar							1.55	1.69
Brazilian real							2.59	2.81
Chilean peso							729.68	820.02
South African rand							10.27	11.92
The Group's operating profit from continuing operations before exceptional items and intangibles amortisation was denominated in the following currencies.
							2010	2009
							£m	£m
US dollar							163.6	88.7
Australian dollar							39.7	20.5
Euro							47.3	51.7
Canadian dollar							8.3	8.6
Brazilian real							8.7	8.4
Chilean peso							19.6	13.5
South African rand							8.1	7.8
Other							14.4	5.5
Operating profit from continuing operations before exceptional items & intangibles amortisation							309.7	204.7

 

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