Final Results

Press Release 25 February 2015

 

The Weir Group PLC today reports its results for the 52 week period ended 2 January 2015.

A good underlying performance in fast changing markets

• Strong constant currency growth in 2014: results in line with expectations.
• 14% increase in aftermarket orders and revenues.  Aftermarket 67% of orders, up from 64% last year.
• Innovation: New products driving growth;
  • Comminution and premium fluid end input of £105m;
  • R&D up 15%.
• Collaboration: Second global customer agreement secured with major mining house.
• Value Chain Excellence:
  • £46m in procurement savings achieved in 2014;
  • £35m savings programme announced in November, will deliver £20m of savings in 2015;
  • Additional Oil & Gas measures: in total 22% reduction in the division's North American workforce.
• Global Capability: Trio acquisition strengthening presence in Chinese mining markets and US aggregates.
• Total exceptional costs of £212m: Primarily in relation to £49m of efficiency review costs and the non-cash £160m oil price driven impairment of Pressure Control goodwill.

Continuing Operations	2014	2013	Reported Growth	Constant Currency1
Order input1	£2,473m	£2,274m	-	+9%
Revenue	£2,438m	£2,430m	0%	+9%
Operating profit2	£450m	£467m	-4%	+5%
Operating margin2	18.4%	19.2%	-80bps	-70bps
Profit before tax2	£409m	£418m	-2%	+7%
Cash from operations	£421m	£474m	-11%	-
Earnings per share2	141.3p	145.4p	-3%	-
Dividend per share	44.0p	42.0p	+5%	-
Return on Capital Employed3	18.1%	17.5%	-	+60bps
Net debt	£861m	£747m	-£114m	-

Keith Cochrane, Chief Executive, commented:

"2014 demonstrated the strength of Weir's strategy and aftermarket-focused business model as we captured good growth opportunities in fast changing markets.  Significant progress was made in developing new products, working in partnership with customers, expanding into new markets through the acquisition of Trio, and streamlining our operations to maintain cost competitiveness."

"In terms of outlook for 2015, we will continue to make progress in delivering our strategy while responding to market conditions as they evolve.  The Group has already acted following steep price declines in key commodities, particularly oil, taking additional measures to reduce operating costs."

"While visibility in oil and gas remains limited, it is clear that the Group's strategic progress and cost initiatives will only partly offset the impact of a substantial reduction in demand and the associated pricing pressure.  As a result we are planning for a significant reduction in constant currency Group revenues and lower operating margins in 2015. However, we will continue to invest in extending the Group's global leadership positions and increasing market share, supported by a strong balance sheet and the cash generative nature of the Group."

A live webcast of the management presentation to the investment community will begin at 8:30am (GMT) on 25 February 2015 at weir.co.uk.

Enquiries:
Investors: Stephen Christie	[phone]
Media: Raymond Buchanan / Ross Easton	[phone] / [phone]
Brunswick: Patrick Handley / Nina Coad	[phone]

Notes:

1. 2013 restated at 2014 average exchange rates.
2. Adjusted to exclude exceptional items and intangibles amortisation.  Reported operating profit and profit before tax were £193m (2013: £490m) and £149m (2013: £431m) respectively. Reported earnings per share were 33.8p (2013: 157.2p).
3. Continuing operations EBIT before exceptional items on a constant currency basis (excluding Trio EBIT and exceptional items) divided by average net assets (excluding Trio net assets) excluding net debt and pension deficit (net of deferred tax asset).

Strategic overview
Our strategy is to strengthen and extend our position in the structural growth markets of minerals, oil and gas and power, and achieve sustainable growth ahead of these markets.  We execute our strategy by focusing on the four strategic pillars which define our distinctive approach and build on our existing competitive advantage: innovation; collaboration; value chain excellence; and global capability.

Innovation:
The Group has continued to invest in new products and services which extend its leadership positions and increase market share, with research and development expenditure increasing by 15% to £25m (2013: £22m), and a new Pressure Pumping research and development centre opened in Fort Worth in the United States.  Weir has responded to customer demands across its end markets to reduce capital expenditure and operating costs by developing equipment which extends wear-life and delivers productivity gains. 

In Oil & Gas, the division's range of premium fluid ends extends the life of this critical component by up to five fold and in 2014 supported strong organic growth, with fluid end sales almost doubling.  Over the past two years fluid end market share has increased 5% and flow control has risen 4%.  Development is also underway of the next generation frack pump, incorporating patented design features, with field trials scheduled for the first quarter of 2015.

Minerals developed a new vertical slurry pump with a retrofit capability which allows existing customers to upgrade at a reduced cost and the division also designed and manufactured the world's largest slurry pump at a mine in Chile.  Power & Industrial designed and installed turbine bypass valves in South Korea, providing a reference site for this new product line and opening up an opportunity for future growth, while a new range of municipal pumps progressed to field trials.

Collaboration:
The Group has increased efforts to work more closely with key customers and suppliers in order to improve performance across all divisions. A Global Framework Agreement (GFA) was signed with Kinross Gold Corporation which will see Weir Minerals become the preferred mining equipment supplier to their global operations.  This agreement follows last year's GFA with Anglo American which has delivered gains in component life and power-saving through applying Weir's technology to existing pumps.

In response to customer demands for more integrated engineering solutions, the Group is partnering with MTU America (part of Rolls-Royce Holdings PLC) to design the hydraulic fracturing industry's first purpose built integrated power system.  When complete, it will help reduce expensive downtime and increase operational efficiency.

Value Chain Excellence:
A Value Chain Excellence (VCE) management system has been rolled out across the Group to support efforts to make operations even more responsive to customer needs.  Minerals continued to develop a global Enterprise Resource Planning platform to increase efficiency, decrease working capital and deliver lead time reductions. In Oil & Gas, Pressure Pumping enhanced its lean manufacturing and supply chain platform, giving it the operational flexibility to increase or decrease production rapidly as its markets change. Power & Industrial supported performance by utilising the Group's global manufacturing capability in best-cost locations in Malaysia, China and India.

£46m of direct cost procurement savings were achieved through a global category management approach across the supply chain.  The Group is targeting £50m of procurement savings to be delivered by the end of 2015. These strategic supplier initiatives, alongside the benefits of the VCE management system will support an improved working capital performance and strong cash generation.

Global Capability:
The Group's regional manufacturing and extensive global service centre network were enhanced with additional Minerals service facilities in Mozambique, Colombia and Kazakhstan. Planning is continuing for a new best-cost campus in Malaysia which will include a new foundry, machine shop and continuous rubber processing plant.  The acquisition of Trio expands the division's product offering and gives it scale in domestic Chinese mining markets and access to growing aggregates markets.

A new Oil & Gas Middle East headquarters was completed in Dubai, alongside increasing divisional service centre capability in Azerbaijan and Iraq, with the latter supporting a ramp up in activity to support the $100m LUKOIL contract announced at the beginning of 2014.  The new Dubai facility will meet regional demand for locally manufactured wellheads and valves, supporting the internationalisation of Pressure Control, while also expanding service centre capacity to capture fast growing regional opportunities.  Power & Industrial's Valves operations expanded its capacity in South Korea, to support strong growth.

Financial performance overview

Summary
Overall, in a challenging year, both order input and revenue on a constant currency basis increased by 9%, with each quarter ahead of the prior year comparator.  On a reported basis, revenues were flat in the face of a £185m foreign exchange headwind.  Aftermarket input rose 14% and increased to 67% of orders from 64% last year. In constant currency terms, operating margins declined 70bps while profit before tax of £409m was up 7%, supported by a record second half performance.

In the Minerals division, as expected, orders fell as a result of continuing declines in customer capital expenditure and the impact of industrial actions in South Africa, which affected demand for both original and aftermarket equipment.  These more than offset strong global aftermarket growth as production levels of key commodities continued to increase.  As expected, operating margins declined slightly as a result of a lower-margin product mix, the aforementioned impacts of industrial actions in South Africa and investment in the comminution platform.

In Oil & Gas, all businesses within the division achieved good order growth with Pressure Pumping in particular benefiting from its market-leadership position and lean manufacturing platform to capture growth opportunities as the North American unconventional markets grew for the majority of the year.  Both Pressure Pumping and Pressure Control expanded market share and experienced strong demand for both original and aftermarket equipment as drilling and completion activity increased and fracking processes became more intense.  New product introductions, such as the premium fluid end range, grew strongly while operating margins were in line with the prior year. 

Power & Industrial's financial performance was disappointing with overall orders down 4% as strong growth in Hydro markets was more than offset by project delays in power and wastewater markets.  Aftermarket orders declined as strong Valves growth was more than offset by lower Services input.  Operating margins were down 360bps reflecting operational challenges and a lower-margin product mix.  Operating profit fell 37%.

The Group has taken a number of operational efficiency and cost reduction measures since the beginning of 2014 which, when complete, will see a reduction in total workforce of approximately 1,200 or 8%.  As a result of an efficiency review announced in November 2014, the Group announced plans to consolidate five smaller manufacturing facilities into larger units and reduce headcount by 350 posts across all three divisions, targeting £35m of annualised savings, £20m of which will be delivered in 2015. In addition, following the recent substantial oil price decline further steps have been taken by the Oil & Gas division, which in total will result in a 22% reduction (circa 650 posts) in its North American workforce, insourcing production and reducing operating costs.

Segmental analysis
Continuing Operations £m	Minerals	Oil & Gas	Power & Industrial	Unallocated Expenses	Total	Total OE	Total AM
Input (constant currency)
2014	1,127	1,032	314	-	2,473	819	1,654
2013	1,180	768	326	-	2,274	823	1,451
Variance:
- Constant currency	-4%	34%	-4%		9%	0%	14%
Revenue
2014	1,128	992	318	-	2,438	822	1,616
2013 (as reported)	1,304	796	330	-	2,430	894	1,536
Variance:
- As reported	-14%	25%	-3%		0%	-8%	5%
- Constant currency	-4%	32%	1%		9%	-1%	14%
Operating profit
2014	226	225	19	(20)	450
2013 (as reported)	269	181	31	(14)	467
Variance:
- As reported	-16%	25%	-41%	-43%	-4%
- Constant currency	-7%	32%	-37%	-44%	5%
Operating margin
2014	20.1%	22.7%	5.8%		18.4%
2013 (as reported)	20.6%	22.7%	9.5%		19.2%
Variance:
- As reported	-50bps	0bps	-370bps		-80bps
- Constant currency	-50bps	0bps	-360bps		-70bps

Minerals
Weir Minerals is a global leader in the provision of mill circuit technology and services as well as the market leader in slurry handling equipment and associated aftermarket support for abrasive high wear applications. Its differentiated technology is used in mining, oil & gas and general industrial markets around the world.

Constant currency £m	H11	H2	2014	20131	Growth
Input OE	171	176	347	445	-22%
Input aftermarket	394	386	780	735	+6%
Input Total	565	562	1,127	1,180	-4%
Revenue OE	180	189	369	445	-17%
Revenue aftermarket	367	392	759	733	+4%
Revenue Total	547	581	1,128	1,178	-4%
Operating profit2	104	122	226	243	-7%
Operating margin2	19.0%	21.1%	20.1%	20.6%	-50bps
Book-to-bill	1.03	0.97	1.00	1.00
12013 and H1 restated at 2014 average exchange rates.
2Adjusted to exclude exceptional items and intangibles amortisation.

Market review
Price declines were experienced across a number of key commodities in 2014, as increased global supplies of iron ore, coal and copper combined with slowing demand growth, principally as a result of economic conditions in China and other emerging market economies.  Iron ore prices fell by almost 50% in the year, resulting in a notable impact on brownfield project activity.  While copper prices fell by 14%, brownfield investment remained resilient.  Gold prices were broadly flat over the period and remained below the levels required to drive higher capital investment.  Ore production from existing mines continued to increase, supported by the move from construction to full operation of several new mines, particularly in South America, and miners seeking to maximise production from existing sites to partially offset commodity price declines.  Both these trends supported aftermarket demand with global ore production growing 3% in 2014.

Mining sector capital expenditure fell by an estimated 17% in 2014. As a result there were very few greenfield project opportunities and customers displayed caution in proceeding with brownfield investment. Industrial action in South Africa significantly impacted local production levels, and the outbreak of the Ebola virus also caused disruption in West Africa.  In Europe, weak economic conditions and geopolitical unrest in Eastern Europe impacted activity. Non-mining end markets also declined with lower project activity across power, oil and gas, although oil sands aftermarket demand remained stable.

Order input decreased by 4% to £1,127m (2013: £1,180m), with strong aftermarket growth more than offset by a material fall in original equipment orders. Original equipment orders were 22% lower year on year, driven by a reduction in the number of brownfield projects reaching the procurement stage and lower orders from non-mining markets, although a good level of quotation was maintained. Although down year on year, original equipment order trends improved slightly through the year with second half input up 3% compared to the first half, despite the non-recurrence of a large HPGR order received in H1.

Aftermarket orders grew by 6%, at the upper end of original expectations, and represented 69% of total input (2013: 62%).  This was supported by the benefits of a large and growing active installed base, underlying ore production trends and the commissioning of greenfield sites. Aftermarket growth of more than 4% was achieved in three out of four quarters with Q4 impacted by the cancellation of a large £11m HPGR order previously booked in Q3.

The division continued to make good progress in comminution with input of £49m (2013: £30m).  Slurry pump orders were materially lower year on year, reflecting market conditions.  Good progress was made in growing the valves product line. In oil sands markets, there was an increase in demand for barge products and aftermarket performance was supported by growth from the R Wales group of companies which was acquired in early 2013.

Emerging markets accounted for 47% of input (2013: 45%) with higher activity levels in South America and the Middle East offsetting the impact of industrial action in South Africa. Orders from mining end markets were flat year on year and accounted for 77% of input (2013: 74%).  Input from non-mining markets declined by 16% compared to 2013, which included large orders from coal bed methane and wastewater projects which were not repeated in 2014.

Revenue was 4% lower at £1,128m on a constant currency basis (2013: £1,178m) but with second half revenues showing 6% sequential growth. Original equipment sales were 17% lower and accounted for 33% (2013: 38%) of divisional revenue. Production-driven aftermarket revenues increased by 4% with sequential growth achieved in each quarter.

Double-digit growth in Asia Pacific, supported by the acquisition of Trio in late October 2014, was offset by a £42m reduction in African revenues, primarily as a result of strikes in South Africa.  Revenues from European and South American markets also fell, reflecting subdued end market conditions although output in Australasia increased slightly, supported by strong aftermarket demand.  Reported revenues declined by 14%, reflecting a 10% foreign exchange headwind (2013: £1,304m).

Operating profit decreased 7% on a constant currency basis to £226m (2013: £243m), as a result of lower revenues, a fall in contribution from African operations of £18m and investment in the comminution platform.  One-off integration and acquisition costs of £1m were incurred in relation to Trio, largely offsetting its operating contribution in the period.  Reported operating profit fell by 16% after a 10% foreign exchange headwind (2013: £269m).

Operating margin declined by 50bps to 20.1% (2013: 20.6%), reflecting a higher mix of lower margin products, increased investment in the comminution platform and a circa 30bps impact on a constant currency basis from materially lower revenues in Africa and the effects on the division's supply chain and operations, of direct strike action in the second half. These adverse factors were somewhat offset by the benefit of cost reduction and procurement initiatives and a higher proportion of aftermarket revenues.

Capital expenditure of £45m (2013: £53m) included investment in the initial development of a new best cost campus in Malaysia.  The division is also investing in a common ERP platform over the next three years to support global capacity planning. Research and development spending of £11m (2013: £13m) was focused on developing the division's materials technology, mechatronics capability and expand its product portfolio.

2015 divisional outlook
Total mining capital expenditure is expected to reduce for the third year in succession in 2015, albeit at a lower rate than 2014.  Maintenance capital expenditure is anticipated to remain broadly in line with recent years; however, further reductions are forecast in brownfield and greenfield investment.  The growth rate for global ore production is expected to be in the low single digits, supported by growing global demand.  Oil sands capital expenditure is anticipated to decline materially, reflecting recent oil price reductions, although production levels are expected to be resilient.

The impact on mining original equipment revenues is expected to be largely offset by a strengthening comminution presence, particularly in the growing aggregates end market and including a full year contribution from Trio.  Aftermarket revenues are anticipated to benefit from increasing ore production volumes and a growing active installed base as customers commission and continue to ramp up activity levels at new mines, particularly in South America.  In addition, profits will be supported by the first benefits from the previously announced efficiency review and a more normalised operating environment in South Africa.  Operating margins are expected to be slightly lower year on year, as a result of reduced profitability and volumes in oil and gas markets.

Oil & Gas
Weir Oil & Gas provides superior products and service solutions to upstream, production, transportation, refining and related industries. Upstream products include pressure pumping equipment and services and pressure control products and rental services. Equipment repairs, upgrades, certification and asset management & field services are delivered globally by Weir Oil & Gas Services. Downstream products include API 610 pumps and spare parts.

Constant currency £m	H11	H2	2014	20131	Growth
Input OE	161	149	310	211	+47%
Input aftermarket	343	379	722	557	+30%
Input Total	504	528	1,032	768	+34%
Revenue OE	123	158	281	213	+32%
Revenue aftermarket	316	395	711	541	+32%
Revenue Total	439	553	992	754	+32%
Operating profit2	99	126	225	171	+32%
Operating margin2	22.5%	22.8%	22.7%	22.7%	0bps
Book-to-bill	1.15	0.96	1.04	1.02
12013 and H1 restated at 2014 average exchange rates.
2Adjusted to exclude exceptional items and intangibles amortisation.

Market review
Global oil and gas markets continued to grow strongly for the majority of the year with average US rig count, an indicator of activity in our Pressure Pumping and Pressure Control operations, increasing by 6% in 2014.  A prolonged period of stability in global oil prices ended in the fourth quarter, as oil prices began to fall dramatically with a subsequent pull back in activity levels beginning at the very end of 2014. 

For the majority of the year, increased investment supported strong growth in North American oil production with a 5% rise in the number of wells drilled in the US.   Production was supported by increased intensity in operations which resulted in the number of horizontal wells rising 11% and the number of frack stages rising by 22%.  Alongside increasing intensity of completion techniques, this contributed to strong growth in aftermarket demand. North American activity continued to be dominated by oil and liquids which accounted for 82% of North American drilling and completion.  Gas activity was subdued as natural gas prices remained below incentive levels, despite briefly increasing early in the year as a result of a harsh winter in the US.  In pressure pumping markets, demand for original equipment increased from 2013 levels as frack fleet utilisation reached 87% in North America, reflecting greater demand and the increased intensity of operations.  Internationally, Chinese frack fleet growth was subdued but Australia grew strongly, albeit from a low base.

Average rig count in the Middle East continued to grow, increasing by 9% with continued positive trends in Iraq and Saudi Arabia in particular. Mid and downstream markets were impacted by project delays in the second half of the year.

Order input at £1,032m (2013: £768m) was 34% higher with good growth from each business in the division. Aftermarket input was up 30% year on year, driven by strong growth in Pressure Pumping and accounted for 70% (2013: 73%) of divisional orders. Original equipment input was 47% higher, primarily driven by demand for new pressure pumping equipment.

Pressure Pumping input increased by 50%, with strong trading until the final weeks of the year, when there was a reduction in demand in North America as customers started to revise spending plans in response to the steep fall in oil prices. This growth was driven by a strong aftermarket performance as the division's comprehensive product and service offering allowed it to gain market share. Fluid end input was up nearly 90% on 2013, supported by differentiated new products.  Flow control orders exceeded their previous record in 2011 and accounted for nearly 30% of Pressure Pumping input. Original equipment orders more than doubled from a low base in 2013, with some initial signs in the second quarter of a frack pump replacement cycle starting, but this did not materialise in the second half, as the oil price declined.  Pressure Control also benefitted from strong North American demand and increased its share of rigs, supported by the expansion of its product and service offering including launching a range of zipper manifolds, a new hydraulic choke and a well-overshot system for subsea applications.  Input increased by 20% over the year, although order rates softened at the end of 2014, reflecting changing market conditions.

Services enjoyed strong double-digit input growth, supported by higher Operations & Maintenance (O&M) activity as a result of the LUKOIL contract in Iraq, which was secured at the start of 2014.  Downstream orders also increased as Gabbioneta secured a number of large LNG and refinery contracts across the Middle East and Asia.

Revenue increased by 32% to £992m on a constant currency basis (2013: £754m), reflecting the strong order input trends across the business. Original equipment and aftermarket revenues both increased by 32% with aftermarket accounting for 72% of output (2013: 72%).  Revenues increased sequentially each quarter with record second half divisional sales.

Pressure Pumping delivered strong revenue growth broadly mirroring input trends and only slightly down on the previous 2011 peak.  Pressure Control revenues also increased in line with order trends, supported by positive North American activity levels for the majority of the year.  Both operations saw a slightly softer than expected finish to the year as a result of oil price declines.  Services grew strongly although Gabbioneta was down year on year as a result of a lower opening order book and customers delaying project delivery dates. Reported divisional revenues increased by 25% after a 5% foreign exchange headwind (2013: £796m).

Operating profit including joint ventures was 32% higher on a constant currency basis at £225m (2013: £171m), primarily driven by strong Pressure Pumping profit growth.  Reported operating profit increased by 25% after a 5% foreign exchange headwind (2013: £181m).

Operating margin was unchanged at 22.7% (2013: 22.7%) reflecting positive operating leverage in Pressure Pumping offset by increased bonus costs and lower margins in Pressure Control.  Margins were slightly below prior expectations as a result of softer than anticipated trading at the end of the year in the higher-margin Pressure Pumping and Pressure Control operations.

Capital expenditure of £50m (2013: £38m) included additional facilities for Services in Iraq and Dubai, additional Pressure Control rental assets, a new R&D facility in Fort Worth, US and the commencement of construction of a new facility in Milan, Italy for Gabbioneta. Total research and development expenditure of £8m was focused on developing the new frack pump design and related sensor and control technologies (2013: £5m).

2015 divisional outlook
Oil prices are expected to remain substantially below their average of the last three years as a result of oversupply.  As such, the market is expected to take longer to reach a balance than during the demand driven downturns in 2008-9 and 2012-13.  However, global demand continues to grow and unconventional oil is well positioned to react quickly when market conditions improve.

Many E&P and service companies have already announced plans to significantly reduce their capital spending in response to lower oil prices - a trend reflected in the fall in US onshore rigs in the first two months of 2015. Visibility in these upstream markets is limited as customers continue to adjust their operations to the evolving pricing environment, although a significant fall in activity levels is anticipated with resulting pricing pressure.  Conditions are also expected to be more challenging in international and mid and downstream markets, although the impacts will be less pronounced.

The division has already acted to reduce costs and increase efficiency and will continue to monitor the need for further actions to support operational performance.  However, these measures will not fully offset market impacts, with a substantial reduction in divisional revenues and lower operating margins expected in 2015.

Power & Industrial
Weir Power & Industrial designs and manufactures valves, pumps and turbines as well as providing specialist support services to the global power generation, industrial and oil and gas sectors.

Constant currency £m	H11	H2	2014	20131	Growth
Input OE	87	75	162	167	-3%
Input aftermarket	88	64	152	159	-4%
Input Total	175	139	314	326	-4%
Revenue OE	91	81	172	172	0%
Revenue aftermarket	71	75	146	142	+3%
Revenue Total	162	156	318	314	+1%
Operating profit2	10	9	19	30	-37%
Operating margin2	5.8%	5.9%	5.8%	9.4%	-360bps
Book-to-bill	1.08	0.89	0.99	1.04
12013 and H1 restated at 2014 average exchange rates.
2Adjusted to exclude exceptional items and intangibles amortisation.

Market review
Uncertain global economic conditions generally led to customer caution and subsequent project delays in power, industrial and downstream oil and gas projects, with a few limited exceptions.

In the division's core conventional power markets, steady demand in the US and China, together with improving conditions in India offset weakness in Korea and Europe.  Nuclear activity gained some momentum including the announcement of new developments in the UK but it will be later in 2015 before many projects move to the procurement stage.  North American Hydro markets recovered from a low point in 2013 albeit not returning to peak levels.

There was weakness in mid and downstream oil and gas projects with customers cautious in allocating capital expenditure and thereby delaying projects, particularly in Europe and the Middle East.  In Liquefied Natural Gas (LNG), project momentum continued for Australian and Russian projects. 

The slowdown in projects had a positive effect on aftermarket orders with strong demand across all geographies reflecting more intense use of assets.  Aftermarket conditions were also supported by the first major maintenance cycles starting after the substantial increase in Chinese power projects in the last decade. 

Order input decreased by 4% to £314m (2013: £326m) primarily due to a large £20m one-off Services order in 2013 which was not repeated and we withdrew from low margin projects in Libya in response to the country's deteriorating security situation.  Excluding this, order input was up 3%. Original equipment orders were down 3%, with strong growth in Hydro more than off-set by tougher end market conditions and project delays in Valves.  Aftermarket input declined by 4%, with strong double-digit Valves growth off-set by lower Services input.  Total Valves input was slightly down year on year.

Power markets represented 58% of orders (2013: 61%) and the proportion of orders from oil and gas markets increased to 14% (2013: 12%), supported by the division's move into adjacent sectors such as LNG and Floating Production, Storage and Offloading (FPSO).  Emerging markets accounted for 35% of input (2013: 33%). There was further progress in oil and gas markets with notable success in a number of LNG projects and other severe service applications.

Revenue increased by 1% on a constant currency basis to £318m (2013: £314m), with aftermarket growth of 3% and original equipment revenues broadly flat on the prior year. Valves revenues were higher year on year but slightly below expectations due to customers delaying shipments and the impacts of a four-week strike from late November at its US facility.   Hydro sales fell as a result of the lower opening order book.  Full year divisional book-to-bill was marginally negative at 0.99 (2013: 1.04).  Reported revenues fell by 3% after a 5% foreign exchange headwind (2013: £330m).

Operating profit was down 37% at £19m on a constant currency basis (2013: £30m) as a result of margin declines across Valves, Services and Hydro operations.  Valve operating profits were lower as a result of £0.6m additional costs incurred following strike action at its US facility in December.  Reported operating profits fell 41% after a 6% foreign exchange headwind (2013: £31m).

Operating margin was down 360bps to 5.8% (2013: 9.4%) on a constant currency basis, reflecting the disappointing operational performance and product mix within Valves and Services as higher margin nuclear revenues were replaced by lower margin commercial valve opportunities.  Margins also declined in Hydro, reflecting negative operating leverage.

Capital expenditure of £9m (2013: £11m) was primarily focused on expanding the capacity of the division's valves facility in South Korea.  Investment in research and development declined slightly to £2.4m (2013: £2.9m) with a new range of municipal pumps progressing to field trials.

2015 divisional outlook
Power end markets are expected to remain subdued in 2015, with expenditure in Europe impacted by low projected economic growth rates and the majority of project activity continuing to be located in emerging markets.  Mid and downstream oil and gas markets will be impacted by the recent fall in oil prices, with existing and new projects subject to delays.

Supported by the opening order book and good aftermarket opportunities, the division is targeting constant currency revenue growth and is expected to benefit from measures taken at the end of 2014 to improve the profitability of the business.

Group Financial highlights
Order input at £2,473m increased 9% on a constant currency basis, with strong growth in Oil & Gas more than offsetting declines in Minerals and Power & Industrial.  Original equipment orders were flat with the impact of lower mining capex in Minerals offset by a recovery in upstream Oil & Gas.  Aftermarket orders were up 14% supported by strong growth in Oil & Gas and continued progress in Minerals, representing 67% of overall input (2013: 64%).

Revenue of £2,438m was 9% up on a constant currency basis, reflecting order input trends with strong growth in Oil & Gas, a flat performance in Power & Industrial and a slight decline in Minerals which included the impacts of industrial action in South Africa.  Aftermarket accounted for 66% of revenues, a 3 percentage point increase over the prior year.  The 2014 acquisitions of Trio and Metra contributed £12m in revenue. On a reported basis revenue was flat following a £185m (8%) foreign exchange headwind.

Operating profit from continuing operations (before exceptional items and intangibles amortisation) decreased by 4% to £450m on a reported basis.  The movement in the average exchange rates year on year resulted in a significant adverse translational impact of £37m, the main driver being the US dollar which moved from an average of $1.56:£1 in 2013 to $1.65:£1 in 2014.  On a constant currency basis, operating profit increased by £20m (5%), with strong growth in Oil & Gas partly offset by decreases in Minerals and Power & Industrial.  One-off costs incurred in the period, excluding exceptional items, were £2m (2013: £8m) and related solely to acquisition and integration costs, compared to the equivalent charge of £3m in 2013.  Acquisitions contributed operating profit of £2m, before integration costs.  Unallocated costs were £20m (2013: £14m), reflecting increased investment in our strategic initiatives of Value Chain Excellence and Innovation.  EBITDA was £511m (2013: £526m).

Operating margin from continuing operations (before exceptional items and intangibles amortisation) was 18.4%, a decrease of 80 basis points on the prior year (2013: 19.2%; 19.1% on a constant currency basis).  Minerals margins declined slightly, reflecting a higher mix of lower margin products and investment in our comminution platform.  The Oil & Gas full year operating margin was in line with the prior year with strong flow-through on revenue in Pressure Pumping offset by lower margins in Pressure Control and the impact of higher bonus costs compared to the prior year.  Operating margin in Power & Industrial declined as a result of operational issues and the impact of the different product mix within Valves compared to 2013. 

An exceptional charge of £212m (2013: gain of £71m) was recorded in the period, primarily in relation to the impairment of intangible assets within the Pressure Control Cash Generating Unit (CGU) and £49m of costs relating to the Group-wide efficiency review. The total charge associated with this review comprises a cash cost of £30m, of which £8m is reflected in the current year cash flow statement, and impairment of tangible assets of £19m.

The Group has tested the carrying value of assets exposed to oil and gas markets on the assumption oil prices remain at current levels for an extended period.  This has led to a £160m impairment in the carrying value of goodwill in relation to the Pressure Control CGU.  The carrying value of goodwill for this CGU included £60m in respect of contingent consideration for which no cash sum was ultimately paid.  No impairment has been made to the carrying value of any other CGUs. 

The other exceptional costs in the period relate to the costs associated with the proposed acquisition of Metso Corporation of £2m and an uplift of £1m in the net present value of contingent consideration payable in respect of the Weir International acquisition.

In 2015 additional exceptional costs of circa £20m, based on current cost reduction plans, are expected in relation to completion of the Group-wide efficiency review and additional measures taken subsequent to the financial year end in response to oil and gas market conditions. 

Total net finance costs, including exceptional items, were £43m (2013: £59m).  There were four components of this net charge, the most significant being the interest cost of £44m (2013: £48m) on the Group's borrowings (including amounts in relation to derivative financial instruments).  The other elements were finance income of £6m (2013: £3m), a charge of £3m (2013: £4m) in relation to the Group's defined benefit pension plans and an exceptional cost of £2m (2013: £11m) being the unwind of the discount on contingent consideration liabilities.

Profit before tax from continuing operations (before exceptional items and intangibles amortisation) decreased by 2% to £409m (2013: £418m).  Taking foreign exchange into consideration, the 2013 result on a constant currency basis would have been £35m lower with 2014 representing growth of 7% year on year.  Reported profit before tax from continuing operations decreased to £149m (2013: £431m).

The tax charge for the year of £106m (2013: £108m) on profit before tax from continuing operations (before exceptional items and intangibles amortisation) of £409m (2013: £418m) represents an underlying effective tax rate of 25.8% (2013: 25.7%).

Earnings per share from continuing operations (before exceptional items and intangibles amortisation) decreased by 3% to 141.3p (2013: 145.4p).  Reported earnings per share including exceptional items, intangibles amortisation and profit from discontinued operations was 33.8p (2013: 157.2p).

Cash generated from operations before working capital movements was down £12m at £503m (2013: £515m).  Cash generated from operations decreased by 11% from £474m to £421m representing an EBITDA to cash conversion ratio of 82% (2013: 90%).  Working capital cash outflows of £82m (2013: £41m) reflects an outflow in the first half of £79m but only £3m in the second half.  Outflows in relation to both inventory and receivables were driven by the strong growth seen in Oil & Gas year on year. Exceptional items in the period resulted in cash outflows of £11m in relation to the Group-wide efficiency review and the Metso proposal.  Net capital expenditure increased slightly from £97m in 2013 to £101m in 2014, reflecting strategic investments in production capacity in Malaysia and Information Systems across the Group.  The settlement of financing derivatives resulted in a net cash outflow of £3m (2013: £5m) and additional pension contributions of £11m (2013: £12m) were paid in the year in respect of agreed deficit recovery contributions.  Free cash flow from continuing operations, before cash exceptional items and after dividends of £103m (2013: £83m), was £79m (2013: £168m).  Outflows in respect of the acquisition of subsidiaries of £138m resulted in a closing net debt of £861m (2013: £747m, £791m constant currency).  On a reported basis, the ratio of net debt to EBITDA was 1.7 times and on a debt covenant basis was 1.6 times.

The Group's Return on Capital Employed (ROCE) of 18.1% for 2014 (on a constant currency and like for like basis, excluding Trio) was slightly higher than the prior year (2013: 17.5%). 

Dividend The Board is recommending a 5% increase in the full year dividend, with a final dividend of 29.0p (2013: 33.2p).  This reflects a rephasing of the dividend such that the final payment will represent approximately two-thirds of the total dividend for 2014, making a total of 44.0p for the year (2013: 42.0p).  This represents the 31st consecutive year of dividend growth. If approved at the Annual General Meeting, the final dividend will be paid on 29 May 2015 to shareholders on the register on 1 May 2015.

Board and Management Changes
On 1 January 2015, Sir Jim McDonald joined the Board as Non-Executive Director.  On 31 January 2015 Lord Robertson of Port Ellen retired from the Board and as Senior Independent Director. Rick Menell succeeded Lord Robertson as Senior Independent Director.  On 1 January 2015, Paul Coppinger was appointed to the Group Executive, succeeding Steve Noon as Oil & Gas Divisional Managing Director.

Appendix 1 - 2014 quarterly input trends

	Reported growth
Division	Q1	Q2	Q3	Q4	FY
Original Equipment	-27%	-28%	-18%	-14%	-22%
Aftermarket	4%	6%	12%	3%	6%
Minerals	-7%	-8%	1%	-3%	-4%
Original Equipment	33%	99%	28%	37%	47%
Aftermarket	33%	31%	44%	13%	30%
Oil & Gas	33%	47%	40%	19%	34%
Original Equipment	19%	-4%	-14%	-11%	-3%
Aftermarket	-9%	20%	9%	-31%	-4%
Power & Industrial	5%	8%	-4%	-21%	-4%
Original Equipment	-2%	4%	-4%	0%	0%
Aftermarket	13%	17%	25%	3%	14%
Continuing Ops	7%	12%	14%	2%	9%

Appendix 2 - 2014 Foreign Exchange (FX) rates and profit exposure

	2013 FY average FX rates	2014 FY average FX rates	Percentage of 2014 operating profits
US $	1.56	1.65	58%
Australian $	1.61	1.83	9%
Canadian $	1.61	1.82	9%
Euro €	1.18	1.24	6%
Chilean Peso	771.29	940.16	6%
United Arab Emirates dirham	5.74	6.01	4%
Russian Rouble	49.70	63.32	2%

A one-cent move in the average US$:£ exchange rate has an impact of circa £2m on operating profit over the year.

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 ("the Company") 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 2 January 2015
		52 weeks ended 2 January 2015			53 weeks ended 3 January 2014
		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	2,438.2	-	2,438.2	2,429.8	-	2,429.8
Continuing operations
Operating profit before share of results of joint ventures		439.8	(257.3)	182.5	458.1	23.8	481.9
Share of results of joint ventures		10.0	-	10.0	8.4	-	8.4
Operating profit		449.8	(257.3)	192.5	466.5	23.8	490.3
Finance costs		(44.5)	(2.1)	(46.6)	(47.9)	(10.7)	(58.6)
Finance income		6.0	-	6.0	3.0	-	3.0
Other finance costs - retirement benefits		(2.8)	-	(2.8)	(3.5)	-	(3.5)
Profit before tax from continuing operations		408.5	(259.4)	149.1	418.1	13.1	431.2
Tax expense	4	(105.5)	30.1	(75.4)	(107.5)	12.0	(95.5)
Profit for the period from continuing operations		303.0	(229.3)	73.7	310.6	25.1	335.7
Profit for the period from discontinued operations	5	-	1.0	1.0	-	-	-
Profit for the period		303.0	(228.3)	74.7	310.6	25.1	335.7
Attributable to:
Equity holders of the Company		301.4	(228.3)	73.1	309.8	25.1	334.9
Non-controlling interests		1.6	-	1.6	0.8	-	0.8
		303.0	(228.3)	74.7	310.6	25.1	335.7
Earnings per share	6
Basic - total operations				34.3p			157.2p
Basic - continuing operations		141.3p		33.8p	145.4p		157.2p
Diluted - total operations				34.2p			156.6p
Diluted - continuing operations		140.9p		33.7p	144.9p		156.6p

Consolidated Statement of Comprehensive Income
for the 52 weeks ended 2 January 2015
		52 weeks ended	53 weeks ended
		2 January 2015	3 January 2014
		£m	£m
Profit for the period		74.7	335.7
Other comprehensive income
(Losses) gains taken to equity on cash flow hedges		(4.0)	0.1
Exchange gains (losses) on translation of foreign operations		61.3	(111.3)
Exchange (losses) gains on net investment hedges		(16.1)	16.5
Reclassification adjustments on cash flow hedges		0.9	0.2
Tax relating to other comprehensive income (expense) to be reclassified in subsequent periods		0.3	0.3
Items that are or may be reclassified to profit or loss in subsequent periods		42.4	(94.2)
Remeasurements on defined benefit plans		(31.1)	8.0
Tax relating to other comprehensive (expense) income that will not be reclassified in subsequent periods		6.8	(2.2)
Items that will not be reclassified to profit or loss in subsequent periods		(24.3)	5.8
Net other comprehensive income (expense)		18.1	(88.4)
Total net comprehensive income for the period		92.8	247.3
Attributable to:
Equity holders of the Company		90.7	246.5
Non-controlling interests		2.1	0.8
		92.8	247.3

Consolidated Balance Sheet
at 2 January 2015
				2 January 2015	3 January 2014
			Notes	£m	£m
ASSETS
Non-current assets
Property, plant & equipment			8	435.0	398.7
Intangible assets			8	1,638.3	1,614.5
Investments in joint ventures				33.7	27.1
Deferred tax assets				22.8	17.2
Other receivables			10	22.3	-
Retirement benefit plan assets			11	4.1	1.4
Derivative financial instruments			12	3.5	1.1
Total non-current assets				2,159.7	2,060.0
Current assets
Inventories				551.3	485.0
Trade & other receivables				625.0	497.1
Construction contracts				31.3	28.3
Derivative financial instruments			12	10.5	11.1
Income tax receivable				5.8	2.3
Cash & short-term deposits				178.7	79.1
Total current assets				1,402.6	1,102.9
Total assets				3,562.3	3,162.9
LIABILITIES
Current liabilities
Interest-bearing loans & borrowings				166.1	26.5
Trade & other payables				581.4	476.8
Construction contracts				13.8	12.1
Derivative financial instruments			12	11.3	9.6
Income tax payable				32.1	36.7
Provisions			10	65.1	28.9
Total current liabilities				869.8	590.6
Non-current liabilities
Interest-bearing loans & borrowings				873.3	799.6
Other payables				25.6	22.4
Derivative financial instruments			12	3.1	0.6
Provisions			10	47.4	25.7
Deferred tax liabilities				162.5	165.5
Retirement benefit plan deficits			11	98.4	71.8
Total non-current liabilities				1,210.3	1,085.6
Total liabilities				2,080.1	1,676.2
NET ASSETS				1,482.2	1,486.7
CAPITAL & RESERVES
Share capital				26.8	26.7
Share premium				38.0	38.0
Treasury shares				(5.8)	(5.8)
Capital redemption reserve				0.5	0.5
Foreign currency translation reserve				(12.6)	(57.3)
Hedge accounting reserve				(2.0)	0.8
Retained earnings				1,430.5	1,479.3
Shareholders' equity				1,475.4	1,482.2
Non-controlling interests				6.8	4.5
TOTAL EQUITY				1,482.2	1,486.7
Approved by the Board of Directors on 25 February 2015
Keith Cochrane,	Jon Stanton,
Director	Director

Consolidated Cash Flow Statement
for the 52 weeks ended 2 January 2015
		52 weeks ended	53 weeks ended
		2 January 2015	3 January 2014
	Notes	£m	£m
Continuing operations
Cash flows from operating activities	13
Cash generated from operations		421.3	473.9
Additional pension contributions paid		(10.6)	(12.1)
Exceptional cash items		(10.6)	-
Income tax paid		(94.1)	(71.9)
Net cash generated from operating activities		306.0	389.9
Continuing operations
Cash flows from investing activities
Acquisitions of subsidiaries	13	(137.7)	(201.2)
Disposals of subsidiaries	13	-	(0.3)
Investment in joint ventures		-	(14.0)
Purchases of property, plant & equipment and intangible assets		(108.0)	(108.4)
Other proceeds from sale of property, plant & equipment and intangible assets		6.7	11.1
Interest received		6.2	2.8
Dividends received from joint ventures		6.0	6.1
Net cash used in investing activities		(226.8)	(303.9)
Continuing operations
Cash flows from financing activities
Purchase of shares for equity settled share-based incentives		(0.2)	(2.2)
Proceeds from borrowings		404.0	312.5
Repayments of borrowings		(237.5)	(572.0)
Settlement of external debt of subsidiary on acquisition	13	-	(1.3)
Settlement of derivative financial instruments		(3.1)	(5.0)
Interest paid		(42.7)	(43.3)
Proceeds from increase in non-controlling interests		0.2	0.6
Dividends paid to equity holders of the Company	7	(102.7)	(82.6)
Net cash generated from (used in) financing activities		18.0	(393.3)
Net increase (decrease) in cash & cash equivalents from continuing operations		97.2	(307.3)
Cash & cash equivalents at the beginning of the period		68.6	384.2
Foreign currency translation differences		0.8	(8.3)
Cash & cash equivalents at the end of the period		166.6	68.6

Consolidated Statement of Changes in Equity
for the 52 weeks ended 2 January 2015
	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 28 December 2012	26.7	38.0	(5.6)	0.5	37.5	0.2	1,209.8	1,307.1	3.2	1,310.3
Profit for the period	-	-	-	-	-	-	334.9	334.9	0.8	335.7
Gains taken to equity on cash flow hedges	-	-	-	-	-	0.1	-	0.1	-	0.1
Exchange losses on translation of foreign operations	-	-	-	-	(111.3)	-	-	(111.3)	-	(111.3)
Exchange gains on net investment hedges	-	-	-	-	16.5	-	-	16.5	-	16.5
Remeasurements on defined benefit plans	-	-	-	-	-	-	8.0	8.0	-	8.0
Reclassification adjustments on cash flow hedges	-	-	-	-	-	0.2	-	0.2	-	0.2
Tax relating to other comprehensive income	-	-	-	-	-	0.3	(2.2)	(1.9)	-	(1.9)
Total net comprehensive income for the period	-	-	-	-	(94.8)	0.6	340.7	246.5	0.8	247.3
Proceeds from increase in non-controlling interests	-	-	-	-	-	-	-	-	0.5	0.5
Cost of share-based payments inclusive of tax charge	-	-	-	-	-	-	12.6	12.6	-	12.6
Dividends	-	-	-	-	-	-	(82.6)	(82.6)	-	(82.6)
Purchase of shares *	-	-	(1.4)	-	-	-	-	(1.4)	-	(1.4)
Exercise of LTIP awards	-	-	1.2	-	-	-	(1.2)	-	-	-
At 3 January 2014	26.7	38.0	(5.8)	0.5	(57.3)	0.8	1,479.3	1,482.2	4.5	1,486.7
Profit for the period	-	-	-	-	-	-	73.1	73.1	1.6	74.7
Losses taken to equity on cash flow hedges	-	-	-	-	-	(4.0)	-	(4.0)	-	(4.0)
Exchange gains on translation of foreign operations	-	-	-	-	60.8	-	-	60.8	0.5	61.3
Exchange losses on net investment hedges	-	-	-	-	(16.1)	-	-	(16.1)	-	(16.1)
Remeasurements on defined benefit plans	-	-	-	-	-	-	(31.1)	(31.1)	-	(31.1)
Reclassification adjustments on cash flow hedges	-	-	-	-	-	0.9	-	0.9	-	0.9
Tax relating to other comprehensive income	-	-	-	-	-	0.3	6.8	7.1	-	7.1
Total net comprehensive income for the period	-	-	-	-	44.7	(2.8)	48.8	90.7	2.1	92.8
Proceeds from increase in non-controlling interests	-	-	-	-	-	-	-	-	0.2	0.2
Cost of share-based payments inclusive of tax credit	-	-	-	-	-	-	5.2	5.2	-	5.2
Dividends	-	-	-	-	-	-	(102.7)	(102.7)	-	(102.7)
Exercise of LTIP awards	0.1	-	-	-	-	-	(0.1)	-	-	-
At 2 January 2015	26.8	38.0	(5.8)	0.5	(12.6)	(2.0)	1,430.5	1,475.4	6.8	1,482.2
* These shares were purchased on the open market and are held by the Appleby EBT on behalf of the Group for satisfaction of any future vesting of the deferred bonus plan.

Notes to the Audited Results

1. Accounting policies

Basis of preparation
The audited results for the 52 weeks ended 2 January 2015 ("2014") 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 financial information set out in the audited results does not constitute the Group's statutory financial statements for the 52 weeks ended 2 January 2015 within the meaning of section 434 of the Companies Act 2006 and has been extracted from the full financial statements for the 52 weeks ended 2 January 2015.

Statutory financial statements for the 53 weeks ended 3 January 2014 ("2013"), which received an unqualified audit report, have been delivered to the Registrar of Companies. The reports of the auditors on the financial statements for the 53 weeks ended 3 January 2014 and for the 52 weeks ended 2 January 2015 were unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The financial statements for the 52 weeks ended 2 January 2015 will be delivered to the Registrar of Companies and made available to all shareholders in due course.

These financial statements are presented in Sterling. All values are rounded to the nearest 0.1 million pounds (£m) except when otherwise indicated.

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.

Exceptional items are items of income and expense which, because of the nature, size and/or 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. Exceptional items may include but are not restricted to: profits or losses arising on disposal or closure of businesses; the cost of significant business restructuring; significant impairments of intangible or tangible assets; adjustments to the fair value of acquisition related items such as contingent consideration and inventory; other items deemed exceptional due to their significance, size or nature; and the related exceptional taxation.

Intangibles amortisation, including impairment, has been shown separately to provide 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.

The accounting policies applied in preparing these audited results are unchanged from those set out in the Group's 2013 Annual Report except as described below.

The standards listed below have not resulted in a change to the Group's financial statements in the period of initial application.

IFRS 10, 'Consolidated financial statements' builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination where it is difficult to assess.

IFRS 11, 'Joint arrangements' focuses on the rights and obligations of the parties to the arrangement rather than its legal form.  There are two types of joint arrangements: joint operations and joint ventures.  Joint operations arise where the investors have rights to the assets and obligations for the liabilities of the arrangements, while joint ventures arise where the investors have rights to the net assets of the arrangement.

IFRS 12, 'Disclosures of interests in other entities' includes the disclosure requirements for all forms of interests in other entities including joint arrangements, associates, structured entities and other off balance sheet vehicles.

There are several other standards and amendments which apply for the first time in 2014 which also do not impact the Group financial statements.

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 under IFRS 8. The operating and reportable segments were determined based on the reports reviewed by the Chief Executive which are used to make operational decisions.

The Minerals segment is the global leader in the provision of slurry handling equipment and associated aftermarket support for abrasive high wear applications used in the mining and oil sands markets. The Oil & Gas segment provides products and service solutions to upstream, production, transportation, refining and related industries. The Power & Industrial segment designs and manufactures valves, pumps and turbines as well as providing specialist support services to the global power generation, industrial and oil and gas sectors.

The Chief Executive assesses the performance of the operating segments based on operating profit from continuing operations before exceptional items (including impairments) and intangibles amortisation ('segment result'). Finance income and expenditure and associated interest-bearing liabilities and derivative financial instruments are not allocated to segments as all treasury activity is managed centrally by the Group treasury function. The amounts provided to the Chief Executive with respect to assets and liabilities are measured in a manner consistent with that of the financial statements. The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated based on the operations of the segment.

Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with third parties.

2. Segment information (continued)

The segment information for the reportable segments for 2014 and 2013 is disclosed below.

		Minerals		Oil & Gas		Power & Industrial		Total continuing operations
		2014	2013	2014	2013	2014	2013	2014	2013
		£m	£m	£m	£m	£m	£m	£m	£m
Revenue
Sales to external customers		1,127.9	1,304.3	992.1	795.9	318.2	329.6	2,438.2	2,429.8
Inter-segment sales		3.9	4.4	14.6	15.7	8.5	7.3	27.0	27.4
Segment revenue		1,131.8	1,308.7	1,006.7	811.6	326.7	336.9	2,465.2	2,457.2
Eliminations								(27.0)	(27.4)
								2,438.2	2,429.8
Sales to external customers - 2013 at 2014 average exchange rates
Sales to external customers		1,127.9	1,177.7	992.1	753.6	318.2	314.0	2,438.2	2,245.3
								2,438.2	2,245.3
Segment result
Segment result before share of results of joint ventures	226.4		268.7	214.9	172.1	18.6	31.3	459.9	472.1
Share of results of joint ventures	-		-	10.0	8.4	-	-	10.0	8.4
Segment result	226.4		268.7	224.9	180.5	18.6	31.3	469.9	480.5
Unallocated expenses								(20.1)	(14.0)
Operating profit before exceptional items & intangibles amortisation								449.8	466.5
Total exceptional items & intangibles amortisation								(259.4)	13.1
Net finance costs before exceptional items								(38.5)	(44.9)
Other finance costs - retirement benefits								(2.8)	(3.5)
Profit before tax from continuing operations								149.1	431.2
Segment result - 2013 at 2014 average exchange rates
Segment result before share of results of joint ventures	226.4		243.1	214.9	162.8	18.6	29.6	459.9	435.5
Share of results of joint ventures	-		-	10.0	8.0	-	-	10.0	8.0
Segment result	226.4		243.1	224.9	170.8	18.6	29.6	469.9	443.5
Unallocated expenses								(20.1)	(14.0)
Operating profit before exceptional items & intangibles amortisation								449.8	429.5
There are no material revenues derived from a single external customer.

2. Segment information (continued)

	Minerals		Oil & Gas		Power & Industrial		Total continuing operations
	2014	2013	2014	2013	2014	2013	2014	2013
	£m	£m	£m	£m	£m	£m	£m	£m
Assets & liabilities
Intangible assets	536.9	397.0	991.3	1,109.4	102.0	101.6	1,630.2	1,608.0
Property, plant & equipment	214.6	198.7	167.0	147.2	52.3	50.9	433.9	396.8
Working capital assets	504.6	449.6	532.4	390.9	178.4	176.2	1,215.4	1,016.7
	1,256.1	1,045.3	1,690.7	1,647.5	332.7	328.7	3,279.5	3,021.5
Investments in joint ventures	-	-	33.7	27.1	-	-	33.7	27.1
Segment assets	1,256.1	1,045.3	1,724.4	1,674.6	332.7	328.7	3,313.2	3,048.6
Unallocated assets							249.1	114.3
Total assets							3,562.3	3,162.9
Working capital liabilities	286.0	243.4	242.8	149.9	113.8	87.3	642.6	480.6
Unallocated liabilities							1,437.5	1,195.6
Total liabilities							2,080.1	1,676.2
Other segment information
Segment additions to non-current assets	56.9	56.6	50.6	37.6	8.9	11.1	116.4	105.3
Unallocated additions to non-current assets							3.7	6.3
Total additions to non-current assets							120.1	111.6
Segment depreciation & amortisation	37.7	35.3	54.7	54.9	10.6	14.2	103.0	104.4
Impairment of property, plant & equipment	4.0	-	5.2	-	-	-	9.2	-
Impairment of intangible assets	-	-	160.0	-	-	-	160.0	-
Unallocated depreciation & amortisation							3.0	1.4
Total depreciation, amortisation & impairment							275.2	105.8

Unallocated assets primarily comprise cash and short-term deposits, derivative financial instruments, income tax receivable, deferred tax assets and retirement benefit surpluses as well as those assets which are used for general head office purposes. Unallocated liabilities primarily comprise interest-bearing loans and borrowings, derivative financial instruments, income tax payable, provisions, deferred tax liabilities, contingent consideration and retirement benefit deficits as well as liabilities relating to general head office activities. Segment additions to non-current assets do not include those additions which have arisen from business combinations (note 9).

2. Segment information (continued)

Geographical information
Geographical information in respect of revenue and non-current assets for 2014 and 2013 is disclosed below. Revenues are allocated based on the location to which the product is shipped. Assets are allocated based on the location of the assets and operations. Non-current assets consist of property, plant & equipment, intangible assets and investments in joint ventures.

	UK	USA	Canada	Europe & FSU	Asia Pacific	Australia	South America	Middle East & Africa	Total
52 weeks ended 2 January 2015	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue from continuing operations
Sales to external customers	113.0	875.9	246.0	180.9	252.4	220.3	261.6	288.1	2,438.2
Non-current assets	144.7	1,130.5	59.0	144.6	304.6	163.0	49.5	111.1	2,107.0
	UK	USA	Canada	Europe & FSU	Asia Pacific	Australia	South America	Middle East & Africa	Total
53 weeks ended 3 January 2014	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue from continuing operations
Sales to external customers	104.8	743.4	234.6	246.1	229.8	223.2	308.1	339.8	2,429.8
Non-current assets	102.8	1,251.5	58.1	141.7	180.3	157.5	50.2	98.2	2,040.3

The following disclosures are given in relation to continuing operations.
	2014	2013
	£m	£m
An analysis of the Group's revenue is as follows:
Original equipment	748.7	818.8
Aftermarket parts	1,145.3	1,074.4
Sales of goods	1,894.0	1,893.2
Aftermarket services	470.5	461.4
Revenue from construction contracts	73.7	75.2
Revenue	2,438.2	2,429.8
Finance income	6.0	3.0
Total revenue	2,444.2	2,432.8

3. Exceptional items & intangibles amortisation
	2014	2013
	£m	£m
Recognised in arriving at operating profit from continuing operations
Intangibles amortisation	(44.9)	(46.7)
Exceptional item - Intangibles impairment	(160.0)	-
Exceptional item - Group-wide efficiency review	(49.4)	-
Exceptional item - Metso aborted acquisition costs	(2.4)	-
Exceptional item - release of Mathena contingent consideration liability	-	67.8
Exceptional item - pension curtailment gain	-	2.7
Exceptional item - uplift in respect of contingent consideration liability	(0.6)	-
	(257.3)	23.8
Recognised in finance costs
Exceptional item - unwind in respect of contingent consideration liability	(2.1)	(10.7)
	(2.1)	(10.7)
Recognised in arriving at profit for the period from discontinued operations
Exceptional items (note 5)	1.0	-

A Group-wide efficiency review was undertaken in the third quarter to identify opportunities to reduce costs, increase customer responsiveness and efficiency while aligning resources globally to capture end market opportunities. This review resulted in the Group taking a number of actions including the closure of a number of small manufacturing facilities, consolidation of service centres, workforce reductions in other areas and the exit from certain lower margin activities. The review was extended towards the end of the fourth quarter to include additional workforce reductions in Oil & Gas in anticipation of reduced activity levels following the significant oil price decline. Exceptional costs totalling £49.4m have been recognised in the Income Statement in relation to these actions, represented by £30.1m in restructuring costs and impairment charges of £19.3m. The restructuring costs include £15.6m of termination costs and the impairment charge includes £9.2m in relation to property plant & equipment, £5.3m on inventory and £4.8m on trade receivables. The cash outflow in 2014 was £8.2m in relation to the restructuring costs.

The very significant decline in the oil price towards the end of 2014 and at the start of 2015, and the resultant impact on the North American rig count and related activity levels, has had a substantial impact on the short to medium term forecasts of our upstream oil and gas business.  As a result, an impairment charge of £160m has been recognised against the Pressure Control CGU in the year, allocated entirely against goodwill.

The cash flow forecasts underpinning the impairment testing reflect the current oil price and depressed activity levels enduring for the next two years, with pressure on both volumes and pricing, and a measured return to more 'normal' levels thereafter. With regard to impairment testing of the Pressure Pumping CGU, this business is more mature than Pressure Control and had significant levels of headroom between net asset value and value in use prior to the current market downturn. On this basis and even under the stress testing undertaken, no impairment has been assessed in respect of the carrying value of assets in this CGU. No impairment has been identified in relation to any of the other CGUs. 

Other exceptional items in the period include costs associated with the aborted acquisition of Metso, the uplift in the contingent consideration payable on the acquisition of Weir International and the unwind of contingent consideration liabilities.

Included within discontinued operations is the release of unutilised tax warranty provisions regarding previous disposals.
The exceptional items in 2013 related to:

• release of the entire Mathena contingent consideration liability offset by the unwind of the contingent consideration liability which had been recorded in that period.
• recognition of a curtailment gain in the main UK defined benefit plan following a consultation process which ended in August 2013, concluding that the plan will close to future accrual of benefits effective from 30 June 2015.

4. Income tax expense
		2014	2013
		£m	£m
Group - UK		(0.1)	(12.1)
Group - Overseas		(75.3)	(83.4)
Total income tax expense in the Consolidated Income Statement		(75.4)	(95.5)
The total income tax expense is disclosed in the Consolidated Income Statement as follows.
Tax expense - continuing operations before exceptional items & intangibles amortisation		(105.5)	(107.5)
	- exceptional items	16.0	(0.5)
	- intangibles amortisation	14.1	12.5
Total income tax expense in the Consolidated Income Statement		(75.4)	(95.5)
The total income tax expense included in the Group's share of results of joint ventures is as follows.
Joint ventures		(3.1)	(1.2)

5. Discontinued operations
There were no disposals of core businesses during the current or prior period.  As disclosed in note 3 an exceptional gain of £1.0m (2013: £nil) has been recognised in the period in relation to the release of unutilised tax warranty provisions relating to previous disposals.
Earnings per share from discontinued operations were as follows.
	2014	2013
	pence	pence
Basic	0.5	n/a
Diluted	0.5	n/a
These earnings per share figures were derived by dividing the net profit attributable to equity holders of the Company from discontinued operations by the weighted average number of ordinary shares, for both basic and diluted amounts, shown in note 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 is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period (adjusted for the effect of dilutive share awards).
The following reflects the profit and share data used in the calculation of earnings per share.
	2014	2013
Profit attributable to equity holders of the Company
Total operations* (£m)	73.1	334.9
Continuing operations* (£m)	72.1	334.9
Continuing operations before exceptional items & intangibles amortisation* (£m)	301.4	309.8
Weighted average share capital
Basic earnings per share (number of shares, million)	213.3	213.0
Diluted earnings per share (number of shares, million)	213.9	213.8
* Adjusted for £1.6m (2013: £0.8m) in respect of non-controlling interests.

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.
	2014	2013
	Shares Million	Shares Million
Weighted average number of ordinary shares for basic earnings per share	213.3	213.0
Effect of dilution: LTIP and deferred bonus awards	0.6	0.8
Adjusted weighted average number of ordinary shares for diluted earnings per share	213.9	213.8

The profit attributable to equity holders of the Company used in the calculation of both basic and diluted earnings per share from continuing operations before exceptional items and intangibles amortisation is calculated as follows.
	2014	2013
	£m	£m
Net profit attributable to equity holders from continuing operations*	72.1	334.9
Exceptional items & intangibles amortisation net of tax	229.3	(25.1)
Net profit attributable to equity holders from continuing operations before exceptional items & intangibles amortisation*	301.4	309.8

	2014	2013
	pence	pence
Basic earnings per share:
Total operations*	34.3	157.2
Continuing operations*	33.8	157.2
Continuing operations before exceptional items & intangibles amortisation*	141.3	145.4
Diluted earnings per share:
Total operations*	34.2	156.6
Continuing operations*	33.7	156.6
Continuing operations before exceptional items & intangibles amortisation*	140.9	144.9
* Adjusted for £1.6m (2013: £0.8m) in respect of non-controlling interests.
There have been no share options (2013: nil) exercised between the reporting date and the date of signing of these financial statements.

7. Dividends paid & proposed
	2014	2013
	£m	£m
Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2013: 33.2p (2012: 30.0p)	70.7	63.8
Interim dividend for 2014: 15.0p (2013: 8.8p)	32.0	18.8
	102.7	82.6
Proposed for approval by shareholders at the annual general meeting
Final dividend for 2014: 29.0p (2013: 33.2p)	61.9	70.8
The dividend has been re-phased such that the final payment will represent approximately two thirds of the total dividend for 2014.
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
	2014	2013
	£m	£m
Additions of property, plant & equipment & intangible assets
- land & buildings	23.9	17.4
- plant & equipment	72.1	73.0
- intangible assets	24.1	21.2
	120.1	111.6

9. Business combinations

On 25 July 2014, the Group completed the acquisition of 100% of the voting shares of Metra Equipment Inc, (Weir Metra) for a cash consideration of C$6.0m (£3.4m) less cash acquired of C$0.7m (£0.4m).  Based in Saskatchewan, Canada, Weir Metra is a niche provider of wellhead equipment and services and will support and expand the existing Pressure Control business.  The provisional fair value of the net assets has been assessed as £2.0m, giving rise to goodwill on acquisition of £1.4m.  No separately identifiable intangible assets have been recognised in relation to the acquisition.

On 22 October 2014, the Group completed the acquisition of Trio Engineered Products (Weir Trio) a Chinese-American manufacturer of crushing and separation equipment for the mining and aggregate markets, for a consideration of US$236.0m inclusive of net cash balances held by Weir Trio.  The consideration includes US$13.2m discounted contingent consideration deferred for up to 2 years conditional on the realisation of certain working capital targets and the achievement of agreed management goals. The provisional fair values are disclosed in the table below and are subject to change following completion of the fair value exercise during 2015.  There are certain intangible assets in the £75.7m of goodwill recognised that cannot be individually separated and reliably measured due to their nature.  These items include anticipated business growth, synergies and an assembled workforce.

Provisional fair values				Trio
				2014
				£m
Property, plant & equipment				10.1
Inventories				20.9
Intangible assets
- customer and distributor relationships				21.9
- brand name				14.7
- order backlog				3.5
- intellectual property				7.2
- purchased software				0.1
- other				1.3
Trade & other receivables				15.6
Cash & cash equivalents				8.0
Trade & other payables				(20.0)
Provisions				(10.9)
Current tax				(1.2)
Deferred tax				(1.0)
Fair value of net assets				70.2
Goodwill arising on acquisition				75.7
Total consideration				145.9
Cash consideration				137.7
Contingent consideration				8.2
Total consideration				145.9
The total net cash outflow on current year acquisitions was as follows:
Weir Trio
- cash paid				(137.7)
- cash & cash equivalents acquired				8.0
Weir Metra - net cash outflow				(3.0)
Total cash outflow (note 13)				(132.7)
The fair value of the Trio trade receivables amounts to £15.6m. The gross amount of trade receivables is £20.2m, of which £4.6m have been impaired as it is expected that the full contractual amounts may not be collected.
Together, Weir Trio and Weir Metra contributed £11.7m to revenue and £1.1m to operating profit (including exceptional items and intangibles amortisation) in the 52 weeks ended 2 January 2015. The contribution of the individual acquisitions to revenue and profit for the period from continuing operations after exceptional items and intangibles amortisation of the Group was not material and so has not been separately disclosed.  If the acquisitions had occurred at the start of 2014 the combined revenue and profit for the period from acquired operations after exceptional items and intangibles amortisation, would not have been materially different from the results disclosed in the Consolidated Income Statement.   The fair values for Weir Mathena, Weir Wales and all other acquisitions during 2013 were finalised in the financial statements for the period ended 3 January 2014. The 2013 cash flows in relation to these acquisitions are disclosed in note 13.
10. Provisions
	Warranties & onerous sales contracts	Employee related			Exceptional rationalisation		Other	Total
	£m	£m			£m		£m	£m
At 3 January 2014	27.8	22.5			-		4.3	54.6
Additions	16.4	30.6			30.1		1.9	79.0
Acquisitions	8.7	1.5			-		0.7	10.9
Utilised	(15.2)	(1.7)			(8.2)		(1.8)	(26.9)
Unutilised	(3.1)	(0.9)			-		(1.2)	(5.2)
Exchange adjustment	1.0	(0.4)			(0.3)		(0.2)	0.1
At 2 January 2015	35.6	51.6			21.6		3.7	112.5
Current 2014	30.8	10.9			20.3		3.1	65.1
Non-current 2014	4.8	40.7			1.3		0.6	47.4
	35.6	51.6			21.6		3.7	112.5
Current 2013	21.7	3.7			-		3.5	28.9
Non-current 2013	6.1	18.8			-		0.8	25.7
	27.8	22.5			-		4.3	54.6

Warranties and onerous sales contracts
Provision has been made in respect of actual warranty and contract penalty claims on goods sold and services provided and allowance has been made for potential warranty claims based on past experience for goods and services sold with a warranty guarantee. It is expected that all costs related to such claims will have been incurred within five years of the balance sheet date.

Provision has been made in respect of sales contracts entered into for the sale of goods in the normal course of business where the unavoidable costs of meeting the obligations under the contracts exceed the economic benefits expected to be received from the contracts. Provision is made immediately when it becomes apparent that expected costs will exceed the expected benefits of the contract. It is expected that the majority of these costs will be incurred within one year of the balance sheet date.

Employee related
Employee related provisions arise from legal obligations, some of which are for asbestos related claims.

Asbestos-related claims
Certain of the Group's US-based subsidiaries are co-defendants in lawsuits pending in the United States in which plaintiffs are claiming damages arising from alleged exposure to products previously manufactured which contained asbestos.  The Group has comprehensive insurance cover for these cases with all claims directly managed by the Group's insurers who also meet all associated defence costs.  The insurers and their legal advisers agree and execute the defence strategy between them and there are no related cash flows to or from the Group.  We expect this to continue for the foreseeable future as long as the litigation arises. 

At the end of 2014, there are 1,503 asbestos-related claims outstanding in the US (2013: 1,129).  In light of the recent increase in claims, a review was completed to assess the adequacy of the Group's insurance policies to meet future settlement and defence costs.  As a result of this review we have estimated settlement and defence costs for existing and projected claims received in the next five years and recorded a provision of £28m with an equivalent receivable for insurance proceeds.

This provision represents the Directors best estimate of the future liability at this time although given the lack of consistent claims and settlement history, these estimates and the period over which they are assessed will continue to be refined.

Due to the inherent uncertainty associated with estimating future costs in respect of asbestos-related diseases, there can be no guarantee that the assumptions used to estimate the provision will result in an accurate prediction of the actual costs that may be incurred.  However, we do not expect there to be a net financial exposure to the Group given the comprehensive insurance cover in place.

In the UK, there are 26 (2013: 26) outstanding asbestos-related claims which are not the subject of insurance cover.  The Group provides for both based on management's best estimate of the likely costs given past experience of the volume and cost of similar claims brought against the Group.  It is expected that these costs will be incurred in the period up to 2025.

Exceptional rationalisation
As part of the Group-wide efficiency review announced in November 2014 the Group has provided £30.1m, of which £8.2m was utilised in the year. The provision is based on expected costs for the closure of small manufacturing facilities, consolidation of service centres, workforce reductions and the exit from certain lower margin activities. The majority of the provision will be utilised in the next year, with the remainder utilised within the next 24 months.

Other
Other provisions relate to an environmental clean-up programme in the United States for a company acquired in 1992, the discontinued operations and indemnity provision, and various other legal claims and exposures across the Group. The environmental provision is based on management's current best estimate of the expected costs under the programme. It is expected that these costs will be incurred in the period up to 2019. The discontinued operations warranty and indemnity provision was reduced in the year (note 5) leaving a closing balance of £0.3m (2013: £1.3m).

11. Pensions & other post-employment benefit plans
	2014	2013
	£m	£m
Net liability	94.3	70.4

The net Group deficit for retirement benefit obligations at the period end was £94.3m (2013: £70.4m) reflecting a reduction in discount rates and RPI only partially offset by the returns on net assets and contributions in excess of benefit accrual.

12. 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.

	2014	2013
	£m	£m
Included in non-current assets
Forward foreign currency contracts designated as cash flow hedges	0.2	0.6
Cross currency swaps designated as net investment hedges	3.3	0.1
Other forward foreign currency contracts	-	0.4
	3.5	1.1
Included in current assets
Forward foreign currency contracts designated as cash flow hedges	0.5	0.7
Forward foreign currency contracts designated as net investment hedges	-	0.4
Other forward foreign currency contracts	10.0	10.0
	10.5	11.1
Included in current liabilities
Forward foreign currency contracts designated as cash flow hedges	(2.3)	(0.1)
Forward foreign currency contracts designated as net investment hedges	(2.4)	(0.2)
Cross currency swaps designated as net investment hedges	(0.7)	-
Other forward foreign currency contracts	(5.9)	(9.3)
	(11.3)	(9.6)
Included in non-current liabilities
Forward foreign currency contracts designated as cash flow hedges	(0.2)	(0.2)
Cross currency swaps designated as net investment hedges	(2.7)	(0.3)
Other forward foreign currency contracts	(0.2)	(0.1)
	(3.1)	(0.6)
Net derivative financial (liabilities) assets	(0.4)	2.0

13. Additional cash flow information
				2014	2013
				£m	£m
Continuing operations
Net cash generated from operations
Operating profit				192.5	490.3
Exceptional items				52.4	(70.5)
Share of results of joint ventures				(10.0)	(8.4)
Depreciation of property, plant & equipment				61.1	59.1
Amortisation of intangible assets				44.9	46.7
Impairment of intangible assets				160.0	-
Gains on disposal of property, plant & equipment				(1.4)	(1.3)
Funding of pension & post-retirement costs				(0.4)	(0.5)
Employee share schemes				4.4	8.7
Net foreign exchange including derivative financial instruments				1.4	4.1
Decrease in provisions				(1.9)	(13.4)
Cash generated from operations before working capital cash flows				503.0	514.8
(Increase) decrease in inventories				(45.5)	1.6
(Increase) in trade & other receivables and construction contracts				(86.4)	(37.1)
Increase (decrease) in trade & other payables and construction contracts				50.2	(5.4)
Cash generated from operations				421.3	473.9
Additional pension contributions paid				(10.6)	(12.1)
Exceptional cash items				(10.6)	-
Income tax paid				(94.1)	(71.9)
Net cash generated from operating activities				306.0	389.9
Exceptional items are detailed in note 3.   The employee-related provision and associated insurance asset in relation to US asbestos-related claims disclosed in note 10 will not result in any cash flows either to or from the Group and therefore they have been excluded from the table above.
13. Additional cash flow information (continued) The following tables summarise the cashflows arising on acquisitions:
				2014	2013
				£m	£m
Acquisitions of subsidiaries
Current period acquisitions (see below)				(132.7)	(200.9)
Prior period acquisitions contingent consideration paid				(5.0)	(0.3)
				(137.7)	(201.2)
Acquisition of subsidiaries - cash paid				(140.7)	(207.4)
Cash & cash equivalents acquired				8.0	6.5
Acquisition of subsidiaries - current period acquisitions				(132.7)	(200.9)
Settlement of external debt of subsidiary on acquisition				-	(1.3)
Total cash outflow on acquisition of subsidiaries - current year  (note 9)				(132.7)	(202.2)
Prior period acquisitions contingent consideration paid				(5.0)	(0.3)
Total cash outflow relating to acquisitions				(137.7)	(202.5)
Disposals of subsidiaries
Prior period disposals				-	(0.3)
The settlement of the external debt of Weir Mathena on acquisition in 2013 was classified as a financing cash flow in accordance with IAS 7.
13. Additional cash flow information (continued)				2014	2013
				£m	£m
Reconciliation of net increase (decrease) in cash & cash equivalents to movement in net debt
Net increase (decrease) in cash & cash equivalents from continuing operations				97.2	(307.3)
Net (increase) decrease in debt				(166.5)	260.7
Change in net debt resulting from cash flows				(69.3)	(46.6)
Lease inceptions				(0.4)	(0.1)
Loans acquired				-	(1.5)
Foreign currency translation differences				(44.0)	(9.9)
Change in net debt during the period				(113.7)	(58.1)
Net debt at the beginning of the period				(747.0)	(688.9)
Net debt at the end of the period				(860.7)	(747.0)
Net debt comprises the following
Cash & short-term deposits				178.7	79.1
Current interest-bearing loans & borrowings				(166.1)	(26.5)
Non-current interest-bearing loans & borrowings				(873.3)	(799.6)
				(860.7)	(747.0)

14. Related party disclosure

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	Purchases from related parties - services	Amounts owed to related parties
Related Party		£m	£m	£m	£m	£m
Joint ventures	2014	26.7	0.5	8.2	0.5	-
	2013	5.6	0.5	2.7	1.7	-
Group pension plans	2014	-	-	-	-	1.8
	2013	-	-	-	-	2.3

15. 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.

A claim has been made by Philippines Gold Processing & Refining Corporation against Weir Services Australia Pty Limited (WSA), a subsidiary of the Company, in arbitration proceedings in respect of two contracts relating to the refurbishment and installation of a mill undertaken by WSA in 2007-2008 and 2008-2009, respectively.  The amount claimed, which totals approximately £58m plus interest, seeks damages for the cost of repair and subsequent replacement of the mill together with business interruption loss at the processing plant.  The original value of the contracts was around £1m.  WSA is contesting the claim on multiple grounds.  The claim is being vigorously defended although the outcome remains uncertain.  The arbitration process is expected to conclude by the end of 2015.

The Directors are of the view that the outcome of legal proceedings in 2014 in relation to the UN Oil for Food programme are such that a contingent liability no longer exists in relation to this matter.

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.

16. Exchange rates
The principal exchange rates applied in the preparation of these financial statements were as follows.
			2014	2013
Average rate (per £)
US dollar			1.65	1.56
Australian dollar			1.83	1.61
Euro			1.24	1.18
Canadian dollar			1.82	1.61
United Arab Emirates dirham			6.01	5.74
Chilean peso			940.16	771.29
Russian rouble			63.32	49.70
Closing rate (per £)
US dollar			1.54	1.64
Australian dollar			1.89	1.83
Euro			1.28	1.21
Canadian dollar			1.80	1.74
United Arab Emirates dirham			5.64	6.03
Chilean peso			942.64	869.82
Russian rouble			90.99	54.53

The Group's operating profit from continuing operations before exceptional items and intangibles amortisation was denominated in the following currencies.
	2014	2013
	£m	£m
US dollar	262.3	241.3
Australian dollar	41.1	46.2
Euro	26.5	44.5
Canadian dollar	42.3	42.6
United Arab Emirates dirham	16.6	14.3
Chilean peso	27.8	33.8
Russian rouble	10.6	8.3
United Kingdom pound	(5.4)	0.2
Other	28.0	35.3
Operating profit from continuing operations before exceptional items & intangibles amortisation	449.8	466.5

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Source: The Weir Group PLC via Globenewswire

HUG#1897011