REG - Weir Group PLC - Final Results <Origin Href="QuoteRef">WEIR.L</Origin> - Part 2
22/02/2017 07:06
- Part 2: For the preceding part double click ID:nRSV4845Xa
17.7p (83.6p)
Diluted - continuing operations 60.8p 20.0p 78.0p (73.1p)
Consolidated Statement of Comprehensive Income
for the period ended 31 December 2016
Period ended Period ended
31 December 2016 1 January 2016
£m £m
Profit (loss) for the period 38.2 (179.0)
Other comprehensive income (expense)
Losses taken to equity on cash flow hedges (0.7) (2.8)
Exchange gains (losses) on translation of foreign operations 377.4 (13.0)
Reclassification of foreign currency translation reserve on discontinued operations 0.8 -
Exchange losses on net investment hedges (142.0) (16.5)
Reclassification adjustments on cash flow hedges 1.9 1.6
Tax relating to other comprehensive income (expense) to be reclassified in subsequent periods 0.2 1.2
Items that are or may be reclassified to profit or loss in subsequent periods 237.6 (29.5)
Remeasurements on defined benefit plans (53.0) 13.5
Tax relating to other comprehensive (expense) income that will not be reclassified in subsequent periods 8.6 (2.1)
Items that will not be reclassified to profit or loss in subsequent periods (44.4) 11.4
Net other comprehensive income (expense) 193.2 (18.1)
Total net comprehensive income (expense) for the period 231.4 (197.1)
Attributable to:
Equity holders of the Company 228.9 (196.5)
Non-controlling interests 2.5 (0.6)
231.4 (197.1)
Total net comprehensive income (expense) for the period attributable to equity holders of the Company
Continuing operations 233.0 (173.4)
Discontinued operations (4.1) (23.1)
228.9 (196.5)
Consolidated Balance Sheet
at 31 December 2016
31 December 2016 Restated (note 1) 1 January 2016
Notes £m £m
ASSETS
Non-current assets
Property, plant & equipment 402.0 388.3
Intangible assets 1,628.8 1,411.8
Investments in joint ventures 40.5 33.4
Deferred tax assets 42.1 20.2
Other receivables 39.2 22.3
Retirement benefit plan assets 11 9.8 8.2
Derivative financial instruments 13 - 8.5
Total non-current assets 2,162.4 1,892.7
Current assets
Inventories 551.6 478.7
Trade & other receivables 481.8 444.7
Construction contracts 23.8 28.5
Derivative financial instruments 13 24.0 14.2
Income tax receivable 21.5 29.1
Cash & short-term deposits 258.6 184.0
Total current assets 1,361.3 1,179.2
Total assets 3,523.7 3,071.9
LIABILITIES
Current liabilities
Interest-bearing loans & borrowings 144.0 195.6
Trade & other payables 548.1 459.8
Construction contracts 4.2 8.9
Derivative financial instruments 13 30.2 14.1
Income tax payable 43.8 31.6
Provisions 83.2 70.3
Total current liabilities 853.5 780.3
Non-current liabilities
Interest-bearing loans & borrowings 949.1 813.4
Other payables 14.9 22.6
Derivative financial instruments 13 14.9 5.8
Provisions 60.2 46.7
Deferred tax liabilities 100.5 115.3
Retirement benefit plan deficits 11 147.0 90.0
Total non-current liabilities 1,286.6 1,093.8
Total liabilities 2,140.1 1,874.1
NET ASSETS 1,383.6 1,197.8
CAPITAL & RESERVES
Share capital 27.3 26.8
Share premium 86.2 38.0
Merger reserve 9.4 9.4
Treasury shares (5.9) (5.8)
Capital redemption reserve 0.5 0.5
Foreign currency translation reserve 191.8 (41.8)
Hedge accounting reserve (0.6) (2.0)
Retained earnings 1,066.4 1,166.5
Shareholders' equity 1,375.1 1,191.6
Non-controlling interests 8.5 6.2
TOTAL EQUITY 1,383.6 1,197.8
The financial statements were approved by the Board of Directors on 22 February 2017.
Jon Stanton John Heasley
Director Director
Consolidated Cash Flow Statement
for the period ended 31 December 2016
Period ended Period ended
31 December 2016 1 January 2016
Notes £m £m
Cash flows from operating activities 12
Cash generated from operations 292.6 396.5
Additional pension contributions paid (2.8) (2.6)
Exceptional cash items 3 (58.1) (33.4)
Income tax paid (15.7) (50.4)
Net cash generated from operating activities 216.0 310.1
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash acquired 12 (10.6) (14.1)
Purchases of property, plant & equipment (50.5) (69.1)
Purchases of intangible assets (15.4) (23.0)
Other proceeds from sale of property, plant & equipment and intangible assets 3.5 4.4
Disposals of discontinued operations, net of cash disposed 12 31.4 -
Exceptional items included in asset disposal programme 35.7 -
Interest received 6.5 3.9
Dividends received from joint ventures 7.3 10.0
Net cash generated from (used in) investing activities 7.9 (87.9)
Cash flows from financing activities
Purchase of non-controlling interest (3.4) -
Proceeds from borrowings 1,328.1 541.9
Repayments of borrowings (1,420.5) (591.2)
Settlement of external debt of subsidiary on acquisition 12 - (1.2)
Settlement of derivative financial instruments (3.7) (1.7)
Interest paid (46.3) (41.8)
Dividends paid to equity holders of the Company 7 (45.8) (94.0)
Purchase of shares for LTIP & other awards (0.1) -
Net cash used in financing activities (191.7) (188.0)
Net increase in cash & cash equivalents 32.2 34.2
Cash & cash equivalents at the beginning of the period 179.3 166.6
Foreign currency translation differences 45.5 (21.5)
Cash & cash equivalents at the end of the period 257.0 179.3
The cash flows from discontinued operations included above are disclosed separately in note 5.
Consolidated Statement of Changes in Equity
for the period ended 31 December 2016
Share capital Share premium Merger reserve Treasury shares Capital redemption reserve Foreign currency translation reserve Hedge accounting reserve Retained earnings Attributable to equity holders of the Company Non- controllinginterests Total equity
£m £m £m £m £m £m £m £m £m £m £m
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
Loss for the period - - - - - - - (178.7) (178.7) (0.3) (179.0)
Losses taken to equity on cash flow hedges - - - - - - (2.8) - (2.8) - (2.8)
Exchange losses on translation of foreign operations - - - - - (12.7) - - (12.7) (0.3) (13.0)
Exchange losses on net investment hedges - - - - - (16.5) - - (16.5) - (16.5)
Remeasurements on defined benefit plans - - - - - - - 13.5 13.5 - 13.5
Reclassification adjustments on cash flow hedges - - - - - - 1.6 - 1.6 - 1.6
Tax relating to other comprehensive income (expense) - - - - - - 1.2 (2.1) (0.9) - (0.9)
Total net comprehensive expense for the period - - - - - (29.2) - (167.3) (196.5) (0.6) (197.1)
Issue of shares - - 9.4 - - - - - 9.4 - 9.4
Share-based payments credit inclusive of tax charge - - - - - - - (2.7) (2.7) - (2.7)
Dividends - - - - - - - (94.0) (94.0) - (94.0)
At 1 January 2016 26.8 38.0 9.4 (5.8) 0.5 (41.8) (2.0) 1,166.5 1,191.6 6.2 1,197.8
Profit for the period - - - - - - - 38.3 38.3 (0.1) 38.2
Losses taken to equity on cash flow hedges - - - - - - (0.7) - (0.7) - (0.7)
Exchange gains on translation of foreign operations - - - - - 374.8 - - 374.8 2.6 377.4
Reclassification of exchange losses on discontinued operations - - - - - 0.8 - - 0.8 - 0.8
Exchange losses on net investment hedges - - - - - (142.0) - - (142.0) - (142.0)
Remeasurements on defined benefit plans - - - - - - - (53.0) (53.0) - (53.0)
Reclassification adjustments on cash flow hedges - - - - - - 1.9 - 1.9 - 1.9
Tax relating to other comprehensive income (expense) - - - - - - 0.2 8.6 8.8 - 8.8
Total net comprehensive income for the period - - - - - 233.6 1.4 (6.1) 228.9 2.5 231.4
Acquisition of non-controlling interest - - - - - - - (3.8) (3.8) (0.2) (4.0)
Issue of shares 0.5 48.2 - - - - - - 48.7 - 48.7
Cost of share-based payments inclusive of tax charge - - - - - - - 4.3 4.3 - 4.3
Dividends - - - - - - - (94.5) (94.5) - (94.5)
Purchase of shares* - - - (0.1) - - - - (0.1) - (0.1)
At 31 December 2016 27.3 86.2 9.4 (5.9) 0.5 191.8 (0.6) 1,066.4 1,375.1 8.5 1,383.6
1,383.6
* These shares were purchased on the open market and are held by the Estera 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 period ended 31 December 2016 ("2016") 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 period ended 31 December 2016 within the meaning of section 434 of the Companies Act 2006 and has been extracted from
the full financial statements for the period ended 31 December 2016.
Statutory financial statements for the 52 weeks ended 1 January 2016 ("2015"), 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 52 weeks
ended 1 January 2016 and for the period ended 31 December 2016 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 period ended 31
December 2016 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
where otherwise indicated.
The accounting policies which follow are consistent with those of the previous period. Several new amendments apply for
the first time in 2016:
· Accounting for acquisitions of interests in joint operations - Amendments to IFRS 11;
· Clarification of acceptable methods of depreciation and amortisation - Amendments to IAS 16 and IAS 38;
· Annual improvements to IFRSs 2012 - 2014 cycle; and
· Disclosure initiative - Amendments to IAS 1.
In addition to the above there are no other new standards or interpretations which are considered to have a material impact
on the annual consolidated financial statements of the Group.
Comparative period - restatements
i) Discontinued operations
During the current period, the Group has disposed of its non-core renewable assets which formed part of the Flow Control
division. These businesses are therefore treated as discontinued operations. As a result of this, these financial
statements have been re-presented and restated where required as if operations discontinued during the current year had
been discontinued from the start of the comparative period (note 5).
ii) Business combinations - update to provisional fair values
During the year, the provisional fair values attributed to the 2015 Delta Industrial Valves, Inc. (Delta Valves)
acquisition were finalised. In accordance with IFRS 3 'Business Combinations', the net impact of the adjustments to the
provisional fair values has been recognised by means of an increase to goodwill and the adjustments to the provisional
amounts have been recognised as if the accounting for the business combinations had been completed at the relevant
acquisition date. As such, all affected balances and amounts have been restated in the financial statements. The
Consolidated Balance Sheet and affected notes present restated comparative information as at 1 January 2016. There was no
material impact on the Consolidated Income Statement or Consolidated Statement of Comprehensive Income as a result of the
finalisation of the provisional fair values.
The table below reflects the adjustments made to finalise the Delta Valves fair values.
Provisional Final
fair values fair values Adjustments
1 January 2016 1 January 2016 to fair values
£m £m £m
Trade & other payables (3.1) (3.3) (0.2)
Goodwill arising on acquisition 14.8 15.0 0.2
Impact on net assets -
Exceptional items & intangible amortisation
In order to provide the users of the financial statements with a more relevant presentation of the Group's underlying
performance, on a like for like basis, profit for each period 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. These specific items are presented on the face of the income statement
to provide greater clarity and a better understanding of the impact of these items on the Group's financial performance.
In doing so, it also facilitates greater comparison of the Group's underlying results with prior periods and assessment of
trends in financial performance. This split is consistent with how underlying business performance is measured internally.
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 has been shown separately to provide visibility over the on-going impact on the Group's income
statement of prior and current year period investment activities.
Further analysis of the items included in the column 'Exceptional items & intangibles amortisation' is provided in note 3
to the financial statements.
Non-GAAP measures
The financial statements are 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. In measuring our performance,
the financial measures that we use include those which have been derived from our reported results in order to eliminate
factors which distort period-on-period comparisons. These are considered non-GAAP financial measures. We believe this
information, along with comparable GAAP measurements, is useful to investors in providing a basis for measuring our
operational performance. Our management uses these financial measures, along with the most directly comparable GAAP
financial measures, in evaluating our performance and value creation. Non-GAAP financial measures should not be considered
in isolation from, or as a substitute for, financial information in compliance with GAAP. Non-GAAP financial measures as
reported by the Group may not be comparable with similarly titled amounts reported by other companies.
Below we set out our definitions of non-GAAP measures and provide reconciliations to relevant GAAP measures
Free cash flow
Free cash flow (FCF) is defined as cash flow from operating activities adjusted for income taxes, net capital expenditures,
net interest payments, dividends paid, settlement of derivatives and pension contributions. FCF reflects an additional way
of viewing our liquidity that we believe is useful to investors as it represents cash flows that could be used for
repayment of debt or to fund our strategic initiatives, including acquisitions, if any.
The reconciliation of cash flow from operating activities to FCF is as follows.
2016 2015
£m £m
Cash flow from operating activities 292.6 396.5
Income tax paid (15.7) (50.4)
Net capital expenditure from purchase & disposal of property, plant & equipment & intangibles (62.4) (87.7)
Net interest paid (39.8) (37.9)
Dividends paid to equity holders of the Company (45.8) (94.0)
Dividends received from joint ventures 7.3 10.0
Settlement of derivative financial instruments (3.7) (1.7)
Additional pension contributions paid (2.8) (2.6)
129.7 132.2
EBITDA
EBITDA is operating profit from continuing operations, before exceptional items and intangibles amortisation, excluding depreciation. EBITDA is used in conjunction with other GAAP and non-GAAP financial measures to assess our operating performance. A reconciliation of EBITDA to the closest equivalent GAAP measure, operating profit, is provided.
Restated (note 1)
2016 2015
£m £m
Continuing operations
Operating profit (loss) 90.3 (133.1)
Adjusted for:
Intangibles amortisation 50.2 51.8
Exceptional items (note 3) 73.5 338.8
Depreciation of property, plant & equipment 55.9 62.0
269.9 319.5
2. Segment information
For strategic reasons, the Group has re-organised its three operating divisions: Minerals, Oil & Gas and Flow Control
(previously Minerals, Oil & Gas and Power & Industrial). The strategic restructuring of the Power & Industrial division led
to it being renamed Weir Flow Control and it now incorporates the downstream-orientated pump businesses Floway and
Gabbioneta, which were previously in the Minerals and Oil & Gas divisions respectively. This created a division clearly
focused on flow control opportunities in power, oil and gas and other process industries. Comparative information has been
restated to reflect the change in management structure.
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 Officer 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 Flow Control segment
designs and manufactures valves and pumps as well as providing specialist support services to the global power generation,
industrial and oil and gas sectors.
The Chief Executive Officer 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 Officer with respect to assets and liabilities are measured in a manner consistent with that of the financial
statements. The assets are allocated based on the operations of the segment and the physical location of the asset. The
liabilities are allocated based on the operations of the segment.
Transfer prices between business segments are set on an arm's length basis, in a manner similar to transactions with third
parties.
2. Segment information (continued)
The segment information for the reportable segments for 2016 and 2015 is disclosed below.
Minerals Oil & Gas Flow Control Total continuing operations
Restated(note 1) Restated(note 1) Restated(note 1) Restated(note 1)
2016 2015 2016 2015 2016 2015 2016 2015
£m £m £m £m £m £m £m £m
Revenue
Sales to external customers 1,112.0 1,000.8 401.4 541.4 331.5 337.6 1,844.9 1,879.8
Inter-segment sales 6.1 4.4 12.8 13.5 14.7 15.5 33.6 33.4
Segment revenue 1,118.1 1,005.2 414.2 554.9 346.2 353.1 1,878.5 1,913.2
Eliminations (33.6) (33.4)
1,844.9 1,879.8
Sales to external customers - 2015 at 2016 average exchange rates
Sales to external customers 1,112.0 1,091.0 401.4 603.7 331.5 368.5 1,844.9 2,063.2
Segment result
Segment result before share of results of joint ventures 217.0 192.4 (16.2) 43.5 30.1 32.2 230.9 268.1
Share of results of joint ventures - - 7.2 8.3 - - 7.2 8.3
Segment result 217.0 192.4 (9.0) 51.8 30.1 32.2 238.1 276.4
Unallocated expenses (24.1) (18.9)
Operating profit before exceptional items & intangibles amortisation 214.0 257.5
Total exceptional items & intangibles amortisation (127.5) (393.0)
Net finance costs before exceptional items (40.7) (35.5)
Other finance costs - retirement benefits (3.0) (3.3)
Profit (loss) before tax from continuing operations 42.8 (174.3)
Segment result - 2015 at 2016 average exchange rates
Segment result before share of results of joint ventures 217.0 212.7 (16.2) 49.1 30.1 36.0 230.9 297.8
Share of results of joint ventures - - 7.2 9.3 - - 7.2 9.3
Segment result 217.0 212.7 (9.0) 58.4 30.1 36.0 238.1 307.1
Unallocated expenses (24.1) (19.0)
Operating profit before exceptional items & intangibles amortisation 214.0 288.1
There are no material revenues derived from a single external customer.
2. Segment information (continued)
Minerals Oil & Gas Flow Control Total Group
Restated(note 1) Restated(note 1) Restated(note 1) Restated(note 1)
2016 2015 2016 2015 2016 2015 2016 2015
£m £m £m £m £m £m £m £m
Assets & liabilities
Intangible assets 652.4 562.0 815.2 703.9 137.5 130.0 1,605.1 1,395.9
Property, plant & equipment 226.1 191.6 90.9 115.6 75.4 61.5 392.4 368.7
Working capital assets 523.0 422.9 290.2 277.4 248.0 245.8 1,061.2 946.1
1,401.5 1,176.5 1,196.3 1,096.9 460.9 437.3 3,058.7 2,710.7
Investments in joint ventures - - 40.5 33.4 - - 40.5
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