REG - Weir Group PLC - Half-year Report <Origin Href="QuoteRef">WEIR.L</Origin> - Part 3
27/07/2017 07:06
- Part 3: For the preceding part double click ID:nRSa1966Mb
intangibles amortisation 112.7 122.6
Total Group
Assets & liabilities
Intangible assets 621.2 617.7 750.9 766.4 137.6 113.6 1,509.7 1,497.7
Property, plant & equipment 216.9 215.6 83.9 119.0 72.6 74.2 373.4 408.8
Working capital assets 567.0 484.1 336.9 274.3 232.0 248.7 1,135.9 1,007.1
1,405.1 1,317.4 1,171.7 1,159.7 442.2 436.5 3,019.0 2,913.6
Investments in joint ventures - - 43.0 39.6 - - 43.0 39.6
Segment assets 1,405.1 1,317.4 1,214.7 1,199.3 442.2 436.5 3,062.0 2,953.2
Unallocated assets 433.0 391.8
Total assets 3,495.0 3,345.0
Working capital liabilities 318.4 271.0 168.3 106.4 160.2 163.2 646.9 540.6
Unallocated liabilities 1,518.3 1,488.8
Total liabilities 2,165.2 2,029.4
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 and retirement benefit deficits as well as
liabilities relating to head office activities.
2. Segment information (continued)
Period ended 31 December 2016 Minerals Oil & Gas Flow Control Totalcontinuingoperations
£m £m £m £m
Revenue
Sales to external customers 1,112.0 401.4 331.5 1,844.9
Inter-segment sales 6.1 12.8 14.7 33.6
Segment revenue 1,118.1 414.2 346.2 1,878.5
Eliminations (33.6)
1,844.9
Sales to external customers - 2016 at 2017 average exchange rates
Sales to external customers 1,213.7 429.6 351.1 1,994.4
Segment result
Segment result before share of results of joint ventures 217.0 (16.2) 30.1 230.9
Share of results of joint ventures - 7.2 - 7.2
Segment result 217.0 (9.0) 30.1 238.1
Unallocated expenses (24.1)
Operating profit before exceptional items & intangibles amortisation 214.0
Total exceptional items & intangibles amortisation (127.5)
Net finance costs before exceptional items (40.7)
Other finance costs - retirement benefits (3.0)
Profit before tax from continuing operations 42.8
Segment result - 2016 at 2017 average exchange rates
Segment result before share of results of joint ventures 236.7 (17.6) 32.4 251.5
Share of results of joint ventures - 7.8 - 7.8
Segment result 236.7 (9.8) 32.4 259.3
Unallocated expenses (24.4)
Operating profit before exceptional items & intangibles amortisation 234.9
Total Group
Assets & liabilities
Intangible assets 652.4 815.2 137.5 1,605.1
Property, plant & equipment 226.1 90.9 75.4 392.4
Working capital assets 523.0 290.2 248.0 1,061.2
1,401.5 1,196.3 460.9 3,058.7
Investments in joint ventures - 40.5 - 40.5
Segment assets 1,401.5 1,236.8 460.9 3,099.2
Unallocated assets 424.5
Total assets 3,523.7
Working capital liabilities 311.6 150.6 169.4 631.6
Unallocated liabilities 1,508.5
Total liabilities 2,140.1
3. Revenues & expenses
The following disclosures are given in relation to continuing operations and exclude exceptional items & intangibles amortisation.
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m
A reconciliation of revenue to operating profit is as follows
1,844.9 Revenue 1,091.0 866.1
(1,241.7) Cost of sales (766.9) (577.1)
603.2 Gross profit 324.1 289.0
5.6 Other operating income 3.9 1.8
(221.1) Selling & distribution costs (128.5) (100.9)
(180.9) Administrative expenses (93.7) (90.4)
7.2 Share of results of joint ventures 6.9 3.5
214.0 Operating profit 112.7 103.0
Details of exceptional items and intangibles amortisation are provided in note 4.
4. Exceptional items & intangibles amortisation
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
Recognised in arriving at operating profit from continuing operations
(50.2) Intangibles amortisation (26.8) (23.8)
(0.4) Exceptional item - intangibles impairment - -
(63.8) Exceptional item - restructuring and rationalisation charges (3.3) (30.6)
(17.0) Exceptional Item - China operations - -
5.1 Exceptional item - gain on sale and leaseback of properties - -
(1.1) Exceptional item - legal claims (1.1) -
3.7 Exceptional item - fair value adjustment to contingent consideration liability (0.5) 0.1
(123.7) (31.7) (54.3)
Recognised in finance costs
(3.8) Exceptional item - unwind in respect of contingent consideration liability (0.8) (1.9)
Restructuring and rationalisation charges represent the additional cost of programmes which commenced in prior periods to
right size operations and discontinue certain activities. The restructuring and rationalisation exceptional cost of £3.3m
comprises £4.2m of restructuring costs for programmes commenced in 2016, offset by un-utilised releases of £0.9m for
onerous lease contracts and the reversal of an impairment following the disposal of a North American property.
Other exceptional items in the period relate to costs of £1.1m associated with the extension of a prior period legal claim,
a fair value adjustment of £1.0m related to the acquisition of Weir International, offset by a £0.5m credit following the
settlement of Delta deferred consideration and £0.8m unwind of contingent consideration liability for Weir International.
5. Tax expense
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
Continuing operations
(1.4) Group - UK (3.2) 1.3
1.8 Group - overseas (9.6) (2.9)
0.4 Total income tax (expense) credit in the Consolidated Income Statement (12.8) (1.6)
The total income tax (expense) credit is disclosed in the Consolidated Income Statement as follows:
(38.4) - continuing operations before exceptional items & intangibles amortisation (21.6) (17.9)
21.0 - exceptional items 0.3 8.3
17.8 - intangibles amortisation and impairment 8.5 8.0
0.4 Total income tax (expense) credit in the Consolidated Income Statement (12.8) (1.6)
(1.6) Total income tax expense included in the Group's share of results of joint ventures (0.6) (0.8)
The underlying effective tax rate for the full financial year 2017 is estimated at 23.6% (full year 2016: 22.5%), based on the weighted average effective tax rate across all jurisdictions. Therefore the underlying effective tax rate used for the half year 2017 was 23.6% (half year 2016: 21.9%).
6. Discontinued operations
Description
During the period ended 30 June 2017 there were no
disposals of businesses which meet the definition
of a discontinued operation under IFRS 5.
The Group disposed of Ynfiniti Engineering Services
(31 May 2016), American Hydro Corporation and the
trade and assets of the Montreal business of Weir
Canada Inc. (30 June 2016) for a combined
consideration of £38.4m of which £3.6m was to be
held in escrow for one year. £0.6m has been
received in the current period with a £0.1m
adjustment to deferred consideration recorded in
discontinued operations. The remainder of the
escrow balance is due for settlement in July 2017.
The prior year also included a maximum contingent
consideration of £1.9m with £0.8m initially
recognised and the balance being settled in 2016.
Exceptional items and intangibles amortisation in
the prior period related to intangibles
amortisation of £0.1m and a charge of £4.0m for
reassessment of liabilities related to previous
disposals.
Financial performance and cash flow information for
discontinued operations
Period ended Period ended 30 June 2017 Period ended 30 June 2016
31 December 2016 Before exceptional items & intangibles amortisation Exceptional items & intangibles amortisation Before exceptional items & intangibles amortisation Exceptional items & intangibles amortisation
Total Total Total
£m £m £m £m £m £m £m
(3.8) Profit (loss) before tax from discontinued operations - (0.1) (0.1) 0.3 (4.1) (3.8)
1.6 Tax (expense) credit - - - (1.2) 0.8 (0.4)
(2.2) (Loss) profit after tax from discontinued operations - (0.1) (0.1) (0.9) (3.3) (4.2)
(2.8) Loss on sale of the subsidiaries after income tax (see below) - - - - (3.1) (3.1)
(5.0) (Loss) profit for the period from discontinued operations - (0.1) (0.1) (0.9) (6.4) (7.3)
0.8 Reclassification of foreign currency translation reserve - - - 0.8 - 0.8
0.8 Other comprehensive income from discontinued operations - - - 0.8 - 0.8
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
(4.4) Cash flows from operating activities - (4.3)
(0.4) Cash flows from investing activities - (0.4)
(4.8) Net (decrease) in cash and cash equivalents from discontinued operations - (4.7)
Loss per share
Loss per share from discontinued operations were as
follows.
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
pence pence pence
(2.3) Basic - (3.4)
(2.3) Diluted - (3.4)
These loss 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
7.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the period attributable to
equity holders of the Company by the weighted average number of ordinary shares outstanding during the
period. Diluted earnings per share amounts are calculated by dividing the net profit attributable to
equity holders of the Company by the weighted average number of ordinary shares outstanding during the
period (adjusted for the effects of dilutive share awards and shares to be issued as part of the
proposed KOP acquisition).
The following reflects the earnings and share data used in the calculation of earnings per share.
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
Profit attributable to equity holders of the Company
38.3 Total operations* (£m) 46.0 16.2
43.3 Continuing operations* (£m) 46.1 23.5
132.0 Continuing operations before exceptional items & intangibles amortisation* (£m) 69.8 63.4
Weighted average share capital
215.6 Basic earnings per share (number of shares, million) 217.9 214.3
216.9 Diluted earnings per share (number of shares, million) 222.2 215.6
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.
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
Shares Shares Shares
Million Million Million
215.6 Weighted average number of ordinary shares for basic earnings per share 217.9 214.3
1.3 Effect of dilution: LTIP awards and share issue 4.3 1.3
216.9 Adjusted weighted average number of ordinary shares for diluted earnings per share 222.2 215.6
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.
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
43.3 Net profit attributable to equity holders from continuing operations* 46.1 23.5
88.7 Exceptional items & intangibles amortisation net of tax 23.7 39.9
132.0 Net profit attributable to equity holders from continuing operations before exceptional items & intangibles amortisation * 69.8 63.4
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
pence pence pence
Basic earnings per share:
17.8 Total operations* 21.1 7.6
20.1 Continuing operations* 21.2 11.0
61.2 Continuing operations before exceptional items & intangibles amortisation* 32.0 29.6
Diluted earnings per share:
17.7 Total operations* 20.7 7.5
20.0 Continuing operations* 20.7 10.9
60.8 Continuing operations before exceptional items & intangibles amortisation* 31.4 29.4
*Adjusted for £0.2m (2016: £0.3m) in respect of non-controlling interests.
There have been no share options (2016: nil) exercised between the reporting date and the date of
signing of these financial statements.
Loss per share from discontinued operations are disclosed in note 6.
8. Dividends paid & proposed
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
Declared & paid during the period
Equity dividends on ordinary shares
62.0 Final dividend for 2016: 29.0p (2015: 29.0p) 63.1 62.0
32.5 Interim dividend: see below (2016: 15.0p) - -
94.5 63.1 62.0
63.1 Final dividend for 2016 proposed for approval by shareholders at the AGM: 29.0p - -
- Interim dividend for 2017 declared by the Board: 15.0p (2016: 15.0p) 33.5 32.5
The Weir Group PLC Scrip Dividend Scheme allows shareholders on record the opportunity to elect to
receive dividends in the form of new fully paid ordinary shares. In the current period participation
in the Scheme resulted in shares with a value of £6.4m being issued and a cash dividend of £56.7m for
the 2016 final dividend. In the prior year, for the 2015 final dividend, shares with a value of £29.6m
were issued with a cash dividend of £32.4m. For the 2016 interim dividend, shares with a value of
£19.1m were issued with a cash dividend of £13.4m.
The proposed final dividend and the declared interim dividend are 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 actual dividend paid may differ due to increases or decreases in the number
of shares in issue between the date of approval of the financial statements and the record date for
the dividend.
9. Property, plant & equipment & intangible assets
Period ended Period ended Period ended
31 December 2016 30 June 2017 30 June 2016
£m £m £m
Additions of property, plant & equipment & intangible assets
19.2 Land & buildings 5.1 11.9
35.1 Plant & equipment 21.5 12.7
23.5 Intangible assets 10.3 17.6
77.8 36.9 42.2
The above additions relate to the normal course of business and do not include any additions made by way of business combinations.
10. Provisions
Warranties & onerous sales contracts Employee related Exceptional rationalisation Other Total
£m £m £m £m £m
At 31 December 2016 23.5 69.4 47.1 3.4 143.4
Additions 9.6 1.1 5.3 2.1 18.1
Utilised (5.7) (2.0) (18.5) (0.3) (26.5)
Unwind - 0.6 - - 0.6
Unutilised (0.5) (0.2) (0.4) (0.1) (1.2)
Transfers 4.4 - (4.4) - -
Exchange adjustment (0.7) (3.3) (1.6) (0.2) (5.8)
At 30 June 2017 30.6 65.6 27.5 4.9 128.6
Current 24.6 18.6 24.1 4.7 72.0
Non-current 6.0 47.0 3.4 0.2 56.6
At 30 June 2017 30.6 65.6 27.5 4.9 128.6
Current 19.1 12.7 29.4 2.8 64.0
Non-current 4.8
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