Interim Results - Replacement

Weir Group PLC 22 August 2001 The issuer advises that the following replaces The Weir Group Interim Results 2001 released today at 0730 RNS No 8523I. Payment of the Interim dividend will be made to shareholders on the register at close of business on 14 September 2001 and not 12 September 2001 as previously stated. The amended announcement is shown in full below. THE WEIR GROUP PLC INTERIM RESULTS 2001 Results for 26 weeks ended 29th June 2001 (unaudited) Highlights Group Results Ongoing Operations 3 2001 2001 Turnover £462m +10% £451m +17% Operating Profit 1 £29.5m -6% £32.5m +6% Pre-Tax Profit 1 £25.6m no change Earnings per share 1 9.6p no change Dividend 3.15p +5% Order Intake2 £390m +12% £379m +21% (2001 exchange rates) 1: Excludes goodwill amortisation and exceptionals. 2: Excludes Joint Ventures and Associates. 3: Excludes discontinued and discontinuing businesses. The Chairman, Sir Ron Garrick, commented as follows. 'During the first half of 2001 the value of orders booked by Group subsidiaries reached record levels despite the current uncertain economic conditions in global markets. 'Operating profits from ongoing operations are improving and we expect to make further progress during the remainder of the year.' Enquiries: The Weir Group PLC Available through UBS Warburg Sir Ron Garrick, Chairman Tel. 020 7567 0800 (switchboard); Mark Selway, Chief Executive Tel 020 7568 0566/0554 (direct) Helen Walker, Public Relations Manager (Mobile: 07802 431 385) The Maitland Consultancy Tel. 020 7379 5151 Angus Maitland Suzanne Bartch (Mobile: 07769 710 335) General Overview During 2001 we have continued to implement our strategy to build shareholder value by focussing on those areas of our business where significant market positions can be established and stronger growth achieved. In early July 2001 we announced the sale of Weir Systems Limited and our intention to withdraw from Tooling Products, G. Perry and the Manchester operation of Strachan & Henshaw (formerly known as Bridgetest Holdings). At that time we indicated that the results for 2001 would include an exceptional charge of £15m, of which approximately half related to asset impairment and goodwill which had previously been written off to reserves. Approximately £6m has been included in the interim results. The initial cash outflow will be fully recovered, in time, from the release of working capital and the sale of fixed assets. Prior to exceptionals and goodwill amortisation the pre tax profit for the Group as a whole in 2001 was similar to last year. However for ongoing operations an improving trend was evident. Order input for Group subsidiaries in the first half of 2001 at £390m was a record level for any six month period as was the order input from ongoing operations at £379m. In the current uncertain economic conditions in global markets, this was a particularly pleasing result. The increased business came mainly from the oil and gas, minerals processing, power generation and naval & marine markets. Summary of Results Total Group turnover rose to £462m (2000 : £420m) with £371m (2000 : £358m) being generated from Group subsidiaries and £91m (2000 : £62m) from Joint Ventures and Associates. Operating profit for ongoing operations at £32.5m (2000 : £30.7m) is up by about 6% from 2000. Whilst it is not practical to produce a pro forma pre tax profit for ongoing operations for last year, the removal of the non core businesses will make a significant improvement in performance at the pre tax level. Pre tax profit before goodwill amortisation and exceptionals was broadly similar to the previous year at £25.6m, (2000 : £25.5m) and is in line with the statements made in the 2000 Annual Report and at the AGM in May 2001. The interim tax charge is based on the estimated effective tax rate for the full year of 25%, the same as last year, and as a result earnings per share are unchanged at 9.6p. An interim dividend of 3.15p (2000 : 3.0p) is declared, an increase of 5%. The Group's net debt at the half year was £105m substantially down on the June 2000 level of £168m but slightly up on the end 2000 level of £95m. The first half of the year normally produces an outflow of funds due to payment of the final dividend in June. Engineering Products Excluding discontinued and discontinuing businesses, turnover from Engineering Products was £285m (2000 : £260m) resulting in an operating profit of £22.8m (2000 : £22.5m). Pumps and valves accounted for over 75% of the ongoing operations turnover. At the operating profit level, the margin was 8.0% compared with 8.7% in 2000. The main reasons for the reduction were a lack of volume in some operations, mix changes in others and competitive pricing in all of our markets. With an expectation of higher volumes margins should be stronger in the second half of 2001. Engineering Services Turnover from ongoing service operations was £75m (2000 : £65m) and operating profits were £5.6m (2000 : £5.1m). This resulted in an operating margin of 7.4% compared with 7.8% in 2000. A good performance from our service operations in the UK, Middle East and Canada was offset to some extent by a reduction in drilling activity in the UK sector of the North Sea. Steps have been taken to transfer equipment from the UK to other parts of the world and some recovery is therefore expected during the remainder of the year. Joint Ventures and Associates The main turnover from Joint Ventures and Associates came from Engineering Services businesses and at £90m for the half year, there was substantial growth over the £62m achieved in 2000. Operating profit at £5.1m (2000 : £3.9m) produced an operating margin of 5.6% (2000 : 6.4%). Most of the increased turnover came from Devonport Dockyard where a current contract has generated high billings but profit determination awaits completion. Other Joint Ventures and Associate companies performed well with both increased turnover and margins. The Board Mark Selway became Chief Executive of the Group on 5 June. He has extensive manufacturing and commercial experience of engineering businesses in the automotive sector and he has run companies in the UK, USA, Australia, Europe and the Far East. By the middle of September he will have visited most of the Group's global operations and become familiarised with our activities. At that time it is my intention to revert to a part time Chairman's role but of course I shall be available to Mark Selway as required to ensure a smooth transfer of responsibilities. David Dunbar, the Chief Operating Officer of the Group reaches his normal retirement date at the end of August and will leave the Board at that time. David has made a significant contribution to the success of the Group in recent years and I am delighted that he has agreed to continue to represent the company on the Boards of our associate companies namely DML and First Engineering Limited. He has also agreed to be available to Mark Selway in an advisory capacity and on a part time basis until March 2002. Strategy and Prospects The strategy being followed by the Group is to concentrate our financial resources on those areas of our business where we can establish significant market positions which will lead to stronger growth. In the year to date we have taken action to dispose or withdraw from four businesses and we continue to seek suitable acquisitions to strengthen core activities. Current economic conditions are likely to provide greater opportunities to grow by acquisition. On prospects, it is evident from the Group's results that as we implement our strategy to concentrate on core activities, operating profits from ongoing operations are improving and we expect to make further progress during the remainder of the year. CONSOLIDATED PROFIT AND LOSS ACCOUNT 26 weeks to 29 26 weeks to 29 26 weeks 52 weeks to 29 June 2001 June 2001 to Dec 2000 30 June 2000 Continuing Discontinued Total £'000 £'000 £'000 £'000 £'000 TURNOVER Group - Ongoing 360,513 - 360,513 324,057 680,313 - Discontinuing 7,619 - 7,619 11,338 19,458 - Discontinued - 3,303 3,303 22,981 46,165 ----------- --------- ------ ------- -------- 368,132 3,303 371,435 358,376 745,936 Share of - Joint 5,090 - 5,090 3,383 8,044 Ventures - Associates 85,503 - 85,503 58,350 128,872 ------- ------- ------- --------- ----------- 458,725 3,303 462,028 420,109 882,852 ======== ====== ====== ======= ======= OPERATING PROFIT Group - Ongoing 27,484 - 27,484 26,793 61,419 - Discontinuing (2,576) - (2,576) (589) (305) - Discontinued - (420) (420) 1,336 3,247 - Goodwill (3,324) - (3,324) (3,760) (6,705) amortisation ---------- -------- ------- ---------- ---------- 21,584 (420) 21,164 23,780 57,656 Share of - Joint 1,112 - 1,112 466 1,123 Ventures - Associates 3,923 - 3,923 3,483 7,391 --------- -------- -------- --------- ---------- 26,619 (420) 26,199 27,729 66,170 ---------- --------- EXCEPTIONAL (6,082) - 2,317 ITEMS INTEREST AND OTHER INCOME Group (3,909) (5,676) (11,459) Joint Ventures (5) (7) (10) Associates 33 (278) (192) ------- -------- --------- (3,881) (5,961) (11,661) --------- --------- ----------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 16,236 21,768 56,826 ESTIMATED TAX ON PROFIT ON ORDINARY ACTIVITIES 5,868 6,382 15,276 -------- -------- ---------- PROFIT ON ORDINARY ACTIVITIES AFTER TAX 10,368 15,386 41,550 Minority Interest 23 20 74 ------- ------- --------- PROFIT ATTRIBUT-ABLE TO THE WEIR GROUP PLC 10,345 15,366 41,476 ====== ====== ====== EARNINGS PER SHARE 5.1p 7.7p 20.7p EARNINGS PER SHARE EXCLUDING GOODWILL AMORTISATION AND EXCEPTIONAL ITEMS 9.6p 9.6p 22.9p DILUTED EARNINGS PER SHARE 5.1p 7.7p 20.7p DIVIDENDS 26 weeks to 26 weeks to 52 weeks to 29 June 30 June 29 December 2000 2001 2000 Ordinary Shares pence per share 3.15p 3.0 11.0 costing - £'000 6,364 5,999 22,079 An interim dividend of 3.15p (net) per ordinary share (2000: 3.0p per ordinary share) will be paid on 9 November 2001 to shareholders on the register at close of business on 14 September 2001. EXCEPTIONAL ITEMS 26 26 52 weeks to 29 weeks weeks December 2000 to to 29 June 30 June 2001 2000 £'000 £'000 £'000 (Loss) profit on disposal of discontinued operations Pre-goodwill 400 - 11,961 Goodwill (1,520) - (9,644) ------- ------- ----------- (1,120) - 2,317 ------- -------- ----------- Impairment of fixed assets of discontinuing operations Tangible assets (2,506) - - Goodwill (2,456) - - ------- ------- ----------- (4,962) - - ------- ------- ----------- Total exceptional items (6,082) - 2,317 ------ -------- ----------- The loss on disposal of discontinued operations relates to the disposal of Weir Systems Ltd which was completed on 29 June 2001. The results of Weir Systems Ltd for the six months to date of disposal have been shown in the profit and loss account as 'discontinued' and prior year figures have been restated accordingly. The comparative figures for the 52 weeks to 29 December 2000 reflect the profit on disposal of Darchem Engineering Ltd . The results of Darchem Engineering Ltd for prior years to date of disposal on 22 December 2000 are shown in the profit and loss account as 'discontinued'. Businesses in the process of disposal or closure which were referred to in the announcement of 5 July 2001 are categorised as 'discontinuing operations' and in accordance with FRS11 fixed asset impairment is recognised in the period to 29 June 2001. The businesses concerned are Tooling Products Ltd, G Perry & Sons Ltd and the Manchester operation of Strachan & Henshaw Ltd. The results of these operations are separately identified under the heading of 'continuing' activities in the profit and loss account. TAX 26 weeks 26 weeks 52 weeks to to to 29 June 30 June 29 December 2001 2000 2000 £'000 £'000 £'000 Group - United Kingdom 1,103 1,072 3,922 Group - Overseas 3,999 4,207 8,789 Joint Ventures 112 63 148 Associates 1,196 1,040 2,417 UK tax on exceptional item (542) - - ---------- --------- --------- Tax on Profit on Ordinary 5,868 6,382 15,276 Activities -------- -------- --------- BASIS OF PREPARATION The interim financial statements are unaudited and do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. These statements have been prepared on the basis of the accounting policies set out in the Group's 2000 Annual Report and Accounts, and were approved by the Board of Directors on 22 August 2001. Financial statements for the 52 weeks to 29 December 2000 are abridged statements; full accounts with an unqualified audit report have been lodged with the Registrar. INTERIM RESULTS The Interim Results will be sent to shareholders and copies will be available from The Weir Group PLC, 149 Newlands Road, Cathcart, Glasgow G44 4EX SEGMENTAL ANALYSIS Turnover and profit on ordinary activities before tax were contributed as follows: 26 weeks to 29 June '01 26 weeks to 30 52 weeks to 29 Turnover June '00 Dec '00 Turnover Turnover £'000 £'000 £'000 ENGINEERING PRODUCTS Group Ongoing 285,485 259,902 548,471 Discontinuing 7,619 11,338 19,458 Discontinued - 14,565 30,763 ------------ ------------ ------------ 293,104 285,805 598,692 Share of Joint 600 - 815 Venture Share of Associates - - 507 -------- ---------- ---------- 293,704 285,805 600,014 ----------- ----------- ------------ ENGINEERING SERVICES Group Ongoing 75,028 64,756 137,863 Discontinued 3,303 8,416 15,402 --------- --------- ---------- 78,331 73,172 153,265 Share of Joint 4,490 3,383 7,229 Ventures Share of Associates 85,503 58,350 128,365 ------------ ------------ ------------ 168,324 134,905 288,859 ----------- ----------- ------------ SEGMENTAL TOTALS Group Ongoing 360,513 324,658 686,334 Discontinuing 7,619 11,338 19,458 Discontinued 3,303 22,981 46,165 Joint Ventures & 90,593 61,733 136,916 Associates Goodwill amortisation Engineering Products - - - Unallocated costs - - - Exchange adjustment Group - (601) (6,021) ------------ ----------- ------------ 462,028 420,109 882,852 Exceptional items Engineering Products - - - Engineering Services - - - Interest and other - - - income ---------- --------- ------------ 462,028 420,109 882,852 ------------ ----------- ------------ 26 weeks to 29 26 weeks to 30 52 weeks to 29 Dec June '01 June '00 '00 Profit Profit Profit £'000 £'000 £'000 ENGINEERING PRODUCTS Group Ongoing 22,865 22,516 52,223 Discontinuing (2,576) (589) (305) Discontinued - 1,538 3,511 ------------- ------------- ------------- 20,289 23,465 55,429 Share of Joint Venture (48) - 10 Share of Associates - - 37 --------- --------- ---------- 20,241 23,465 55,476 ---------- ----------- ---------- ENGINEERING SERVICES Group Ongoing 5,565 5,055 11,874 Discontinued (420) (202) (264) --------- -------- -------- 5,145 4,853 11,610 Share of Joint 1,160 466 1,113 Ventures Share of Associates 3,923 3,483 7,354 ----------- --------- --------- 10,228 8,802 20,077 ------------ ---------- --------- SEGMENTAL TOTALS Group Ongoing 28,430 27,571 64,097 Discontinuing (2,576) (589) (305) Discontinued (420) 1,336 3,247 Joint Ventures & 5,035 3,949 8,514 Associates Goodwill amortisation Engineering Products (3,324) (3,760) (6,705) Unallocated costs (946) (833) (2,256) Exchange adjustment Group - 55 (422) ------------ ------------ ----------- 26,199 27,729 66,170 Exceptional items Engineering Products (4,962) - 2,317 Engineering Services (1,120) - - Interest and other (3,881) (5,961) (11,661) income ----------- ----------- ------------ 16,236 21,768 56,826 ----------- ------------ ------------ For comparative purposes 2000 figures have been restated at the 29 June 2001 closing exchange rates. CONSOLIDATED BALANCE SHEET 29 June 2001 30 June 2000 29 December 2000 £'000 £'000 £'000 Fixed assets Goodwill 117,092 136,470 124,988 Tangible assets 121,990 137,714 127,250 Investments Joint ventures - share of gross assets 9,453 8,138 8,727 - share of gross liabilities 3,080 2,131 3,060 --------- ----------- ----------- 6,373 6,007 5,667 Associates 20,976 18,968 18,303 Other 431 359 428 ------------ ----------- ----------- 27,780 25,334 24,398 ----------- ----------- ------------ Total fixed assets 266,862 299,518 276,636 Current assets Stocks 125,286 137,600 113,048 Debtors 234,240 221,401 244,400 Cash at bank and in hand 76,983 34,302 96,244 ----------- ----------- ----------- 436,509 393,303 453,692 ----------- ----------- ------------ Creditors falling due within one year: Bank overdrafts and short term debt 8,472 15,260 7,991 Other borrowings 16,207 5,999 15,562 Other creditors 182,319 177,729 209,326 ------------ ------------- ------------- 206,998 198,988 232,879 ------------- ------------- ------------- Net current assets 229,511 194,315 220,813 ------------- ------------ ------------ Total assets less current liabilities 496,373 493,833 497,449 Less: Creditors falling due after more than one year: Loan capital 155,433 180,663 165,826 Obligations under finance leases 1,323 567 1,564 Provisions for liabilities and charges 44,775 40,352 42,314 Deferred income Grants not yet credited to profit 308 453 494 Minority interest 428 411 447 ---------- ----------- -------- 294,106 271,387 286,804 ----------- ----------- ----------- Capital and reserves Called up share capital 25,230 24,997 25,078 Reserves 268,876 246,390 261,726 ----------- ----------- ------------- 294,106 271,387 286,804 ------------ ----------- ------------ CONSOLIDATED CASH FLOW STATEMENT 26 weeks 26 weeks to 30 52 weeks to to June 2000 29 December 29 June 2000 2001 £'000 £'000 £'000 Cash inflow from operating activities Funds generated by operations 33,109 35,468 81,217 Increase in working capital (14,490) (22,984) (10,377) Cash spent on Warman (661) (2,031) (5,132) reorganisation costs ---------- ------------ ------------- 17,958 10,453 65,708 Dividends received from joint - - 911 ventures Dividends received from 248 5 3,948 associates Returns on investments and (5,240) (4,461) (10,540) servicing of finance Taxation (2,678) (2,139) (5,997) Capital expenditure and financial (6,668) (8,117) (13,565) investment Acquisitions - (4,884) (988) Disposals 146 3,842 30,278 Equity dividends paid (16,083) (14,997) (21,007) ---------- ------------- ------------- Cash outflow before liquid (12,317) (20,298) 48,748 resources and financing Management of liquid resources 12,763 3,944 (59,666) Financing - issue of shares - issues of shares 2,680 34 1,246 - new loans - 32,540 74,000 - debt repaid (8,166) (10,383) (55,648) - foreign exchange hedging (1,625) - - ---------- ------------ ------------ (7,111) 22,191 19,598 ---------- ------------ ------------ (Decrease) increase in Cash (6,665) 5,837 8,680 ---------- ----------- ------------ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT £'000 £'000 £'000 (Decrease) increase in cash (6,665) 5,837 8,680 Cash flow from debt repaid 8,166 10,383 55,648 Cash flow from new loans - (32,540) (74,000) Cash flow from management of liquid (12,763) (3,944) 59,666 resources ------------ ------------ ------------ Change in net debt resulting from cash (11,262) (20,264) 49,994 flows Loans - disposal - 108 111 Leases - inceptions - - (1,180) Exchange 1,489 (1,868) 2,518 ----------- ----------- ------------ Movement in net debt during the period (9,773) (22,024) 51,443 Net debt at 30th December 2000 (95,018) (146,461) (146,461) ---------- -------------- ------------- Net debt at 29th June 2001 (104,791) (168,485) (95,018) ------------- ------------- ------------ RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 26 weeks to 29 26 weeks to 30 52 weeks June 2001 June 2000 to 29 December 2000 £'000 £'000 £'000 Operating Profit 21,164 23,780 57,656 Depreciation, goodwill amortisation 13,424 15,014 28,603 and grant credits Surplus on disposal of tangible (451) (841) (1,655) assets and investments Pension prepayments (743) (1,187) (2,894) Provision movements (285) (1,298) (493) ---------- ----------- ----------- Funds generated by operations 33,109 35,468 81,217 ----------- ----------- ---------- (Increase) decrease in stocks (11,479) (8,761) 9,417 Decrease (increase) in debtors 8,887 (6,401) (37,021) (Decrease) increase in creditors (11,898) (7,822) 17,227 ------------ ----------- ------------ Increase in working capital (14,490) (22,984) (10,377) ------------- ------------- ------------ Exceptional Warman reorganisation costs: Accelerated depreciation - - 295 Provision movements (661) (2,031) (5,427) Cash spent on Warman reorganisation (661) (2,031) (5,132) costs --------- ------------ ------------ NET CASH INFLOW FROM OPERATING 17,958 10,453 65,708 ACTIVITIES ----------- ----------- ------------ STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES £'000 £'000 £'000 Profit excluding share of profits of Joint Ventures and Associates 6,590 12,805 35,729 Share of Joint Ventures' profit 995 396 965 Share of Associates' profit 2,760 2,165 4,782 --------- ----------- --------- Profit attributable to The Weir Group PLC 10,345 15,366 41,476 Exchange differences on foreign currency net 467 3,880 66 investments Tax thereon (1,346) (1,357) (1,512) ----------- ----------- ----------- TOTAL RECOGNISED GAINS 9,466 17,889 40,030 ----------- ----------- ----------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS £'000 £'000 £'000 Total recognised gains 9,466 17,889 40,030 Dividends (6,364) (5,999) (22,079) Goodwill released 1,520 695 8,839 Other movements New share capital subscribed 3,121 34 1,368 Cost of issuing shares (441) - (122) Net addition to shareholders' funds 7,302 12,619 28,036 Opening shareholders' funds 286,804 258,768 258,768 ------------ ------------ ------------ CLOSING SHAREHOLDERS' FUNDS 294,106 271,387 286,804 ------------ ----------- ------------- Shareholders' funds are entirely attributable to equity interests

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