The Weir Group PLC today reports its interim results for the six months up to 30 June 2017

 

Building momentum in improving markets

 

·      Accelerated recovery in North American oil and gas reflected in updated full year outlook (17/07/2017)

o  69% growth in North American revenue, strong operating leverage and modest pricing improvement

o  Growth accelerated in Q2, driving upgrade to full year guidance

·      Mining markets also improved supported by industry investment in productivity gains

o  11% order growth in H1 with a book-to-bill of 1.12

o  H1 operating margins reflect investment in growth, phasing of revenues and plant moves

·      Flow Control was loss making as a result of one-off charges of £13m

·      Order book puts Group in position to deliver strong constant currency revenue and profit growth in 2017

Continuing Operations2	H1 2017	H1 2016	Reported Growth	Constant Currency3
Order input3	£1,199m	£1,000m	n/a	20%
Revenue	£1,091m	£866m	26%	10%
Operating profit1	£113m	£103m	9%	-8%
Operating margin1	10.3%	11.9%	-160bps	-210bps
Profit before tax1	£92m	£82m	12%	-8%
Reported profit after tax	£46m	£24m	95%	n/a
Cash from operations4	£78m	£133m	-41%	n/a
Earnings per share1	32.0p	29.6p	8%	n/a
Dividend per share	15.0p	15.0p	0%	n/a
Return on capital employed5	7.2%	8.6%	n/a	-140bps
Net debt	£869m	£835m6	-£34m	-£69m

 

Jon Stanton, Chief Executive Officer, commented: 

 

"The first half of 2017 saw the Group make good progress as we fully captured opportunities in our main markets.  In North America, the Oil & Gas division delivered a great set of results with margins rapidly improving in recent weeks.  Demand increased sequentially, demonstrating shale's position as a competitive and sustainable source of global energy supply.  Mining markets also continued to improve with good demand for Weir's technology as customers sought to increase productivity. 

 

In our two main businesses we are transitioning from an intense downturn into a recovery and growth phase.  Our focus is on ensuring we take full advantage of improving markets and further enhance our leadership positions by investing in our distinctive competencies - People, Customers, Technology, and Performance - where we have made substantial progress in the first half.    

 

Looking to the rest of the year and assuming supportive commodity prices, expectations for our Oil & Gas division were recently upgraded, while guidance for our Minerals division remains unchanged. Overall, the Group expects to deliver strong constant currency revenue and profit growth, with good cash generation and substantial de-leveraging."

 

A live webcast of the management presentation will begin at 0830 (BST) on 27 July 2017 at www.investors.weir.  A recording of the webcast will also be available at www.investors.weir.

Enquiries:
Investors: Stephen Christie	+44 (0) 7795 110456
Media: Raymond Buchanan	+44 (0) 7713 261447
Brunswick PR advisers: Patrick Handley / Diana Vaughton	+44 (0) 20 7404 5959

Notes:

1	Adjusted to exclude exceptional items and intangibles amortisation.  Reported operating profit and profit before tax from continuing operations were £81m (2016: £49m) and £59m (2016: £25m) respectively.  Reported earnings per share were 21.2p (2016: 11.0p).
2	Continuing operations excludes American Hydro Corporation and Ynfiniti Engineering Services,which were disposed of during H1 2016 and are reported in discontinued operations.
3	2016 restated at H1 2017 average exchange rates.
4	Cash from operations includes continuing and discontinued operations.
5	Continuing operations EBIT before exceptional items on a constant currency basis (excluding exceptional items) divided by average net assets excluding net debt and pension deficit (net of deferred tax asset).
6	Net debt at 31 December 2016.

 

Strategic priorities

Weir provides highly engineered mission-critical solutions for global mining, oil and gas, power and other aftermarket-orientated process industries.  The Group's strategy, 'We are Weir', is focused on outperforming in four distinctive competencies: People; Customers; Technology and Performance.

People:

 

·      Safety: becoming a zero harm workplace

o  Excellent Group safety performance; 28% reduction in Total Incident Rate to less than 0.5

o  New behavioural safety programme launched

·      Learning and Development

o  Leadership and development programmes refreshed

o  New performance development system being rolled out

·      Diversity and Engagement

o  Diversity and Inclusion action plans developed by every business

o  More than 3,000 employees collaborating daily on internal social media platform

 

Customers:

 

·      Embedded customer relationships

o  Minerals service network expanded with additional facilities in Mexico, Kazakhstan and Philippines

o  E-commerce platforms for customers in the UK, France and Africa were expanded

·      Customer insight process

o  Oil & Gas' key account strategy grew market share with Tier-1 customers

o  Minerals invested in an additional 150 customer-facing roles across its regions  

·      Solutions mind-set

o  Minerals brownfield optimisation strategy built a strong order pipeline

o  Flow Control targeting reduced quotation times and leveraging division-wide key accounts

 

Technology:

 

·      Digital solutions

o  A range of IoT connected products successfully trialled in H1 to be launched by Minerals in H2

o  Oil & Gas introduced an intelligent assessment tool to monitor flowback and flare gas

·      Technology informed by the customer

o  SPM® QEM 3000 frack pump extending trials programme to additional Tier-1 Oil & Gas customers

o  Oil & Gas One Single Line (OSL) solution developed after extensive customer consultation

·      Innovation and disruptive technologies 

o  Chief Technology Officer is building the Group's technology blueprint 2021

o  £63m of H1 revenues delivered from new products; R&D investment of £15m in H1

     

Performance:

 

·      Consistent outperformance

o  Oil & Gas and Minerals input outperformed capital spending in their end markets

o  £21m in purchasing savings in H1 as the Group leveraged its global scale 

·      Value chain refocus

o  Long term improvement targets developed as part of a value chain excellence refresh 

o  Capability development programmes continue with planning and lean training across all regions  

·      Sustainable value chain

o  Product development focused on energy efficiency, water consumption and transformational technologies

o  Minerals achieved double-digit reductions in energy per tonne in foundry operations in Europe

 

 

H1-17 Segmental analysis
Continuing operations £m1	Minerals	Oil & Gas	Flow Control	Unallocated expenses	Total	Total OE	Total AM
Input (constant currency)
2017	686	354	159	n/a	1,199	360	839
2016	617	201	182	n/a	1,000	323	677
Variance:
- Constant currency	11%	76%	-13%		20%	12%	24%
Revenue
2017	611	314	166	n/a	1,091	320	771
2016 (as reported)	524	183	159	n/a	866	279	587
Variance:
- As reported	16%	72%	4%		26%	15%	31%
- Constant currency	0%	53%	-6%		10%	1%	15%
Operating profit2
2017	105	32	(12)	(12)	113
2016 (as reported)	103	(2)	14	(12)	103
Variance:
- As reported	2%	2205%	-184%	-5%	9%
- Constant currency	-13%	1871%	-171%	-2%	-8%
Operating margin2
2017	17.1%	10.1%	-7.0%	n/a	10.3%
2016 (as reported)	19.5%	(0.8)%	8.8%	n/a	11.9%
Variance:
- As reported	-240bps	1090bps	-1580bps		-160bps
- Constant currency	-260bps	1100bps	-1640bps		-210bps
1 The Group financial highlights and divisional financial reviews include a mixture of GAAP measures and those which have been derived from our reported results in order to provide a useful basis for measuring our operational performance. Operating results are for continuing operations before exceptional items and intangibles amortisation as provided in the Consolidated Income Statement. Details of other non-GAAP measures are provided in note 1 of the financial statements. 2 Adjusted to exclude exceptional items and intangibles amortisation.

 

Group financial highlights 

Order input at £1,199m (2016: £1,000m) increased 20% on a constant currency basis primarily due to the strong upturn in North American oil and gas markets, coupled with good growth in Minerals.

 

Revenue of £1,091m (2016: £866m) increased 26% on a reported basis reflecting both the recovery in North American Oil & Gas and a foreign exchange benefit of £124m. On a constant currency basis revenue was 10% ahead of prior year. The Group's order book increased in the period with a positive book to bill ratio of 1.10 (2016: 1.01), the highest level since the first quarter of 2013.

 

Operating profit from continuing operations (before exceptional items and intangibles amortisation) of £113m, increased by £10m or 9% on reported basis. 

 

The reported operating profit benefited from a £20m foreign exchange gain on the translation of overseas earnings due to the weakening of Sterling against the majority of currencies.  Excluding foreign exchange gains, constant currency operating profit was £10m lower. Net one-off costs incurred in the period, excluding exceptional items, were £9m, leaving underlying operating profit £1m lower than the prior year on a constant currency basis; Oil & Gas was higher driven by positive North American markets, offset by Flow Control and Minerals. Flow Control was negatively impacted by continued depressed market conditions and higher competition.  The lower Minerals profit reflects different phasing from last year with early investment in growth initiatives and lower GEHO® volumes during the first half, together with plant and supply chain reconfiguration costs. EBITDA before exceptional items was £141m (2016: £130m).

 

Operating margin from continuing operations (before exceptional items and intangibles amortisation) was 10.3%, a decrease of 160bps on a reported basis and 210bps on a constant currency basis. On a constant currency basis Minerals decreased 260bps to 17.1%, reflecting phasing and plant and supply chain reconfiguration costs mentioned above. Oil & Gas increased from a loss of 0.8% in the prior year to 10.1% following a strong market upturn and excellent operating leverage. Flow Control margins decreased to (7.0%) from 8.8% in H1 2016 as a result of subdued end markets and one-off legacy contract delivery challenges in the Gabbioneta business. 

 

Net finance costs before exceptional items were £21m in total (2016: £21m).

 

Profit before tax from continuing operations (before exceptional items and intangibles amortisation) increased by 12% to £92m (2016: £82m).  The reported profit before tax from continuing operations (including exceptional items and intangibles amortisation) of £59m compares to £25m in 2016.

 

An exceptional charge of £6m (2016: £32m) was recorded in the period, which primarily related to the finalisation of restructuring and rationalisation charges for programmes which commenced in prior periods to right size operations and discontinue certain activities. The cash outflow in respect of restructuring programmes in the period totals £17m. 

 

Intangibles amortisation totalled £27m in the period (2016: £24m), an increase of £3m due to adverse foreign exchange translation.

 

The result from discontinued operations in the period reflects the finalisation of balances associated with the disposal of American Hydro Corporation in 2016.

 

The tax charge, before exceptional items and amortisation, for the period of £22m (2016: £18m) on profit before tax from continuing operations (before exceptional items and intangibles amortisation) of £92m (2016: £82m) represents an underlying effective tax rate of 23.6% (2016: 21.9%).

 

Earnings per share from continuing operations (before exceptional items and intangibles amortisation) increased by 2.4p to 32.0p (2016: 29.6p).  Reported earnings per share including exceptional items, intangibles amortisation and the impact of discontinued operations was 21.1p (2016: 7.6p).

 

Cash generated from operations decreased by 41% from £133m to £78m, with the increase in operating profit offset by the activity level driven growth in working capital of £66m (2016: inflow of £6m). 

 

Free cash flow from continuing operations was an outflow of £50m (2016: inflow of £46m). The £96m reduction reflecting lower operating cashflows, higher cash tax and increased cash dividend with lower uptake for the scrip dividend compared to the prior year.

 

The free cash outflow, plus outflows for exceptional items of £17m and investments of £2m were offset by a favourable foreign exchange movement of £35m, mainly on US$ and Euro denominated debt, resulting in an increase in reported net debt at the half year to £869m (December 2016: £835m). On a lender covenant basis, the ratio of net debt to EBITDA excluding exceptional items was 3.1 times, compared to a covenant level of 3.5 times.

 

Dividend

The Board has approved an interim dividend of 15.0p (2016: 15.0p).  The interim dividend will be paid on 3 November to shareholders on the register on 22 September 2017. The scrip will be announced on 28 September 2017 and the last date for elections is 20 October 2017.

 

Board and management changes

Clare Chapman and Barbara Jeremiah will join the Board as Non-Executive Directors with effect from 1 August 2017.  Clare is the former Group People Director of BT Group plc and is currently a Non-Executive Director of Kingfisher plc and Heidrick & Struggles International, Inc.  Barbara is a former Executive Vice President, Corporate Development and Chairman's Counsel for Alcoa, the global aluminium producer, and is currently a Non-Executive Director with Aggreko plc, Russel Metals Inc and Allegheny Technologies Inc.  After more than 6 years' service, Non-Executive Director Melanie Gee is to retire from the Board with effect from 30 September 2017.  The Board would like to express its thanks to Melanie for her wise counsel, dedication and service to the Group.  Melanie will be succeeded as Chair of the Remuneration Committee by Clare Chapman with effect 1 August 2017.  Barbara Jeremiah will join both the Audit and Remuneration Committees.  There are no further details to be disclosed in relation to Clare Chapman and Barbara Jeremiah under section 9.6.13 of the Listing Rules. 

 

The Board also announces that Mary Jo Jacobi, Non-Executive Director will be appointed to the Nomination Committee with effect from 1 August 2017. 

 

As previously announced, Pauline Lafferty stepped down as Chief People Officer and will be succeeded by Rosemary McGinness who will join the Group Executive on 31 July 2017.  In addition and also previously announced, Andrew Neilson, Director of Strategy & Corporate Affairs also stepped down from the Group Executive on 30 June 2017 to take up the post of Vice-President, Finance & IT of the Minerals division. 

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 and gas and general industrial markets around the world.

 

Constant currency £m	H1 2017	H1 20161	Growth	H2 20161
Input OE	215	189	14%	169
Input aftermarket	471	428	10%	444
Input Total	686	617	11%	613
Revenue OE	163	179	-9%	170
Revenue aftermarket	448	429	4%	435
Revenue Total	611	608	0%	605
Operating profit2	105	120	-13%	117
Operating margin2	17.1%	19.7%	-260bps	19.3%
Operating cash flow	83	105	-21%	131
Book-to-bill	1.12	1.01		1.01
1 2016 restated at H1 2017 average exchange rates except for operating cash flow.
2 Adjusted to exclude exceptional items and intangibles amortisation.

 

Strong order growth

 

·      Divisional input up 11% with a significant building of a high quality order book

·      Margins reflect £5m strategic investment, £5m project phasing and c.£5m of plant & facility reconfiguration

·      Full year outlook: Moderately higher constant currency revenues and broadly stable operating margins

 

H1 2017 Market review

 

Overall capital investment by miners continued to fall for a fifth year although sustaining expenditure on maintenance and productivity improvements started to recover after a period of under-investment.  Customers focused on brownfield opportunities, with the aftermarket normalising after some initial restocking and customers seeking to take advantage of a more supportive commodity price environment. Global ore production continued to increase although copper production was impacted by industrial action at Escondida in Chile and in Grasberg, Indonesia.  Both gold and copper prices increased in the first half by 7% while iron ore prices fell 28%.

 

Regionally, Australasia increased activity with good growth in gold and lithium production, although coal markets remained challenging.  Similarly, Africa benefited from increased activity in gold and copper, particularly in West Africa.  Both North America and Europe benefited from improved sentiment and activity in hard rock mining markets.  Mining activity in South America remained robust, despite the impact of strikes in Chile, with the number of early-stage quotations for future greenfield projects increasing. 

 

In non-mining markets, oil sands production continued to be resilient driving growth in demand for aftermarket spares and services.  Comminution markets for crushing, grinding and screening saw good demand growth in North America and China, where infrastructure investment increased.

 

H1 2017 Divisional financial review

 

Order input increased by 11% to £686m (2016: £617m), and supported a strong book-to-bill of 1.12.  Original equipment orders were up 14% year-on-year, reflecting higher sustaining expenditure by miners in brownfield asset optimisation projects.

 

Aftermarket orders increased by 10% on a constant currency basis and represented 69% of total input (2016: 69%).  Mines continued to operate at more normalised production levels compared to the prior year, resulting in strong sequential and year-on-year aftermarket order growth. 

 

In total, mining end markets accounted for 72% of input (2016: 73%) with orders growing strongly.  Non-mining markets including sand and aggregates, oil sands and power sectors grew while industrial markets declined.

 

Revenue was flat on a constant currency basis at £611m (2016: £608m).  Original equipment sales accounted for 27% (2016: 29%) of divisional revenues and were 9% lower than the prior year driven by the timing of project revenues, particularly in GEHO®, the division's longest lead time business.  Production-driven aftermarket revenues were up 4% on a constant currency basis.

 

Regionally, revenues from Africa, South and North America grew, while Europe was more subdued and the Middle East was more challenging.  Aftermarket revenues grew strongly for pump and mill circuit spares particularly in Latin America and Oil Sands.  Reported revenues increased by 16% (2016: £524m), due to a foreign exchange tailwind.

 

Operating profit reduced by 13% on a constant currency basis to £105m (2016: £120m).  This reflects £5m investment in growth initiatives, £5m related to the timing of GEHO® projects, and approximately £5m of plant and supply chain reconfiguration costs. Reported operating profit increased by 2% after a 17% foreign exchange tailwind (2016: £103m).

 

Operating margin on a constant currency basis fell by 260bps to 17.1% (2016: 19.7%) reflecting investment in strategic priorities and normalised seasonal margin trends.  Gross margins were broadly stable.   

 

Operating cash flow decreased by 21% to £83m (2016: £105m) reflecting the decline in operating profit and working capital investment to support future growth.

 

2017 Divisional outlook

Mining markets are expected to remain relatively stable with miners maintaining normal maintenance schedules and continuing modest ore production growth supporting demand for aftermarket products and services. We expect further modest reductions in overall mining capital expenditure to be largely offset by increased investment in sustaining capital expenditure in plant optimisation and maintenance, which is the main focus of the division.  Overall, Minerals is expected to deliver moderately higher constant currency revenues and broadly stable full year operating margins, with performance supported by both the strong order book and investment in growth initiatives in the first half. 

Oil & Gas

Weir Oil & Gas provides highly engineered and mission-critical solutions to upstream markets.  Products include pressure pumping and pressure control equipment and aftermarket spares and services. Equipment repairs, upgrades, certification and asset management, and field services are delivered globally by Weir Oil & Gas Services.

 

Constant currency £m	H1 2017	H1 20161	Growth	H2 20161
Input OE	74	38	96%	41
Input aftermarket	280	163	72%	205
Input Total	354	201	76%	246
Revenue OE	62	39	58%	37
Revenue aftermarket	252	166	52%	187
Revenue Total	314	205	53%	224
Operating profit/(loss)2	32	(2)	+1871%	(8)
Operating margin2	10.1%	-0.9%	+1100bps	-3.6%
Operating cash flow	(1)	18	-104%	29
Book-to-bill	1.13	0.98		1.10
1 2016 restated at H1 2017 average exchange rates except for operating cash flow.
2 Adjusted to exclude exceptional items and intangibles amortisation. Includes contribution from joint ventures.

 

Strong recovery in North American upstream markets

 

·      Strong order, revenue and margin growth reflected significantly increased activity in North America

·      International markets remain challenging but Group well positioned for upturn

·      Full year outlook: a material increase in constant currency revenues; low-teens operating margins in H2

 

H1 2017 Market review

 

The West Texas Intermediate oil price decreased in the first half of the year by approximately 15% and averaged US$50 per barrel through the period.  These prices were above incentive levels for a number of North American shale basins and supported increased investment in upstream markets, with the US land rig count increasing by 70%.  Service companies responded by refurbishing frack fleets with effective utilisation of the active US fleet rising to more than 90%.  The number of frack stages and volume of proppant used also increased strongly, driving demand for aftermarket spares and services.  As upstream markets tightened, pricing started to improve modestly.  Natural gas prices averaged 3.07Mbtu, above break-even prices for the major gas plays where we have seen a 39% increase in rigs since the start of 2017.

 

International markets entered the oil and gas downturn later than North America and remained challenging.  New investment was subdued, with continued pricing pressure and project delays common. 

 

H1 2017 Divisional financial review

 

Order input at £354m (2016: £201m) was 76% higher reflecting the increase in activity levels in North America as rig counts recovered and customers accelerated the refurbishments of their frack fleets, with North American order input up 102%.  On a sequential basis, quarterly orders increased through the first half and this contributed to a positive book-to-bill ratio of 1.13 for the period.  Aftermarket orders were up 72% year-on-year and represented 79% (2016: 81%) of divisional orders.  Original equipment input was 96% higher, against a weak comparator, driven primarily by increased demand for frack pumps, flow equipment and wellheads, as customers increased activity.

 

Input from international markets fell on a sequential and year-on-year basis, as customers continued to reduce activity levels and postpone orders and maintenance.   

 

Revenue increased by 53% to £314m on a constant currency basis (2016: £205m), reflecting order input trends. Original equipment and aftermarket revenues increased by 58% and 52% respectively, with aftermarket accounting for 80% of total revenues (2016: 81%). Reported revenues were up 72% after a 13% foreign exchange benefit (2016: £183m).

 

North American revenues increased sequentially through the first half, reflecting input trends.  Sequentially, international revenues grew in the first half despite challenging market conditions.

 

Operating profit including joint ventures was £32m (2016: operating loss of £2m on a constant currency and reported basis).  The recovery was driven by improved conditions in upstream North American markets where there was a significant increase in volumes, exceptionally strong manufacturing overhead recoveries supported by previous cost base reductions, and modest pricing improvement in the second quarter.      

 

Operating margin was up 1100bps reflecting positive market conditions, pricing and operating leverage.

Operating cash flow declined by £19m to £(1)m (2016: £18m) with the significant increase in operating profit more than offset by a working capital outflow to support the division's growth.

 

2017 Divisional outlook

Assuming North American upstream market conditions remain supportive, the division expects to deliver a material increase in constant currency revenues and profits, with low-teens second half operating margins. 

Flow Control

Weir Flow Control designs and manufactures valves and pumps as well as providing specialist support services to the global power generation, industrial, oil and gas and other aftermarket-orientated process industries.

 

Constant currency £m	H1 2017	H1 20161	Growth	H2 20161
Input OE	71	96	-26%	93
Input aftermarket	88	86	2%	61
Input Total	159	182	-13%	154
Revenue OE	95	99	-4%	101
Revenue aftermarket	71	77	-8%	74
Revenue Total	166	176	-6%	175
Operating (loss)/profit2	(12)	17	-171%	16
Operating margin2	-7.0%	9.4%	-1640bps	9.1%
Operating cash flow	8	18	-56%	24
Book-to-bill	0.96	1.04		0.88
1 2016 restated at H1 2017 average exchange rates except for operating cash flow.
2 Adjusted to exclude exceptional items and intangibles amortisation.

 

Later-cycle markets continue to be challenging

 

·      Limited project activity impacted OE demand; AM demand resilient

·      Margins reflect continued tough market conditions and one-off charges of £13m

·      Full year outlook: Modest revenue growth; returning to mid/high single-digit operating margins in H2

 

H1 2017 Market review

 

Customers continued to be cautious in both power and downstream oil and gas markets.  There was limited project activity with significant pricing pressure common.  Nuclear developments in China continued to make progress but sentiment in South Korea, the United States and Europe was more negative.  

 

Downstream markets, which were later to enter the downturn, remained challenging for original equipment and aftermarket demand.  Industrial markets were more positive, in line with global GDP growth.

 

H1 2017 Divisional financial review

 

Order input decreased by 13% to £159m (2016: £182m) and was principally impacted by the significant decline in mid and downstream oil and gas markets.  In addition, there was limited project activity in power markets.  Original equipment orders were down 26% led by reduced pump orders in downstream markets.  Aftermarket orders grew 2% driven by demand for valves.  

 

Power markets represented 42% of orders (2016: 38%).  The proportion of orders from oil and gas markets decreased to 20% (2016: 28%).  Emerging markets accounted for 36% of input (2016: 36%).  Overall, slight growth in Australasia was more than offset by reductions in Africa, Asia-Pacific, North America and Europe.

 

Revenue decreased by 6% on a constant currency basis to £166m (2016: £176m), with aftermarket revenues down 8% on the prior year.  Original equipment revenues were down 4%, less significant than the input shortfall as the legacy order book unwound. Reported revenues were up 4% (2016: £159m) reflecting an 11% foreign exchange tailwind.

 

An operating loss of (£12m) (2016: £17m profit on a constant currency basis) was recorded as a result of tough trading conditions impacting gross margins and overhead recoveries, and the impact of £13m of one-off costs. The reported operating loss included a £3m foreign exchange tailwind.

 

Operating margin was down 1640bps against the prior year to a loss of 7.0% (2016: 9.4%). 

 

Operating cash flow decreased by 56% to £8m (2016: £18m) reflecting the reduced profitability of the division.

 

2017 Divisional outlook

Power, mid and downstream oil and gas markets are expected to remain subdued.  The division is expected to deliver modest revenue growth for the full year with a return to normal mid to high single-digit operating margins in the second half.

 

Principal risks and uncertainties

The Board considers the principal risks and uncertainties affecting the business activities of the Group are: 

·      Technology and innovation

·      Political and social risk

·      Safety, health and environment

·      IT systems and cyber security

·      Ethics, governance and control

·      Value chain management

·      Staff recruitment, retention and development

·      Market volatility

·      Contract risk

 

Further details of the Group's policies on principal risks and uncertainties are contained within the Group's 2016 Annual report, a copy of which is available at www.annualreport.weir. 

Appendix 1 - 2016 / 2017 quarterly input trends

 

	Reported growth1					Like-for-like growth2
Division	Q3	Q4	Q1	Q2		Q3	Q4	Q1	Q2
Original Equipment	-28%	34%	4%	25%		-28%	36%	4%	25%
Aftermarket	4%	19%	13%	7%		4%	19%	13%	7%
Minerals	-7%	23%	10%	12%		-7%	23%	10%	12%
Original Equipment	-24%	13%	56%	143%		-24%	13%	56%	143%
Aftermarket	-6%	0%	48%	98%		-6%	0%	48%	98%
Oil & Gas	-10%	2%	50%	106%		-10%	2%	50%	106%
Original Equipment	0%	-17%	-18%	-33%		0%	-17%	-18%	-33%
Aftermarket	-10%	-8%	-3%	6%		-10%	-8%	-3%	6%
Flow Control	-4%	-14%	-11%	-15%		-4%	-14%	-11%	-15%
Original Equipment	-20%	11%	5%	19%		-20%	11%	5%	19%
Aftermarket	-1%	10%	21%	27%		-1%	10%	21%	27%
Continuing Ops1	-7%	10%	15%	24%		-7%	10%	15%	24%
Book to Bill	1.02	0.99	1.14	1.06		1.02	0.99	1.14	1.06

1 Continuing operations (excludes American Hydro Corporation and YES which were disposed of in Q2 2016).

2 Like-for-like excludes the impact of acquisitions. Delta Valves was acquired on 8 July 2015 and excluded in Q3 and Q4 2016.

 

 

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 PLC's ("the Group") financial position, business strategy, plans (including development plans and objectives relating to the Group'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 Group 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 Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this document. The Group 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 Group'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.