The Weir Group Annual Report 2007

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FY2007 Annual Report · The Weir Group

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The Weir Group PLC
Clydesdale Bank Exchange
20 Waterloo Street
Glasgow G2 6DB, Scotland

Telephone: +44 (0)141 637 7111
Facsimile: +44 (0)141 221 9789

Email: investor-relations@weir.co.uk
Website: www.weir.co.uk

The Weir Group PLC
Annual Report 2007

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Solutions

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(1) Calculated at 2007 average exchange rates

(2) Adjusted to exclude intangibles amortisation and exceptional items

*shareholders on the register at this date will receive the dividend

Financial Highlights 2007

Group results - continuing operations

Revenue

£1,060.6m

Up 22%

Operating profit (2)

£122.1m

Up 57%

Pre-tax profit (2)

£120.2m

Up 56%

Order input (1)

£1,095.3m

Up 10%

Earnings per share (2)

41.4p

Up 49%

Dividend

16.5p

Up 14%

Net debt

£171.3m

2006
27.8p

2007
41.4p

2006
14.5p

2007
16.5p

Contents:

The Reports

Group Financial Statements

2007 Highlights

46 Directors Statement of Responsibilities

Chairman’s Statement

47 Independent Auditors Report

4 Our geographic footprint

48 Consolidated Income Statement

Chief Executive’s Review

49 Consolidated Balance Sheet

9 Operational Review

19 Financial Review

22 Board of Directors

24 Directors Report

29 Corporate Governance Statement

32 Audit Committee Report

33 Nomination Committee Report

34 Remuneration Committee Report

40 Corporate Social Responsibility Report

50 Consolidated Cash Flow Statement

51 Consolidated Statement of Recognised

Income & Expense

52 Notes to the Group Financial Statements

Company Financial Statements

96 Directors Statement of Responsibilities

97 Independent Auditors Report

98 Company Balance Sheet

99 Notes to the Company Financial

Statements

107 Principal Companies of the Group

108 Shareholder Information

Inside back cover - Financial Calendar

Financial Calendar

Ex-dividend date for final dividend

30 April 2008

Record date for final dividend*

2 May 2008

Annual General Meeting

7 May 2008

Final dividend paid

2 June 2008

Registered office & company number

Clydesdale Bank Exchange
20 Waterloo Street
Glasgow G2 6DB, Scotland
Registered in Scotland
Company Number 2934

The Weir Group PLC Annual Report 2007 | Highlights

In 2007, Weir enjoyed its best operating year in
company history delivering record sales, earnings and
cash flow generation. During the year we realigned
the portfolio of businesses, significantly improved
operational performance and added high quality
businesses to the Group.

We enter 2008 with an even more robust portfolio
of businesses, a healthy balance sheet and significant
opportunities for future growth. We have the financial
flexibility to fund organic growth and pursue aligned
acquisitions and remain confident of delivering
further progress in 2008.

2007 Highlights (continuing operations):
• Revenue up 22% to £1060.6m

• Operating profit1 up 57% to £122.1m

• Profit before tax1 up 56% to £120.2m

• Earnings per share1 up 49% to 41.4p

• Dividend increase of 14% to 16.5p

• Cash generation improved significantly to £151.8m

• Weir SPM acquired, integrated and exceeding year

one expectations

• Secured acquisition of CH Warman for £113m2

1 Adjusted to exclude intangibles amortisation and exceptional items

2 Using a US$/£ exchange rate of 2.05 as at 3 December 2007

The Weir Group PLC Annual Report 2007

Chairman’s Statement: It is again pleasing to report
continued progress in our objective to improve
significantly the operational and financial
performance of the Group. In 2007, we delivered
our best ever revenue and operating profit while
substantially enhancing future prospects
for the Group.

Financial highlights

In 2007, the Weir Group enjoyed its best operating year in company
history delivering record sales, earnings and cash flow generation. Our
acquisition of Weir SPM within the Engineering Products Division, the
improved operational returns from our Engineering Services Division and
the strength of the oil & gas, mining and power markets all contributed
to this very strong result.

Group revenue from continuing operations increased 22% to £1.1bn
(2006: £870.4m) driven by a partial year contribution from Weir SPM
and stronger performances across all divisions. Operating profit from
continuing operations, before intangibles amortisation and exceptional
items, at £122.1m was 57% above the 2006 level of £77.7m. Group
subsidiaries contributed £118.7m (2006: £75.3m) and our joint ventures
£3.4m against £2.4m last year. Operating margins, excluding joint
ventures, increased to 11.2% against 8.7% last year.

As a result of this strong performance, Group pre-tax profit from continuing
operations, before intangibles amortisation and exceptional items, was up
56% to £120.2m (2006: £77.1m).

With an effective tax rate of 28% on attributable profit for continuing
operations, earnings per share before intangibles amortisation and
exceptional items, amounted to 41.4p (2006: 27.8p).

Profit for the period before exceptional items of £11.8m was recognised in
respect of our discontinued operations and exceptional gains of £80.9m
were recognised in relation to disposals during the year. This reflects
a £26.0m gain on the sale of the Weir Pumps Glasgow operations and
a £54.9m gain on the disposal of the Group’s interest in Devonport
Management Limited.

Operating cash flow from continuing operations improved significantly
to £151.8m (2006: £111.0m) as a result of both increased profitability
and the success of management’s focus on improving working capital.
The year ended with net debt of £171.3m compared with £7.1m in
2006, reflecting the continued strong cash generation and the second
half acquisition of Weir SPM.

The Group’s exposure has been reduced to its pension fund obligations
through the purchase of an insurance policy from Legal & General
Assurance Society to secure the current pensioners’ liabilities of the
main UK plan and a similar process was also undertaken in Canada.

The Board is recommending a final dividend of 12.35p per share making
a total distribution for the year of 16.5p (2006: 14.5p), a 14% increase
on 2006 and 25% over the last two years.

“The positive market conditions that we
experienced in 2007 are expected to remain
throughout 2008 and we anticipate that the
acquisition of Weir SPM and CH Warman,
coupled with further operational developments,
will deliver a good level of progress in 2008.”

Strategy & structure

It is particularly rewarding to report a further year of successful execution
of our programme to improve significantly the operational performance
and financial returns of the Group. The achievements are evident in our
2007 results: a realigned portfolio of businesses, improved operational
performance and success in our endeavours to add high quality businesses
to the Group. In the year, we achieved further significant growth in
revenue and operating profit and achieved our best operating year ever.

The Engineering Products Division produced substantially improved
results in 2007 and benefited from its portfolio realignment to the higher
growth oil, power and mining markets which represented more than
80% of revenue during the year. The gains from our investments in Lean
Manufacturing and continuing geographic expansion were also clearly
evident in this year’s results with these initiatives contributing significantly
to the division’s 2007 performance.

In May of 2007, the Group announced the sale of its Weir Pumps Glasgow
operations for a cash consideration of £45.5m. The business represented
less than 8% of Group revenue and a smaller percentage of profit and its
sale was consistent with our stated intention to exit lower margin activities
where the Group had limited opportunity to lead.

In June, the Group announced its largest ever acquisition – SPM Flow
Control Inc., for a cash consideration of £328m1 ($653m). Weir SPM is
a Texas based supplier of pumps and flow equipment to the upstream
oil & gas market. The business is now fully integrated and plans are well
progressed to improve operational performance and extend its geographic
reach using Weir’s global footprint.

In August, the Group acquired Weir Multiflo, a small dewatering company
in Australia, with the objective of extending the portfolio of offerings to
the Group’s mining customers. The business was integrated successfully
and plans are in place to extend its reach to the wider Minerals markets.

In December, the Group announced the acquisition of CH Warman, a
South African based company, for a consideration of £113m2 ($231m).
The acquisition was subject to South African merger approval which was
received on 10 March 2008. This acquisition provides the Group with a
platform in the strategically important sub-Saharan mining market. Our
immediate objectives are to improve the respective performance of both
the local Weir and CH Warman businesses to provide a solid foundation for
future integration and growth.

The benefits of the 2006 restructuring of our Engineering Services Division
were evident in the Group’s 2007 results. We enter 2008 with fewer
businesses, improved performance and greater focus on our core end
markets. The division remains well positioned to introduce Weir SPM
products across its global network throughout the coming year.

In June, we announced the sale of our 24.5% interest in Devonport
Management Limited for a consideration of £85.7m. The disposal reduces
our exposure to the UK defence industry and opens up resources to
develop in the sectors which will underpin the Group’s future growth.

The outlook for defence markets particularly in Australia and Canada,
which are key markets for Weir defence products, remains encouraging
and the decommissioning activities in the UK nuclear market provide a
positive outlook for 2008. The shipbuilding market is fully loaded and this
will limit Weir LGE’s future order book. Profitability in 2008 will be tied to
delivery of orders already secured and should provide the gas business
with broadly equivalent results in the year ahead.

1 Using a US$/£ exchange rate of 1.99 as at 19 June 2007.
2 Using a US$/£ exchange rate of 2.05 as at 3 December 2007.

Chairman’s Statement

Two of management’s key priorities for 2008 are to integrate CH Warman
successfully and to deliver the early benefits from the Group’s acquisition
of SPM. In addition, we will continue to accelerate the execution of the
Weir Production System which helped to underpin the significant
improvement in the Group’s performance during the year. Improved
working capital, market share gains and enhanced customer relationships
remain an important area of focus.

While the Group’s organic opportunities are excellent, our strong cash
generation and healthy balance sheet provide us with the flexibility to
pursue the full range of options for future growth.

The Board

Christopher Clarke has confirmed his intention to retire from the Board
at the end of 2008 following nine years of valued service to the Group.
In preparation for this change, John Mogford has been appointed a Non
Executive Director with effect from 1 June 2008. John is currently a group
vice president of BP PLC. He has been with BP for 30 years, initially in their
exploration division and progressively rising to his current role as executive
vice president - safety and operations and chief operating officer (refining).
During his tenure, John has held numerous positions in every area of BP
operations from gas and renewables to upstream and downstream oil.

Corporate governance

The Board’s governance framework is underpinned by clearly defined
strategies and strong vision and values which combine to create
shareholder value through the effective use of our resources. An internal
audit function complements our robust external and peer group audits
and self-certification programmes.

I remain confident that we have the culture and required processes within
the Weir Group to safeguard the interests of all of our stakeholders. Ethical
conduct is a vital part of the Weir Group culture and a non negotiable
expectation of every Weir employee. It is supported by our code of conduct,
independent Board of Directors and clear statement of company values.

People

On behalf of the Board, I want to thank employees throughout our
company for their commitment, tireless energy and focus during 2007.
We will be looking for the same ambition in 2008 as we continue to
develop our markets, improve productivity and forge new and stronger
customer relationships.

Prospects

We are confident of continued progress in 2008. The Group’s focus
on the longer cycle markets, commitment to enhanced operational
performance and ability to invest in new, exciting prospects provide a
strong platform to support future growth. By staying on track, we move
forward with confidence that we can achieve even greater results in the
years to come.

Finally, I want to thank our shareholders who continue to demonstrate
belief in the potential of the Group. I remain convinced that the Weir Group
has the right strategy and depth of expertise to deliver increasing returns.

Sir Robert Smith
Chairman
11 March 2008

The Weir Group PLC Annual Report 2007

Our geographic footprint: Our sector leading
geographic reach allowed the Group to capitalise
on the strong global growth in our core oil & gas,
mining and power & industrial markets. In 2007,
we expanded our presence in North America,
the Middle East, Africa and China, all areas where
the Group sees opportunities for growth.

Map is illustrative of Weir’s geographic footprint and is not definitive of all our locations.

The Weir Group Worldwide

Our business at a glance:

Our Geographic Footprint

The Weir Group has a strong reputation for
engineering excellence in the manufacture
of specialist equipment and the delivery of
through-life engineering solutions. The best
manufacturing facilities in the Group deliver
industry leading performance and every
business has well defined plans to maximise
operational performance.

Weir employs over 8,800 people worldwide,
focused on our key markets. These range
from mining and minerals processing to
the defence and nuclear industry, from oil &
gas exploration to power generation. In all
these areas, we provide solutions that meet
the engineering and operational challenges
facing our customers.

For further information
about The Weir Group PLC,
visit www.weir.co.uk

Engineering Products

Minerals

Weir Minerals best-in-class products are designed and
built to reduce downtime and minimise disruption in
heavy duty, abrasive or corrosive processes. A robust
global supply operation is backed by excellent local
engineering support.

Facts and figures
No. of people
No. of businesses
2007 order input
Market size
Market position

c4,100
13
£491.2m
£1.7bn
No. 1 in slurry pumps

Clear Liquid

Weir Clear Liquid is continuously enhancing and
developing its product range to solve the technical
and operational challenges facing its customers,
enabling them to improve performance and
compete effectively worldwide.

Facts and figures
No. of people
No. of businesses
2007 order input
Market size
Market position

c1,630
6
£191.9m
£5.4bn
Niche businesses regularly
holding No. 1 positions in
their sectors and territories.

Valves & Controls

Weir Valves & Controls products reflect our state-of-
the-art product development and manufacturing focus.
Our global sales operation and engineering capability
enable us to offer whole project and process solutions
our customers require.

Facts and figures
No. of people
No. of businesses
2007 order input
Market size
Market position

c700
5
£77.6m
£2.1bn
Top 3 for specialist Power
Generation valves.

Engineering Services

Weir Services is a customer-oriented service provider,
delivering practical and innovative engineered solutions
from development and successful execution of large
turnkey projects to upgrading complex mechanical
pressure control and rotating equipment setting new
asset management standards.

Facts and figures
No. of people
No. of countries
2007 order input
Market size
Market position

c1,800
Global
£250.6m
£2.5bn
Leadership position in Canada,
UK, Middle East and in various
regional niche businesses.

Defence, Nuclear & Gas

Weir Defence, Nuclear & Gas specialist engineering
design businesses provide the design and management
of complex engineering projects.

“The Weir Group remains focused on higher
growth, longer cycle markets and is committed
to enhance operational performance and to
invest in new and exciting prospects as a
strong platform of our future growth.”

Facts and figures
No. of people
No. of businesses
2007 order input
Market position

c640
2
£84.0m
No. 1 independent submarine
weapons handling and launch
system provider.
No. 1 marine LPG storage and
handling system provider.

The Weir Group PLC Annual Report 2007

Chief Executive’s Review: 2007 was a year of significant
achievement where all divisions delivered improved
financial performance. We have a strong platform to
support future progress and remain well positioned
to deliver further growth in 2008.

At the outset of the Group’s programme for transformation, we defined
our ambition to achieve sector best performance by targeting those
markets that offer the most attractive prospects and in which the Group
has a realistic ability to lead. 2007 proved a critical year on our journey.
We exited low margin and non core activities and acquired Weir SPM
which operates in the higher margin, higher growth upstream oil sector.

The benefits of these initiatives were evident in our 2007 results.
We delivered higher order input and strong growth in the core areas
of the business. Our performance also demonstrated the Group’s
capabilities for integrating new business activities as shown by the
seamless entry of Weir SPM into Clear Liquid and the integration of
Weir Multiflo within Minerals.

In 2007, Group revenue from continuing operations increased 22%
to £1.1bn with almost 90% of the year’s input tied to the mining,
oil & gas and power generation and industrial markets.

Operating margins, before intangibles amortisation and exceptional
items, also improved substantially with progress in all areas of operations.
Our Engineering Products Division achieved 13.9% compared with
11.1% last year and the 2006 restructuring programme undertaken
by our Services Division contributed to an improved operating margin
of 8% in 2007 compared with 5.9% in the previous year.

The increase in the Group’s debt to £171.3m, compared with £7.1m in
2006, is a reflection of the acquisition of Weir SPM. Our Lean initiatives
again delivered improved working capital and this contributed to the
excellent operating cash generation achieved during the year.

Our Journey to Excellence

Engineering Products Division

The Engineering Products Division posted record results in 2007,
growing order input 30%, revenue 35% and profit 70% when compared
with 2006. The division includes the combined activities of our Minerals,
Clear Liquid and Valves & Controls businesses which supply pumps, valves
and ancillary equipment to the oil & gas, mining and power generation
and general industrial markets.

A key component of the division’s success in 2007 has been its strong
portfolio of businesses with solid positions in growing and attractive
markets and the addition of Weir SPM in the second half of the year.
Input grew 30% to £760.7m with more than 80% attributed to the
mining, oil & gas and power generation markets. We achieved excellent
results from Minerals (up 28%) and Clear Liquid (up 43%) which when
combined with 13% growth from Valves & Controls, resulted in the
division achieving its highest ever level of order input.

“In the year we delivered further significant
growth in revenue, operating profit and
earnings per share and achieved our best
operating year ever.”

Chief Executive’s Review

In 2007, the division’s revenue grew 35% to £711.6m compared to £525.5m
the previous year with a largely balanced workload of new project and
aftermarket activity. Our businesses specialise in operationally critical,
technology driven, high wear applications where new project sales provide
the foundations for medium to long term spares and service streams.

Operating profit, before intangibles amortisation and exceptional items,
of £98.7m was up 70% on the 2006 result, validating confidence in our
strategy of concentrating resources in higher growth markets in which
the Group has the ability to lead. Profitability improved in every area
during the year. This improvement plus the benefits of the Weir SPM
acquisition and a continued contribution from our operational excellence
initiative all helped to achieve underlying margin growth to 13.9%
compared with 11.1% last year.

Our Engineering Products Division includes a strong portfolio of businesses in
the mining, oil & gas and power generation markets – and all the indicators
point to sustained demand for our products. Increasing infrastructure needs
in China and India combined with growing global population are expected
to underpin ongoing sector growth in the medium term.

The Engineering Products Division has changed dramatically over the past
few years. We have restructured our underperformers, exited lower margin
activities and acquired new businesses in higher growth oil and mining
sectors. These activities, combined with focus on Lean processes and the
application of the Weir Production System, provide a strong basis for
achieving improved results in 2008 and beyond.

Our Minerals business posted another year of excellent progress with
significant gains in input, revenue and profit when compared with 2006.
The principal market for the business is global mining which accounted for
almost 70% of revenues in the year.

Order input grew 28% to £491.2m, reflecting the ongoing strength of
global mining markets as well as the benefits of management’s emerging
markets strategy and our entry into specialised areas of the power
generation and oil sectors. The combination of an ongoing spares stream
from the existing installed base together with the year end order book
provides a solid platform for further progress in 2008 and beyond.

Our Netherlands business secured significant new project work in the
mining markets of Madagascar and Brazil. Power generation orders from
India also contributed to this company’s highest ever order input of
£101m in 2007 against £57m in 2006.

The Americas also delivered impressive growth with significant new
project work in Chile and Brazil adding to the success of our flue gas
desulphurisation products in North America. In total, input grew 35%
to £230m.

The Australian, Former Soviet Union and African markets continue to
benefit from mining investment and the division secured double digit
input growth from each of these regions.

Power related input totalled £67m compared with £45m in 2006, reflecting
the increased global requirements for flue gas desulphurisation which is used
to improve emissions in coal fired power stations. The Minerals team has
built a leading position in this high growth area and during the year secured
a significant number of new contracts in North America.

Recognising the need to respond to the changing geographic profile of
the global mining market, our Minerals businesses continued to invest in
growing their presence in the emerging territories of South America, Asia
and the Former Soviet Union. Our recent announcement of the acquisition
of CH Warman further complements our geographic expansion agenda and
provides a strong foundation for growth in a rapidly developing market.

The CH Warman acquisition provides an excellent platform to grow our
mining activities within Africa. The combination of CH Warman with our
existing business will bring a stronger portfolio of mining products to the
market and provide the critical mass to justify further investment in the
region. Our objective is to improve the operational performances of the
existing operations while building the strategic platform for future
consolidation benefits.

The acquisition of Weir Multiflo for A$22m was also strategically
important, supporting our ambition to extend the range of product
offerings to existing customers. Weir Multiflo was successfully integrated
and now forms the division’s centre for dewatering products. Plans are
being prepared to introduce Weir Multiflo products across the remaining
divisional operations.

Going forward, the Minerals business will benefit from the growing
demand for basic commodities and continue to progress against its
strategic goals.

The Valves & Controls businesses made solid progress in 2007 and
contributed to revenue and profit growth within the Engineering Products
Division during the year. Overall input grew 13% to £77.6m with the
power and oil markets representing more than 80% of total orders
booked in the year.

During 2007, our United States operations grew their order input
considerably through the award of new power generation projects in
China and plant upgrades in the USA. Valves & Controls also recorded
growth in oil related orders as a result of continued buoyant market
conditions in the UK, Indo Pacific and the Former Soviet Union, all
regions which we expect will maintain a positive outlook for 2008.

As outlined in our last update, Valves & Controls USA has now completed
plans to move to larger premises and to capitalise on the growing
opportunities in its domestic market. During the year, we disposed
of the inefficient Salem, Massachusetts facility and will move the
operations into a new modern plant in the first quarter of 2008.

Our Valves & Controls business in China continued to make good
progress and contributed positively to the results of the division. Orders
in the Chinese new build power sector substantially increased during
the year and the outlook remains positive for 2008 and beyond.

We remain encouraged by the prospects for the Valves & Controls
businesses. The European and North American power markets are
entering a period of life extensions and new build projects. In addition,
we expect dramatic growth in China, India and South Africa and remain
well placed to capitalise on these opportunities as we enter 2008.

Our Clear Liquid businesses contributed significantly to the results of
Engineering Products in 2007. The acquisition of Weir SPM, our disposal
of Weir Pumps, Glasgow and the significant growth of Weir Gabbioneta
were all significant contributors to Clear Liquid’s improved results.

Clear Liquid now comprises a portfolio of businesses with solid positions in
growing and attractive markets. In 2007, input increased 43% to £191.9m.
This reflects the addition of Weir SPM and a further 3% increase from the
speciality businesses against the record high input achieved in 2006. The
oil, power and general industrial markets collectively represent more than
75% of total orders booked in the year.

The results for Clear Liquid include a partial year contribution from Weir
SPM from July of 2007 when the acquisition was completed. Weir SPM
contributed £78.7m of revenue and £19.1m of operating profit, before
intangibles amortisation, which exceeded our expectations at the time
of the announcement of the acquisition. Our success in clearing past due
orders provided a one-off benefit in 2007 which is not expected to repeat
in 2008. The business has been successfully integrated and the Weir
Production System is in the early stages of implementation.

The Weir Group PLC | Chief Executeve’s Review

Weir SPM’s market is largely tied to the upstream drilling of gas wells in
North America where gas storage levels, gas prices and North American
weather conditions are key market drivers. While we are likely to see
some unwinding of favourable market conditions during 2008, we remain
confident that growth from servicing the installed base and the continued
success of our improvement initiatives will underpin further profit progress
in the year.

The Clear Liquid speciality businesses continued to perform well with
excellent progress at our operations in Missouri, California and Utah
as a result of continued buoyant domestic demand and the increased
geographic reach of the Group.

Weir Gabbioneta, our downstream oil business, performed exceptionally
well and clearly gained from strong market conditions and a two year
investment in the Weir Production System. Productivity and plant
throughput improved dramatically, underpinning a year of substantial
growth in revenue and profit. The downstream oil market in Europe and
the Former Soviet Union benefited from the continued high price of oil
which allowed Weir Gabbioneta to equal the exceptional level of bookings
achieved in 2006.

The disposal of the Weir Pumps Glasgow operation for a consideration of
£45.5m resulted in an exceptional gain of £26.0m being reported for the
year. The business will, however, remain on the Weir owned Cathcart site
until the early part of 2009 following which the site will be sold in
a prearranged deal with Cala Homes.

The medium term outlook for Clear Liquid and the oil & gas, power and
related general industrial markets remains positive and this, when coupled
with our plans for ambitious operational improvement, provides a solid
platform for further progress in 2008.

Engineering Services Division

Input from Engineering Services increased 8% to £250.6m (2006:
£232.9m). Revenue grew 4% to £231.4m (2006: £221.7m), producing
an operating profit, before intangibles amortisation and exceptional items,
of £18.5m up 41% when compared with 2006. This reflects the benefits
of our 2006 restructuring initiatives in the UK, USA and Middle East.
The division’s operating margin of 8.0% exceeded our expectations
and is expected to progress further in 2008.

In the UK, input grew 5% to £74.2m (2006: £70.9m) with new hydro
orders contributing to solid growth in our power generation activities.
Rationalisation of the number of UK Service Centres, which was completed
in 2006, underpinned the 2007 results and this is expected to provide
further improvements in the year ahead.

Our Middle East business grew input by 15% to £28.9m (2006: £25.1m)
with significant new orders booked in oil services. Our joint venture service
operations in Saudi Arabia and Abu Dhabi continued to benefit from
strong market conditions in their regions and contributed £3.4m of
operating profit for the Group compared with £2.4m in 2006.

The Canadian operation had another successful year, benefiting in particular
from continued buoyant market conditions and Weir’s growing position in
the oil sands sector. In the USA, the 2006 closure of our loss making service
centres resulted in the remaining United States businesses contributing
positively to the division’s results in 2007.

The Australian operations performed well in the year, growing both
revenue and profit when compared with 2006. Our investment in larger
facilities in Western Australia, which came on-line in the first half, made
a solid first time contribution in the year.

We remain optimistic about the prospects for our Services Division which
is increasingly aligned with the higher growth oil & gas, power, mining
and industrial markets. The facility investments made in 2007, together
with the excellent progress from our joint ventures in Saudi Arabia and
Abu Dhabi provide the foundations for further improvement in 2008.

Defence, Nuclear & Gas Division

Revenue from the Defence, Nuclear & Gas Division increased 10% to
£117.6m (2006: £107.3m) and produced an operating profit, before
intangibles amortisation and exceptional items, of £10.4m against a
prior year of £10.0m. Input in 2007 decreased by 53% to £84.0m
against the exceptional level of orders in the previous year.

Our liquid gas operation, Weir LGE, is the market leader in the design,
project management and commissioning of facilities for the shipbuilding
and onshore storage of liquid gas. In 2007, revenue grew 13% to £65.8m
compared with £58.1m in the previous year. The majority of growth during
the year was due to the successful achievement of predetermined milestones
on new ship contracts which had been booked previously.

The defence and nuclear businesses delivered an increase in revenue and
operating profit. Order input at £72.2m was 10% below 2006 due to last
year’s award of the £38m Spanish defence contract. Revenue grew 5% to
£51.8m compared with £49.2m in the prior year. We remain confident of
securing a number of significant opportunities in the defence and nuclear
activities in 2008.

The outlook for the defence markets in the UK, Australia and Canada,
which are all key markets for Weir defence products, remains encouraging
and the decommissioning activities in the UK nuclear market provide a
positive outlook for 2008. The shipbuild market is fully committed which
will limit Weir LGE’s future order book. Profitability in 2008 will be tied to
delivery of orders already secured and should provide the gas business
with broadly equivalent results in the year ahead.

2008 Outlook

In 2008, the Engineering Products Division is expected to deliver growth
in revenue and profits when compared to 2007.

The Engineering Services Division is forecast to deliver margin and profit
growth in 2008.

The Defence, Nuclear & Gas Division is positioned to deliver equivalent
revenue and profit as achieved last year and joint ventures are also
expected to continue their good contribution.

The Group is in good financial condition with a robust order book which
supports our continuing level of confidence in our outlook for the year
ahead. By remaining on course and capitalising on our position in strong
end markets we are confident in achieving the Reuters market consensus
for 2008, which at 4 March 2008 projected profit before tax for continuing
operations of £140m.

Mark Selway
Chief Executive
11 March 2008

Operational Review

Engineering Products: includes the combined activities of our
Minerals, Clear Liquid and Valves & Controls operations which
collectively substantially grew their input, revenue and profits
when compared to last year.

Operating
profit (£m)

100

Operating profit

£98.7m

Up 70%

Revenue

£711.6m

Up 35%

Order Input

£760.7m

Up 30%

2006

2007

Mining
2007 input £359.8m

Engineering Products mining related activities represented 47% of the division’s total 2007 input
and grew 26% when compared to 2006. Basic commodities - coal, alumina, copper, iron ore,
platinum and gold prices - maintained historically high levels during the year. These conditions
continued to call for an increased volume of new equipment and a resultant increase in spares
and service work to support the increased installed base.

Oil & Gas
2007 input £167.7m

The division’s oil & gas related activities represented 22% of the division’s
total 2007 input and grew 50% when compared to the prior year.

Oil prices have recently achieved all-time highs after rising steadily during
2007, resulting in buoyant upstream and downstream market conditions
in the year. Weir SPM’s input is largely related to onshore gas where United
States storage levels, gas prices and unconventional drilling rates
dictate demand.

In the year ahead we are expecting further growth in downstream
opportunities, particularly in the Middle East. While we may
see less favourable market conditions, the recent
cold weather and stronger gas prices in North
America are positive indications for our
upstream activities.

Power & Industrial
2007 Input £197.0m

The combined Power and Industrial activities represented 26% of the division’s
total 2007 input and grew 26% when compared to the prior year.

Power related input increased 32% to £110.9m with new work secured in
nuclear, conventional power and flue gas desulphurisation areas of the market.
The outlook remains positive with significant new project and facility upgrade
opportunities being planned across all of our core markets.

The division’s industrial activities involve the supply of Group related products and
services. The markets for these products are industrial and consumer related where
general economic conditions directly affect the state of the market. Continued strong
conditions are expected in the Indo Pacific and South America with more moderate
growth in the UK and Europe. Our USA activities are largely utilities and infrastructure
related and continued high levels of spend are forecast in the year ahead.

9
9

The Weir Group PLC Annual Report 2007

Minerals: 2007 was a year of commercial success and operational
improvements for Weir Minerals. We are looking forward to
a buoyant 2008 and are excited about strengthening our
geographical and market position and our ability to support
our customers in both the near and long-term future.

500

400

300

200

100

Order input

£491.2m

Up 28%

2006

2007

Our brands

Warman

Geho

Cavex

Isogate

Vulco

Operational review

Case Study

2007 was characterised by the continued strong performance of the
minerals processing market worldwide and recent investments in capacity
coming online.

Throughout the year, we continued to align our installed capacity to
our growing market position with facility improvements underway at our
operations in Madison, Wisconsin in the United States and in Venlo in the
Netherlands. Capacity has increased in all of our rubber shops and the foundries
established in China and South Africa in 2006 have both come fully online.

Our Chinese and Indian companies are creating solid positions in their
domestic markets at the same time developing low cost supply to support
the rest of the division. Our purchasing group also continued to make
progress in its low cost sourcing initiative. In addition to servicing the local
market, the Chinese foundry is supplying products competitively around
the world while the Indian company has grown its engineering service
activities tenfold in the last two years.

Our success in 2007 was underpinned by a solid commitment to human
resource management. We have been able to reduce our lost-time accidents
by 4% and five of our locations – France, the Netherlands, the UK, Russia
and India – have completed the year without a single accident. Succession
planning is now in place for the vast majority of our employees and we
have made further investment into apprenticeship and executive training
programmes in all of our operating regions. In a strong and buoyant
market, we are focused on providing Weir employees with the extensive
training and opportunities to ensure that Weir Minerals is strong going
into 2008 and through the next generation.

During the year, we identified services best practice throughout the
division and the Group. We have established a tailored Lean assessment
with significant help from Weir Services and all of our service companies
have implemented this into their businesses. We have also established our
Hazleton service centre in Pennsylvania in the United States as a world class
centre of excellence and we expect our remaining service centres to reach
similar levels of operational excellence in 2008.

Our development activities continue to strengthen with real progress
in our Design Centre of Origin development process, which allows input
and ideas to come from all of our operating companies. We currently have
Design Centres in Brazil, Chile, the United States, South Africa, India and
the Netherlands. These are all coordinated by our Group Technology
service, which operates out of Australia.

For the past two years, our development focus has been to refresh, improve
and lower the manufacturing cost of our core product lines – and this
continues to be our strategy moving into 2008. We introduced major
product initiatives in both 2006 and 2007 and we plan to do the same in
2008 and 2009. By 2011, the whole Weir Minerals product portfolio will
have been refreshed with the benefits of increased wear and durability
while lowering overall costs. We are excited about the enhancements
and improvements that we are bringing to our end customers.

Weir Minerals Netherlands wins record order for world’s
longest slurry pipeline

Weir Minerals Netherlands started 2007 by securing a major order
to supply its largest type pump, the Geho TZPM 2000, for the Brazilian
MMX iron ore pipeline project. This multi-million dollar contract, won
against tough competition, represents the largest order that this
business has ever received.

The project involves creating a 550km long pipeline that will transport
26.6 million tonnes of iron ore as slurry to the Port of Acu. Here, a pellet
plant will be built before the product is processed for shipping to steel
plants around the world.

The 24-inch diameter pipeline will be the longest and highest capacity
slurry pipeline in the world. Customer savings for transporting iron ore
through this pipeline rather than using conventional systems, such
as railway transportation, are estimated to be US$6 per dry tonne.

The Geho positive displacement pumps will be installed in two pump
stations. The first will be located at the mine site while another pump
station will be sited about halfway along the pipeline.

The pumps will develop pressures up to 206 bar to transport the heavy
iron ore slurry through the pipeline. The Geho pumps were selected
due to the high pump quality and reliability which has been proven
in operation under similar conditions in pipeline systems all over the
world. Deliveries began at the start of the year and will continue
through to July 2008. The pipeline is scheduled for commercial
operation in July 2009.

Geho pumps being installed on the Brazilian pipeline.

Operational Review

Minerals: specialist businesses
delivering and supporting slurry
equipment solutions for global
mining and mineral processing, the
power sector and general industry.

Primary input breakdown
Minerals
Power
General industrial
Oil
Water & wastewater

Geographic breakdown
Americas
Europe & Former Soviet Union
Australia
Middle East & Africa
Indo Pacific
UK

70.0%
13.5%
12.0%
3.3%
1.2%

46.8%
15.1%
14.6%
11.4%
10.5%
1.6%

Scot Smith
Divisional Managing Director

Key achievements

• Significant facility expansion at Weir Minerals North America in

Madison reducing the need for sub-contracting.

• Largest-ever valve order received by Weir Minerals North America

from Siemens Environmental Services.

• Largest order in history of Weir Minerals Netherlands achieved with

major award for Geho pumps for the Brazilian MMX pipeline project.

• Investment in excellence results in Weir Minerals Hazleton being

selected as finalist for Industry Week Best Plants North America 2007.

• China facility officially opened in June 2007 with three-shift foundry

run rate achieved.

• Weir India awarded Indian Manufacturing Gold Award for emerging
facilities and gained approval from India’s largest power company to
supply slurry pumps locally.

• Growth of Weir Minerals South America continues with input up 28%,

output up 32% and profit up 35%.

• Enhanced apprenticeship and graduate trainee scheme introduced to

grow and develop internal skills.

• Reductions in Lost Time Accident results, with several plants

completing the year without any accidents.

• Weir Minerals France awarded major contract for gravel pumps and

Isogate valves for a tunneling project in China.

Market review

• Continuing focus across the division on Lean improvements brings

further benefits in capacity and delivery targets.

High growth in the Chinese and Indian economies in 2007 fueled
a continuation of the ‘super cycle’ in our industry, with commodity
prices supporting solid market conditions in the minerals processing
sector. While some commodity prices declined throughout the year
most still remained at historically high levels. The strength of commodity
prices has continued to support strong growth in new equipment sales
through both brownfield and greenfield expansion projects. This has
also underpinned solid growth in aftermarket sales as new projects
are brought on-stream. We fully expect these favourable market
conditions to continue into 2008.

Strong demand continued for large flue gas desulphurisation recycle
pumps. A feature of the year was the surge of activity in the United
States, as local power plants move to meet stricter emission targets.
We are optimistic that demand will remain at historical highs
throughout 2008.

Higher oil prices in 2007 have accelerated the upgrading and
expansion of oil sands mining in Northern Alberta, Canada and
industry data has estimated that over US$100bn of capital investment
is currently on the drawing board. Transportation and processing of
the oil sand is undertaken in slurry form and we have already received
significant orders for HTP hydrotransport and plant pumps.

The Weir Group PLC Annual Report 2007

Clear Liquid: By executing a strategy to focus on higher
margin, specialist markets, Weir Clear Liquid delivered a strong
performance in 2007. Weir Pumps was sold, Weir SPM was
purchased and Weir Gabbioneta has been successfully integrated
and is exceeding expectations. Going forward, Weir Clear Liquid
is well placed to continue to grow.

200

150

100

Order input

£191.9m

Up 43%

2006

2007

Our brands

Weir SPM

Lewis

Floway

Gabbioneta

Roto-Jet®

Wemco®

Begemann

Zeron 100®

Operational review

Case Study

Weir Gabbioneta productivity increases dramatically

Weir Gabbioneta enjoyed a highly successful 2007, with original
equipment output up more than 70% without increasing the number
of production employees.

The manufacturing process has been revised through Weir Production
System methodology and material flows have been created in the
workshop. The machining shop layout has been completely changed,
without any disruption in production activity. Most of the layout
changes were suggested, designed and realised by cross-functional
teams involved in Kaizen activities. As a result, the lead time for parts
reduced from 3-4 weeks to just a few days.

In the assembly department, a pull system driven cell has been created
and dedicated to the end-to-end process of the high volume ‘R’ pump
family. Dramatic improvements in productivity, lead-time and work-in-
progress were achieved. All the piping, welding and finishing processes,
as well as materials handling and people movements, were also optimised.
Workers have received training to develop multifunctional skills and a
continuous improvement programme is in place to sustain further
growth in efficiency and lead-time reduction.

The company’s supply chain has been reinforced with the introduction
of specific key performance indicators to monitor quality and on time
delivery performance with overall improvements of 20%.

Weir Gabbioneta pumps ready for despatch.

After an outstanding 2006 for Weir Clear Liquid, 2007 was a year of further
growth and improving operational performance. All businesses benefited
from our strategy of focusing on higher technology, higher margin and
speciality activities while exiting lower margin markets. In line with this
strategy, we disposed of the lower margin, non-core Weir Pumps, Glasgow
business in May 2007.

The acquisition of Weir SPM was completed in July 2007 and adds
significantly to the scale of the division. Weir SPM’s market is largely tied to
the upstream drilling of gas wells in North America where gas storage levels,
gas prices and North American weather conditions are key market drivers.

The unprecedented growth of unconventional drilling activity over the
past few years has resulted in high levels of inventory and some expansion
in industry operating margins. In 2008, our expectation is that the industry
will see some unwinding of these favourable conditions. The impact on
Weir SPM will however be offset through growth in servicing the installed
equipment base and our profit improvement plans which will result in
further growth in 2008.

An in-depth strategic review has been undertaken and identified significant
opportunities for Weir SPM growth. Expansion of Weir SPM’s geographic
reach to better service high growth markets while leveraging off Weir’s
services network and investment in production facilities to increase retained
value-add are the cornerstones of our medium term agenda.

The acquisition of Italian pump manufacturer Weir Gabbioneta has been
an excellent strategic fit and the integration of this business has now been
completed. The Group has made significant investment to strengthen
the new organisation and improve its core processes. As a result, 2007
was an excellent year for the company, with productivity and profitability
up dramatically. Weir Gabbioneta is now well placed to benefit from
continued growth in the oil & gas markets, particularly in the buoyant
Middle East downstream market.

Weir Lewis recorded another excellent year, on top of a very strong 2005
and 2006, with significant new orders from Northern Africa. The outlook
for 2008 remains strong with some minor decline in activity expected as
the number of new projects has reached a plateau.

Weir Specialty Pumps had a strong year, with input up 17%. Particularly
pleasing was the success of new products – such as the Self Primer pump,
designed to outperform the competition in key areas important to the
customer. Sales more than doubled in 2007 with the industrial sector,
particularly food processing, being the main growth. Success has been
achieved in Venezuela, through cooperation with Weir sister companies
and in Australia through partnering with the market leading distributor.

Weir Floway continued to deliver significant operational improvements in the
year and despite input being flat, profitability was much improved. The future
outlook remains encouraging with significant opportunities being developed
in the mining and oil & gas markets in addition to its core water market.

Key achievements

• Successful acquisition of Weir SPM increasing exposure to upstream

gas & oil.

• Weir Gabbioneta is now fully integrated and achieved further growth

in input in 2007 after exceptional growth in 2006.

• Successful disposal of lower margin, non-core Weir Pumps business

at £26.0m profit to book value.

• Weir Lewis continues to perform strongly, with particular success in

North Africa.

• Weir Specialty Pumps grew input by 17% – sales of our new product

in the Self Primer market more than doubled.

• Materials business in Manchester continued to see significant success
in oil & gas and desalination applications for our Zeron 100 Super
Duplex stainless steel.

• Lost time accidents reduced by 24% compared with 2006.

• Continued investment in implementing Lean principles resulted in

improvements in quality, on time delivery and working capital across
the Clear Liquid businesses.

Operational Review

Clear Liquid: world-class businesses
providing end-to-end pumping
solutions for major oil & gas, power
generation, water and hydrocarbon
processing projects.

Primary input breakdown
Oil
Water & wastewater
General industrial
Minerals
Power

Geographic breakdown
Americas
Middle East & Africa
Europe & Former Soviet Union
UK
Indo Pacific
Australia

Stephen Bird
Divisional Managing Director

67.8%
15.3%
8.0%
8.0%
0.9%

50.0%
20.6%
17.8%
6.5%
4.7%
0.4%

Market review

The primary markets for Weir Clear Liquid are oil & gas, specialist
water, wastewater and speciality products for general industrial
markets. The strategy is to strengthen participation in higher margin
activities and focus our resources on those markets where we believe
we can lead and bring added value to our customers.

Oil prices remained high in 2007, which meant that both the
upstream and downstream oil markets continued to be buoyant and
growing globally. This resulted in significant business opportunities
for Weir Gabbioneta, which saw continued strong performance in
the Middle East in particular. Weir SPM’s market is largely tied to
upstream drilling of gas wells in North America. While we are likely
to see some unwinding of favourable market conditions in 2008,
we are confident that growth from servicing the installed base and
our improvement initiatives will underpin further profit progress.

We remain selective about our activities in the water and wastewater
markets and will continue to focus on more technical, higher margin
products. Through Weir Floway and Weir Specialty Pumps, we currently
operate successfully and have leading positions in the clean water
market in the United States, as well as in our selected municipal
water and wastewater markets also in the United States.

The minerals & mining sector continues to be a growth market,
particularly with regard to our Weir Floway vertical turbine pumps.
By working closely with Weir Minerals, we have been able to grow
our market share considerably, particularly in South America.

Weir Lewis enjoyed considerable success supplying pumps for specialist
chemical processing applications and this market continues achieving
like for like volumes as the historical high.

Our 2007 performance in the general industrial market was also
strong. The sector continues to grow at 3-4% and the Clear Liquid
businesses are well placed to grow ahead of this market.

The Weir Group PLC Annual Report 2007

Valves & Controls: We have seen healthy growth in both power
generation and oil & gas markets during 2007 leading to increased
input, output and profit. Our key markets continue to be buoyant
with good prospects for further growth. The factory moves in the USA
and Middle East are now substantially complete and the business is
well positioned to deliver sector best practice performance.

Order input

£77.6m

Up 13%

2006

2007

Our brands

Atwood & Morrill

MAC Valves

Batley Valve

Blakeborough
Controls

Hopkinsons

Sarasin – RSBD

Sebim

Tricentric

Operational review

Case Study

2007 was a year of significant input growth for Weir Valves & Controls
principally due to strong growth in our power generation and oil
& gas markets.

The previously restructured businesses delivered strong profit growth and
we expect this to further improve in 2008 with an objective to achieving
best-in-class margins as the power market improves. The new supply
chains in our relocated UK factory have developed well and proved
sufficiently robust to cope with the growth in output, while also reducing
quoted lead times and improving customer delivery performance.

Investment in the Weir Production System and Lean principles continued
to deliver significant business benefits. Of particular note are the factories
in North Carolina in the United States, in northern France and China,
where we have seen excellent improvements in output from the existing
facilities and personnel.

In North America, the old and inefficient site in Massachusetts was sold
and relocation to a modern world-class facility is now substantially
completed. The investment in this facility is underpinned by our growth
expectations for the United States nuclear programme.

Our operations in the United Arab Emirates are being consolidated into a
single facility with capacity to support continued expansion. The political
difficulties in Iran have meant that new work has been minimal during
the year.

Significant investment has been made to develop new, lower cost supply
chains in China, India and in particular, the Middle East. Existing suppliers
have been supported and developed and new suppliers brought online
with a result that a greater proportion of components are now being
sourced from these countries. Investment in this initiative in 2007 has
built strong partnerships and processes that can deliver excellent
quality parts to our demanding requirements going forward.

We have continued the excellent improvements in our Health and Safety
record with a further reduction in accidents and the roll out of new safety
programmes. The skills and talents of the teams have also been improved
partly by the addition of some new people but more importantly by strong
training activity driven through the Weir Personal Development Programmes.

Reducing the pressure at Korean power station

Many valves in a modern power station can be designated as severe
service, due to their generation of high noise levels, vibration,
cavitation or erosion. One such application is the pump minimum
flow valve on a boiler feedwater control system.

When filling the boiler, the feedwater control valve is required to operate
with a high inlet pressure and a low outlet pressure, which generally
results in high levels of cavitation – a highly destructive phenomenon.

At Youngheung-do Power Station in Korea, the installed control valve
suffered from severe levels of cavitation, generating high levels of noise
and vibration. The temperature of the feedwater was such that the
vapour pressure was very close to the outlet pressure of the liquid.
This meant that the liquid could change from liquid to gas, causing
cavitation. As a result of this damage, the trim had to be replaced
every six months.

To combat this problem, Weir Valves & Controls created the X-Stream
trim, which works to prevent the fluid pressure falling below the
vapour pressure at the valve trim.

A new X-Stream trim was manufactured and installed to fit an existing
valve body at Youngheung-do Power Station. When the valve was put
back into service, it was immediately clear that previous problems
associated with noise, vibration and cavitation had been solved due
to the smooth operation of the valve.

Although the original trim had to be changed after six months in service,
the new X-Stream valve trim has not had to be taken out of service since
installation. The application has been so successful that the customer
has ordered further repeat valves for later phases of the station.

The X-Stream trim is fitted to a valve.

Key achievements

• Growth in nuclear power generation activity, driven by new projects

in China and potential work in Europe and North America.

• New factory site for North American nuclear operations in

Massachusetts to support future business growth.

• Significant growth in profits and output from conventional
power generation projects in China, North America, Europe
and South Africa.

• Further profit growth from the restructured and relocated UK
operation, with a stronger supply chain underpinning future
growth prospects.

• Continued strong performance from the restructured

French operations.

• The first full year of the new factory in Suzhou, China, showed

strong growth, with further products being introduced.

• Expansion and consolidation of our Middle East operations into

a new facility to support growth expectations.

• Development of new products to support new nuclear reactors

and the supercritical, high efficiency coal plants.

Operational Review

Valves & Controls: businesses
specialising in high integrity valves
for critical service, process protection
and plant safety applications in
power generation, oil & gas and
severe industrial processes.

54.9%
27.6%
15.6%
0.9%
0.8%
0.2%

26.1%
24.2%
20.8%
16.9%
11.9%
0.1%

Primary input breakdown
Power
Oil
General industrial
Naval & Marine
Minerals
Water & wastewater

Geographic breakdown
Americas
Europe & Former Soviet Union
Indo Pacific
UK
Middle East & Africa
Australia

Phil Clifton
Divisional Managing Director

Market review

Weir Valves & Controls principally operate in the power generation
and oil & gas sectors. Some of our specialist products are also
supplied into critical service and safety applications in other
industrial processes.

During 2007, we have seen strong growth in the power generation
market, with significant orders being received for new power plants
in China, both nuclear and conventional. We are also active on the
new nuclear plants in Finland and France and are well positioned
to take advantage of expected growth in new nuclear plant
development in both North America and Europe.

Life extension of existing power plants (both nuclear and conventional)
in Europe, North America and South Africa has shown important
growth and together with our sister operations in Weir Services, we
have been able to offer a strong service to our customers. Growth in
our after-market activities has been very pleasing during the year.

We saw continued growth in the oil & gas markets throughout
2007 – despite the political difficulties in trading with Iran, which
has traditionally been an important market for us. We have been
successful in replacing the Iranian orders with work from other
markets in the Middle East.

The general industrial markets have also been busy, in particular the
chemical, petrochemical and special process industries, all of which
need our high integrity equipment.

The Weir Group PLC Annual Report 2007
The Weir Group PLC Annual Report 2006

Engineering Services: Weir Services has built a reputation for
excellent service and customers value our ability to employ sound
engineering and project management principles on budget and
on time. Through our Global Knowledge Centre, we can share best
practices and processes across the world on demand.

Operating profit (£m)

Operating profit

£18.5m

Up 41%

Revenue

£231.4m

Up 4%

Order input

£250.6m

Up 8%

2006

2007

Operational review

Case Study

A gold mine of new opportunities

Weir Services Australia has been selected to assist in the re-commissioning
of a gold mine in the Philippines where the work includes complete
refurbishment of two ball mills and one SAG mill. Excellent company
capabilities and cooperation played a major part in the success of
winning the contract.

The two ball mills will be shipped to the Henderson service centre in
Western Australia for refurbishment. The SAG mill, meanwhile, was in
a state of disassembly, with some parts in Washington State in the
USA and others in British Columbia, Canada.

All parts have been shipped to our Edmonton service centre in Canada
where they will be inspected and refurbished to original equipment
standards. On completion, all three mills will be returned to the mine
site in the Philippines for installation and commissioning.

A senior customer representative visited both our Australian and
Canadian facilities to assess the equipment and technical ability to
perform this type of work prior to confirming the order. One of the key
factors in the customer’s decision was the global reach of Weir Services,
our proven experience in performing similar work in the past and our
exceptional project management skills.

A SAG mill in situ, similar to one being refurbished for the
Philippines gold mine.

Engineering Services performed well in 2007 growing revenue 4% to
£231.4m and producing an operating profit before intangibles amortisation
of £18.5m against £13.1m in 2006. The concentration for the year was to
execute and deliver the benefits of restructuring activities in the UK, USA
and Middle East which all contributed significantly to the improved
performance in the year.

In the UK, input was solid with a combination of continued strong demand
from our oil activities in Aberdeen and consistently good markets for our
power and industrial businesses across the balance of our UK activities.
A programme to modernise the Group’s UK service infrastructure included
a significant expansion of the Barton facilities and full implementation of
a totally integrated management system across all of the UK operations.

With the restructuring now behind us, we are anticipating further growth
in 2008 and expect markets to remain buoyant.

In the Middle East, the Group’s service operations include wholly owned
facilities in Dubai and India and joint ventures in Abu Dhabi and Saudi
Arabia with the majority of revenue related to the oil & gas market.
The high cost of oil combined with the Group’s facility and equipment
investments have positioned us well to capitalise on the massive market
opportunities in the future. During the year, we took the decision to acquire
the minority interest in our subsidiary in India, providing a further platform
for medium term growth.

The Services Division in North America consists of three principal activities,
all of which made solid progress in 2007. The engineering distribution
business operates throughout Canada and benefited from the ongoing
large scale project work being undertaken in the industry.

The services network in Canada and the Houston, Texas operation made
significant progress. The introduction of Lean and a programme to upgrade
facilities delivered substantial operational benefits which were underpinned
by continued buoyant markets in the oil sands, oil & gas and power
generation sectors.

The third activity in Canada relates to our involvement in the asset
management and operation of the Canadian Navy’s test and certification
facilities in Montreal. This activity performed well and prospects exist for
increased work in the future.

In Australia, the division performed equally well growing turnover and profit
when compared to 2006. Our activities include facilities in New South Wales,
Victoria and our recent investment in a centre in Western Australia.

The principal markets for the Australian services business relate to the
provision of replacement equipment and aftermarket services to the
mining, oil & gas and power generation markets. All of these sectors are
expected to see additional growth in 2008 as a consequence of continued
buoyant commodity markets and the significant number of new projects
planned to come on board in the year.

Operational Review

Engineering Services: A turnkey
service provider with the ability
to manage large, complex plant
outages requiring civil engineering
to integrated design and project
planning. Our proven ability in
developing and successfully
executing projects set new
standards for our customers.

Primary input breakdown
Oil
Power
Minerals
Naval & Marine
General industrial
Water & wastewater

Geographic breakdown
Americas
UK
Middle East & Africa
Australia
Indo Pacific
Europe & Former Soviet Union

Steve Simone
Divisional Managing Director

39.0%
22.6%
15.4%
11.2%
7.8%
4.0%

47.7%
25.4%
12.2%
10.7%
2.3%
1.7%

Key achievements

• Improved margins from 5.9% in 2006 to 8% in 2007.

• Peace River project for BC Hydro in Canada set new standards for

project management and Health & Safety.

• Field machining project in Venezuela expanded our reach from

Montreal and built on our success in hydro markets.

• Secured a further two hydro projects for Scottish & Southern Energy

and ScottishPower in the UK.

• ScottishPower awarded our Alloa business the Opticon Contractor

of the Year award for Health & Safety.

• Implementation of the Weir Production System in the Middle East

resulted in an increase in manufacturing capacity while broadening
core business capability.

• Explicit recognition as a ‘top tier supplier’ by BP led to a fourfold

increase in business generated by the Baku service facility
in Azerbaijan.

• Successful completion and commissioning of the $15m Ravensthorpe

desalination plant in Western Australia.

• Awarded a three-year multi-million dollar contract to refurbish coal
pulverisation equipment for power plants in Victoria, Australia.

• 36% improvement in year-on-year safety statistics.

Market review

Around the world, the oil & gas industries continue to be a key sector
for Weir Services.

As demand continues to grow and prices remain high, oil dominates
opportunities in many of our businesses. Western Canada continues to
fund new work and expand its capacity in oil production and we have
enjoyed continued success in our oil sands projects. Meanwhile, Saudi
Arabia deploys ever-increasing numbers of drilling rigs – the current
count is 13% up on the start of 2007. In the UK, oil assets continue to
be sold off to smaller independents as the fields production in relevant
terms is projected to end in 10 years time. Azerbaijan and Kazakhstan
are gearing up to be the new boom areas.

Power generation continues to be a strong market for Weir Services.

The division’s biggest opportunities come from major plant outages
and extension projects. In the UK, we are forecasting some reductions
in hydro power orders, as a significant number of plants have now been
upgraded. Canada is expected to provide a good level of hydro upgrade
work in the future. The expertise gathered in the UK is being transferred
to Canada to support improving opportunities in that region.

The mining industry remains strong and both our Australian and
Canadian businesses are very well positioned to take advantage of
the continuing boom.

The Weir Group PLC Annual Report 2007 | Operational Review

Defence, Nuclear & Gas: We have continued to develop
opportunities in the defence sector, with strong growth in
Australia, Canada and Spain. The performance of our nuclear
business was pleasing, despite some uncertainties in the UK
decommissioning market. Weir LGE has performed well and
continues to deliver against customer and financial expectations.

Operating profit

£10.4m

Up 4%

Revenue

£117.6m

Up 10%

Order input

£84.0m

Down 53%

Operating profit (£m)

2006

2007

Operational review

The nuclear and defence businesses once again performed well in 2007.
Impressive results on a number of fronts have put the Weir Defence, Nuclear
& Gas Division in a good position to take advantage of new opportunities
going into 2008. The Spanish submarine programme secured in 2006 has
developed well and customer confidence in the Group’s capabilities has
resulted in the award of significant additional work.

Our submarine support operations in Australia and Canada are also being
expanded to respond to new market opportunities. In Australia, we
experienced growth in 2007 and are well positioned to obtain work on their
surface ship activity and naval defence programme. In Canada, we remain
confident of winning some major new orders and our workload in the region
increased during 2007, resulting in the opening of an office in Ottawa.

The UK remains a key market for both our defence and nuclear businesses.
The launch last year of the first Astute nuclear submarine marked a key
milestone in this project. We are now working closely with BAE Systems on
the remaining three boats. In the nuclear area, we have built an excellent
relationship with the UK Atomic Weapons Establishment and in 2007
secured preferred supplier status in support of its nuclear decommissioning
and material handling requirements. The relationship with British Energy
continues to develop and successfully culminated in a five-year partnership
agreement on the maintenance of its nuclear fuel systems.

The exceptional level of orders secured in the LPG marine market over the
past two years provides a solid platform for further progress in 2008 and
all projects are proceeding successfully with equipment delivered to plan.
As expected, the shipyards are now fully booked through the turn of the
decade and new input will be limited until the backlog is cleared. Weir LGE
has a healthy workload which will sustain its activities through 2009.

Defence

During 2007, we have continued to see growth
in defence spending worldwide. Our strategy
of reducing our relative dependence on the
UK market has shown benefits, with continued
growth in Australia, Canada, Spain and the
Netherlands, as well as significant opportunities
in other countries.

Nuclear

In the UK, the Nuclear Decommissioning
Agency re-focused its activities for much of the
year, leading to a period of uncertainty. Despite
this, we are forecasting good prospects for
2008 and have seen further development of
our already strong relationships with other UK
nuclear businesses requiring decommissioning
and nuclear material handling services.

Gas

As expected, we are seeing a slow down in
LPG marine activities worldwide following
the exceptional influx of orders placed over
the past two years. However, we are continuing
to develop potential onshore LPG storage
opportunities and our order book through
2009 remains strong.

Key achievements

Primary input breakdown

Geographic breakdown

Naval & Marine

Power

Oil

General industrial

64.6%

16.8%

14.6%

4.0%

Phil Clifton
Divisional Managing Director

Europe &
Former Soviet Union

Americas

Middle East & Africa

Australia

Indo Pacific

35.4%

29.1%

14.7%

11.0%

6.4%

3.4%

• Good performance on the initial stages of new Spanish conventional

submarines contract has led to significant additional work.

• Continued expansion of our Australian and Canadian submarine

support operations.

• Launch of the first UK Astute nuclear submarine marked a key milestone
in this project and we continue to work closely with BAE Systems on the
remaining boats.

• Excellent relationships have been built with the UK Atomic Weapons
Establishment to support its nuclear material handling requirements.

• Relationship with British Energy continues to develop, culminating in

a five-year partnership agreement on its nuclear fuel systems.

• LPG marine market projects are being progressed successfully with

equipment delivered to plan.

Financial Review: The Group has delivered a strong
set of results which demonstrate yet again its
underlying cash generation capability.

Financial Review

Over 75% (2006: 70%) of Group revenues are now generated from these
three markets with original equipment sales representing 54% of revenues
(2006: 50%). Strong growth was evident in North American revenues
following the acquisition of Weir SPM and good growth was also
experienced by our European and South American operations.
Unfavourable exchange movements from the translation effects
of overseas subsidiaries reduced revenue growth by £15.9m.

Operating profits2 rose 57% to £122.1m (2006: £77.7m). Excluding
attributable profits from our joint ventures, the operating margin2 was
11.2% of revenues against 8.7% last year. Increased operational leverage
and the impact of the higher margin Weir SPM acquisition benefited
Engineering Products. Engineering Services performance improved following
the restructuring of operations undertaken in 2007 and the Defence, Nuclear
& Gas business benefited from the strength of its current order book.
Attributable profits, reported on an after tax basis, from our joint ventures
contributed £3.4m against £2.4m in 2006. The impact of unfavourable
exchange movements reduced operating profits2 in 2007 by £1.6m.

No exceptional profits from continuing operations were recognised in the
year (2006: £15.7m). Intangibles amortisation, however, rose to £6.2m from
£2.3m in the prior year primarily reflecting an incremental £3.7m charge in
respect of intangible assets recognised on the Weir SPM acquisition. For
2008, this latter charge will rise to around £8m before falling to £5m in 2009.

Net interest costs of £5.1m were lower than 2006 (£5.5m) with the impact
of positive operating cashflows and business disposal proceeds more than
offsetting that of the purchase of Weir SPM and Weir Multiflo. The net interest
costs were covered 24 times by operating profit2. In addition, there was a £1.7m
reduction in the net income earned from the Group’s pension schemes reflecting
a higher proportion of bonds within the pension fund investment portfolio.

Profit before tax2 increased 56% on the previous year at £120.2m
(2006: £77.1m). Reported profit before tax increased 26% to £114.0m
(2006: £90.5m), reflecting the impact of additional amortisation in the
current year and exceptional items in the prior year.

Details of the trading highlights of each of the Group’s business segments
are set out below.

Engineering Products

Input1, on a constant currency basis, grew 30% to £760.7m with in excess
of 80% being attributable to the oil & gas, mining and power generation
markets. We achieved excellent results from Minerals (up 28%) and Clear
Liquid (up 43%) which combined with 13% growth from Valves & Controls
resulted in the Group achieving its highest ever level of order input.

Revenue1 on a constant currency basis increased 35% to £711.6m in 2007
(2006: £525.5m), due to continued strong demand from our core mining,
oil and power markets and a first revenue contribution of £78.7m from
Weir SPM in the post acquisition period; ahead of our initial expectations.

1919

“The Group includes a strong portfolio of businesses

in the oil & gas, power generation and mining
markets where fundamentals point to sustained
future progress.”

Operating Structure

The trading activities of The Weir Group PLC comprise the manufacture
of pumps, valves and ancillary equipment for the mining, oil & gas, power
generation and general industrial markets (the Group’s Engineering Products
Division); the provision of equipment maintenance, process support and
asset management services (which constitutes the Engineering Services
Division) and the specialist design of turnkey engineering projects,
(the Group’s Defence, Nuclear and Gas Division). The Group also
has a number of joint ventures which are reported separately.

Results overview

The Group has delivered a strong set of results which demonstrate yet
again its underlying cash generation capability. The results include the first
contributions from the current year acquisitions of Weir SPM and Weir Multiflo
and reflect the disposals of the Weir Pumps, Glasgow operations and our
investment in Devonport Management Limited. The Group includes a strong
portfolio of businesses in the oil & gas, power generation and mining markets
where fundamentals point to sustained future progress.

Revenue1 increased by 22% in 2007 from £870.4m to £1060.6m with all
three divisions achieving growth over 2006. Continued buoyant conditions
in the mining, oil & gas and power generation markets, together with first
contributions from Weir SPM and Weir Multiflo, contributed to the year’s results.

The Weir Group PLC Annual Report 2007

Underlying revenue growth, excluding the part year impact of the Weir
SPM acquisition, was 20% realised through a combination of increased
output from existing facilities utilising the Weir Production System and
selective capacity increases coming online. Over 83% (2006: 81%) of
revenues were attributable to the oil & gas, mining and power markets
with year on year revenue growth in these markets of around 20%, on
a like for like basis. The impact of adverse foreign currency movements
was to reduce current year revenues by £12.5m.

Operating margins2 as a percentage of revenue increased to 13.9% against
11.1% in 2006, consistent with the Group’s focus on higher technology,
higher margin and speciality activities. Operating leverage from increased
revenues across all operations and the inclusion of Weir SPM’s higher margin
product sales for a part year each contributed to this improved result. The
Weir SPM operating margin2 was in line with our expectations at 24.3%.

Operating profits2, on a constant currency basis, increased 70% to £98.7m
(2006: £58.1m) including a part year contribution of £19.1m from Weir
SPM. Adverse foreign currency translation movements reduced current
year operating profits by £1.8m.

Engineering Services

Input1 from Engineering Services, on a constant currency basis, increased
8% to £250.6m (2006: £232.9m) with strong growth across the power
and oil sectors. On a constant currency basis, revenue increased 4% to
£231.4m (2006: £221.7m) reflecting a conscious focus on the most
profitable activities and markets. Operating profits2 on the same basis
were £18.5m compared to £13.1m in 2006. This reflected an improvement
in the underlying trading performance of the division and one-off costs
of £4.4m in the prior year arising from restructuring activities in the UK,
USA and Middle East.

Good progress was made across all operations during the year reflecting
strong conditions in the oil & gas, mining and power markets with around
75% (2006: 63%) of revenues coming from these markets. In the UK and
North America, the benefits of the 2006 restructuring were realised and the
Middle East operations also delivered good growth following investment
and restructuring in 2006.

Defence, Nuclear & Gas

This division comprises those businesses in the Group where revenue
is derived from the specialist design of turnkey engineering projects for
the defence, nuclear and gas markets. The division’s revenue in 2007
increased 10% on a constant currency basis to £117.6m (2006: £107.3m),
with gains in the marine market as revenue milestones were achieved on
a number of major contracts. Operating profit2 on the same basis grew
4% to £10.4m against £10.0m in 2006.

Joint ventures

The Group’s share of profit from its joint ventures increased 42% to £3.4m with
good growth from the Group’s joint ventures in Saudi Arabia and Abu Dhabi.

Taxation

The tax charge for the year of £31.7m (2006: £18.9m), on attributable
profits before exceptional items of £114.0m (2006: £74.8m), represents
an underlying effective rate of 27.8% (2006: 25.3%). This differs from a
theoretical expected rate of 31.3% (2006: 31%) principally as a consequence
of the tax efficient use of capital, the recognition of historic losses and the
release of provisions equivalent to 1.5% on the rate following closure of
certain tax enquiries at no cost. The underlying tax rate is expected to rise
further in 2008 given the full year impact of the Weir SPM acquisition
which has an effective tax rate of around 35%.

In accordance with IFRS, earnings from joint ventures are reported on an after
tax basis, with a tax charge of £0.6m reflected within these net earnings.

Discontinued operations

During the year, the Group disposed of the Weir Pumps Glasgow operations
and its investment in Devonport Management Limited. As such, the post
tax trading results of each of these businesses and disposal gains arising on
Weir Pumps and Devonport Management Limited are classified within
discontinued operations with prior year comparatives restated.

Profit after tax of £8.5m was recognised in the year in respect of these
businesses for the periods prior to disposal. Profits of £3.3m have also been
recognised in respect of prior period disposals following the settlement
of outstanding legal matters and the expiry of warranty periods.

Disposal gains of £80.9m were recognised as exceptional items within
discontinued operations in respect of Weir Pumps and Devonport
Management Limited. No tax is payable on either disposal.

Earnings and Dividends

Earnings per share2 was 41.4p, an increase of 49% compared to 2006.
Reported earnings per share, taking account of exceptional items, intangible
amortisation and discontinued operations, was 83.8p (2006: 39.4p). The
weighted average number of ordinary shares in issue increased to 208.6m
as a result of the issue of 1.1m shares during the year to fulfil option exercises
and awards under the Long Term Incentive Plan.

Subject to shareholder approval, the total dividend for the year is 16.5p,
an increase of 14% over last year’s total of 14.5p. This represents dividend
cover (being the ratio of earnings per share1 before intangibles amortisation
and exceptional items to dividend per share) of 2.5 times compared to
2.2 times in 2006. Going forward, the Group will look to sustain a
progressive dividend policy and maintain cover of at least 2 times.

Acquisition of SPM Flow Control Inc.

On 19 July 2007, the Group completed the acquisition of SPM Flow Control
Inc. and on 21 August 2007, the acquisition of Weir Multiflo for a total cash
consideration, including expenses, of £331.2m. As required by IFRS, a
review of the fair value of assets and liabilities at the date of acquisition has
been undertaken and accounting policies aligned with those of the Group.
This has given rise to fair value adjustments of £83.3m, resulting in net
assets acquired of £153.1m. These principally reflect the valuation of
separately identifiable intangible assets, including customer relationships
and trade name, with the former amortised over their expected useful lives
of up to 25 years. Other adjustments were made in relation to property,
plant and equipment, inventory and provisions. Goodwill of £178.1m
has been recorded in respect of these acquisitions.

Cashflows

The Group has delivered strong growth in cashflows, with cash generated
from operations1 of £151.8m substantially ahead of 2006 (£111.0m) as
a consequence of increased profitability. A further £10.6m improvement
in net working capital was realised, despite increased trading volumes.
Operating cashflows of £23.5m were generated by Weir SPM in the period
since acquisition reflecting a greater focus on working capital management.
A £6.5m special contribution was made during the year to facilitate the
purchase of an insurance policy from Legal & General Assurance Society
to secure the current pensioners’ liabilities of the main UK plan and this is
outlined in more detail below.

Net capital expenditure1 was £40.3m (2006: £23.9m) reflecting continued
investment across the business and asset disposal proceeds of £3.2m (2006:
£0.8m). This represents 2.2 times depreciation and we expect to continue to
spend around 2.5 times in 2008 given projects now underway in Brazil, the
USA and Australia to meet the medium term needs of the business.

Net cashflows1 of £44.3m (2006: £35.6m) were generated from recurring
activities. Cash proceeds from business disposals were £127.3m. Taken
together with the net funding cost of new acquisitions of £317.8m and
operating cashflows generated from discontinued operations of £0.9m, this
resulted in an increase in net debt from cashflows of £145.7m. An £18.3m
adverse movement arose on the translation of overseas borrowings, giving
a year end net debt position of £171.3m, up £164.2m on 2006.

Financial Review

UK plans, facilitated the purchase of an insurance policy from Legal &
General Assurance Society to secure the current pensioners’ liabilities of
the main UK plan. This represents some 43% of the plan’s total liabilities
at 28 December 2007. This substantially reduces future investment and
mortality risks borne by the Group. A similar process was also undertaken
in Canada and it is planned to wind up that plan during 2008. The Group
will also continue to explore ways of further reducing future volatility risk.

Net assets

Net assets at 28 December 2007 were £545.2m (2006: £371.9m), with
the increase due to the improved profitability of the business, including
business disposal profits and gains from pension fund performance.

Litigation

The Group has no material litigation. There are 112 (2006: 52) asbestos
related actions outstanding against Group companies. All such actions
are robustly defended.

Critical accounting policies

The financial statements have been prepared in accordance with IFRS and
the material accounting policies are set out on pages 52 to 57 of this report.
There have been no changes to the accounting policies adopted in 2006.

Applying accounting policies requires the use of certain judgements,
assumptions and estimates. The most important of these are set out
below. Further judgements, assumptions and estimates are set out in
the financial statements.

Construction contracts
Approximately 10% of revenue was derived from construction contracts.
The timing of revenue and profit recognition in these contractual
arrangements is important and is usually measured by reference to the stage
of completion of contract activity at the balance sheet date. This assessment
necessarily requires a high degree of judgement. For other aspects of revenue
recognition, our accounting policies allow revenue to be recognised only
when the risks and rewards of ownership have passed to the customer.

Intangible assets
On the acquisition of a business it is necessary to attribute fair values
to any intangible assets acquired (provided they meet the criteria to
be recognised). The fair values of these intangible assets are dependent
on estimates of attributable future revenues, margins and cashflows.
In addition, the allocation of useful lives to acquired intangible assets
requires the application of judgement based on available information
and management’s expectations at the time of recognition.

Impairment
IFRS requires companies to carry out impairment testing on any assets that
show indications of impairment and annually on goodwill and intangibles
that are not subject to amortisation. This testing involves exercising
management judgement about future cashflows and other events
which are, by their nature, uncertain.

Liquidity and funding

Our general policy is to finance the Group through a mixture of debt
and equity. The Group’s capital structure is managed centrally with the
objective of optimising the returns to shareholders over time, whilst
safeguarding the Group’s ability to continue as a going concern.

The Group has a £300m multi-currency revolving credit facility and
Canadian dollar credit facilities of C$180m maturing in 2009. These have
standard covenant and variable rate interest structures and all covenants
were met in 2007. Foreign currency denominated borrowings of £216.5m
equivalent were outstanding under these facilities at 28 December 2007.
In June 2007, the Group put in place a £550m revolving credit facility
with a maximum maturity of two years, incorporating similar financial
covenants, to support the acquisition of SPM Flow Control, Inc. This
facility was subsequently reduced to £85m and has remained undrawn.

The maturity profile of committed borrowing facilities is regularly reviewed
and facilities are extended or replaced as required in advance of their expiry.

The Group held cash balances of £46.1m at 28 December 2007, of which
£9.3m was held in the UK and the remainder held as operating funds by
Group companies worldwide.

The Group has a variety of committed and uncommitted bank facilities
under which advance payment and performance guarantees are issued
to support normal contract terms.

Treasury management & policies

The Group’s treasury policies seek to reduce financial risk and to ensure
adequate controls over treasury activities group-wide. Treasury activities
in relation to transactional risk management are largely delegated to
the Group’s operating companies and are carried out within this policy
framework. Under treasury policy, all material foreign exchange exposures
are hedged, typically by means of forward contracts matching the
underlying contract cashflows, to provide certainty of future revenues and
costs. No speculative transactions are undertaken. Group Treasury monitors
foreign exchange exposures group-wide and reports regularly to support
Group financial risk management processes. Although all companies with
risk exposures undertake hedging transactions, only two companies apply
hedge accounting for such transactions for IFRS purposes.

In 2007, the extent of the Group’s foreign currency denominated net
investments in subsidiaries increased as a result of the purchase of Weir
SPM. The Group has initiated a partial hedging programme to reduce
its exposure to translation risk in respect of such net investments.

Further information on financial risk management objectives and policies
can be found in note 30 on page 89.

Exchange rates

The Group operates in a number of foreign currencies. The results of
overseas operations are translated into sterling at average exchange rates
for the year with the impact of the weakening of the United States and
Canadian dollar against sterling more than offsetting the marginal
strengthening of the Australian dollar and Euro. Net assets are translated
at year end rates. The weakening of sterling against the Euro, Canadian
and Australian dollar at the year end contributed to a positive net asset
translation effect of £3.1m.

Details of principal exchange rates used are contained in note 32
on page 95.

Retirement benefits

The Group has 16 pension plans around the world of which six are
defined benefit plans, the most significant being the UK and Canadian
plans. All defined benefit plans are closed to new members. The net
retirement benefits obligation surplus reported at 28 December 2007 was
£36.9m (2006: net deficit of £3.9m). During the year, the pension plans
have benefited from rising equity markets and bond yields which, together
with a further £6.5m special contribution made by the Company into the

Keith Cochrane
Finance Director
11 March 2008

1 from continuing operations.
2 from continuing operations, before

intangibles amortisation and
exceptional items.

The Weir Group PLC Annual Report 2007

Board of Directors: The Board's operational
framework is underpinned by clearly defined
strategies, vision and values which combine to
create shareholder value through the effective
use of our resources.

Mark Selway
Chief Executive

Alan Mitchelson
Legal and Commercial Director

Keith Cochrane
Group Finance Director

Aged 48, was appointed chief executive in June
2001. Before his appointment, he was a director
of Britax International plc and managing director
of its automotive components division. Following
the purchase of that division by Schefenacker
International AG in 2000, he became a director
of that company and executive director of
Schefenacker Vision Systems.

Aged 58, is a solicitor and joined the Group in
March 2000 as group company secretary. He
was appointed a director in December 2001.
Before joining the Company, he was legal and
personnel director of Highland Distillers plc,
following a number of years as a legal advisor
with Trafalgar House plc.

Aged 43, is a chartered accountant and was
appointed group finance director in July 2006.
He was formerly group director of finance at
ScottishPower plc. Before that he was with
Stagecoach Group plc where he was group
finance director before becoming group
chief executive in 2000.

Audit Committee

Stephen King (Chairman)
Christopher Clarke
Michael Dearden

Remuneration Committee

Michael Dearden (Chairman)
Christopher Clarke
Professor Ian Percy

Nomination Committee

Sir Robert Smith (Chairman)
Michael Dearden
Professor Ian Percy
Lord Robertson
Mark Selway

Group Operations
Executive Committee
From left to right

Keith Cochrane
Group Finance Director

Mark Selway
Chief Executive

Alan Mitchelson
Legal and Commercial Director and
Company Secretary

Phil Clifton
Valves & Controls and Defence,
Nuclear & Gas Divisional MD

Steve Simone
Services Divisional MD

Scot Smith
Minerals Divisional MD

Stephen Bird
Clear Liquid Divisional MD

Board of Directors

Sir Robert Smith
Chairman

Stephen King
Non-Executive Director

Michael Dearden
Non-Executive Director

Aged 63, was appointed chairman in July 2002.
He is chairman of Scottish and Southern Energy
plc and a non-executive director of 3i Group plc,
Standard Bank Group Limited and Aegon UK plc.
He was formerly chief executive of Morgan
Grenfell Asset Management, a member of the
Financial Services Authority and of the Financial
Reporting Council and chairman of Stakis plc.

Aged 47, was appointed a non-executive
director in February 2005. He has been group
finance director of De La Rue plc since January
2003. He was formerly group finance director of
Midlands Electricity plc and held senior financial
roles with Seeboard plc and Lucas Industries plc.
He was also a director of Camelot Group plc
until May 2006.

Aged 65, was appointed a non-executive
director in February 2003. A graduate of Oxford
University, he was formerly with Burmah Castrol
plc, where he was CEO of Castrol International.
He is a non-executive director of Johnson
Matthey plc and Travis Perkins plc. He was
chairman of Minova International Ltd until
December 2006.

Christopher Clarke
Non-Executive Director

Aged 62, was appointed a non-executive
director in 1999. A graduate of Cambridge
University and of the London Business School,
he was formerly a director of Samuel Montagu
& Co. Limited and HSBC Investment Banking.
He is a Deputy Chairman of the Competition
Commission and a non-executive director of
Omega Insurance Holdings Ltd.

Professor Ian Percy CBE
Deputy Chairman & Senior Non-
Executive Director

Aged 66, was appointed a non-executive
director in 1996. He was formerly senior partner
of accountants Grant Thornton, president of the
Institute of Chartered Accountants of Scotland
and chairman of The Accounts Commission for
Scotland. He served as a member of the Treasury
and DTI Co-ordinating Committee on Audit
and Accounting in 2003 and was chairman
of Companies House until December 2006.
He is senior non-executive director of Cala
Group Limited, non-executive deputy chairman
of Ricardo plc and chairman of Queen Margaret
University, Edinburgh.

Lord Robertson of Port Ellen (George)
KT, GCMG, HonFRSE, PC
Non-Executive Director

Aged 61, was appointed a non-executive director
in February 2004. He was Secretary General of
NATO (1999-2003) and before that Secretary
of State for Defence (1997-99). Lord Robertson
is deputy chairman of TNK-BP. He is a non-
executive director of Western Ferries (Clyde) Ltd.
He is also an international advisor to Cable and
Wireless PLC, on the Advisory Board of Englefield
Capital, senior counsellor with The Cohen Group
(USA) and President of Chatham House.

Directors Report

The directors are pleased to present their 114th annual report,
together with the audited financial statements, for the 52 weeks
ended 28 December 2007.

Cautionary statement
This annual report and financial statements have been prepared for
the shareholders of the Company, as a body, and no other persons.
The various reports contain forward looking statements that are
subject to risk factors because of the nature of the sector and
markets in which the Group operates and reflect the knowledge
and information available at the date of the preparation of these
financial statements.

Statements made in the Chief Executive’s Review, the Operational
Review and the Financial Review in respect of divisional performance
are made on a continuing business basis and operating profits are
stated before intangibles amortisation and exceptional items.
Operating profit before intangibles amortisation and exceptional
items, which is a non-IFRS measure, is the primary performance
measure used by management as it is felt that the exclusion of these
items provides more relevant information to users of the financial
statements and a more useful indication of the underlying
performance of each of the divisions.

It is also Group practice to discuss divisional performance in terms
of constant exchange rate growth by re-translating the prior year’s
results of overseas subsidiaries at 2007 average exchange rates.
This removes the effect of currency movements which allows
us to focus on the increases or decreases which are driven by
volume, price and cost levels relative to the prior year. Therefore,
in the Chief Executive’s Review, the Operational Review and the
Financial Review, growth rates and other comparative data in
respect of divisional input, revenue and operating profits before
intangibles amortisation and exceptional items are given on a
constant exchange rate basis. Underlying growth on this basis is
a non-IFRS measure because, unlike actual growth, it cannot be
directly derived from the information in the financial statements.

Results
The Group profit attributable to members for the 52 weeks,
after taxation, amounted to £174.9m.

Dividends
The directors recommend a final ordinary dividend of 12.35p per
share to be paid on 2 June 2008 to ordinary shareholders whose
names are on the Company’s register at close of business on 2 May
2008. Together with the interim ordinary dividend of 4.15p per
share paid on 7 November 2007, this makes the total dividend
for the year 16.5p.

Principal activities and business review
The Group's principal activity is the provision of specialised
mechanical engineering solutions for a diversified range of
industrial and geographic markets. A review of the Group’s
operations and future developments, together with key performance
indicators can be found in the Chairman’s Statement on pages 2
to 3, the Chief Executive’s Review on pages 6 to 8, the Operational
Review on pages 9 to 18, the Financial Review on pages 19 to 21
and the Corporate Social Responsibility Report on pages 40 to 43,
which are incorporated into this report by reference, as well as
within this report.

The Weir Group PLC Annual Report 2007

Other reports
The annual report includes a separate Corporate Governance
Statement, which is on pages 29 to 31, Audit Committee Report
on page 32, Nomination Committee Report on page 33 and
Remuneration Committee Report on pages 34 to 39.

Takeovers Directive
The information required for shareholders as a result of the
implementation of the Takeovers Directive into UK law is set out
in Shareholder Information on pages 108 to 109 and in this report
under Substantial shareholders.

Directors
Details of the current directors of the Company are set out on
pages 22 and 23. The directors who retire this year by rotation
are Christopher Clarke, Stephen King and Mark Selway. In
accordance with article 97 of the articles of association of the
Company, Christopher Clarke, Stephen King and Mark Selway
offer themselves for re-election. In addition, as he has been a
non-executive director for more than nine years, Professor Ian
Percy is subject to annual re-election.

Director’s indemnities
The Company has granted indemnities to each of its directors
in respect of all losses arising out of, or in connection with, the
execution of their powers, duties and responsibilities as directors
to the extent permitted by the Companies Act and the Company's
articles of association. In addition, directors and officers of the
Company and its subsidiaries and trustees of its pension schemes
are covered by Directors & Officers liability insurance.

Share capital
During the year, options were exercised by participants in the
Company’s share option schemes as a consequence of which
937,966 ordinary shares of 12.5p each were allotted and issued.
In addition, under the Group Long Term Incentive Plan the awards
granted in 2004 vested during the year. In order to satisfy the
awards, 207,205 ordinary shares of 12.5p each were allotted and
issued and 427,869 ordinary shares of 12.5p each were transferred
from treasury to satisfy the awards. Details of the options and awards
outstanding under each of the Company’s share schemes at the end
of the year are set out in note 28 to the Group financial statements.

At the 2007 annual general meeting, shareholders renewed the
Company’s authority to make market purchases of up to 20.8m
ordinary shares (representing 10% of the issued share capital). No
shares were purchased under this authority during the 52 weeks to
28 December 2007 and at the forthcoming annual general meeting
the Board will again seek shareholder approval to renew the annual
authority for the Company to make market purchases.

Annual general meeting
The annual general meeting will be held on 7 May 2008. A separate
letter is being sent to all shareholders containing the Notice of
Meeting and the resolutions to be proposed.

Substantial shareholders
At 11 March 2008, the following had disclosed an interest in the
issued ordinary share capital of the Company in accordance with
the requirements of section 5.1.2 of the UK Listing Authority’s
Disclosure and Transparency Rules:

Shareholder

Date of
Number disclosure to
of shares

Percentage
of issued
Company share capital

12,173,278
Baillie Gifford & Co.
11,673,950
AXA
10,678,821
Barclays Global Investors
Threadneedle Asset Management Ltd
10,450,300
Legal & General Investment Management 8,536,157
6,425,000
FMR Corp

17.12.07
19.06.07
18.01.08
18.10.07
20.11.07
23.03.07

5.82%
5.60%
5.10%
4.996%
4.08%
3.09%

Since the date of disclosure to the Company, the interest of
any person listed above may have increased or decreased. No
requirement to notify the Company of any increase or decrease
would have arisen unless the holding moved up or down through
a whole number percentage level. The percentage level may
increase (if the Company cancelled shares pursuant to the power
to purchase its own shares) or decrease (on the issue of new
shares under any of the Company’s share plans).

Going concern
After making enquiries, the directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the financial statements.

Charitable contributions
During the year, Group companies made the following contributions:

• charitable (being specifically health, heritage, educational and

community) purposes £252,227 (2006: £169,218).

• the Group made no political contributions during the period

(2006: nil).

Audit and auditors
So far as each of the directors is aware, there is no relevant audit
information (as defined by section 234ZA of the Companies Act
1985) of which the Company’s auditors are unaware.

Each of the directors has taken all of the steps that he ought to
have taken as a director to make himself aware of any relevant
audit information (as defined) and to establish that the Company’s
auditors are aware of that information.

A resolution to re-appoint Ernst & Young LLP as the Company’s
auditors will be put to the forthcoming annual general meeting.

Principal risks
Risk is inherent in our business activities and as a consequence
of operating a sound risk management process the Group has
identified the following principal risks and uncertainties, which
it believes could have a materially adverse effect on its business,
turnover, profit, assets, liquidity, resources and reputation.

The nature of risk is such that no list can be comprehensive and
it is possible that other risks may arise, or that risks not currently
considered material may become so in the future. Any forward-
looking statements in the annual report or otherwise made by
the Group should be considered in light of these risk factors.

The Group operates controls as described in the Corporate
Governance report to mitigate against these risks.

Economic, political and natural catastrophe risks
The Group operates in around 40 countries around the world
including several within Africa, Middle East, Asia and South America.
While benefiting from the opportunities and growth in these
regions, the Group is exposed to the economic, political and
business risks associated with international operations, such as
sudden changes in regulation, expropriation of assets, imposition
of trade barriers and wage controls, limits on the export of currency
and volatility of prices, taxes and currencies. The Group’s diversified
geographic footprint mitigates against any exposure within any
one country in which it operates.

The Group’s operations are exposed to varying degrees of natural
catastrophe risk, such as earthquake and flood, as well as security
risk, in the various manufacturing locations in which it operates.
Where cost effective, such risks are mitigated through physical
measures designed to counter the impact of a catastrophe. The
value of assets and associated profits are also protected by insurance.

Market cycles
Almost 90% of the Group’s new business comes from the power
generation, oil & gas, mining and industrial markets and its
performance may be impacted by market trends across these
markets. The provision of both original equipment and aftermarket
sales and services spreads this risk together with the broad
geographical diversification of the Group.

Legislative risks
Revision of environmental legislation in various countries takes
time and the Group monitors this in order to anticipate the effect
on its business and that of its customers. Unforeseen legislative
changes may have an adverse impact on operations and tighter
environmental legislation may increase manufacturing costs.
However, it can also provide opportunities to offer customers new
solutions to meet the more stringent environmental standards.

Intellectual property
The Group operates in a competitive market and constantly
has to take steps to prevent misappropriation of its intellectual
property rights. The Group relies on a combination of patent
rights, licensing arrangements and contractual arrangements
to establish and protect those rights, as well as occasionally
bringing law suits against third parties.

Industry competition
The markets for many of the Group’s products are fragmented
and highly competitive. The Group competes against large and
well established global companies, as well as local companies,
and low cost replicators of spare parts, on the basis of price,
technical expertise, timeliness of delivery, previous installation
history and reputation for quality and reliability. To remain
competitive, the Group invests continuously in its manufacturing,
marketing, customer service support and distribution networks.
The diversity of operations reduces the possible effect of action
by a single competitor and combined with the application of
Lean manufacturing ensures the Group’s competitive advantage
is sustained.

The Weir Group PLC Annual Report 2007

Directors Report (Continued)

Product liability claims
The Group faces an inherent business risk of exposure to product
liability and warranty claims in the event that a failure of a product
results in, or is alleged to result in, bodily injury, property damage
or consequential loss. The Group maintains insurance coverage
for product liability claims where possible. For warranty claims not
covered by insurance, warranty costs may be incurred which the
Group may not be able to recover.

Foreign exchange risk
As a consequence of the Group selling its products in over 100
countries and having manufacturing operations in over 15 countries
two forms of currency exposure, transactional and translational, arise.

Transactional currency exposure arises when operating subsidiaries
enter into transactions denominated in a currency other than
their functional currency. Foreign exchange transaction exposures
are identified and managed directly by the Group's operating
subsidiaries, normally by means of foreign exchange forward
transactions, within the policies and guidelines established by
Group Treasury.

Translational currency exposure arises within the income statement
on translation of the profits of overseas subsidiaries into sterling for
consolidated reporting purposes and within the balance sheet on
translation of the Group's net investments in overseas subsidiaries.
The Group reduces its translational currency exposures by means
of foreign currency borrowings and derivatives.

Tax
The effective rate of tax paid by the Group may be influenced
by a number of factors including changes in law and accounting
standards and the Group’s overall approach to such matters, the
results of which could increase or decrease that rate. The Group
seeks to manage its financial structure efficiently to minimise
the overall tax burden on the business where practicable. The
continued ability of the Group to manage its businesses in this
way cannot be guaranteed and so could affect the Group’s
financial performance.

Pensions
Estimates of the amount and timing of future funding obligations
for the Group’s pension plans are based on various assumptions
including, among other things, the actual and projected market
performance of the pension plan assets, future long-term
corporate bond yields, increased longevity of members and
statutory requirements. Whilst the relative improvement in equity
markets and increased bond yields, together with the additional
contributions made by the Group, have enabled the pension plans
to be in surplus in 2007, the Group continually reviews this risk
and takes action to mitigate where possible. For instance, in 2007
the trustees purchased an insurance policy from Legal & General
Assurance Society to secure the current pensioners’ liabilities of the
main UK plan and a similar process was also undertaken in Canada.
In addition, while the Group is consulted by the trustees on the
investment strategies of its pension plans, the Group has no
direct control over these matters as the trustees are directly
responsible for the strategy.

The Weir Group PLC Annual Report 2007

Acquisitions
The Group has made a number of acquisitions in recent years
as part of its growth strategy and may make acquisitions in the
future. While the Group identifies expected synergies, cost savings
and growth opportunities prior to completing any acquisition,
these benefits may not always be achieved or within the
anticipated timescale.

To mitigate against this, the Group implements a vigorous due
diligence process and ensures clear financial targets are in place
together with ensuring any acquisition is put through a formal
approval process. The Group also has its internal 100 day plan to
ensure that the integration process runs as smoothly as possible.

Delivery performance
The Group’s ability to meet customer delivery schedules is dependent
on a number of factors including sufficient manufacturing capacity,
access to raw materials, inventory control, sufficient trained and
equipped employees, engineering expertise and the appropriate
planning and scheduling of the manufacturing process. Many of
the contracts it enters into require long lead times and therefore
contain clauses on on-time delivery. Failure to deliver in accordance
with customer expectation could subject the Group to financial
penalties, may result in damage to customer relationships and
could impact on the Group’s financial performance.

Employee issues
Group performance depends on the skills and efforts of its
employees and management team across all of its businesses.
In striving to be an employer of choice, the Group recognises
that failing to attract new talent and retain existing expertise,
knowledge and skills in operations, products and infrastructure
areas such as information technology could have a negative
impact on its business. In addition, the success of Group
acquisitions will depend on the Group’s ability to retain
management personnel of acquired companies.

Health & safety
The Group operates in a number of demanding environments.
Safe working practices are extremely important to protect everyone
at the Group's locations. The Group has developed quality and
safety processes within each of its businesses which are regularly
audited by professional bodies and customers. The Group
operates long established working practices and controls to
minimise damage and injury. If the Group cannot maintain a
safe place for all its employees to work this could result in a
number of negative outcomes to the Group including:

• fines and penalties;

• loss of key customers;

• exclusion from certain market sectors deemed important for

future development of the business; and

• damage to reputation.

Group performance
The Group’s strategy is underpinned by focusing on a number
of key performance measures. The following measures are the
ones that the Board feel communicate the performance and
strength of the Group as a whole. However, management use
further performance measures to run and assess the performance
of their divisions and the individual companies within each division.

Input - continuing operations (1)(2)

1081.5

1095.3

878.0

Up 1%
in 2007

)

m
£
(

t
u
p
n

1200

1000

800

600

400

200

2005

2006

2007

Order input is a key measure used to evaluate market trends,
establish forward sales and enable the efficient management
of production schedules. Order input is defined as the expected
revenues to be generated from contractually committed
orders received.

Operating margin - continuing operations (2)

)

(
n
g
r
a
M

11.2

8.2

7.2

Up 37%
in 2007

2005

2006

2007

One of the Group’s key objectives is to continue to improve
business operating margins. These are monitored on an ongoing
basis. Operating margins are defined as operating profits
expressed as a percentage of revenues. These are calculated
before taking account of any intangibles amortisation and
exceptional items to focus on underlying trading performance.

Earnings per share - continuing operations (2)

41.4

32.4

23.5

Up 28%
in 2007

)
e
c
n
e
p
(

e
r
a
h
s

r
e
p
s
g
n
n
r
a
E

2005

2006

2007

The Group seeks to deliver long-term shareholder value as evidenced
in part through the growth in underlying earnings per share. Growth
in underlying earnings per share is a key measure in determining the
vesting of shares under the Group's incentive schemes.

Underlying earnings per share is represented by profit for the
period from continuing operations, before intangibles amortisation
and exceptional items, divided by the weighted average number
of shares in issue.

Dividend and dividend cover - continuing operations (2)

16.5

14.5

13.2

3.0

2.5

2.0

1.5

1.0

0.5

)
e
c
n
e
p
(
d
n
e
d
v
D

)
s
e
m

i
t
(

r
e
v
o
c
d
n
e
d
v
D

Dividend
up 14%
in 2007

2005

2006

2007

Shareholder value is also generated through the payment of annual
dividends to shareholders. Our ability to sustain such payments is
measured against the dividend cover ratio with our current policy
being to sustain dividend cover of at least two times. Dividend
cover is defined as basic earnings per share from continuing
operations, before intangibles amortisation and exceptional items,
divided by the annual dividend per share.

Weir Production System implementation
The Group’s goal is consistently to meet customer demand on
time with the least cost method, through implementation of the
Weir Production System, adapted from the Toyota Production
System. By eliminating waste, quality is improved and production
time and costs are reduced. The key objective is to embed the
appropriate practices across all business processes to produce
just what is needed, when it is needed, in the most efficient way.

(1) Calculated at 2007 average exchange rates.
(2) The figures for 2005 and 2006 are based on the published results and are therefore in

respect of continuing operations at that time and do not exclude intangibles amortisation.

The Weir Group PLC Annual Report 2007

Directors Report (Continued)

The Group has adopted the Lean Management philosophy
focusing on reduction of the Seven Wastes to improve overall
customer value. These are:

• transportation

• motion

• overproduction

• scrap

• inventory

• waiting time

• the processing itself.

Due to the importance of ownership in the process, the measurement
of performance is by an evaluation across all Group companies
comparing their current plant practice against world-class practice
and performance.

The evaluation involves an audit of each manufacturing site which
results in the site being awarded a Lean Score. Audits are performed
annually by internal peer groups. The Lean Score for each site is
then totalled and expressed as a Group Lean Score.

Group Lean Score - continuing operations (2)

119

104

Up 14%
in 2007

e
r
o
c
S
n
a
e
L
p
u
o
r
G

120

100

2005

2006

2007

The Group Lean Scores are interpreted as follows:

• 0-60 means the site needs significant improvement, action

is required;

• 61-99 means relatively good practice, but regular follow up

and further improvements are required;

• 100-150 is world-class practice where process has taken root

and needs to be maintained and further improved.

The scores awarded to individual businesses are used to identify
improvement actions and set future targets.

Glasgow
11 March 2008

By order of the Board
Alan Mitchelson
Secretary

The Weir Group PLC Annual Report 2007

Corporate Governance Statement

The Combined Code
The Company remains committed to the highest standards of
corporate governance and manages its affairs in accordance with
the Combined Code on Corporate Governance (the “Combined
Code”) issued by the Financial Services Authority in June 2006.
During the 52 weeks ended 28 December 2007, the Company
complied with the Combined Code provisions. This statement
describes how the Company has applied the Combined Code.

The Board
The Board comprises the chairman, chief executive, group finance
director, legal and commercial director and five non-executive
directors, all of whom are independent. The Board meets regularly
throughout the year with ad hoc meetings as necessary. In the
year to 28 December 2007, the Board met seven times. Meetings
are held at the head office in Glasgow, London at the time of the
Company’s annual and interim announcements and at operating
locations. The following table identifies the number of board and
committee meetings held during the past year and the attendance
record of individual directors.

Board
Meetings

Audit Remuneration

Nomination

Committee Meetings

No. of meetings in year

Sir Robert Smith
Christopher Clarke
Keith Cochrane
Michael Dearden
Stephen King
Alan Mitchelson
Professor Ian Percy
Lord Robertson
Mark Selway

7
7
7
7
7
7
7
6
7

3
3

5
4
5

Directors appointed to the Board other than at an annual general
meeting of the Company are required to retire at the following
annual general meeting when they may offer themselves for
election. One third of the remaining members of the Board
(or, where that number is not a whole number, the nearest lower
whole number) are required to retire by rotation, subject to all
directors submitting themselves for re-election at least once every
three years. In line with best practice under the Combined Code,
any director who has held office for more than nine years is
required to submit himself for re-election annually.

On joining the Board, directors are provided with documentation
on the Company and its activities. New directors are provided
with an appropriate induction programme and, where appropriate,
site visits are arranged to major business units. Ongoing training
is provided as necessary.

A formal process for evaluating the performance of the Board is
undertaken annually. This process is conducted internally based
on a detailed questionnaire completed by each director and
individual and collective discussions.

The evaluation examines the balance of skills of the directors,
the operation of the Board in practice including its corporate
governance and the operation and content of board meetings.
The findings are used to assist the Board in its consideration of
the opportunities for improvement in the performance of the
Board and its directors.

During 2007, the Board also conducted an internal review of
the effectiveness of the Audit, Nomination and Remuneration
Committees incorporating a questionnaire covering such matters
as the role and organisation of each committee, meeting
arrangements, information provision and effectiveness. Following
completion of these questionnaires by the members of each
committee, the chairman met with the respective chairmen of the
Audit and Remuneration Committees to discuss the feedback. The
results of this evaluation were reported to the Board and, where
areas for improvement had been identified, actions were agreed.

Additionally, a one-to-one appraisal of all board members is
undertaken annually, including the chairman, whose appraisal
is carried out by the senior non-executive director, with input
from other board members.

There is an agreed procedure for directors, where appropriate,
to take independent professional advice on any matter at the
Company’s expense. The company secretary is responsible for
ensuring that board procedures are followed and all directors have
direct access to the advice and services of the company secretary.
The company secretary is also responsible for facilitating the
induction and professional development of the board members
and information flows within the Board, its committees and
between the non-executive directors and senior management.

There is an agreed list of matters which requires to be authorised
by the Board, such as the approval of the Group strategic plan,
Group budget and risk management strategy. Major acquisitions
and disposals, as well as major capital spend, are authorised by
the Board and are subsequently monitored by the Board after
execution. The Board also approves the issue of full year and
interim reports.

All directors bring their own independent judgement to all major
matters affecting the Group. Each of the non-executive directors is
considered by the Company to be independent. Notwithstanding
his presence on the Board for a period of more than nine years,
the Board considers Professor Percy, who continues to be a member
of the Board and the Remuneration and Nomination Committees,
to be independent in character and judgement. He brings a wealth
of experience to the Board’s deliberations and is considered to be
free from any business or other relationship that could materially
interfere with his independent judgement.

The Weir Group PLC Annual Report 2007

Corporate Governance Statement (Continued)

The views of executive directors are not limited to those
operational or functional areas for which directors have prime
responsibility. Board and committee papers are sent to directors
in sufficient time before meetings and any further back-up papers
and information are readily available to all directors on request to
the company secretary. The chairman ensures that non-executive
directors are properly briefed on any issue arising at board
meetings and non-executive directors have access to the
chairman at any time.

The roles of chairman and chief executive are separate.
The chairman’s primary role is to ensure that the Board is
effective in its task of setting and implementing the Company’s
direction. The chief executive is responsible for management
of the business and developing the appropriate organisational
structure for a global organisation. The chief executive chairs
the Group Operations Executive Committee.

The non-executive directors are independent of management.
None of the non-executive directors has any material business or
other relationship with the Company. Each member of the Board
has considerable experience at senior level in other companies,
which allows for well informed and broadly based debate.
The Board structure ensures that no individual or group
dominates the decision-making process. Professor Ian Percy
has been designated the senior non-executive director to
whom any concerns can be conveyed.

The executive directors have contracts of service with one year’s
notice, whilst non-executive directors are appointed on a
rotational basis for periods of up to three years.

Board committees
Where appropriate, matters are delegated to board committees,
all of which have written terms of reference which are available
on the Company’s website. The company secretary acts as
secretary to all these committees.

Group Operations Executive Committee
The Group Operations Executive Committee is responsible for
ensuring that each of the Group’s businesses is managed effectively
and that the operational objectives of the Group, as approved by
the Board, are achieved. Its role includes the preparation of the
Group budget for approval by the Board, management of business
performance to achieve the Group budget, establishing and
maintaining reporting systems providing clear and consistent
information on all aspects of business performance, managing
and minimising corporate risk and ensuring that the necessary
mechanisms are in place to achieve effective inter-divisional
co-ordination in areas such as purchasing, branding and career
development planning. It also approves major items of capital
expenditure within limits authorised by the Board. The Group
Operations Executive Committee meets each month. Its
membership comprises the chief executive, group finance
director, legal and commercial director and the four divisional
managing directors. In the year to 28 December 2007,
the Group Operations Executive Committee met 12 times.

The Weir Group PLC Annual Report 2007

General Administration Committee
The principal duties of the General Administration Committee are
to allot shares under the various share option schemes and other
matters of a routine nature. This Committee comprises the
executive members of the Board and meets as required.

Other committees
The other board committees are the Audit Committee,
the Nomination Committee and the Remuneration Committee
(details of which are contained on pages 32 to 39).

Principles of business conduct
As an international company, the Group’s approach to
maintaining high ethical standards is critical to its business
success. The Group’s Operating Policies, which provide guidance
in this area, have been communicated throughout the Group
through its intranet. A copy is available from the Group
secretariat. These policies are reviewed on a regular basis.

Shareholders
The Company maintains regular dialogue with its shareholders.
The investor relations programme includes formal presentations
of full year and interim results. Feedback from these presentations
is reported to the Board, which gives investors an opportunity to
comment on the quality of the communications they receive in
their contact with the chief executive and group finance director.
Attendees at the results presentations include the chairman, the
executive directors and the senior non-executive director. The
Company also encourages communication with private shareholders
throughout the year and welcomes their participation at shareholder
meetings. In addition to the chairman’s statement at the annual
general meeting, a trading update to shareholders is given and
details of the Company’s trading activities are on display. The
directors attend the annual general meeting when the chairmen
of the Audit, Remuneration and Nomination Committees are
available to answer questions.

Notice of the annual general meeting is sent to shareholders at
least 20 working days before the meeting. The Company conducts
the vote at the annual general meeting by electronic poll and the
result of the votes (including proxies) is published on the Company’s
website after the annual general meeting.

Communications
The Board considers that the annual report and financial statements
and interim statements present a balanced and understandable
assessment of the Group’s performance and prospects. In addition
to information which any company is under a legal or regulatory
requirement to publish, the Group frequently publicises other
business developments through the national or specialised
press or in its own newspapers and bulletins which have
wide circulation.

The Company’s website at www.weir.co.uk provides additional
company information, is regularly updated and includes the
presentations to shareholders given at the announcements of the
full year and interim results. The website also contains an online
version of the notice of the annual general meeting, the annual
report and financial statements and the interim report.

The Board has monitored the effectiveness of the Group’s system
of internal control during the year. This is refined as necessary
to meet changes in the Group’s business and associated risks.
Regular performance reports are provided to the Group Operations
Executive Committee and/or the Audit Committee or the Board.
Where weaknesses are identified, plans and timetables for
addressing them are also reported.

In addition to the Group Risk and Control Framework, other
procedures which are fundamental to the Group’s system of
internal control are as follows:

Control environment
There is a clearly defined organisational structure within which
individual responsibilities are identified and monitored. Businesses
follow well understood procedures and are required to comply
with them.

Main control procedures
The Group has identified a number of key areas which are
subject to regular reporting to the Board. These controls
include procedures for seeking and obtaining approval for
major investments and transactions.

Group-wide standards
There are, for application throughout the Group, operating
policies and a standards manual which set out policies and
procedures with which all Group companies are required to
comply. The manual is communicated to all Group operating
companies through the Group intranet.

The managing directors are responsible for ensuring that each
company observes and implements the policies and procedures
set out in the manual which was reviewed in 2006.

Information systems
There is a comprehensive budgeting system in place with an
annual budget approved by the Board. Management information
systems provide directors with relevant and timely reports that
identify significant deviations from approved plans and include
regular re-forecasts for the year.

The Group’s internal control procedures described in this section
have not been extended to cover its interests in joint ventures.
The Group has board representation on each of its joint venture
companies where separate systems of internal control have
been adopted.

Internal control
In accordance with the Turnbull Guidance on internal control,
the Board ensures that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by Group
companies. This process has been in place throughout 2007
and up until the date of this report, except that it did not apply
to the Group’s material joint ventures and associates. As part
of the integration programme, Weir SPM did not become fully
integrated into the Risk and Control Framework and the Group
system of internal control until September 2007. As part of the
integration plan, Weir Multiflo will be integrated into the
Framework during 2008.

The directors have overall responsibility for the Group’s system
of internal control and for reviewing its effectiveness. The Board
delegates to executive management the responsibility for designing,
operating and monitoring both the system and the maintenance of
effective internal control in each of the businesses which comprise
the Group. In addition, each operating company is responsible for
the operation of key internal controls and to formally assess the
effectiveness of the internal control environment through the
submission, twice yearly, of the financial scorecard.

An internal audit function is in place to review and challenge the
effectiveness of key internal controls and to suggest relevant actions
to address potential weaknesses. The internal audit review programme
is based on a ‘risk based approach’ that helps to prioritise resource
upon the areas of perceived greatest risk to the Group. This process
is supplemented by a number of peer reviews that seek to further
monitor and evaluate the process of internal control and share
best practice around the Group.

Internal audit and peer review reports are provided to the
Group Operations Executive Committee as well as to the Audit
Committee which considers and determines relevant action in
respect of any control issues raised.

As part of the control framework, each Group operating company
and business prepares a Risk and Control Framework for their
respective business. As part of this process, the operating companies
prepare a report identifying the relative probability and severity of
the risks identified, the process for managing and mitigating these
risks and the means by which management might be assured that
the processes are effective. These frameworks are considered and
approved by the chief executive, group finance director and the
Group Operations Executive Committee. In addition, a Group
Risk and Control Framework is prepared, taking account of the
significant risks identified by the individual units together with
other group-wide risks. The Group Risk and Control Framework
is considered and adopted by the Board which is responsible for
the risk management strategy. The system of internal control is
designed to manage, rather than eliminate, the risk of failure to
achieve business objectives and can only provide reasonable, but
not absolute, assurance against material misstatement or loss.

The Weir Group PLC Annual Report 2007

Audit Committee Report

The Audit Committee is charged with responsibility to the Board
for satisfying itself, on behalf of the Board as a whole, that the
financial affairs of the Group are conducted with openness, integrity
and accountability and in accordance with such existing statutory
and regulatory provisions and codes as are applicable to the
Group and to report on these matters to the Board.

Its duties are to:

e) the scope of the function and the findings of internal audit

reviews undertaken by PricewaterhouseCoopers LLP and the
Internal Auditor;

f) Corporate Governance Reporting;

g) the fees for Ernst & Young LLP for 2007;

h) the audit strategy for year end 2007 audit;

• consider the appointment, resignation or dismissal of the

i) the fraud and error guidelines contained in IAS240; and

auditors and the level of audit fee;

• discuss with the auditors the nature and scope of the audit;

• review the draft interim and annual financial statements before

submission to the Board for approval;

• discuss any problems and reservations arising from the annual

audit and any matters the auditors may wish to raise;

• discuss with the auditors the Group’s system of internal financial
controls and any auditors recommendations for improvement;

• consider the findings of internal investigations and

management’s response;

• oversee the implementation of systems for financial control and

risk management;

• pre-approve non-audit services provided by the auditor;

• review the internal audit programme and its implementation;

• receive and review internal audit reports;

• review treasury policy.

The chairman of the Committee is Stephen King. The other
members of the Committee are Christopher Clarke and Michael
Dearden. The secretary to the Committee is Alan Mitchelson.
In addition the chief executive, group finance director and the
internal and external auditors also attend each meeting. The
Board is satisfied that Stephen King has recent and relevant
financial experience.

The Committee has the ability to call on the Group’s staff to assist
in their work and also has access to independent advice. The
chairman of the Committee receives additional remuneration
for his duties, details of which are set out on page 36. The Committee
meets each January, March and August and at other times as
appropriate. During the March meeting the Committee undertakes
a full review of the audit with the Group’s auditors.

There were three meetings in 2007. In the course of 2007, the
Committee discussed the following matters:

a) operational issues identified by the auditors in both their audit

and interim review;

b) the Internal Audit Charter and Strategy;

c) the Group Risk and Control Framework;

d) the Group accounting policies;

j) the Group 'whistleblowing' policy.

Both the Group internal auditor and PricewaterhouseCoopers LLP
undertake their activities in conjunction with the Group’s usual
peer group review process.

The Committee maintains a policy on the appointment and role
of the auditors. This includes guidelines on their appointment
which is subject to review at least every five years and on their
ongoing work to ensure that the independence of the Group’s
auditors is not threatened, particularly by the provision of non-
audit services. Prior approval of the Committee is required where
the expected cost of non-audit services provided by the appointed
external auditors is in excess of £75,000.

The day-to-day implementation of the Committee’s policy is
delegated to the group finance director who in turn monitors
the business units to ensure that all engagements fall within the
Committee’s guidelines. Fees payable to Ernst & Young LLP in
respect of audit and assurance services of £1.6m (2006: £1.0m)
and transaction support services of £0.7m (2006: £nil) in respect
of 2007 were approved by the Committee.

The Group maintains a ‘whistleblowing’ policy in line with the
Public Interest Disclosure Act 1998 to enable employees, on a
confidential basis, to raise concerns internally in cases where they
believe they have discovered malpractice or impropriety. This is
reviewed on an ongoing basis. Complaints can be made either
to line managers or directly to the company secretary who will
appoint an investigating officer. Action will be taken in cases
where the complaint is shown to be justified and at all times the
complainant is informed of progress and outcomes. In addition,
the auditors Ernst & Young LLP can be brought in to review
procedures if appropriate. The ‘whistleblowing’ policy is
published on the Group intranet.

The Committee’s terms of reference are available from the
company secretary on request and can also be found on the
Company’s website.

Stephen King
Chairman of the Audit Committee
Signed and approved for and on behalf of the Board
11 March 2008

The Weir Group PLC Annual Report 2007

Nomination Committee Report

During 2007, the members of the Nomination Committee were
Sir Robert Smith (chairman), Michael Dearden, Professor Ian Percy,
Lord Robertson and Mark Selway. Alan Mitchelson acts as secretary
to the Committee. The Committee meets at least twice a year and
at other times when necessary. The Committee uses external
search consultants to assist it in its work.

The Committee primarily monitors the composition and balance
of the Board and its committees and identifies and recommends
to the Board the appointment of new directors. The Committee’s
terms of reference establish a framework through which it can
operate to ensure the selection process of board candidates is
conducted in a formal, disciplined and objective manner. When
considering candidates, the Committee evaluates the balance
of skills, knowledge and experience of the Board and prepares a
description of the role and capabilities required for the particular
appointment. The Committee also reviews the succession planning
and leadership needs of the organisation and ensures that, on
appointment, all directors receive a formal contract or letter of
appointment as appropriate. The Committee’s terms of reference
are available from the company secretary and can also be found
on the Company’s website.

Appointments to the Board are approved by the Board as a whole.
However, it is the role of the Committee to make recommendations
to the Board in respect of the appointment of new executive or
non-executive directors. The process by which the Committee
brings candidates to the Board has been agreed by the Board.
In the case of executive directors, the Committee has
recommendations presented to it by the chief executive and
thereafter nominates candidates for consideration by the Board.
The procedure for non-executive directors is that the Committee
identifies and nominates candidates for consideration by the
Board to fill vacancies as and when they arise.

During the year the Committee reviewed:

a) the Group’s current committee structure and procedures
including the composition and membership of each of
the board committees;

b) the training for directors;

c) the board evaluation process; and

d) the progress on the recruitment of the successor to

Christopher Clarke.

Sir Robert Smith
Chairman of the Nomination Committee
Signed and approved for and on behalf of the Board
11 March 2008

The Weir Group PLC Annual Report 2007

Remuneration Committee Report

Committee membership
The chairman of the Remuneration Committee is Michael Dearden.
The other members of the Committee are Christopher Clarke and
Professor Ian Percy. The secretary to the Committee is Alan
Mitchelson. The Committee consists exclusively of non-executive
directors who are independent of management and free from any
business or other relationship which could materially interfere with
the exercise of their independent judgement. No member of the
Committee has any personal financial interest, other than as a
shareholder, in the matters decided by the Committee. New Bridge
Street Consultants LLP continued to provide external advice in
formulating remuneration policy and its implementation during
2007, as well as advice on employee share schemes. New Bridge
Street Consultants LLP’s appointment was renewed by the
Committee in 2007. New Bridge Street Consultants LLP do not
undertake any other work for the Group other than remuneration
work. In carrying out its business, the Committee consults with
the chairman and the chief executive as appropriate.

Committee responsibilities
The responsibilities of the Committee are as follows:

• to determine the policy on the remuneration and performance

of executive directors of the Company;

• to determine the conditions of employment, including levels

of salary, pension arrangements, bonuses, incentives and share
options of executive directors of the Company;

• to determine targets for any performance-related pay schemes;

and

• to recommend to the Board the remuneration of the chairman

of the Board.

The Committee met four times in 2007. The Committee is
constituted, and operated throughout the year, in accordance
with the relevant provisions of the Combined Code. This report
complies with the Directors Remuneration Report Regulations
2002. The Committee’s terms of reference are available from
the company secretary on request and can also be found on
the Company’s website.

Executive directors remuneration policy
The Committee has adopted the following policy for the
remuneration of executive directors throughout 2007. It is
intended that this policy will apply in 2008 and for future years.

The objective of the Company’s remuneration policy is to attract,
motivate and retain executive directors with the necessary abilities
to manage and develop the Group’s activities successfully for the
benefit of shareholders.

Accordingly, the Committee sets remuneration packages for
the executive directors to reflect both the size and complexity
of the business and individual responsibilities. It also takes into
consideration the remuneration practices adopted by other
companies of similar size and international spread of operations.
For all senior executives, the Group policy is to provide a significant
part of their total potential reward through performance based
incentive plans (annual bonus and long term incentives) as
described in this Report.

To ensure the interests of management remain aligned with those
of shareholders, executive directors are encouraged to build up a
meaningful shareholding in the Company by both the purchase of
shares and/or the retention of a proportion of their share awards.
In addition, executive directors are obliged to convert part of their
bonus into shares under the Long Term Incentive Plan (“LTIP”) so
that over a five year period they build up a meaningful shareholding.

Executive directors remuneration components
The components of the remuneration package comprise of
the following:

a) A basic salary, which is set by the Committee for each executive
director by reference to companies of a similar size and industry
practice and having regard to salary increases throughout
the Group;

b) An annual performance-related bonus. Bonus payments are

intended to reflect the achievement of agreed business objectives
and positive contribution to stretching the performance of the
Group. The Committee reviews the bonuses payable on an
annual basis and sets the targets at the beginning of the financial
year. The targets used are based primarily on normalised pre-
tax profits but can also on occasion include other performance
measures. In 2007, the target was based solely on normalised
pre-tax profits and the maximum potential bonus receivable
by the chief executive was 125% of salary and for the other
executive directors 100% of salary. The performance criteria
and the maximum bonus potential will be the same for 2008.
As a member of the LTIP, the chief executive is required to
contribute 25% of his bonus in exchange for which he receives
a conditional award of investment shares. The other executive
directors are required to contribute 20% of their bonuses in
the same manner. Investment share awards are subject to
forfeiture if the director leaves the Group within three years.
Bonuses are non-contractual and non-pensionable;

c) Participation in the LTIP, details of which are set out on the

following pages;

d) Participation in the Company’s pension plan by Alan
Mitchelson, details of which are set out below; and

e) Other benefits which are the provision of a car allowance,

participation in a Group health care scheme, travel allowance
and death in service insurance. The Committee believes that
the level and provision of benefits is consistent with that
provided by other comparable companies.

The Weir Group PLC Annual Report 2007

Pensions
Alan Mitchelson is a member of the Company’s 1972 pension and
life assurance plan. The plan is a defined benefit contributory plan
with the active members contributing 8% of salary, the balance of
the cost of the plan is met by the Company having taken account
of the Trustee’s opinion arrived at by considering the funding
recommendations of the plan’s independent actuary.

The plan targets a pension of two thirds of final salary payable
at normal retirement date, providing a member then has at least
24 years pensionable service. Where a member has less than 24
years pensionable service to normal retirement date their pension
currently accrues at 1/36th of final salary per annum.

For members, salary (both for contributions and for plan benefits)
is subject to a plan specific earnings cap. This is currently £112,800.

The plan provides for a surviving spouse’s pension of one half
of the member’s pension and, in certain circumstances, for a
dependent child’s pension until the child attains the age of
18 years (or 25 years if in full time further education). Pensions
in payment increase by an amount equal to retail price inflation
up to 5% per annum for service up to April 2006. For service
after April 2006, the increase is up to 2.5% per annum. Deferred
pensions increase by an amount equal to retail price inflation up
to 5% per annum.

Life assurance cover of five times salary is provided separately
for each of the executive directors.

Mark Selway and Keith Cochrane are responsible for their own
pension arrangements.

Long Term Incentive Plan
During 2007, the Company continued with its annual grant
policy under the LTIP and made awards of performance shares,
matching shares and investment shares:

i) Performance shares – Performance shares are conditional

awards to acquire free shares subject to Group performance
(see below) and continued employment until the third
anniversary of the award. In 2007, conditional awards of
performance shares were made worth 70% of salary to the
chief executive, 45% of salary to the group finance director
and 80% to the legal and commercial director. At the 2008
annual general meeting of the Company, shareholder approval
will be sought to amend the terms of the LTIP to: (i) increase
the annual limit on performance shares from 80% of salary to
100% of salary and (ii) provide flexibility to increase such limit
to 150% of salary in such circumstances as the Committee
determine exceptional (currently the exceptional limit is
restricted for use in connection with recruitment). The changes
are being proposed following the Committee concluding that
the current annual limits constrain the Company's ability to
make market competitive performance share awards. No
other changes to the terms of the LTIP are currently envisaged.
It is the Committee's intention to make grants in 2008 of
100% of salary to the executive directors.

ii) Matching and investment shares – Matching shares are

conditional awards to acquire free shares, subject to Group
performance (see below) and continued employment until the
third anniversary of the award. Matching shares are granted in
connection with an individual’s investment from their annual
bonus. Under the LTIP, executive directors are required to
compulsorily defer an element of any Group bonus earned
(currently 25% for the chief executive and 20% for the other
executive directors) in exchange for which they are awarded
investment shares. In addition, executive directors are also
allowed to voluntarily invest a further portion of their Group
bonus (subject to any cap imposed by the Committee,
currently 20%) to be further eligible for an award of matching
shares. In return, the executive directors are eligible to receive
a conditional award of matching shares worth a maximum of
2.5 times the pre-tax value of the bonus “invested” both on
a compulsory and voluntary basis under the LTIP.

The awards are based on the Group's share price, using the
average published closing price for the three dealing days
immediately preceding the date of award.

The vesting of conditional awards of performance and matching
shares is subject to the satisfaction of a highly demanding
performance condition. For the performance share awards granted
in 2007, the performance condition will be based on the growth
in the Group’s Total Shareholder Return (“TSR”) over a single
three-year performance period (three consecutive financial years,
beginning with the year in which the award is made) relative to
the growth in the TSR of a comparator group ("the Comparator
Group"). The Comparator Group comprises the following
18 companies: AGA Foodservice Group, Bodycote International,
Cookson Group, Enodis, FKI, Halma, IMI, Meggitt, Mitie Group,
Morgan Crucible Company, Rolls-Royce, Rotork, Senior, Smiths
Group, Spirax-Sarco Engineering, Tomkins, Wood Group and
WS Atkins. Only if the Company’s TSR ranks in the upper quintile
of this group will the full awards be receivable. This reduces on a
sliding scale so that for median performance, 25% of the awards
will be receivable. For below median performance, none of the
awards will be receivable. For awards granted in 2008, the
performance conditions and the Comparator Group will be
the same as for the 2007 awards.

TSR has been selected as the appropriate performance criteria
by the Committee as it is felt that such a measure clearly aligns
the interests of the senior executives with those of shareholders.
The TSR calculation will be performed independently for the
Committee at the time of vesting.

In addition to TSR performance, for any of the performance and
matching shares to vest, the growth in the Company’s earnings
per share over the performance period must be equal to or
greater than the growth in the UK Retail Prices Index over
the same period.

At the 2008 annual general meeting of the Company, shareholder
approval is being sought in relation to changes to the Company’s
long-term incentive arrangements. The details are set out in the
notice of the annual general meeting.

The Weir Group PLC Annual Report 2007

Remuneration Committee Report (Continued)

Executive directors external appointments
The executive directors are permitted, with Board agreement,
to take up one non-executive appointment provided that there is
no conflict of interest and that the time spent would not impinge
on their work for the Group. None of the executive directors has
at the date of this report any such non-executive appointment.
It is the Company's policy that remuneration earned from such
appointments may be kept by the individual executive director.

Letters of appointment
The chairman and each of the non-executive directors have
letters of appointment. The letters of appointment do not contain
any contractual entitlement to a termination payment and the
directors can be removed in accordance with the Company’s
articles of association. The chairman and all non-executive
directors are subject to re-election by shareholders at least
every three years, with the exception of any director whose
appointment exceeds nine years, in which case there is a
requirement for annual re-election.

Remuneration of the chairman & non-executive directors
The remuneration of the chairman is agreed by the Board on the
recommendation of the Committee. Fees of the non-executive
directors are determined by the Board. In determining the fee
levels, account is taken of the time commitment, scale of roles,
market norms and comparison with companies of equivalent size
based on information provided by New Bridge Street Consultants
LLP. Neither the chairman nor any of the non-executive directors
participate in any of the Company’s incentive plans or receive
pension or other benefits, except that the chairman is entitled
to participate in the Group health care scheme and an additional
allowance is made available to non-executive directors to reflect
the additional time commitment in attending intercontinental
board meetings and operational visits. The chairman and the
non-executive directors are not involved in any discussions or
decisions about their own remuneration.

The non-executive directors’ fees and chairman's remuneration
are reviewed annually by the Board. In 2007, the Chairman’s
remuneration increased to £175,000 and the basic fee for each
of the non-executive directors increased to £40,000. In addition,
each of the chairmen of the Audit and Remuneration Committees
is paid an additional fee which in 2007 increased to £7,500.
There was no change to the fee for the combined role of deputy
chairman and senior non-executive director of £10,000 in 2007.
There will be no change to the Chairman's remuneration or fees
for the non-executive directors in 2008.

Performance graph
The graph below compares the Company’s total shareholder
return performance over a five year period against the LTIP
Comparator Group and the FTSE 350 Industrial Engineering
Sector Index. The Board believes that both the FTSE Index and the
Comparator Group represent an appropriate and fair benchmark
upon which to measure the Group’s performance for this purpose.

500

400

300

200

100

0
2002

2003

2004

2005

2006

2007

The Weir Group PLC

FTSE 350 Industrial Engineering Sector Index

LTIP Comparator Group

This chart shows the value, at the end of the 2007 financial year, of £100 invested in The Weir
Group PLC over the last five financial years compared with the value of £100 invested in the
average of the LTIP Comparator Group and the FTSE 350 Industrial Engineering Sector Index.
The other points plotted are values at intervening financial year ends.

Directors contracts/terms of appointment
The details of the service contracts in relation to the
executive directors and letters of appointment in relation to
the non-executive directors who served during the year are:

Director

Sir Robert Smith
Christopher Clarke
Michael Dearden
Stephen King
Professor Ian Percy
Lord Robertson
Keith Cochrane
Alan Mitchelson
Mark Selway

Contract
commencement date

Unexpired
term/next re-election

Notice period
by company

May 2010

6 February 2002
14 December 1999 7 May 2008
17 February 2003 May 2009
7 May 2008
3 February 2006
7 May 2008
11 October 1996
May 2009
1 February 2004
3 July 2006
12 months
12 December 2001 12 months
12 months
5 June 2001

6 months
6 months
6 months
6 months
6 months
6 months
12 months
12 months
12 months

Executive directors service contracts
To recruit the best executives, the Committee has in the past and
may in the future, agree contractual notice periods which initially
exceed 12 months particularly as it is often necessary for executives
to relocate their families. All the directors who served during the
year have service contracts with the Company that provide for
a minimum period of notice of six months by the individual
and 12 months by the Company. In the event that the Company
terminated an executive director’s service contract other than in
accordance with its terms, the Committee, when determining
what compensation, if any, should properly be paid by the
Company to the departing director, will give full consideration
to the obligation of that director to mitigate any loss which
he may suffer as a result of the termination of his contract.

The Weir Group PLC Annual Report 2007

Directors remuneration #

Chairman and non-executive directors:
Sir Robert Smith
Christopher Clarke
Michael Dearden
Stephen King
Professor Ian Percy
Lord Robertson

Executive directors:
Keith Cochrane
Alan Mitchelson
Mark Selway
2006 Retiree

Previous year comparatives

# Audited

Salary
& Fees
£

Bonus
(Note v)
£

Benefits
(Note vi)
£

Total
2007
£

Total
2006
£

Notes

i
ii
iii

168,749
39,000
45,875
45,875
49,000
39,000
387,499

354,056
274,009
541,822
-

-
-
-
-
-
-
-

472
-
-
-
-
-
472

169,221
39,000
45,875
45,875
49,000
39,000
387,971

357,075
276,345
683,100
-

17,505
14,364
44,097
-

728,637
564,717
1,269,019
-

146,668
44,623
40,000
40,000
56,967
35,000
363,258

321,050
498,215
999,737
245,002

1,557,386 1,316,520

76,438 2,950,344 2,427,262

1,471,998

886,050

69,214

(i) The fees for Michael Dearden include £6,875 for services as chairman of the Remuneration Committee (2006: £5,000).

(ii) The fees for Stephen King include £6,875 for services as chairman of the Audit Committee (2006: £5,000).

(iii) The fees for Professor Ian Percy include £10,000 for services as deputy chairman and for his role as senior non-executive director

(2006: £10,000).

(iv) Keith Cochrane was appointed on 3 July 2006.

(v) The bonus figures for Keith Cochrane, Alan Mitchelson and Mark Selway include £71,415 (2006: £25,875), £55,269 (2006: £40,050)

and £170,775 (2006: £112,200) respectively, which will be compulsorily deducted from their bonus in exchange for which they will
be awarded investment shares which, subject to remaining employed with the Group, will be receivable on the third anniversary of
the 2008 award.

(vi) Benefits include, as appropriate, car allowance, participation in the Group health care scheme, travel allowance and death in

service insurance.

Long term incentives#

As at
30 Dec
2006

Granted
during
year

Vested
during
year

Lapsed
during
year

As at
28 Dec
2007

Market price Market price at
at date of date of award
(Note viii)

vesting

Normal exercise period
(Note vii)

Keith Cochrane 2006 Award
2007 Award

Alan Mitchelson 2004 Award
2005 Award
2006 Award
2007 Award

76,695
-
76,695

47,166
32,925
54,062
-
134,153

-
42,288
42,288

-
-
-
61,599
61,599

-
-
-

(47,166)
-
-
-
(47,166)

Mark Selway

# Audited

2004 Award 142,801
2005 Award 105,524
2006 Award 144,764
-
2007 Award

(142,801)
-
-
-
-
-
-
108,198
393,089 108,198 (142,801)

76,695
-
42,288
-
- 118,983

-
-
32,925
-
54,062
-
-
61,599
- 148,586

-
-
105,524
-
144,764
-
-
108,198
- 358,486

-
-
-

723.5p
-
-
-
-

445p
730p

24.08.09 - 24.11.09
29.06.10 - 29.09.10

307p
322p
445p
730p

11.06.07 - 11.09.07
01.04.08 - 01.07.08
04.04.09 - 04.07.09
29.06.10 - 29.09.10

The Weir Group PLC Annual Report 2007

Remuneration Committee Report (Continued)

Long Term Incentive Plan - outstanding awards as at 28 December 2007

Keith Cochrane

Alan Mitchelson

Mark Selway

Performance
Share Awards
(Note iii)

Compulsory
Investment Awards
(Notes i&ii)

Matching
Share Awards
(Notes ii&iii)

2006 Award
2007 Award

2005 Award
2006 Award
2007 Award

76,695
22,426
99,121

32,925
27,338
30,855
91,118

105,524
84,096
53,390
243,010

-
3,611
3,611

-
5,939
5,590
11,529

-
17,334
15,659
32,993

-
16,251
16,251

-
20,785
25,154
45,939

-
43,334
39,149
82,483

Total

76,695
42,288
118,983

32,925
54,062
61,599
148,586

105,524
144,764
108,198
358,486

(i)

Compulsory investment awards are not subject to performance conditions.

(ii) No matching or compulsory investment awards were awarded in 2005 to Alan Mitchelson and Mark Selway as no bonus was

awarded.

(iii)

The figures shown above in relation to Performance Share Awards and Matching Share Awards are maximum entitlements and the
actual number of shares (if any) which vest will depend on the performance conditions being achieved as set out on page 35.

(iv)

The closing market price of the shares at 28 December 2007 was 820.5p and the range for the year was 530p to 909.5p.

(v)

Awards take the form of nil cost options and have no performance retesting facility.

(vi) On 21 June 2007, the 2004 awards under the Group Long Term Incentive Plan vested in full as the Company's TSR ranked in the

upper quintile of the Comparator Group. On 28 June 2007, Alan Mitchelson and Mark Selway exercised their awards and received
47,166 and 142,801 ordinary shares of 12.5p each respectively. In order to release sufficient funds to pay the relevant tax and
national insurance, Alan Mitchelson and Mark Selway sold 19,100 shares and 57,831 shares respectively at a price of 721.6443p.
The balance of the shares were retained by them. The market price on the date of exercise was 723.5p. The aggregate gains made
on all award exercises by directors during the year totalled £1,350,665 (2006: £6,399).

(vii) Awards can be exercised after the third anniversary of the award date, subject to the performance conditions.

(viii) The 2004 Awards were awarded on 11 June 2004. The 2005 Awards were awarded on 1 April 2005. The 2006 Awards were

awarded on 4 April 2006 in the case of Alan Mitchelson and Mark Selway and on 24 August 2006 in the case of Keith Cochrane.
The 2007 Awards were awarded on 29 June 2007.

The Weir Group PLC Annual Report 2007

Directors pension benefits #
Alan Mitchelson was a member of a defined benefit scheme provided by the Group during the year. Mark Selway and Keith Cochrane are
responsible for their own pension provision. Pension entitlement and the corresponding transfer values were as follows during the year:

Disclosures under Directors Remuneration Report Regulations 2002

Listing Rules

Accrued pension

Transfer value of accrued pension

Name of
Director

Contributing member:
Alan Mitchelson

# Audited

Notes

At year
start

Increase
during
the year

At year
end
(note 1)
£

Change during
the year net
of directors
ordinary
contributions
(note 3)
£

At year
start

Directors
ordinary
contributions

At year
end

Increase

pension during
the year (net
of inflation)

in accrued Transfer value
of increase
(net of
inflation)
(note 2)
£

4, 5, 6 22,173

3,990

26,163

416,171

106,781

8,772

531,724

3,060

61,250

1. The pension entitlement shown is that which would be paid annually on normal retirement, prior to any cash commutation,

based on pensionable service to the end of the year.

2. The transfer value of the increase in accrued pension has been calculated on the basis of actuarial advice in accordance with

Actuarial Guidance Note GN11 and includes an allowance for the risk cost of death in service benefits less the director’s ordinary
contributions over the year.

3. The change in the amount of the transfer value over the year is made up of the following elements:

a) transfer value of the increase in accrued pension (net of inflation);
b) transfer value of the increase in accrued pension (due to inflation);
c) increase in the transfer value of accrued pension at year start due to ageing;
d) impact of any change in the economic or mortality assumptions underlying the transfer value basis; and
e) less the director’s ordinary contributions.

The change in the amount of the transfer value over the year includes the effect of fluctuations in the transfer value due to
factors beyond the control of the Group and directors, such as stockmarket movements which will be reflected within d) above.

4. Directors have the option to pay voluntary contributions. Neither the contributions nor the resulting benefits are included in the

above table.

5. The figures allow for the impact of the plan specific earnings cap. Alan Mitchelson does not have an entitlement to an excepted

(formerly known as unapproved) pension from the Group.

6. Payment of actual transfer values (from the defined benefit scheme) are currently reduced below 100% of their value.

The figures above do not reflect this reduction.

The Weir Group PLC Annual Report 2007

Remuneration Committee Report (Continued)

Directors interests
The interests of the directors in the ordinary shares of the Company as at 28 December 2007 and at the end of the preceding financial
year were as follows:–

As at 28 December 2007

As at 29 December 2006

shares under option

LTIP awards

shares under option

LTIP awards

Sir Robert Smith
Christopher Clarke
Keith Cochrane
Michael Dearden
Stephen King
Alan Mitchelson
Professor Ian Percy
Lord Robertson
Mark Selway

52,400
10,000
5,185
10,000
1,050
98,441
-
2,637
211,396

-
-
-
-
-
-
-
-
-

-
-
118,983
-
-
148,586
-
-
358,486

50,000
10,000
3,500
10,000
1,050
67,767
-
2,637
126,426

-
-
-
-
-
-
-
-
-

-
-
76,695
-
-
134,153
-
-
393,089

(i) At the date of this report the interests of the directors in the shares of the Company remain as stated above except that on 9 January

2008, Stephen King purchased 5,500 ordinary shares of 12.5p each.

(ii) No director had, during or at the end of the year, any material interest in any contract of any significance in relation to the

Company’s business, in any debenture stocks of the Company, or in the share capital or debenture or loan stocks of any subsidiary.

Michael Dearden
Chairman of the Remuneration Committee
Signed and approved for and on behalf of the Board
11 March 2008

The Weir Group PLC Annual Report 2007

Corporate Social Responsibility Report

Our approach
The Weir Group is a global organisation, working in sectors and
industries that have a significant impact on human and natural
resources. As an organisation, our core values include integrity,
self-determination and valuing people. These values ensure we
remain focused on meeting our responsibilities to our customers,
suppliers, employees and shareholders, as well as to the
communities where we work.

By ensuring that corporate social responsibility is an inherent
part of leadership that crosses all boundaries in our organisation,
we seek to combine business success with support for people,
communities and the environment. We recognise that corporate
social responsibility requires us first and foremost to listen to
our external and internal customers in everything we do and
to respond to their needs through the enduring excellence of
our actions, policies and processes.

We involve and inform our employees as much as possible within
regulatory constraints. Given the diverse nature and geographical
spread of our operations, it would be inappropriate and impractical
to apply uniform procedures group-wide and each company is
therefore responsible for achieving and maintaining appropriate
consultation and communication with its employees. We
communicate generally with employees through the production
and distribution on a regular basis of printed and electronic
newspapers and bulletins for employees to promote awareness
of current progress and developments within the Group.

The Environmental Health and Safety Group Forum has been
working toward all our major European operations achieving
OHSAS 18001 accreditation by the end of 2008. OHSAS 18001
(Occupational Health Safety Assessment Series) was developed by
the British Standards Institute as a health and safety management
framework allowing organisations to ensure that they are
consistently and accurately identifying hazards and risks within
their organisation. Providing a platform for eliminating and
managing these identified risks, the system supports the
organisation to continually improve its products, people and
process by fulfilling the overhanging safety policy that indicates
the company’s commitment and objectives. OHSAS 18001 offers
a proactive approach to reducing accidents, near misses and
other incidents year on year.

Employees
The root cause of 95% of accidents is as a result of behaviours.
Conventional approaches to accident reduction will go some
way to help achieve the business goal of reducing injuries in
the workplace. However, to further reduce accident rates,
a behavioural approach to safety must be adopted.

The Group has adopted a behavioural system known as SAFESTART
which has been rolled out to all operations and all new employees
are given this training as part of their induction. The Group is
committed to maintain the profile of this programme throughout
the Group as the key to its success is the involvement and
understanding at all levels of the organisation.

The Group gives full and fair consideration to employment
applications from disabled persons. Where an employee
becomes disabled, arrangements are made wherever practicable
to continue employment by identifying an available job suited to
that person’s capabilities and providing any necessary retraining.
The Group’s career development programme encourages disabled
employees to reach their full potential.

The Group is committed to an accident free health and safety
environment based on the belief that all accidents are preventable.
The Group Operations Executive Committee drives this commitment
through operations globally. The businesses record all near misses
and injuries within their operations and these are analysed on
a continuous basis to reduce the number of lost time accidents
through improvement of the working environment.

Throughout 2007, the Group Operations Executive Committee
reviewed the safety, quality and environmental performance
against the objectives set for 2007. The primary concerns are to
reduce accidents in the workplace and maintain high standards
of environmental management in all of our activities.

In line with this philosophy, we pursue excellence through our
global Environmental, Health and Safety Forums whose goal is
to eliminate work-related injuries, prevent pollution, conserve
resources, comply with regulatory requirements and improve
performance. These forums annually review our performance
in these areas, collect data, share best practice and plan for the
coming year. In turn, these plans are disseminated and included
within individual business plans throughout our operations.
This ensures consistency in performance measurement and
improvement activities. Forum members also perform cross
company safety audits to identify practices that are working
well and areas for improvement. Concern reports are used to
track completion of corrective actions. During 2007, the Group
held its first Global Environmental, Safety and Health Conference
in Glasgow which brought together each of the local forums to
identify best practice and plan the priorities for the coming year.

The Group’s policy on health and safety requires that all our
companies take a proactive responsible attitude to the protection
of their employees health and safety. All companies carefully
evaluate risks to personnel wherever they are working and take
appropriate steps to minimise such risks. These include ensuring
that project design engineers consider design factors that
minimise or eliminate the risk of accidents to personnel during
site installation and commissioning. All Group companies are
required to comply with the legislation governing health and
safety at work and to conduct regular formal health and safety
reviews at plant and site level. These reviews are undertaken by
nominated managers and employees to ensure that risks are
properly evaluated, events leading to accidents are examined
and appropriate remedial or avoidance action initiated and
subsequently monitored. Formal reporting procedures have
been implemented so that the safety performance of individual
companies is monitored and peer-to-peer audits are conducted in
order to provide a critical assessment of each company’s performance.

The increased focus in this important issue includes full investigations
of all accidents being carried out and reported at the Group
Operations Executive Committee meetings.

The Weir Group PLC Annual Report 2007

Corporate Social Responsibility Report (Continued)

The key measure of safety performance is the number of lost time
accidents (“LTAs”). The Group adopts a more stringent lost time
measurement criterion than the industry norm of 3 days. The
recorded LTAs use the Group definition of “incidents resulting in
lost time of more than 4 hours”. The results for 2005, 2006 and
2007 are as follows:

Lost Time Accidents

)
n
(

s
t
n
e
d
c
c
A
e
m
T

t
s
o
L

180

160

140

120

100

2005

2006

2007

Acquired Businesses
Existing Businesses

The results for 2005, 2006 and 2007 reflect the considerable
improvement which the Group's focus on safety has achieved
during the period of review. Companies that were already owned
by the Group at the start of 2005 were successful in reducing
their lost time accidents by 19% in 2007. Companies which
have been acquired by the Group in the same period include
Weir Gabbioneta, our Saudi Arabian joint venture, Weir SPM and
Weir Multiflo and we have used their historic prior to ownership
records for the purposes of comparison. These companies
combined reduced their lost time accidents by 49% in the year
reflecting the considerable emphasis which the Group places
on this area on any new acquisition.

The companies who have the highest numbers of accidents
are audited by our insurers to ensure that proper systems and
processes are in place. The reduction can also be attributed to
improvements in education and training and adoption of Lean
manufacturing principles. Near misses are also monitored to
further improve the safety culture that is being engendered
across the Group.

In November 2007, Weir Services Alloa were awarded the
Opticon Contractor of the Year award for Health & Safety by
ScottishPower. Opticon stands for Optimisation of Contractors,
an accreditation scheme which recognises efforts in achieving
added value through cooperation and sharing knowledge and
experience. The award is in recognition of the completion of
two major pump and valve/actuator outages at Longannet Power
Station. Weir Services Alloa completed the contract working over
50,000 man hours on site with an Accident Frequency Rate and
Total Reportable Incident Rate of zero. Through a process of close
engagement involving ScottishPower staff and fellow Opticon
contractors, the contract was completed without injury to
personnel or damage to the environment.

The Weir Group PLC Annual Report 2007

Supplier relations
We recognise that our corporate social responsibility also reflects
the way we behave towards our suppliers. The Group does not
operate a standard policy in respect of payments to suppliers
and each operating company is responsible for agreeing the terms
and conditions under which business transactions are conducted,
including the terms of payment. It is Group policy that payments
to suppliers are made in accordance with the agreed terms. At 28
December 2007, the Group had an average of 61 days purchases
outstanding in trade creditors.

Many Weir companies are collaborating closely with suppliers to
address environmental considerations throughout the supply chain
to our mutual benefit, particularly in areas such as raw materials,
packaging and recycling.

Workplace

In December 2007, Weir Minerals India was honoured with
the prestigious India Manufacturing Excellence Gold Award for
Engineering facilities by Frost & Sullivan, a US based global
growth consulting company. The awards for Engineering and
other sectors aim to highlight the best facilities in India that have
achieved and sustained manufacturing excellence. A stringent
evaluation process including site visits is used to select award
recipients, with factors being assessed including Safety
and Environment, Supply Chain, Quality Systems and
Operational Flexibility.

In 2007, Weir Services Middle East was given recognition as
a “top tier supplier” by BP through the division’s Baku service facility
which manages BP’s workshop and maintains their critical rotating
equipment assets in the Caspian. This is a reflection of the working
relationship with BP which has led them to expand the breadth
of the contract to include spares procurement and additional
asset management.

Environment
• The Group is committed to the protection of the environment

in which all its companies operate.

• Each Weir company will comply with the relevant regulatory

requirements applicable to its business.

• Each Weir company will ensure that it is seen to be a good citizen
in the community in which it operates and adopt practices aimed
at minimising the environmental impact of its operations.

Maintenance of the Group’s environmental policy is the
responsibility of the Group Operations Executive Committee,
while its implementation is the responsibility of divisional
managing directors. Each Weir division is required to report
on environmental performance and maintain environmental
management practices.

The Group policy is that all its operations will be ISO 14001
accredited. ISO 14001 is an internationally recognised specification
for an effective structured environmental management system
which helps organisations achieve environmental and economic
goals as well as assisting in the implementation of environmental
policy. An ISO 14001 accredited environmental management
system provides our customers, employees and shareholders with
the assurance that our environmental performance meets and will
continue to meet our legal and environmental policy requirements.
Through the Group Environmental, Health and Safety Forums,
all new businesses are brought into line with best practice in
the implementation of ISO 14001. In addition, the Forums are
a useful arena to allow local and international environmental
legislative developments to be monitored before they become
law. This proactive approach allows us to conform with future
environmental legislation before laws are passed by voluntarily
taking action on specific issues.

As part of our integrated commitment to ISO 14001 accreditation,
we have a rolling programme as part of our 100 day integration
plan which we put in place in relation to any new business unit.
During 2007, Weir Valves & Controls China, Weir Services in Saudi
Arabia, Abu Dhabi, India and Malaysia, plus service centres in
Grand Prairie, Canada and Wollongong, Australia and the Minerals
South African Rustenberg Service Centre all achieved ISO 14001
accreditation. It is expected that our only other non-compliant
companies, Weir Gabbioneta, Weir Minerals China, Weir SPM
and Weir Multiflo, will achieve full compliance in 2008.

Environmental performance
The Group policy is to minimise its environmental impact and any
environmental incidents are reported to the Group Operations
Executive Committee on a monthly basis. The definition of a
reportable incident is:

“Any incident which involves the accidental release, emission
or discharge of contaminants to air, water or land and requires
outside resources to control or is required to be reported to
a regulatory agency.”

In 2007, there were no environmental incidents at any of the
Group operations.

As all our businesses have an objective of continuous improvement,
our environmental initiatives focus on minimising waste generation,
preventing pollution and reducing energy consumption.

Weir Minerals South America runs free bus services from each
of the towns surrounding its factory for all staff, thus reducing
pollution by reducing car usage and also congestion.

Community and educational
During the year, Group companies were involved in numerous
community, social and cultural initiatives, many of which were
nominated and driven by our employees. We also participate
in a range of educational and training initiatives.

Weir Services Australia sponsors two engineering Scholarships
at the University of New South Wales. Undergraduate Materials
Science students are selected by an interview panel (academics
and Weir personnel) to receive a scholarship over four years
to assist in their studies. The students are offered vacational
employment for 12 weeks per year to obtain practical experience.
The scholarship programme allows Weir to contribute to the
ever-diminishing pool of future scientists. In addition, Weir
Minerals Australia has an employee from the R&D section in
Group Technology who is currently being sponsored for a PhD
at University of Technology, Sydney in the study of erosion wear
resistant white cast irons. Weir Minerals Australia also sponsors
a PhD student and a Post Doctorate Fellow who are working on
a research programme at the University of Alberta, Edmonton,
Canada. This is close to the huge Oil Sands Mineral process
plants. The Oil Sands Mines have estimated operating lives of
hundreds of years and are heavy users of large slurry pumps
for hydro transport and mineral processing. They also sponsor
a research programme at the University of Akron, USA into a
study of wear fundamentals of elastomeric materials over the
next three to four years.

Weir Minerals South America sponsors a chair at the University
School of Engineering to support a professor in the Structural
and Seismic Isolation discipline. They also sponsor a chair at
the University School of Metallurgical Engineering to support a
professor in the Metallurgic and Mining discipline. The managing
director sits as a board member of the Education and Capacitating
National Enterprises Organisation, which is responsible for several
schools for low income students and provides further education
to enable students to get a technical speciality qualification.

Employees from Weir Services Alloa are actively involved with
local Glasgow, South Lanarkshire and East Renfrewshire schools
on issues such as school placement requests and career talks.
They have also provided employees for IMechE Mentoring, a
scheme which provides mentoring for the Institute of Mechanical
Engineers and involves advice and lectures to undergraduates.

The Weir Group PLC Annual Report 2007

Corporate Social Responsibility Report (Continued)

Weir Minerals India has adopted a small school and volunteers
visit the school at least once a month, spending time with the
children and helping them.

The company also has several workplace initiatives namely:

• Comprehensive Sexual, Reproductive Health & HIV/AIDS

Programme;

• Preventative health-care education; and

• Health education about, among others, lifestyle, diseases,

and de-stressing.

Under community outreach initiatives, Weir Minerals India has
identified beneficiaries such as childrens homes and schools, and
is planning to provide educational support, health education and
career mentoring.

In 2007, Weir Services Alloa entered a team of three for a
30 mile cycle and 45 mile walk along Scotland’s Great Glen for
Maggie Monster Bike and Hike. The task, completed in 20 hours,
raised money for Maggie's Cancer Centres. In addition, several staff
and customers of Weir Services Alloa and Cathcart entered a charity
white water rafting event for Chest, Heart and Stroke Scotland.

Weir SPM, Fort Worth employees donated personal care items
and a cash donation for families in need in their local community.
The photograph shows members of the Weir SPM Charity
Committee giving the donations to a member of the White
Settlement Community Services group.

During December 2007, the staff at Weir Minerals South America
Peru took gifts to two local underprivileged communities at
Newmont Yanacocha and La Laguna.

Weir Minerals South America have a variety of initiatives
including charity donations inside the San Bernardo community.
The staff of the Chile Plant in San Bernardo help tidy and prepare
the company football stadium for the surrounding neighbourhood
and their children and also put together a Soccer School.

Weir Minerals South America also organised an Open Day
for the families of employees to come to work to find out more
about the company’s products, how they are used in the mining
industry and how their parents contribute to the Group in their
daily functions.

The Weir Group PLC Annual Report 2007

The Weir Group PLC
Financial Statements
for the 52 weeks ended 28 December 2007

Group Financial Statements

46 Directors Statement of Responsibilities

47 Independent Auditors Report

48 Consolidated Income Statement

49 Consolidated Balance Sheet

50 Consolidated Cash Flow Statement

51 Consolidated Statement of Recognised Income & Expense

52 Notes to the Group Financial Statements

Company Financial Statements

96 Directors Statement of Responsibilities

97 Independent Auditors Report

98 Company Balance Sheet

99 Notes to the Company Financial Statements

107 Principal Companies of the Group

108 Shareholder Information

Inside back cover - Financial Calendar

The Weir Group PLC Annual Report 2007

Directors Statement of Responsibilities

The directors are responsible for preparing the annual report
and the Group ﬁnancial statements in accordance with applicable
United Kingdom law and those International Financial Reporting
Standards (“IFRSs”) as adopted by the European Union.

The directors are required to prepare Group ﬁnancial statements
for each ﬁnancial year which present fairly the ﬁnancial position
of the Group and the ﬁnancial performance and cash ﬂows of
the Group for that period. In preparing those Group ﬁnancial
statements the directors are required to

• select suitable accounting policies in accordance with IAS 8:
‘Accounting Policies, Changes in Accounting Estimates and
Errors’ and then apply them consistently;

• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;

• provide additional disclosures when compliance with the speciﬁc
requirements in IFRSs is insufﬁcient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group’s ﬁnancial position and ﬁnancial performance; and

• state that the Group has complied with IFRSs, subject to any
material departures disclosed and explained in the ﬁnancial
statements.

The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
ﬁnancial position of the Group and enable them to ensure that
the Group ﬁnancial statements comply with the Companies Act
1985 and Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.

The Weir Group PLC Annual Report 2007

Independent Auditors Report

Independent auditors report to the members
of The Weir Group PLC

We have audited the Group ﬁnancial statements of The Weir
Group PLC for the 52 weeks ended 28 December 2007 which
comprise the Consolidated Income Statement, the Consolidated
Balance Sheet, the Consolidated Cash Flow Statement, the
Consolidated Statement of Recognised Income & Expense and
the related notes 1 to 32. These Group ﬁnancial statements have
been prepared under the accounting policies set out therein.

We have reported separately on the Company ﬁnancial statements
of The Weir Group PLC for the 52 weeks ended 28 December
2007 and on the information in the Remuneration Committee
Report that is described as having been audited.

We read other information contained in the annual report and
consider whether it is consistent with the audited Group ﬁnancial
statements. The other information comprises only the Financial
Highlights 2007, 2007 Highlights, the Chairman’s Statement,
Our Geographic Footprint, the Chief Executive’s Review, the
Operational Review, the Financial Review, the Board of Directors,
the Directors Report, the Corporate Governance Statement, the
Audit Committee Report, the Nomination Committee Report,
the unaudited part of the Remuneration Committee Report
and the Corporate Social Responsibility Report. We consider the
implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the Group
ﬁnancial statements. Our responsibilities do not extend to
any other information.

This report is made solely to the Company's members, as a body,
in accordance with Section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state
to them in an auditors report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.

Respective responsibilities of directors & auditors

The directors responsibilities for preparing the annual report and
the Group ﬁnancial statements in accordance with applicable United
Kingdom law and International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union are set out in the
Directors Statement of Responsibilities.

Our responsibility is to audit the Group ﬁnancial statements in
accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Group ﬁnancial
statements give a true and fair view and whether the Group
ﬁnancial statements have been properly prepared in accordance
with the Companies Act 1985 and Article 4 of the IAS Regulation.
We also report to you whether in our opinion the information
given in the Directors Report is consistent with the ﬁnancial
statements. The information given in the Directors Report
includes information that is contained in the Chairman’s
Statement, the Chief Executive’s Review, the Operational Review,
the Financial Review and the Corporate Social Responsibility
Report that is cross referred from the Directors Report.

In addition we report to you if, in our opinion, we have not
received all the information and explanations we require for
our audit, or if information speciﬁed by law regarding directors
remuneration and other transactions is not disclosed.

We review whether the Corporate Governance Statement reﬂects
the Company’s compliance with the nine provisions of the 2006
Combined Code speciﬁed for our review by the Listing Rules of
the Financial Services Authority and we report if it does not. We
are not required to consider whether the Board’s statements on
internal control cover all risks and controls, or form an opinion on
the effectiveness of the Group’s corporate governance procedures
or its risk and control procedures.

Basis of audit opinion

We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the
Group ﬁnancial statements. It also includes an assessment of
the signiﬁcant estimates and judgments made by the directors
in the preparation of the Group ﬁnancial statements and of
whether the accounting policies are appropriate to the Group’s
circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufﬁcient evidence to give reasonable
assurance that the Group ﬁnancial statements are free from
material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the
Group ﬁnancial statements.

Opinion

In our opinion

• the Group ﬁnancial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 28 December 2007
and of its proﬁt for the 52 weeks then ended;

• the Group ﬁnancial statements have been properly prepared
in accordance with the Companies Act 1985 and Article 4 of
the IAS Regulation; and

• the information given in the Directors Report is consistent

with the Group ﬁnancial statements.

Ernst & Young LLP
Registered Auditor
Glasgow
11 March 2008

The Weir Group PLC Annual Report 2007

Consolidated Income Statement

for the 52 weeks ended 28 December 2007

52 weeks ended 28 December 2007

52 weeks ended 29 December 2006

Before
exceptional
items &
intangibles
amortisation
£m

Exceptional
items &
intangibles
amortisation
(note 5)
£m

Notes

Before
exceptional
items &
intangibles
amortisation
£m

Exceptional
items &
intangibles
amortisation
(note 5)
£m

Total
£m

1,060.6

870.4

6
6
24

118.7
3.4

122.1
(12.7)
7.6
3.2

120.2
(33.8)

86.4
11.8
98.2

98.1
0.1
98.2

41.4p

40.9p

(6.2)
-

(6.2)
-
-
-

(6.2)
2.1

(4.1)
80.9
76.8

76.8
-
76.8

112.5
3.4

115.9
(12.7)
7.6
3.2

114.0
(31.7)

82.3
92.7
175.0

174.9
0.1
175.0

83.8p
39.4p

82.9p
39.0p

75.3
2.4

77.7
(10.8)
5.3
4.9

77.1
(19.6)

57.5
12.8
70.3

70.3
-
70.3

27.8p

27.4p

13.4
-

13.4
-
-
-

13.4
(2.0)

11.4
(0.1)
11.3

11.3
-
11.3

88.7
2.4

91.1
(10.8)
5.3
4.9

90.5
(21.6)

68.9
12.7
81.6

81.6
-
81.6

39.4p
33.3p

38.8p
32.8p

Continuing operations
Revenue

Continuing operations
Operating proﬁt
Share of results of joint ventures

Operating proﬁt
Finance costs
Finance income
Other ﬁnance income - retirement beneﬁts

Proﬁt before tax from continuing operations
Tax expense

Proﬁt for the period from continuing operations
Proﬁt for the period from discontinued operations
Proﬁt for the period

Attributable to
Equity holders of the Company
Minority interests

Earnings per share
Basic - total operations
Basic - continuing operations

Diluted - total operations
Diluted - continuing operations

The Weir Group PLC Annual Report 2007

Consolidated Balance Sheet

at 28 December 2007

ASSETS
Non-current assets
Property, plant & equipment
Investment property
Intangible assets
Investments in joint ventures & associate
Deferred tax assets
Retirement beneﬁt plan surpluses
Derivative ﬁnancial instruments
Total non-current assets

Current assets
Inventories
Trade & other receivables
Construction contracts
Derivative ﬁnancial instruments
Income tax receivable
Cash & short-term deposits
Total current assets
Total assets

LIABILITIES
Current liabilities
Interest-bearing loans & borrowings
Trade & other payables
Construction contracts
Derivative ﬁnancial instruments
Income tax payable
Provisions
Total current liabilities

Non-current liabilities
Interest-bearing loans & borrowings
Derivative ﬁnancial instruments
Provisions
Deferred tax liabilities
Retirement beneﬁt plan deﬁcits
Total non-current liabilities
Total liabilities
NET ASSETS

CAPITAL & RESERVES
Share capital
Share premium
Treasury shares
Capital redemption reserve
Foreign currency translation reserve
Hedge accounting reserve
Retained earnings

Shareholders equity
Minority interest
TOTAL EQUITY

Approved by the Board of Directors on 11 March 2008

28 December
2007
£m

29 December
2006
£m

Notes

11
11
12
15
23
24
30

16
17
18
30

20
21
18
30

20
30
22
23
24

25
25
25
25
25
25
25

136.3
4.8
503.2
7.2
3.1
45.5
1.2
701.3

173.5
255.2
32.8
10.6
1.8
54.2
528.1
1,229.4

8.5
257.8
55.9
11.8
20.8
22.8
377.6

217.0
5.1
22.6
53.3
8.6
306.6
684.2
545.2

26.5
37.7
(9.3)
0.5
0.2
3.5
485.6

544.7
0.5
545.2

116.6
-
180.1
33.5
19.3
7.8
4.9
362.2

120.9
203.8
34.9
6.5
0.1
146.3
512.5
874.7

7.5
212.4
46.3
3.0
19.4
27.3
315.9

145.9
1.8
13.6
13.9
11.7
186.9
502.8
371.9

26.4
35.4
(10.7)
0.5
(2.9)
3.5
319.3

371.5
0.4
371.9

Mark Selway Director

Keith Cochrane Director

The Weir Group PLC Annual Report 2007

Consolidated Cash Flow Statement

for the 52 weeks ended 28 December 2007

Continuing operations
Cash ﬂows from operating activities
Cash generated from operations
Additional pension contributions paid
Fundamental restructuring costs paid
Income tax paid
Net cash generated from operating activities

Continuing operations
Cash ﬂows from investing activities
Acquisitions of subsidiaries
Disposals of subsidiaries & associate
Purchases of property, plant & equipment & intangible assets
Exceptional proceeds on sale of property
Other proceeds from sale of property, plant & equipment & intangible assets
Interest received
Dividend received from discontinued associate
Other dividends received
Net cash used in investing activities

Continuing operations
Cash ﬂows from ﬁnancing activities
Proceeds from issue of ordinary shares
Proceeds from borrowings
Repayments of borrowings
Interest paid
Dividends paid to equity holders of the Company
Net cash generated from (used in) ﬁnancing activities

Net (decrease) increase in cash & cash equivalents from continuing operations
Net increase in cash & cash equivalents from discontinued operations - operating activities
Net decrease in cash & cash equivalents from discontinued operations - investing activities
Cash & cash equivalents at beginning of period
Foreign currency translation differences
Cash & cash equivalents at end of period

52 weeks
ended 28
December
2007
£m

52 weeks
ended 29
December
2006
£m

151.8
(6.5)
(0.4)
(33.1)
111.8

(317.8)
127.3
(43.5)
-
3.2
7.5
2.5
3.7
(217.1)

2.4
124.3
(73.7)
(12.6)
(31.1)
9.3

(96.0)
1.4
(0.5)
139.1
2.1
46.1

111.0
(7.0)
(3.3)
(16.5)
84.2

(2.1)
(1.8)
(24.7)
8.3
0.8
5.3
-
1.5
(12.7)

3.1
90.7
(110.2)
(10.2)
(27.7)
(54.3)

17.2
22.9
(2.7)
104.0
(2.3)
139.1

Notes

26
26

The Weir Group PLC Annual Report 2007

Consolidated Statement of Recognised
Income & Expense

for the 52 weeks ended 28 December 2007

Income & expense recognised directly in equity
Gains taken to equity on cash ﬂow hedges
Exchange differences on translation of foreign operations
Actuarial gains on deﬁned beneﬁt plans
Share of associate’s actuarial gain on deﬁned beneﬁt plans
Transfers to the income statement
On cash ﬂow hedges
On cash ﬂow hedges - discontinued operations
Tax on items taken directly to or transferred from equity

Net income recognised directly in equity
Proﬁt for the period
Total recognised income & expense for the period

Attributable to
Equity holders of the Company
Minority interests

Note

52 weeks
ended 28
December
2007
£m

52 weeks
ended 29
December
2006
£m

6.2
3.1
29.5
-

(1.9)
(4.3)
(7.0)

25.6
175.0
200.6

200.5
0.1
200.6

11.5
(12.8)
33.0
4.4

(1.1)
-
(12.5)

22.5
81.6
104.1

104.1
-
104.1

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements

1. Authorisation of ﬁnancial statements & statement of compliance

The consolidated ﬁnancial statements of The Weir Group PLC for the 52 weeks ended 28 December 2007 were approved and authorised for issue in
accordance with a resolution of the directors on 11 March 2008. The comparative information is presented for the 52 weeks ended 29 December 2006.
For practical reasons, the Group prepares its ﬁnancial statements to the week ending closest to the Company reference date of 31 December. The results
on this basis are unlikely to be materially different from those that would be presented for a period of one year. The Weir Group PLC is a limited company
incorporated in Scotland and is listed on the London Stock Exchange.

The consolidated ﬁnancial statements of The Weir Group PLC 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 1985.

The principal activities of the Group are described in note 3.

2. Accounting policies

Basis of preparation

The accounting policies which follow set out those policies which have been applied consistently to all periods presented in these ﬁnancial statements.
These ﬁnancial statements are presented in sterling. All values are rounded to the nearest 0.1 million pounds (£m) except when otherwise indicated.

In preparing these ﬁnancial statements the Group has applied IAS40 "Investment Property", IFRS7 “Financial Instruments: Disclosures” and IAS1 “Amendment
to IAS1: Capital Disclosures”. Following the disposal of Weir Pumps, a property held by the company now meets the deﬁnition of investment property.
The application of IAS40 resulted in a reclassiﬁcation, amounting to £4.8m, from property, plant & equipment to investment property in the balance
sheet. The directors have chosen to apply the cost model within IAS40, therefore there has been no adjustment necessary to the measurement basis of
the property and as such there is no other impact from the adoption of this accounting policy, which is detailed below, in these ﬁnancial statements.
The adoption of IFRS7 resulted in the Group disclosing additional information about its ﬁnancial instruments, their signiﬁcance and the nature and extent
of risks that they give rise to including greater detail on the fair value of its ﬁnancial instruments and its risk exposure. The adoption of the IAS1 amendment
resulted in the Group disclosing additional information about its capital structure. There has been no effect on reported income or net assets from the
adoption of IFRS7 or the IAS1 amendment.

The format of the consolidated income statement presented in these consolidated ﬁnancial statements differs from that used in the Group’s consolidated
ﬁnancial statements for the 52 weeks ended 29 December 2006 and the Group’s 2007 Interim Report. The format of the consolidated income statement
included within these consolidated ﬁnancial statements, which now presents intangibles amortisation in a separate column with exceptional items, has
been adopted as it presents information in a format that is more relevant to users of the ﬁnancial statements by improving the visibility of the impact
that increased acquisition activity has had on intangible assets. In addition, the analysis of expenses has been transferred from the face of the income
statement to the notes to the ﬁnancial statements in order to present the key performance indicators more clearly to users of the ﬁnancial statements.
The comparative information has been reclassiﬁed accordingly, resulting in the reclassiﬁcation of intangibles amortisation of £2.3m.

The format of the consolidated cash ﬂow statement presented in these ﬁnancial statements differs from that used in the Group's consolidated ﬁnancial
statements for the 52 weeks ended 29 December 2006. The format of the consolidated cash ﬂow statement included within these ﬁnancial statements,
which presents cash ﬂows for continuing operations only, has been adopted as it presents information in a format that is more relevant to users of the
ﬁnancial statements. The comparative information has been restated accordingly, resulting in £22.9m of cash inﬂows from operating activities and £2.7m
of cash outﬂows from investing activities being reclassiﬁed as relating to discontinued operations.

Use of estimates & judgements

The preparation of the consolidated ﬁnancial statements requires management to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.

Details of the signiﬁcant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most signiﬁcant effect
on the amounts recognised in the ﬁnancial statements are described on page 21.

Basis of consolidation

The consolidated ﬁnancial statements include the results, cash ﬂows and assets and liabilities of The Weir Group PLC (“the Company”) and its subsidiaries
(together, “the Group”), and the Group’s share of its joint ventures and associate’s results. The ﬁnancial statements of subsidiaries, joint ventures and
associate’s are prepared for the same reporting period as the Company using consistent accounting policies.

A subsidiary is an entity controlled, either directly or indirectly, by the Company, where control is the power to govern the ﬁnancial and operating policies of
the entity so as to obtain beneﬁt from its activities. The results of a subsidiary acquired during the period are included in the Group’s results from the effective
date on which control is transferred to the Group. The results of a subsidiary sold during the period are included in the Group’s results up to the effective date
on which control is transferred out of the Group. All intragroup transactions, balances, income and expenses are eliminated on consolidation.

Minority interests represent the portion of proﬁt or loss and net assets in subsidiaries that is not held by the Group and is presented within equity in the
consolidated balance sheet, separately from the Company shareholders equity.

The Weir Group PLC Annual Report 2007

Joint ventures & associates

The Group has a number of long-term contractual arrangements with other parties which represent joint ventures. These all take the form of agreements
to share control over other entities (“jointly controlled entities”). The Group’s interests in the results and assets and liabilities of its jointly controlled entities
are accounted for using the equity method. An associate is an entity over which the Company, either directly or indirectly, is in a position to exercise
signiﬁcant inﬂuence by participating in, but not controlling or jointly controlling, the ﬁnancial and operating policies of the entity. Associates are accounted
for using the equity method.

These investments are carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets less any impairment in value.
The income statement reﬂects the share of results of operations of these investments after tax. Where there has been a change recognised directly in the
investee’s equity, the Group recognises its share of any changes and discloses this when applicable in the statement of recognised income and expense.

Any goodwill arising on the acquisition of a joint venture or associate, representing the excess of the cost of the investment compared to the Group’s share
of the net fair value of the joint venture or associate’s identiﬁable assets, liabilities and contingent liabilities, is included in the carrying amount of the joint
venture or associate and is not amortised. To the extent that the net fair value of the joint venture or associate’s identiﬁable assets, liabilities and contingent
liabilities is greater than the cost of the investment, a gain is recognised and added to the Group’s share of the joint venture or associate’s proﬁt or loss in
the period in which the investment is acquired.

Foreign currency translation

The ﬁnancial statements for each of the Group’s subsidiaries, joint ventures and associate are prepared using their functional currency. The functional
currency is the currency of the primary economic environment in which an entity operates.

At entity level, transactions denominated in foreign currencies are translated into the entity’s functional currency at the exchange rate ruling on the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date.
Currency translation differences are recognised in the income statement except when hedge accounting is applied and for differences on monetary assets
and liabilities that form part of the Group’s net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment,
at which time they are recognised in proﬁt or loss.

On consolidation, the results of foreign operations are translated into sterling at the average exchange rate for the period and their assets and liabilities are
translated into sterling at the exchange rate ruling on the balance sheet date. Currency translation differences, including those on monetary items that
form part of a net investment in a foreign operation, are recognised in the foreign currency translation reserve.

In the event that a foreign operation is sold, the gain or loss on disposal recognised in the income statement is determined after taking into account the
cumulative currency translation differences that are attributable to the operation. As permitted by IFRS1, the Group elected to deem cumulative currency
translation differences to be £nil as at 27 December 2003. Accordingly, the gain or loss on disposal of a foreign operation does not include currency
translation differences arising before 27 December 2003.

In the cash ﬂow statement, the cash ﬂows of foreign operations are translated into sterling at the average exchange rate for the period.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic beneﬁts will ﬂow to the Group and the revenue can be reliably measured.
Revenue from sales of goods is recognised when the signiﬁcant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch
of the goods, and can be reliably measured. Revenue from the sales of services and revenue from construction contracts is recognised by reference to the
stage of completion. The stage of completion of a contract is determined either by reference to the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs, or by reference to the completion of a physical proportion of the contract work. The basis
used is dependent upon the nature of the underlying contract and takes into account the degree to which the physical proportion of the work is subject
to formal customer acceptance procedures.

A construction contract is deﬁned as a contract that is speciﬁcally negotiated for the construction of an asset or a combination of assets that are closely
interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. Where the time taken to complete such
contracts extends over different accounting periods, revenue is recognised by reference to the stage of completion of the contract activity at the balance
sheet date where the outcome can be estimated reliably, otherwise it is recognised to the extent costs are incurred. Losses on contracts are recognised in
the period when such losses become probable.

Exceptional items

Material items of income and expense which, because of the nature and 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, are presented as exceptional items on the face of the income
statement to facilitate comparisons with prior periods and assessment of trends in ﬁnancial performance.

Goodwill

Business combinations on or after 27 December 2003 are accounted for under IFRS3 using the purchase method.

Goodwill arises on the acquisition of subsidiaries and represents any excess of the cost of the acquired entity over the Group’s interest in the fair value
of the entity’s identiﬁable assets, liabilities and contingent liabilities determined at the date of acquisition. Goodwill in respect of an acquired subsidiary
is recognised as an intangible asset. Goodwill is tested at least annually for impairment and carried at cost less any recognised impairment losses.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities exceeds the consideration paid, the excess is recognised
immediately as a gain in the income statement.

Goodwill recognised as an asset as at 27 December 2003 is recorded at its carrying amount at that date and is not amortised. The carrying amount of goodwill
allocated to a cash-generating unit is taken into account when determining the gain or loss on disposal of the unit. Goodwill that was written-off directly to
reserves under UK GAAP is not taken into account in determining the gain or loss on disposal of acquired businesses on or after 27 December 2003.

Other intangible assets

Other intangible assets are stated at cost less accumulated amortisation and any recognised impairment losses.

Intangible assets acquired separately are measured on initial recognition at cost. An intangible resource acquired in a business combination is recognised
as an intangible asset if it is separable from the acquired business or arises from contractual or legal rights, is expected to generate future economic beneﬁts
and its fair value can be measured reliably. An intangible asset with a ﬁnite life is amortised on a straight-line basis so as to charge its cost which, in respect
of an acquired intangible asset, represents its fair value at the acquisition date, to the income statement over its expected useful life. An intangible asset with
an indeﬁnite life is not amortised but is tested at least annually for impairment and carried at cost less any recognised impairment losses.

Computer software that is not integral to an item of property, plant and equipment is recognised separately as an intangible asset. Amortisation is provided
on a straight-line basis so as to charge the cost of the software to the income statement over its expected useful life.

The expected useful lives of intangible assets are as follows

Brand names
Customer relationships
Purchased software
Intellectual property & trade marks
Other

Research & development costs

-
-
-
-
-

indeﬁnite life
10 - 25 years
4 - 8 years
6 -15 years
up to 6 years

All research expenditure is charged to the income statement in the period in which it is incurred.

Development expenditure is charged to the income statement in the period in which it is incurred unless it relates to the development of a new product
and it is incurred after the technical feasibility and commercial viability of the product has been proven, the development costs can be measured reliably,
future economic beneﬁts are probable and the Group intends to and has sufﬁcient resources to complete the development and to use or sell the asset.
Any such capitalised development expenditure will be amortised on a straight-line basis so that it is charged to the income statement over the expected
life of the resulting product.

Property, plant & equipment

The Group elected to use previous UK GAAP revaluations of land and buildings, amounting to £10.5m, prior to 27 December 2003 as deemed cost at
the date of the revaluation.

Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment losses. Freehold land and assets under
construction are not depreciated.

Depreciation of property, plant and equipment, other than freehold land and assets under construction, is provided on a straight-line basis so as to charge
the cost less residual value, based on prices prevailing at the balance sheet date, to the income statement over the expected useful life of the asset
concerned, which is in the following ranges

Freehold buildings, long leasehold land & buildings
Short leasehold land & buildings
Plant & equipment

-
-
-

10 - 40 years
duration of lease
3 - 20 years

Borrowing costs attributable to assets under construction are charged to the income statement in the period in which they are incurred.

Investment property

The Group has one property which is currently being held to earn rentals and for capital appreciation rather than for use in the production or supply
of goods and services and as such this property is classiﬁed as investment property. Investment property is stated at cost less accumulated depreciation.
Depreciation is provided on a straight-line basis over 40 years.

Leases

Leases which transfer to the Group substantially all the risks and rewards of ownership of the leased asset are classiﬁed as ﬁnance leases. All other leases
are classiﬁed as operating leases.

The Weir Group PLC Annual Report 2007

Assets held under ﬁnance leases are included within property, plant and equipment, initially measured at their fair value or, if lower, the present value of the
minimum lease payments and a corresponding liability is recognised within obligations under ﬁnance leases. Subsequently, the assets are depreciated on a
basis consistent with similar owned assets or the lease term if shorter. At the inception of the lease, the lease rentals are apportioned between an interest
element and a capital element so as to produce a constant periodic rate of interest on the outstanding liability. Subsequently, the interest element is
recognised as a charge to the income statement while the capital element is applied to reduce the outstanding liability.

Operating lease rentals and any incentives receivable are recognised in the income statement on a straight-line basis over the term of the lease.

Impairment of non-current assets

All non-current assets are tested for impairment whenever events or circumstances indicate that their carrying values might be impaired. Additionally,
goodwill, intangible assets with an indeﬁnite life and any capitalised development expenditure are subject to an annual impairment test.

An impairment loss is recognised to the extent that an asset’s carrying value exceeds its recoverable amount, which represents the higher of the asset’s fair
value less costs to sell and its value in use. An asset’s value in use represents the present value of the future cash ﬂows expected to be derived from the
asset. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is conducted for the cash-generating unit to
which it belongs. Similarly, the recoverable amount of goodwill is determined by reference to the discounted future cash ﬂows of the cash-generating units
to which it is allocated.

Impairment losses are recognised in the income statement. Impairment losses recognised in previous periods for an asset other than goodwill are reversed
if there has been a change in the estimates used to determine the asset’s recoverable amount. The carrying amount of an asset shall not be increased
above the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. Impairment losses
recognised in respect of goodwill are not reversed.

Inventories

Inventories are valued at the lower of cost and net realisable value, with due allowance for any obsolete or slow moving items. Cost represents the
expenditure incurred in bringing inventories to their existing location and condition and comprises the cost of raw materials, direct labour costs, other
direct costs and related production overheads. Raw material cost is generally determined on a ﬁrst in, ﬁrst out basis. Net realisable value is the estimated
selling price less costs to complete and sell.

Trade & other receivables

Trade receivables, which generally are of a short dated nature, are recognised and carried at original invoice amount less an allowance for estimated
irrecoverable amounts. Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are
written off when the probability of recovery is assessed as being remote.

Cash & cash equivalents

Cash and cash equivalents comprise cash in hand, deposits available on demand, other short-term highly liquid investments with a maturity on acquisition
of three months or less, bank overdrafts and short-term borrowings with a maturity on acquisition of three months or less. Bank overdrafts are presented
as current liabilities to the extent that there is no right of offset with cash balances.

Interest-bearing loans & borrowings

Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at fair value less
directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

Provisions

A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, the obligation can be
estimated reliably and it is probable that an outﬂow of economic beneﬁts will be required to settle the obligation. If the effect is material, provisions are
determined by discounting the expected future cash ﬂows at a pre-tax rate that reﬂects current market assessments of the time value of money and,
where appropriate, the risks speciﬁc to the liability.

Derecognition of ﬁnancial assets & liabilities

The Group's principal ﬁnancial assets and liabilities comprise bank overdrafts and short-term borrowings, loans, cash and short-term deposits as well as ﬁnancial
derivatives. The Group also has other ﬁnancial assets and liabilities such as trade receivables and trade payables which arise directly from its operations.

A ﬁnancial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.

A ﬁnancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing ﬁnancial liability is replaced
by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modiﬁed, such an exchange or
modiﬁcation is treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying
amounts together with any costs or fees incurred are recognised in proﬁt or loss.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

Financial instruments

(a) Derivative ﬁnancial instruments

The Group uses derivative ﬁnancial instruments, principally forward foreign currency contracts and cross currency swaps, to reduce its exposure to
exchange rate movements. The Group does not hold or issue derivatives for speculative or trading purposes.

Derivative ﬁnancial instruments are recognised as assets and liabilities measured at their fair values at the balance sheet date. The fair value of forward
foreign currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity proﬁles. The fair value of cross
currency swap contracts is calculated by reference to market values. Changes in their fair values have been recognised in the income statement, except
where hedge accounting is used, provided the conditions speciﬁed by IAS39 are met. Hedge accounting is applied in respect of hedge relationships where
it is both permissible under IAS39 and practical to do so. When hedge accounting is used, the relevant hedging relationships will be classiﬁed as fair value
hedges, cash ﬂow hedges or net investment hedges.

Where the hedging relationship is classiﬁed as a fair value hedge, the carrying amount of the hedged asset or liability will be adjusted by the increase or
decrease in its fair value attributable to the hedged risk and the resulting gain or loss will be recognised in the income statement where, to the extent that
the hedge is effective, it will be offset by the change in the fair value of the hedging instrument.

Where the hedging relationship is classiﬁed as a cash ﬂow hedge or as a net investment hedge, to the extent the hedge is effective, changes in the fair
value of the hedging instrument will be recognised directly in equity rather than in the income statement. When the hedged item is recognised in the
ﬁnancial statements, the accumulated gains and losses recognised in equity will be either recycled to the income statement or, if the hedged item results
in a non-ﬁnancial asset, will be recognised as adjustments to its initial carrying amount.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualiﬁes for hedge accounting.
At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecasted transaction occurs.
If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net proﬁt or loss for the period.

(b) Embedded derivatives

Derivatives embedded in non-derivative host contracts are recognised separately as derivative ﬁnancial instruments when their risks and characteristics are not
closely related to those of the host contract and the host contract is not stated at its fair value with changes in its fair value recognised in the income statement.

Post-employment beneﬁts

Post-employment beneﬁts comprise pension beneﬁts provided to employees throughout the world and other beneﬁts, primarily post-retirement healthcare,
provided to certain employees in the United States.

For deﬁned beneﬁt plans, the cost is calculated using the projected unit credit method and is recognised over the average expected remaining service lives
of participating employees, in accordance with the advice of qualiﬁed actuaries. Past service costs resulting from enhanced beneﬁts are recognised on a
straight-line basis over the vesting period, or immediately if the beneﬁts have vested. Actuarial gains and losses, which represent differences between the
expected and actual returns on the plan assets and the effect of changes in actuarial assumptions, are recognised in full in the statement of recognised
income and expense in the period in which they occur. The deﬁned beneﬁt liability or asset recognised in the balance sheet comprises the net total for
each plan of the present value of the beneﬁt obligation, using a discount rate based on appropriate high quality corporate bonds, at the balance sheet
date, minus any past service costs not yet recognised, minus the fair value of the plan assets, if any, at the balance sheet date. Where a plan is in surplus,
the asset recognised is limited to the amount of any unrecognised past service costs and the present value of any amount which the Group expects to
recover by way of refunds or a reduction in future contributions.

For deﬁned contribution plans, the cost represents the Group’s contributions to the plans and this is charged to the income statement in the period in
which they fall due.

Share-based payments

Equity settled share-based incentives are provided to employees under the Group’s executive share option scheme, the savings-related share option scheme
and the Long Term Incentive Plan. The Group recognises a compensation cost in respect of these schemes that is based on the fair value of the awards. For
equity settled schemes, the fair value is determined at the date of grant and is not subsequently remeasured unless the conditions on which the award was
granted are modiﬁed. The fair value at the date of the grant is calculated using appropriate option pricing models and the cost is recognised on a straight-
line basis over the vesting period. Adjustments are made to reﬂect expected and actual forfeitures during the vesting period due to failure to satisfy service
conditions or non-market performance conditions.

As permitted by IFRS1, the Group has applied IFRS2 “Share-based Payment” retrospectively only to equity settled awards that were granted on or after 7
November 2002 and had not vested as at 1 January 2005.

The Weir Group PLC Annual Report 2007

Taxation

Current tax is the amount of tax payable or recoverable in respect of the taxable proﬁt or loss for the period.

Deferred tax is recognised, on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base with
the following exceptions.

(a) Deferred tax arising from the initial recognition of goodwill, or of an asset or liability in a transaction that is not a business combination, that,

at the time of the transaction, affects neither accounting nor taxable proﬁt or loss, is not recognised.

(b) Deferred tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of

the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

(c) A deferred tax asset is recognised only to the extent that it is probable that future taxable proﬁts will be available against which the asset can be utilised.

Deferred tax liabilities represent tax payable in future periods in respect of taxable temporary differences. Deferred tax assets represent tax recoverable
in future periods in respect of deductible temporary differences, the carry forward of unutilised tax losses and the carry forward of unused tax credits.
Deferred tax is measured on an undiscounted basis using the tax rates and tax laws that have been enacted or substantively enacted at the balance
sheet date and are expected to apply when the deferred tax asset is realised or the deferred tax liability is settled.

Current and deferred tax is recognised in the income statement except if it relates to an item recognised directly in equity, in which case it is recognised
directly in equity.

Treasury shares

The Weir Group PLC shares held by the Company are classiﬁed in shareholders equity as ‘treasury shares’ and are recognised at cost. Consideration received
for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken directly to
revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.

New standards & interpretations

The IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these ﬁnancial statements.

International Accounting Standards (IAS/IFRS)

Effective date for periods commencing

IFRS2

IFRS3

IFRS8

IAS1

IAS23

IAS27

Amendment to IFRS2 Share Based Payment: Vesting Conditions and Cancellations *

Revised IFRS3 Business Combinations *

Operating Segments

Amendments to IAS1 Presentation of Financial Statements: A Revised Presentation *

Amendments to IAS23 Borrowing Costs

Amendments to IAS27 Consolidated and Separate Financial Statements *

International Financial Reporting Interpretations Committee (IFRIC)

IFRIC11

IFRIC12

IFRIC13

IFRIC14

IFRS 2 – Group and Treasury Share Transactions

Service Concession Arrangements

Customer Loyalty Programmes*

The Limit on a Deﬁned Beneﬁt Asset, Minimum Funding Requirements
and their Interaction*

* not yet adopted for use in the European Union

1 January 2009

1 July 2009

1 January 2009

1 July 2009

1 March 2007

1 January 2008

1 July 2008

1 January 2008

The above standards and interpretations will be adopted in accordance with their effective dates and have not been adopted in these ﬁnancial statements.
The directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s ﬁnancial statements in
the period of initial application.

IAS23 requires borrowing costs attributable to the acquisition or construction of certain assets to be capitalised. The option currently taken by the Group
of charging such costs to the income statement in the period in which they are incurred will no longer be available prospectively from 1 January 2009.

IFRS3 will apply to business combinations arising from 1 January 2010. This will require recognition of subsequent changes in the fair value of contingent
consideration in the income statement rather than against goodwill. In addition, transaction costs will be required to be recognised immediately in the
income statement.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

3. Segment information

The Group’s primary reporting format is business segments, as the Group’s risks and rates of return are affected predominantly by differences in the
products and services provided. The Group’s secondary format is geographical segments. The operating businesses are organised and managed separately
according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and
serves different markets.

The Engineering Products segment comprises the manufacture of pumps and valves for ﬂow control applications. The Engineering Services segment
provides equipment maintenance, process support and asset management services. The Defence, Nuclear & Gas segment comprises the defence and
liquid gas handling businesses which provide specialist design and project management of complex engineering contracts.

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

The Group’s geographical segments are determined by the location of the Group’s assets and operations.

Business segments

The following tables present revenue and proﬁt information and certain asset and liability information on the Group’s continuing operations for the
52 weeks ended 28 December 2007 and 52 weeks ended 29 December 2006 analysed by business segment.

Revenue
Sales to external customers
- existing operations
- acquisitions
Sales to external customers
Inter-segment sales
Segment revenue

Sales to external customers - existing operations
- at 2007 average exchange rates

Result
Segment result before exceptional items & intangibles
amortisation
- existing operations
- acquisitions
Exceptional income (net) - existing operations
Intangibles amortisation
- existing operations
- acquisitions

Share of results of joint ventures

Unallocated expenses*
Unallocated exceptional income
Operating proﬁt

Segment result before exceptional items & intangibles
amortisation - existing operations
- at 2007 average exchange rates

Engineering
Products

Engineering
Services

Defence,
Nuclear & Gas

Total continuing
operations

2007
£m

2006
£m

2007
£m

2006
£m

2007
£m

2006
£m

2007
£m

2006
£m

632.9
78.7
711.6
22.1
733.7

538.0
-
538.0
22.4
560.4

231.4
-
231.4
1.2
232.6

225.2
-
225.2
1.6
226.8

117.6
-
117.6
-
117.6

107.2
-
107.2
-
107.2

981.9
78.7
1,060.6
23.3
1,083.9

870.4
-
870.4
24.0
894.4

632.9

525.5

231.4

221.7

117.6

107.3

981.9

854.5

79.6
19.1
-

(1.7)
(3.7)
93.3
-
93.3

59.9
-
5.0

(1.5)
-
63.4
-
63.4

18.5
-
-

(0.5)
-
18.0
3.4
21.4

12.9
-
-

(0.5)
-
12.4
2.4
14.8

10.4
-
-

(0.2)
-
10.2
-
10.2

10.0
-
-

(0.2)
-
9.8
-
9.8

108.5
19.1
-

(2.4)
(3.7)
121.5
3.4
124.9
(9.0)
-
115.9

82.8
-
5.0

(2.2)
-
85.6
2.4
88.0
(7.6)
10.7
91.1

79.6

58.1

18.5

13.1

10.4

10.0

108.5

81.2

*Unallocated expenses include intangibles amortisation of £0.1m (2006: £0.1m).

The Weir Group PLC Annual Report 2007

3. Segment information (continued)

Assets & liabilities
Segment assets
Investments in joint ventures & associate

Segment assets now classiﬁed as discontinued
operations
Unallocated assets
Total assets

Segment liabilities
Segment liabilities now classiﬁed as discontinued
operations
Unallocated liabilities
Total liabilities

Other segment information
Segment capital expenditure
Unallocated capital expenditure
Total capital expenditure

Segment depreciation & amortisation
Unallocated depreciation & amortisation
Total depreciation & amortisation

Engineering
Products

Engineering
Services

Defence,
Nuclear & Gas

Total
operations

2007
£m

2006
£m

2007
£m

2006
£m

2007
£m

2006
£m

2007
£m

2006
£m

955.7
-
955.7

472.1
-
472.1

110.5
7.2
117.7

111.4
7.5
118.9

34.8
-
34.8

29.6
-
29.6

1,101.0
7.2
1,108.2

-
121.2
1,229.4

613.1
7.5
620.6

77.5
176.6
874.7

216.6

146.5

42.0

44.0

59.4

52.6

318.0

243.1

33.4

17.5

8.7

5.7

1.3

1.2

17.8

12.1

4.7

4.2

0.9

-
366.2
684.2

42.6
217.1
502.8

43.4
0.1
43.5

23.4
0.3
23.7

6.6

24.4
1.1
25.5

17.2
0.3
17.5

4.4

Warranty expense (net)

4.5

4.1

0.8

0.3

1.3

Segment assets now classiﬁed as discontinued operations represent £51.5m previously included within Engineering Products and £26.0m previously included within Engineering Services.

Segment liabilities now classiﬁed as discontinued operations were previously included within Engineering Products. Further details of the Group's discontinued operations can be found in note 8.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

3. Segment information (continued)

Geographical segments

The following tables present revenue, certain asset and capital expenditure information regarding the Group’s geographical segments for the 52 weeks
ended 28 December 2007 and the 52 weeks ended 29 December 2006.

52 weeks ended 28 December 2007

North
America
£m

UK
£m

Far East
& Asia
£m

Australasia
£m

South
America
£m

Middle
East
£m

Other
EU
£m

Total
Others Operations
£m

£m

Revenue
Sales to external customers
Less sales attributable to discontinued operations
Revenue from continuing operations

323.9
(0.2)
323.7

138.4
(6.5)
131.9

123.6
(6.2)
117.4

114.2
(0.1)
114.1

117.2
(0.2)
117.0

83.3
(3.7)
79.6

105.9
(2.0)
103.9

76.1
(3.1)
73.0

1,082.6
(22.0)
1,060.6

Other segment information
Segment assets
Investments in joint ventures

Unallocated assets
Total assets

506.2
-
506.2

146.4
-
146.4

7.5
-
7.5

144.6
-
144.6

63.4
-
63.4

21.0
7.2
28.2

206.3
-
206.3

18.0
-
18.0

1,113.4
7.2
1,120.6
108.8
1,229.4

Total capital expenditure

15.5

6.9

1.6

4.4

4.9

1.8

7.8

1.1

44.0

52 weeks ended 29 December 2006

North
America
£m

UK
£m

Far East
& Asia
£m

Australasia
£m

South
America
£m

Revenue
Sales to external customers
Less sales attributable to discontinued operations
Revenue from continuing operations

241.8
(1.3)
240.5

131.0
(15.1)
115.9

117.3
(12.6)
104.7

Other segment information
Segment assets
Investments in joint ventures & associate

Unallocated assets
Total assets

131.3
-
131.3

180.0
26.0
206.0

3.3
-
3.3

111.2
(1.0)
110.2

119.6
-
119.6

98.7
(5.2)
93.5

41.3
-
41.3

Middle
East
£m

87.4
(15.3)
72.1

Other
EU
£m

Others
£m

Total
Operations
£m

74.5
(1.9)
72.6

79.0
(18.1)
60.9

940.9
(70.5)
870.4

14.0
7.5
21.5

168.5
-
168.5

14.9
-
14.9

672.9
33.5
706.4
168.3
874.7

Total capital expenditure

7.5

7.3

2.6

2.8

0.2

3.5

1.7

28.4

Unallocated assets primarily comprise cash and short-term deposits, income tax receivable, deferred tax assets and retirement beneﬁt plan surpluses as
well as those assets which are used for general head ofﬁce purposes. Unallocated liabilities primarily comprise interest-bearing loans and borrowings,
income tax payable, deferred tax liabilities and retirement beneﬁt plan deﬁcits as well as liabilities relating to general head ofﬁce activities. The difference
between unallocated assets in the business and geographical segments arises as a result of different inter segment eliminations.

The Weir Group PLC Annual Report 2007

4. Revenues & expenses

The following disclosures are given in relation to continuing operations.

An analysis of the Group’s revenue is as follows.
Sales of goods
Rendering of services
Revenue from construction contracts
Revenue
Finance income
Total revenue

No revenue was derived from exchanges of goods or services (2006: £nil).

A reconcilliation of revenue to operating proﬁt is as follows.
Revenue
Cost of sales
Gross proﬁt
Other operating income (note 5)
Selling & distribution costs
Administrative expenses (note 5)
Restructuring costs (note 5)
Share of results of joint ventures
Operating proﬁt

Operating proﬁt is stated after charging
Costs of inventories recognised as an expense
Depreciation
Amortisation (note 12)
Foreign exchange losses (net)
Impairment of trade receivables (note 17) (included within administrative expenses)

The following disclosures are given in relation to total operations.

Auditors remuneration
The total fees payable by the Group to Ernst & Young LLP and their associates for work performed in respect of the audit and
other services provided to the Company and its subsidiary companies during the period are disclosed below.

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts

Fees payable to the Company’s auditor and its associates for other services
- The audit of the Company’s subsidiaries pursuant to legislation
- Other services pursuant to legislation
- Transaction support services

Fees payable in respect of the Group’s pension schemes
- Audit

2007
£m

754.7
202.9
103.0
1,060.6
7.6
1,068.2

2007
£m

1,060.6
(746.4)
314.2
2.4
(115.9)
(88.2)
-
3.4
115.9

2007
£m

746.4
17.5
6.2
0.6
1.5

2006
£m

596.4
183.5
90.5
870.4
5.3
875.7

2006
£m

870.4
(623.6)
246.8
6.7
(110.7)
(52.3)
(1.8)
2.4
91.1

2006
£m

623.6
15.2
2.3
-
0.6

2007
£m

2006
£m

0.3

0.8
0.5
0.7

0.1

0.3

0.6
0.1
-

0.1

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

4. Revenues & expenses (continued)

Research & development costs

Research & development costs consist of £8.9m (2006: £6.1m) charged directly to cost of sales in the income statement.

Operating leases

Minimum lease payments under operating leases recognised as an expense in the year were £10.0m (2006: £9.7m).

Employee beneﬁts expense
Wages & salaries
Social security costs
Pension costs (income) - deﬁned beneﬁt plans
Pension costs - deﬁned contribution plans
Share-based payments - equity settled transactions

2007
£m

234.5
29.4
4.0
6.6
1.4
275.9

2006
£m

223.0
28.5
(4.9)
7.0
1.4
255.0

The net pension income of £4.9m in 2006 in respect of deﬁned beneﬁt plans includes the £10.7m pension plan gain referred to in note 5.

The average monthly number of persons employed by the Company and its subsidiaries is as follows.
Engineering Products
Engineering Services
Defence, Nuclear & Gas
Discontinued operations

5. Exceptional items & intangibles amortisation

Recognised in arriving at operating proﬁt from continuing operations
Proﬁt on sale of property (included in other operating income)
Pension plan gain (included in administrative expenses)
Restructuring costs
Exceptional items
Intangibles amortisation
Exceptional items & intangibles amortisation

Proﬁt on sale of property

2007
Number

2006
Number

5,689
1,893
583
194
8,359

2007
£m

-
-
-
-
(6.2)
(6.2)

4,850
1,980
522
623
7,975

2006
£m

6.8
10.7
(1.8)
15.7
(2.3)
13.4

A proﬁt of £6.8m was made in 2006 on the sale of the Group’s former premises at Huddersﬁeld which were vacated as part of the restructuring of the UK
Engineering Products businesses.

Pension plan gain

The pension plan gain of £10.7m in 2006, which represents a reduction in past service costs, arose on the implementation of amendments to the deﬁned
beneﬁt arrangements of the Group’s main UK deﬁned beneﬁt pension plan made with effect from November 2006.

Restructuring costs

During 2005 the Group incurred costs of £21.4m and impairment losses of £3.3m in connection with the previously announced fundamental restructuring
activities in the UK Engineering Products businesses. Further costs of £1.8m were incurred in 2006 in connection with this restructuring. The restructuring
costs arose from activities that are not considered to fall within the normal function based classiﬁcations adopted by the Group when analysing results and,
accordingly, they have been disclosed separately.

The Weir Group PLC Annual Report 2007

6. Net ﬁnance costs

(a) Finance costs

Interest payable on bank loans & overdrafts
Finance charges payable under ﬁnance leases
Finance charges related to committed loan facilities

(b) Finance income

Interest receivable on cash at bank

7. Tax expense

(a) Income tax expense

Consolidated income statement
Current income tax
UK corporation tax - continuing operations

- discontinued operations

Adjustments in respect of current income tax of previous years

UK corporation tax
Foreign tax
Adjustments in respect of current income tax of previous years
Total current income tax

Deferred income tax
Origination & reversal of temporary differences
Adjustment to estimated recoverable deferred tax assets
Effect of changes in tax rates
Total deferred tax *
Total income tax expense in the consolidated income statement

* Includes £2.6m of deferred tax charge relating to foreign tax (2006: a credit of £2.3m).

The total income tax expense is disclosed in the consolidated income statement as follows.

Tax expense - continuing operations before exceptional items & intangibles amortisation

- exceptional items
- intangibles amortisation
- within proﬁt from discontinued operations

2007
£m

(12.3)
-
(0.4)
(12.7)

2007
£m

7.6

2006
£m

(9.8)
(0.1)
(0.9)
(10.8)

2006
£m

5.3

2007
£m

2006
£m

(9.1)
-
4.6

(4.5)
(21.9)
(1.0)
(27.4)

(8.3)
2.8
0.6
(4.9)
(32.3)

(33.8)
-
2.1
(0.6)

(3.2)
(1.0)
(0.5)

(4.7)
(23.5)
0.2
(28.0)

(7.7)
13.1
-
5.4
(22.6)

(19.6)
(2.7)
0.7
(1.0)

UK corporation tax includes £nil (2006: a credit of £0.5m) in respect of the exceptional restructuring costs of £nil (2006: £1.8m) and deferred tax
“origination & reversal of temporary differences” includes £nil (2006: a charge of £3.2m) in respect of the exceptional pension plan gain of
£nil (2006: £10.7m).

Current tax for 2007 has been reduced by £2.8m (2006: £1.9m) due to the utilisation of deferred tax assets previously not recognised.

The total deferred tax included in the income tax expense is detailed in note 23.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

7. Tax expense (continued)

(b) Tax relating to items charged or credited to equity

Tax credit (charge) on actuarial loss (gain) on retirement beneﬁts
Current tax on contributions in excess of costs through the income statement
Deferred tax - origination & reversal of temporary differences

Deferred tax on hedge gains / losses
Deferred tax on share-based payments
Current tax on share-based payments
Effect of changes in tax rates
Tax charge in the statement of recognised income & expense

2007
£m

-
(8.0)
(8.0)
-
0.4
0.5
0.1
(7.0)

2006
£m

0.1
(10.2)
(10.1)
(3.2)
0.3
0.5
-
(12.5)

The tax expense in the consolidated income statement for the year is less than the weighted average of standard rates of corporation tax across the Group
of 31.3% (2006: 31.0%). The differences are reconciled below.

Proﬁt from continuing operations before tax
Proﬁt from discontinued operations before tax
Accounting proﬁt before tax

At the weighted average of standard rates of corporation tax across the Group of 31.3% (2006: 31.0%)
Adjustments in respect of previous years - current tax

- deferred tax

Effect of changes in tax rates
Joint ventures & associate
Unrecognised deferred tax assets
Overseas tax on unremitted earnings
Permanent differences
Gains exempt from tax
At effective tax rate of 15.6% (2006: 21.7%)

2007
£m

114.0
93.3
207.3

64.8
(3.6)
(0.5)
(0.6)
(2.0)
(2.8)
1.1
0.2
(24.3)
32.3

2006
£m

90.5
13.7
104.2

32.3
0.3
(1.4)
-
(3.2)
(13.1)
7.6
1.1
(1.0)
22.6

The Weir Group PLC Annual Report 2007

8. Discontinued operations

On 8 May 2007, the Group disposed of its Glasgow-based pump manufacturing operation Weir Pumps for a total cash consideration of £45.5m resulting
in a gain on disposal of £26.0m after a tax charge of £nil. Of the disposal proceeds, £1.7m has been allocated to the ongoing lease of the Cathcart site
by the purchaser and has been deferred. The net assets disposed of amounted to £13.7m and direct disposal costs and provisions amounted to £8.4m,
including estimated costs of £2.6m associated with separating the discontinued operations of Weir Pumps from the remaining Weir Engineering
Services and Materials and Foundry operations. The net gain suspended in equity on cash ﬂow hedges, amounting to £4.3m, has been recycled to the
income statement as part of the gain on sale in accordance with IAS39.

On 28 June 2007, the Group completed the sale of its 24.5% interest in its associate, Devonport Management Limited, for a total cash consideration of
£85.7m. Approval of the sale was obtained from the Ministry of Defence on 26 June 2007, at which time the investment became held for sale. The carrying
value of the investment at the date of sale was £26.8m. Costs and provisions associated with the disposal amounted to £4.0m resulting in a gain on
disposal of £54.9m after a tax charge of £nil.

The results of Weir Pumps, which were previously included within the Engineering Products segment, and the Group’s share of the results of Devonport
Management Limited, which were previously reported in the Engineering Services segment, have been included in the consolidated income statement as
discontinued operations. The net gain of £80.9m made on these disposals has been recorded as an exceptional item in the consolidated income statement.

Proﬁts recognised in respect of prior years’ disposals relate to the negotiated settlement of claims connected to prior period disposals and the release of
certain provisions no longer required.

The revenue, results and cash ﬂows relating to discontinued operations are as follows.

Sale of goods
Revenue from construction contracts
Revenue
Cost of sales
Other operating income
Selling & distribution costs
Administrative expenses
Share of results of associate (after tax)
Operating proﬁt
Income tax
Proﬁt after tax
Proﬁts recognised in respect of prior years’ disposals (after tax)
Proﬁt for the period from discontinued operations *
Net gain on current year disposals - exceptional items (on which no tax has been provided)
Proﬁt for the period from discontinued operations

* including intangibles amortisation net of tax of £nil (2006: £0.1m)

Loss before net ﬁnance costs and tax is stated after charging
Costs of inventories recognised as an expense
Depreciation & amortisation
Foreign exchange losses (net)

The income tax is analysed as follows.
On proﬁt on ordinary activities
In respect of prior year disposals

The cash inﬂow from current year disposals was as follows.
Consideration
Costs associated with the disposals
Net cash inﬂow

Inter-segment sales
Capital expenditure
Warranty expense (net)

2007
£m

9.9
12.1
22.0
(13.9)
1.2
(2.7)
(1.4)
3.3
8.5
-
8.5
3.3
11.8
80.9
92.7

13.9
0.9
0.1

-
(0.6)

129.5
(4.3)
125.2

4.2
0.5
0.4

2006
£m

29.9
40.6
70.5
(55.9)
2.2
(8.6)
(4.0)
8.1
12.3
(1.0)
11.3
1.4
12.7
-
12.7

55.9
2.6
-

(1.0)
-

-
-
-

5.0
2.9
2.4

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

8. Discontinued operations (continued)

Earnings per share from discontinued operations

Basic
Diluted

2007
pence

44.4p
43.9p

2006
pence

6.1p
6.0p

These earnings per share ﬁgures were derived by dividing the net proﬁt attributable to equity holders of the Company from discontinued operations of
£92.7m (2006: £12.7m) by the weighted average number of ordinary shares for both basic and diluted amounts shown in note 9.

The major classes of assets and liabilities disposed of were as follows (2006: nil).

Property, plant & equipment
Other intangible assets
Investment in associate
Inventories
Trade & other receivables
Construction contracts assets
Forward foreign currency contracts assets
Trade & other payables
Construction contracts liabilities
Forward foreign currency contracts liabilities
Provisions

9. Earnings per share

2007
£m

9.7
0.4
26.8
6.7
13.6
9.7
2.9
(17.7)
(7.5)
(0.1)
(4.0)
40.5

Basic earnings per share amounts are calculated by dividing net proﬁt for the year attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net proﬁt attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options and LTIP awards).

The following reﬂects the proﬁt and share data used in the calculation of earnings per share.

Basic earnings per share
Proﬁt attributable to equity holders of the Company

- Total operations*
- Continuing*
- Continuing (before exceptional items & intangibles amortisation)*

Weighted average share capital (number of shares, million)

Diluted earnings per share
Proﬁt attributable to equity holders of the Company

- Total operations*
- Continuing*
- Continuing (before exceptional items & intangibles amortisation)*

Weighted average share capital (number of shares, million)

The Weir Group PLC Annual Report 2007

2007
£m

174.9
82.2
86.3

208.6

174.9
82.2
86.3

210.9

2006
£m

81.6
68.9
57.5

207.1

81.6
68.9
57.5

210.1

9. Earnings per share (continued)

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.

Weighted average number of ordinary shares for basic earnings per share
Effect of dilution: share options

LTIP awards

Adjusted weighted average number of ordinary shares for diluted earnings per share

2007
Shares
Million

208.6
0.4
1.9
210.9

2006
Shares
Million

207.1
1.0
2.0
210.1

The proﬁt attributable to equity holders of the Company used in the calculation of both basic and diluted earnings per share on continuing operations
before exceptional items and intangibles amortisation is calculated as follows.

Net proﬁt attributable to ordinary shareholders from continuing operations*
Exceptional items & intangibles amortisation net of tax
Net proﬁt attributable to ordinary shareholders from continuing operations before exceptional items & intangibles amortisation*

2007
£m

82.2
4.1
86.3

There have been 7,200 (2006: 80,367) share options exercised between the reporting date and the date of signing of these ﬁnancial statements.

* adjusted for £0.1m (2006: £nil) attributable to minority interests.

10. Dividends paid & proposed

Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2006: 10.75p (2005: 9.65p)
Interim dividend for 2007: 4.15p (2006: 3.75p)

Proposed for approval by shareholders at the AGM
Final dividend for 2007: 12.35p (2006: 10.75p)

2007
£m

22.4
8.7
31.1

25.8

2006
£m

68.9
(11.4)
57.5

2006
£m

19.9
7.8
27.7

22.3

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.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

11. Property, plant & equipment & Investment property

Cost
At 30 December 2005
Additions
Disposals
Exchange adjustment

At 29 December 2006
Additions
Acquisitions
Disposals
Discontinued operations
Reclassiﬁcation
Exchange adjustment
At 28 December 2007

Accumulated depreciation & impairment
At 30 December 2005
Depreciation charge for the period
Disposals
Exchange adjustment

At 29 December 2006
Depreciation charge for the period
Disposals
Discontinued operations
Reclassiﬁcation
Exchange adjustment
At 28 December 2007
Net book value at 30 December 2005
Net book value at 29 December 2006
Net book value at 28 December 2007

Land &
buildings
£m

Plant &
equipment
£m

Total property
plant &
equipment
£m

Investment
property
£m

67.4
3.6
(2.4)
(4.0)

64.6
8.7
2.4
(1.7)
-
(11.8)
3.3
65.5

23.5
1.6
(0.4)
(1.5)

23.2
1.8
(1.4)
-
(6.8)
1.0
17.8
43.9
41.4
47.7

188.6
22.4
(16.3)
(12.8)

181.9
31.4
8.7
(9.9)
(35.4)
-
8.5
185.2

113.3
16.0
(15.2)
(7.4)

106.7
16.3
(5.3)
(25.7)
-
4.6
96.6
75.3
75.2
88.6

256.0
26.0
(18.7)
(16.8)

246.5
40.1
11.1
(11.6)
(35.4)
(11.8)
11.8
250.7

136.8
17.6
(15.6)
(8.9)

129.9
18.1
(6.7)
(25.7)
(6.8)
5.6
114.4
119.2
116.6
136.3

-
-
-
-

-
-
-
-
-
11.8
-
11.8

-
-
-
-

-
0.2
-
-
6.8
-
7.0
-
-
4.8

The carrying value of buildings held under ﬁnance leases is £1.6m (2006: £1.6m). The carrying value of plant and equipment held under ﬁnance leases is
£0.1m (2006: £nil). Leased assets are pledged as security for the related ﬁnance lease liabilities. The carrying amount of assets under construction included
in plant & equipment is £4.3m (2006: £1.5m). The amount of compensation received from third parties for items of property, plant and equipment that
were impaired or lost included in the income statement is £1.2m (2006: £2.1m).

Following the disposal of Weir Pumps, a property held by the company now meets the deﬁnition of investment property and rental income is generated
from Clyde Pumps Limited. The site is subject to a conditional sale agreement, due for completion in 2009, for a consideration of not less than £25.0m.
The rental income included in the income statement amounts to £0.6m.

The Weir Group PLC Annual Report 2007

12. Intangible assets

Cost
At 30 December 2005
Additions
Disposals
Exchange adjustment

At 29 December 2006
Additions
Acquisitions
Disposals
Discontinued operations
Reclassiﬁcation
Exchange adjustment
At 28 December 2007

Accumulated amortisation & impairment
At 30 December 2005
Amortisation charge for the period
Disposals
Exchange adjustment

At 29 December 2006
Amortisation charge for the period
Disposals
Discontinued operations
Reclassiﬁcation
Exchange adjustment
At 28 December 2007
Net book value at 30 December 2005
Net book value at 29 December 2006
Net book value at 28 December 2007

Goodwill
£m

Brand name
£m

Customer
relationships
£m

Purchased
software
£m

Intellectual
property &
trade marks
£m

Other
£m

Total
£m

160.2
0.8
-
(7.1)

153.9
-
178.1
-
-
-
16.6
348.6

-
-
-
-

-
-
-
-
-
-
-
160.2
153.9
348.6

4.7
-
-
(0.1)

4.6
-
25.1
-
-
-
1.1
30.8

-
-
-
-

-
-
-
-
-
-
-
4.7
4.6
30.8

15.2
-
-
(0.4)

14.8
-
85.1
-
-
-
3.5
103.4

0.2
0.6
-
-

0.8
2.3
-
-
-
-
3.1
15.0
14.0
100.3

14.2
1.6
(0.1)
(0.2)

15.5
1.8
0.2
(0.2)
(1.6)
(0.5)
0.2
15.4

7.2
1.8
(0.1)
(0.5)

8.4
1.9
(0.1)
(1.2)
(0.5)
0.1
8.6
7.0
7.1
6.8

-
-
-
-

-
2.1
11.0
-
-
0.5
0.7
14.3

-
-
-
-

-
0.5
-
-
0.5
0.1
1.1
-
-
13.2

0.6
-
-
-

0.6
-
4.4
-
-
-
0.2
5.2

-
0.1
-
-

0.1
1.6
-
-
-
-
1.7
0.6
0.5
3.5

194.9
2.4
(0.1)
(7.8)

189.4
3.9
303.9
(0.2)
(1.6)
-
22.3
517.7

7.4
2.5
(0.1)
(0.5)

9.3
6.3
(0.1)
(1.2)
-
0.2
14.5
187.5
180.1
503.2

Brand names have been assigned an indeﬁnite useful life and as such are not amortised. The brand name value of £30.8m comprises three brands, Gabbioneta
£5.0m, SPM £23.1m and Multiﬂo £2.7m, all of which were recognised at fair value at their respective dates of acquisition. Both the Gabbioneta and SPM brands
have long histories in the oil & gas markets where they are both considered to be market leaders. The carrying value is tested annually for impairment.

Customer relationships of £100.3m comprise £14.9m acquired as part of the Group’s acquisition of Pompe Gabbioneta SpA in 2005 and £85.4m
acquired as part of the Group’s acquisition of SPM Flow Control, Inc. in 2007. The remaining amortisation period of these assets as at 28 December
2007 is 23 years and an average of 24 years respectively.

The carrying value of purchased software held under ﬁnance leases is £nil (2006: £0.4m). The amortisation charge for the period is included in the
income statement as follows.

Cost of sales
Selling & distribution costs
Administrative expenses
Proﬁt for the period from discontinued operations

2007
£m

0.4
0.1
5.7
0.1
6.3

2006
£m

0.4
0.1
1.8
0.2
2.5

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

13. Business combinations

On 19 July 2007, the Group acquired 100% of the share capital of SPM Flow Control, Inc., a company based in Fort Worth, Texas, specialising in the
manufacture of high-pressure well service pumps and related ﬂow control equipment which operate in abrasive, high-wear applications in oil & gas
drilling and extraction. The total cash consideration was £321.9m. On 21 August 2007, the Group acquired Multiﬂo, a privately owned specialist mine
dewatering pump business based in Caloundra, Australia. The total cash consideration was £9.3m. Both acquisitions have been accounted for on a
provisional basis as a limited number of fair values have still to be ﬁnalised.

The provisional fair values of the identiﬁable assets and liabilities at the relevant dates of acquisition are as follows.

Property, plant & equipment
Intangible assets
Inventories
Trade & other receivables
Cash & cash equivalents
Interest-bearing loans & borrowings
Trade & other payables
Provisions
Income tax
Deferred tax
Fair value of net assets
Goodwill arising on acquisition
Total consideration

Consideration
Costs associated with the acquisition
Total consideration

The cash outﬂow on acquisition was as follows.
Cash & cash equivalents acquired
Cash paid
Net cash outﬂow

2007
Carrying
values

2007
Recognised
on acquisition

2007
Carrying
values

2007
Recognised
on acquisition

Multiﬂo
£m

0.1
-
1.3
1.5
-
-
(2.1)
(0.1)
-
-
0.7

0.2
4.4
0.3
1.5
-
-
(1.4)
(0.1)
-
-
4.9
4.4
9.3

9.2
0.1
9.3

-
(9.3)
(9.3)

SPM
£m

11.5
-
29.6
36.8
13.5
(0.2)
(21.7)
(1.0)
(0.2)
0.8
69.1

SPM
£m

10.9
121.4
37.2
35.6
13.5
(0.2)
(21.9)
(2.7)
(4.2)
(41.4)
148.2
173.7
321.9

319.3
2.6
321.9

Total
£m

11.1
125.8
37.5
37.1
13.5
(0.2)
(23.3)
(2.8)
(4.2)
(41.4)
153.1
178.1
331.2

328.5
2.7
331.2

13.5
(321.9)
(308.4)

13.5
(331.2)
(317.7)

From the date of the acquisition SPM Flow Control, Inc. contributed £9.8m to the 2007 proﬁt for the period from continuing operations of the Group.
The results of Multiﬂo were not signiﬁcant. The combined revenue and proﬁt of the Group, assuming that SPM Flow Control, Inc. and Multiﬂo had been
acquired at the start of 2007, would have been £1164.9m and £98.5m respectively.

On 16 February 2006, the Group acquired the business and certain trading assets of Loftyman Engineering Limited, a company registered in Hong Kong.
The amount payable for the goodwill associated with the business was £0.8m and a total of £0.4m was payable for the trading assets.

Included in the £178.1m of goodwill recognised above are certain intangible assets that cannot be individually separated and reliably measured from the
acquiree due to their nature. These items include the expected value of synergies and an assembled workforce.

The Weir Group PLC Annual Report 2007

14. Impairment testing of goodwill & intangible assets with indeﬁnite lives

Goodwill acquired through business combinations and intangible assets with indeﬁnite lives have been allocated at acquisition to the cash-generating
units (CGUs) that are expected to beneﬁt from that business combination. The carrying amount of goodwill has been allocated as per the table below.
The amount allocated to “Other” is not considered signiﬁcant in comparison to the total carrying amount of goodwill.

Weir SPM
Warman companies
Weir Gabbioneta
Other

2007
£m

178.0
94.7
52.7
23.2
348.6

2006
£m

-
88.5
48.2
17.2
153.9

The Warman companies were acquired in 1999 and form part of the Group’s Engineering Products business segment. Weir Gabbioneta, which also forms
part of the Group’s Engineering Products business segment, relates to the acquisition of Pompe Gabbioneta SpA in 2005.

The carrying amount of intangible assets with indeﬁnite lives (brand names) have been allocated as follows.

Weir SPM
Weir Multiﬂo
Weir Gabbioneta

2007
£m

23.1
2.7
5.0
30.8

2006
£m

-
-
4.6
4.6

The increase of £0.4m in the carrying value of the Gabbioneta brand name results from exchange movements.

The Group tests goodwill and intangible assets with indeﬁnite lives annually for impairment, or more frequently if there are indications that these
might be impaired.

The recoverable amounts of the CGU are determined from value in use calculations using cash ﬂow forecasts based on the latest strategic ﬁve year plan
projections approved by the Board. These projections are based on historical performance and the most recent ﬁnancial forecasts available. The main
assumptions used in the value in use calculations relate to selling price, sales volume and cost increases. The strategic ﬁve year plans of each CGU
incorporate third-party demand projections for the speciﬁc market segments which they serve. These market demand projections contain both volume
and pricing assumptions but generally the pricing assumption assumes growth in line with inﬂation. Beyond sales volume effects, operating cost increases
are projected in line with long-run inﬂation expectations for the relevant territory that the CGU operates in.

Cash ﬂows beyond the period of the projections are extrapolated based on expected growth rates for the geographical area. The growth rates do not
exceed the average long-term growth rates for these areas. Weighted average growth rates used were 2.6% for Weir SPM, 2.9% (2006: 2.9%) for the
Warman companies, 2.0% (2006: 2.0%) for Weir Gabbioneta and 2.8% (2006: 2.6%) for Other. The discount rates applied to the cash ﬂow forecasts
are based on the weighted average, nominal, risk adjusted pre-tax cost of capital in the various geographical regions. The weighted average discount
rates used were 14.8% for Weir SPM, 15.5% (2006: 14.8%) for the Warman companies, 14.3% (2006: 13.6%) for Weir Gabbioneta and 14.0%
(2006: 13.5%) for Other.

In assessing the value in use of the CGUs, management have considered the potential impact of reasonably possible changes in the main assumptions
usedand believe that there are no such changes that would cause the carrying value of the units to exceed their recoverable amounts.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

15. Investments in joint ventures & associate

The signiﬁcant investments in joint ventures & associate are as follows.

Joint
ventures
£m

Associate
£m

At 30 December 2005
Share of results
Share of dividends
Share of actuarial gain on deﬁned beneﬁt plans
Exchange adjustment

At 29 December 2006
Share of results
Share of dividends
Discontinued operations
At 28 December 2007

7.4
2.4
(1.5)
-
(0.8)

7.5
3.4
(3.7)
-
7.2

Details of the Group’s share of the balance sheets, revenue and proﬁts of its joint ventures & associate are given below.

Share of joint ventures’ balance sheet
Goodwill
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets

Share of joint ventures’ revenue & proﬁt
Revenue
Cost of sales
Selling & distribution costs
Administrative expenses
Income tax expense
Proﬁt after tax

Carrying value of investments in joint ventures

Share of associate’s balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets

Share of associate’s revenue & proﬁt
Revenue
Proﬁt after tax

Carrying value of investment in associate

Total carrying value of investments in joint ventures & associate

The Group’s signiﬁcant investments in joint ventures are listed on page 107.

The Weir Group PLC Annual Report 2007

13.5
8.1
-
4.4
-

26.0
3.3
(2.5)
(26.8)
-

2007
£m

2.6
6.8
2.0
(3.7)
(0.5)
7.2

13.7
(8.7)
(0.4)
(0.6)
(0.6)
3.4

7.2

-
-
-
-
-

55.0
3.3

7.2

Total
£m

20.9
10.5
(1.5)
4.4
(0.8)

33.5
6.7
(6.2)
(26.8)
7.2

2006
£m

2.7
7.0
1.4
(3.2)
(0.4)
7.5

12.1
(8.4)
(0.5)
(0.4)
(0.4)
2.4

7.5

30.2
42.8
(40.3)
(6.7)
26.0

111.1
8.1

26.0

33.5

16. Inventories

Raw materials
Work in progress
Finished goods

2007
£m

46.8
48.3
78.4
173.5

2006
£m

30.3
41.6
49.0
120.9

The carrying amount of inventory at fair value less costs to sell is £43.8m (2006:£36.6m). Write downs of inventory occur regularly in the general course of
business and the amounts are considered to be insigniﬁcant. These are included in cost of sales in the income statement.

17. Trade & other receivables

Trade receivables
Allowance for doubtful debts

Other debtors
Sales tax receivable
Accrued income
Amounts owed by joint ventures & associate
Prepayments

The average credit period on sales of goods is 54 days (2006: 59 days).

Analysis of trade receivables

Neither impaired nor past due
Past due but not impaired
Impaired

Ageing of past due but not impaired trade receivables

Up to 3 months
Between 3 and 6 months
More than 6 months

2007
£m

220.7
(4.2)
216.5
21.5
6.8
2.8
-
7.6
255.2

2007
£m

172.5
44.0
4.2
220.7

2007
£m

36.6
5.7
1.7
44.0

2006
£m

172.1
(3.2)
168.9
17.9
5.7
4.2
0.2
6.9
203.8

2006
£m

139.6
29.3
3.2
172.1

2006
£m

21.9
6.1
1.3
29.3

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

17. Trade & other receivables (continued)

Movement in the allowance for doubtful debts

Balance at beginning of period
Impairment losses recognised on receivables
Discontinued operations
Amounts written off as uncollectible
Amounts recovered during the year
Impairment losses reversed
Exchange adjustment
Balance at end of period

Ageing of impaired trade receivables

Up to 3 months
Between 3 and 6 months
More than 6 months

18. Construction contracts

Gross amount due from customers for contract work (included in current assets)
Gross amount due to customers for contract work (included in current liabilities)

2007
£m

(3.2)
(2.0)
0.3
0.3
0.3
0.2
(0.1)
(4.2)

2007
£m

0.1
0.3
3.8
4.2

2007
£m

32.8
55.9

For contracts in progress at the balance sheet date, the amount of contract costs incurred plus recognised proﬁts less recognised losses to date was
£188.2m (2006: £238.6m). The amount of retentions held by customers for contract work amounted to £1.0m (2006: £0.1m) and the amount of
advances received from customers for contract work amounted to £152.5m (2006: £44.3m).

19. Cash & short-term deposits

Cash at bank & in hand
Short-term deposits

For the purposes of the consolidated cash ﬂow statement, cash and cash equivalents comprises the following.

Cash & short-term deposits
Bank overdrafts & short-term borrowings (note 20)

2007
£m

51.6
2.6
54.2

54.2
(8.1)
46.1

2006
£m

(4.2)
(1.2)
-
1.5
0.3
0.3
0.1
(3.2)

2006
£m

0.1
0.3
2.8
3.2

2006
£m

34.9
46.3

2006
£m

43.6
102.7
146.3

146.3
(7.2)
139.1

Cash at bank and in hand earns interest at ﬂoating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between
one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.

The Weir Group PLC Annual Report 2007

20. Interest-bearing loans & borrowings

Current
Bank overdrafts
Short-term borrowings

Bank loans
Obligations under ﬁnance leases (note 27)

Non-current
Bank loans
Obligations under ﬁnance leases (note 27)

Bank loans comprise the following:
C$ variable rate loans 2009
A$ variable rate loans 2009
US$ variable rate loan 2009
Euro 5.4% ﬁxed rate loan 2009

Less: current instalments due on bank loans

2007
£m

2.7
5.4
8.1
0.1
0.3
8.5

216.5
0.5
217.0

89.5
76.9
50.1
0.1
216.6
(0.1)
216.5

2006
£m

7.2
-
7.2
0.1
0.2
7.5

145.3
0.6
145.9

76.7
68.4
-
0.3
145.4
(0.1)
145.3

The A$ and US$ variable rate loans are borrowings under the Group’s £300m ﬁve year syndicated multi-currency revolving credit facility which was entered
into in July 2004. The A$ loans bear interest at rates based on the bank bill swap rate or Australian dollar LIBOR. The current weighted average effective
interest rate on the A$ loans is 7.72% per annum (2006: 6.84% per annum).

The US$ loan bears interest at rates based on US dollar LIBOR. The current effective interest rate on the US$ loan is 5.42% per annum (2006: n/a).

The C$ variable rate loans represent borrowings under four separate credit facilities. These loans bear interest at rates based on Canadian dollar LIBOR.
The current weighted average effective interest rate on the C$ loans is 5.46% per annum (2006: 4.75% per annum).

As at 28 December 2007, the undrawn committed facilities amounted to £173.0m (2006: £231.6m) on the £300m ﬁve year multi-currency revolving
credit facility and C$5.0m (2006: C$5.0m) on the Canadian dollar credit facilities. The Group has further undrawn committed facilities under an additional
revolving credit facility amounting to £85.0m.

The Euro loan is ﬁxed at 5.4% and is repayable in quarterly instalments. The loan is secured over certain of the Group’s local assets.

21. Trade & other payables

Trade payables
Other creditors
Other taxes & social security costs
Accruals
Deferred income

2007
£m

142.1
14.0
14.2
61.4
26.1
257.8

2006
£m

128.4
8.5
11.3
48.0
16.2
212.4

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

22. Provisions

At 29 December 2006
Additions
Acquisitions
Discontinued operations
Utilised
Unused
Exchange adjustment
At 28 December 2007

Current 2007
Non-current 2007

Current 2006
Non-current 2006

Warranties

Warranties
£m

Employee
related
£m

Discontinued
operations
warranty &
indemnity
£m

Rationalisation
£m

Onerous sales
contracts
£m

14.8
8.9
2.7
(4.0)
(3.9)
(1.9)
1.0
17.6

12.7
4.9
17.6

11.0
3.8
14.8

6.1
6.1
0.1
-
(1.0)
(0.5)
0.3
11.1

2.1
9.0
11.1

2.0
4.1
6.1

11.4
4.9
-
-
(6.4)
(1.2)
-
8.7

2.7
6.0
8.7

7.3
4.1
11.4

3.4
1.9
-
-
(2.6)
(0.3)
-
2.4

2.3
0.1
2.4

2.8
0.6
3.4

1.3
1.3
-
-
(0.5)
-
(0.3)
1.8

1.8
-
1.8

1.3
-
1.3

Other
£m

3.9
2.0
-
-
(1.9)
(0.6)
0.4
3.8

1.2
2.6
3.8

2.9
1.0
3.9

Total
£m

40.9
25.1
2.8
(4.0)
(16.3)
(4.5)
1.4
45.4

22.8
22.6
45.4

27.3
13.6
40.9

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.

Employee related

Employee related provisions arise from legal obligations and claims primarily in the UK, Australia, South America and Europe. These provisions are based
on management’s best estimates of the likely costs. It is expected that the costs will be incurred in the period up to 2021.

Discontinued operations warranty & indemnity

During 2005, the Company provided in full for residual liabilities of discontinued operations for which the Company retains responsibility. Provisions
amounting to £6.4m were utilised during 2007 (2006: £2.1m) and, following the expiry of certain warranty periods, an amount of £1.2m has been released
to the income statement as it is no longer required. Provisions have increased by £4.9m during 2007 in respect of the current year disposals (note 8).

The provision as at 28 December 2007 is based on management’s current best estimate of the remaining liabilities. The actual outcome may differ, and in
some cases, this may be dependent on the outcome of legal proceedings. It is expected that the majority of these costs will be incurred within two years of
the balance sheet date with the remaining costs expected to be incurred within ﬁve years of the balance sheet date.

Rationalisation

Rationalisation provisions relate primarily to costs associated with various ongoing restructuring activities across the Group. It is expected that the majority
of the provision will be utilised in 2008 with remaining costs being incurred in the period up to 2010.

Onerous sales contracts

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 exceeds 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 costs will be incurred within one
year of the balance sheet date.

Other

Other provisions relate principally to an environmental clean up programme in the United States, for a company acquired in 1992. 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 Weir Group PLC Annual Report 2007

23. Deferred tax

Consolidated balance sheet
Deferred income tax assets
Post-employment beneﬁts
Decelerated depreciation for tax purposes
Tax losses
US deferred interest deductions
Untaxed reserves
Offset against liabilities
Gross deferred income tax assets

Deferred income tax liabilities
Post-employment beneﬁts
Accelerated depreciation for tax purposes
Overseas tax on unremitted earnings
Intangible assets
Other temporary differences
Offset against assets
Gross deferred income tax liabilities

Net deferred income tax (liability) asset

2007
£m

2006
£m

3.2
0.2
-
0.4
20.1
(20.8)
3.1

(12.8)
(3.0)
(9.1)
(47.8)
(1.4)
20.8
(53.3)

(50.2)

3.5
0.3
2.6
3.2
14.5
(4.8)
19.3

(1.7)
(2.7)
(7.6)
(4.8)
(1.9)
4.8
(13.9)

5.4

Total
£m

13.5
5.4
(13.0)
(0.5)

5.4
(4.9)
(7.5)
(41.4)
(1.8)
(50.2)

The movement in deferred income tax asset and liabilities during the year is as follows.

Post
employment
beneﬁts
£m

Accelerated
depreciation
for tax
purposes
£m

US deferred
interest
deductions
£m

Overseas tax
on unremitted
earnings
£m

Intangible
assets
£m

Other
temporary
differences
£m

Tax losses
£m

At 30 December 2005
(Charged) credited to the income statement
Charged to equity
Exchange adjustment

19.3
(7.0)
(10.1)
(0.4)

At 29 December 2006
(Charged) credited to the income statement
(Charged) credited to equity
Acquisition of subsidiary
Exchange adjustment
At 28 December 2007

1.8
(3.4)
(7.9)
-
(0.1)
(9.6)

(1.5)
(1.0)
-
0 .1

(2.4)
(0.4)
-
-
-
(2.8)

0.6
2.1
-
(0.1)

2.6
(2.7)
-
-
0.1
-

-
3.2
-
-

3.2
(2.7)
-
-
(0.1)
0.4

-
(7.6)
-
-

(7.6)
(1.1)
-
-
(0.4)
(9.1)

(4.8)
0.1
-
(0.1)

(4.8)
2.1
-
(43.7)
(1.4)
(47.8)

(0.1)
15.6
(2.9)
-

12.6
3.3
0.4
2.3
0.1
18.7

Untaxed reserves primarily relate to temporarily disallowed inventory / debtor provisions and accruals / provisions for liabilities where the tax allowance
is deferred until the cash expense occurs.

Deferred tax asset balances for unused tax losses of £8.2m (2006: £9.5m) and deductible temporary differences of £4.0m (2006: £2.4m) have not been
recognised on the grounds that there is insufﬁcient evidence that these assets will be recoverable. These assets will be recovered when future tax charges
are sufﬁcient to absorb these tax beneﬁts. Deferred tax asset balances for capital losses in the UK amounting to £16.1m (2006: £17.6m) have not been
recognised but would be available in the event of future capital gains being incurred by the Group.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

23. Deferred tax (continued)

Temporary differences associated with Group investments

The Group has determined that the unremitted earnings of the South American subsidiaries will be distributed in the foreseeable future and accordingly,
a deferred tax liability of £9.1m (2006: £7.6m) has been recognised in respect of taxes arising from such a distribution. As at 28 December 2007, this is
the only recognised deferred tax liability in respect of taxes on unremitted earnings as the Group does not foresee a distribution of unremitted earnings
from other subsidiaries or joint ventures which would result in a reversal of deferred tax.

The temporary differences associated with investments in subsidiaries and joint ventures, for which a deferred tax liability has not been recognised
aggregate to £465.8m (2006: £211.3m).

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

24. Pensions & other post-employment beneﬁt plans

The Group has six deﬁned beneﬁt pension plans in the UK and North America, all of which, with the exception of the main UK plan, are ﬁnal salary pension
plans. With effect from 23 November 2006, contribution salary in respect of the Group’s main UK plan will increase in line with RPI up to a maximum of 5% per
annum. The most signiﬁcant of the deﬁned beneﬁt plans are the two UK plans and the Canadian plan. All deﬁned beneﬁt plans are closed to new members. For
these closed plans, the current service cost is expected to increase under the projected unit method as the members of the plan approach retirement. The Group
also provides certain additional post-retirement healthcare beneﬁts to senior employees in the United States. These beneﬁts are unfunded.

The assets and liabilities of the plans are as follows.

52 weeks ended 28 December 2007

Plans in surplus at 28 December 2007
Plans in deﬁcit at 28 December 2007

Plan assets at fair value
Equities
Bonds
Insurance policy
Other

Fair value of plan assets
Present value of plan liabilities
Net pension asset (liability)

52 weeks ended 29 December 2006

Plans in surplus at 29 December 2006
Plans in deﬁcit at 29 December 2006

Plan assets at fair value
Equities
Bonds
Other

Fair value of plan assets
Present value of plan liabilities
Net pension liability

UK
pensions
£m

44.0
(1.1)
42.9

208.5
159.2
218.5
-

586.2
(543.3)
42.9

UK
pensions
£m

5.9
(3.4)
2.5

396.7
188.0
-

584.7
(582.2)
2.5

North
American
pensions
£m

Post
retirement
healthcare
£m

1.5
(3.1)
(1.6)

4.6
33.9
18.3
0.7

57.5
(59.1)
(1.6)

-
(4.4)
(4.4)

-
-
-
-

-
(4.4)
(4.4)

North
American
pensions
£m

Post
retirement
healthcare
£m

1.9
(3.4)
(1.5)

26.0
21.6
0.9

48.5
(50.0)
(1.5)

-
(4.9)
(4.9)

-
-
-

-
(4.9)
(4.9)

Total
£m

45.5
(8.6)
36.9

213.1
193.1
236.8
0.7

643.7
(606.8)
36.9

Total
£m

7.8
(11.7)
(3.9)

422.7
209.6
0.9

633.2
(637.1)
(3.9)

The pension plans have not invested in any of the Group’s own ﬁnancial instruments nor in properties or other assets used by the Group.

The Weir Group PLC Annual Report 2007

24. Pensions & other post-employment beneﬁt plans (continued)

The amounts recognised in the Group income statement and in the Group statement of recognised income and expense for the year are analysed as follows.

52 weeks ended 28 December 2007

Recognised in the income statement
Current service cost

Expected return on plan assets
Interest cost on plan liabilities
Other ﬁnance (income) cost

Taken to the statement of recognised income & expense
Actual return on plan assets
Less: expected return on plan assets

Other actuarial gains (losses)
Actuarial gains (losses) recognised in the statement of recognised income & expense

52 weeks ended 29 December 2006

Recognised in the income statement
Current service cost
Negative past service cost

Expected return on plan assets
Interest cost on plan liabilities
Other ﬁnance (income) cost

Taken to the statement of recognised income & expense
Actual return on plan assets
Less: expected return on plan assets

Other actuarial gains
Actuarial gains recognised in the statement of recognised income & expense

UK
pensions
£m

North
American
pensions
£m

Post
retirement
healthcare
£m

2.9

(33.1)
29.8
(3.3)

13.5
(33.1)
(19.6)
50.2
30.6

1.1

(3.0)
2.8
(0.2)

2.9
(3.0)
(0.1)
(1.4)
(1.5)

-
0.3
0.3

-
-
-
0.4
0.4

UK
pensions
£m

North
American
pensions
£m

Post
retirement
healthcare
£m

4.5
(10.7)
(6.2)

(33.2)
28.2
(5.0)

45.3
(33.2)
12.1
16.9
29.0

1.3
-
1.3

(3.0)
2.8
(0.2)

4.9
(3.0)
1.9
1.8
3.7

-
-
-

-
0.3
0.3

-
-
-
0.3
0.3

Total
£m

4.0

(36.1)
32.9
(3.2)

16.4
(36.1)
(19.7)
49.2
29.5

Total
£m

5.8
(10.7)
(4.9)

(36.2)
31.3
(4.9)

50.2
(36.2)
14.0
19.0
33.0

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

24. Pensions & other post-employment beneﬁt plans (continued)

Pension contributions are determined with the advice of independent qualiﬁed actuaries on the basis of annual valuations using the projected unit method.
The Group made contributions of £6.5m in 2007 (2006: £7.0m) in addition to the employers’ regular contributions. The total contributions to the deﬁned
beneﬁt plans in 2008 are expected to be £5.5m. Plan assets are stated at their market values at the respective balance sheet dates and overall expected
rates of return are established by applying published brokers forecasts to each category of plan assets and allowing for plan expenses.

North American pensions
2006
%

2007
%

Post-retirement healthcare
2006
%

2007
%

Main assumptions
Rate of salary increase
Rate of increase in pensions in payment

Pre 6 April 2006 service
Post 6 April 2006 service

Discount rate
Expected rates of return on plan assets

Equities
Bonds
Insurance policy
Other

Inﬂation assumption
Rate of increase in healthcare costs

UK pensions

2007
%

3.3

3.3
2.5
5.9

7.7
4.3
5.9
n/a
3.3
n/a

2006
%

3.1

2.8
2.5
5.2

7.7
4.5
n/a
n/a
3.1
n/a

3.1

n/a
n/a
5.7

8.0
4.2
5.5
2.5
2.3
n/a

* 9.5% per annum decreasing to 5% per annum and remaining static at that level from 2010 onwards.

Post-retirement mortality

Current pensioners at 65 - male
Current pensioners at 65 - female
Future pensioners at 65 - male
Future pensioners at 65 - female

2007
Years

18.1
20.9
19.6
22.3

2006
Years

18.1
20.9
19.6
22.3

2007
Years

19.2
21.7
22.4
22.5

3.1

n/a
n/a
5.4

7.4
4.2
n/a
3.0
2.3
n/a

2006
Years

17.5
21.3
23.8
27.7

n/a

n/a
n/a
6.4

n/a
n/a
n/a
n/a
2.5
*

2007
Years

18.1
20.5
18.1
20.5

n/a

n/a
n/a
5.8

n/a
n/a
n/a
n/a
2.5
*

2006
Years

18.1
20.5
18.1
20.5

The post-retirement mortality assumptions allow for expected increases in longevity. The “current” disclosures above relate to assumptions based on
longevity (in years) following retirement at the balance sheet date, with “future” being that relating to an employee retiring in 2037 (in 30 years time).

A one percentage point change in the assumed rate of increase in healthcare costs would have the following effects.

Effect on deﬁned beneﬁt obligation

0.4

(0.3)

0.4

(0.3)

Increase
2007
£m

Decrease
2007
£m

Increase
2006
£m

Decrease
2006
£m

The Weir Group PLC Annual Report 2007

24. Pensions & other post-employment beneﬁt plans (continued)

Changes in the present value of the deﬁned beneﬁt obligations are analysed as follows.

As at 30 December 2005
Current service cost
Negative past service cost
Interest cost
Beneﬁts paid
Contributions by employees
Actuarial gains & losses
Exchange adjustment

As at 29 December 2006
Current service cost
Interest cost
Beneﬁts paid
Contributions by employees
Actuarial gains & losses
Exchange adjustment
As at 28 December 2007

UK
pensions
£m

North
American
pensions
£m

Post
retirement
healthcare
£m

596.5
4.5
(10.7)
28.2
(21.9)
2.5
(16.9)
-

582.2
2.9
29.8
(23.3)
1.9
(50.2)
-
543.3

57.1
1.3
-
2.8
(3.2)
0.6
(1.8)
(6.8)

50.0
1.1
2.8
(3.0)
0.5
1.4
6.3
59.1

6.1
-
-
0.3
(0.4)
-
(0.3)
(0.8)

4.9
-
0.3
(0.3)
-
(0.4)
(0.1)
4.4

Total
£m

659.7
5.8
(10.7)
31.3
(25.5)
3.1
(19.0)
(7.6)

637.1
4.0
32.9
(26.6)
2.4
(49.2)
6.2
606.8

The deﬁned beneﬁt obligation comprises £5.5m (2006: £5.9m) arising from unfunded plans and £601.3m (2006: £631.2m) from plans that are wholly
or partially funded.

Changes in the fair value of plan assets are analysed as follows.

As at 30 December 2005
Expected return on plan assets
Employer contributions
Contributions by employees
Beneﬁts paid
Actuarial gains & losses
Exchange adjustment

As at 29 December 2006
Expected return on plan assets
Employer contributions
Contributions by employees
Beneﬁts paid
Actuarial gains & losses
Exchange adjustment
As at 28 December 2007

UK
pensions
£m

North
American
pensions
£m

Post
retirement
healthcare
£m

548.0
33.2
10.8
2.5
(21.9)
12.1
-

584.7
33.1
9.4
1.9
(23.3)
(19.6)
-
586.2

50.1
3.0
2.5
0.6
(3.2)
1.9
(6.4)

48.5
3.0
2.0
0.5
(3.0)
(0.1)
6.6
57.5

-
-
0.4
-
(0.4)
-
-

-
-
0.3
-
(0.3)
-
-
-

Total
£m

598.1
36.2
13.7
3.1
(25.5)
14.0
(6.4)

633.2
36.1
11.7
2.4
(26.6)
(19.7)
6.6
643.7

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

24. Pensions & other post-employment beneﬁt plans (continued)

History of experience gains & losses

UK pensions
Fair value of plan assets
Present value of deﬁned beneﬁt obligation
Surplus (deﬁcit) in the plans
Experience adjustments arising on plan liabilities
Changes in ﬁnancial assumptions underlying plan liabilities
Experience adjustments arising on plan assets

North American pensions
Fair value of plan assets
Present value of deﬁned beneﬁt obligation
Deﬁcit in the plans
Experience adjustments arising on plan liabilities
Changes in ﬁnancial assumptions underlying plan liabilities
Experience adjustments arising on plan assets

Post-retirement healthcare
Present value of deﬁned beneﬁt obligation
Experience adjustments arising on plan liabilities
Changes in ﬁnancial assumptions underlying plan liabilities

2007
£m

2006
£m

2005
£m

2004
£m

2003
£m

586.2
(543.3)
42.9
1.6
48.6
(19.6)

57.5
(59.1)
(1.6)
(1.9)
0.5
(0.1)

(4.4)
(0.1)
0.5

584.7
(582.2)
2.5
(0.4)
17.3
12.1

48.5
(50.0)
(1.5)
(0.1)
1.9
1.9

(4.9)
-
0.3

548.0
(596.5)
(48.5)
1.1
(37.1)
60.2

50.1
(57.1)
(7.0)
(0.4)
(4.8)
2.9

(6.1)
0.1
0.1

463.5
(548.2)
(84.7)
0.4
(19.9)
14.6

38.5
(43.2)
(4.7)
0.5
(2.1)
2.3

(5.9)
(0.9)
1.7

419.8
(511.3)
(91.5)

32.5
(40.4)
(7.9)

(7.0)

The cumulative amount of actuarial gains and losses recognised in the Group statement of recognised income and expense since 28 December 2003
is a gain of £81.2m (2006: a gain of £51.7m).

The directors are unable to determine how much of the pension plan deﬁcits are attributable to actuarial gains and losses since inception of those pension
plans. Consequently, the directors are unable to determine the amount of actuarial gains and losses that would have been recognised on an IFRS basis in
the Group statements of recognised income and expense before 27 December 2003.

25. Share capital & reserves

Authorised share capital
Ordinary shares of 12.5p each

The Company has one class of ordinary share which carries no rights to ﬁxed income.

Issued & fully paid share capital
At beginning of period
Issued during the year for cash on exercise of share options
Issued during the year in respect of LTIP awards
At end of period

Shares allotted
Aggregate nominal value of share options exercised
Share premium
Consideration received on exercise of share options

The Weir Group PLC Annual Report 2007

2007
Number
Million

2006
Number
Million

288.0

211.0
0.9
0.2
212.1

2007
£m

0.1
2.3
2.4

209.7
1.3
-
211.0

2006
£m

0.2
2.9
3.1

25. Share capital & reserves (continued)

Treasury shares
At beginning of period
Issued during the year in respect of LTIP awards
At end of period

Reconciliation of movements in equity

Attributable to equity holders of the Company

Share
capital
£m

Share
premium
£m

Treasury
shares
£m

Reserves
£m

At 30 December 2005
Total recognised income & expense for the period
Cost of share-based payments
Dividends
Exercise of options

At 29 December 2006
Total recognised income & expense for the period
Cost of share-based payments
Dividends
Exercise of options & LTIP awards
At 28 December 2007

26.2
-
-
-
0.2

26.4
-
-
-
0.1
26.5

32.5
-
-
-
2.9

35.4
-
-
-
2.3
37.7

(10.7)
-
-
-
-

(10.7)
-
-
-
1.4
(9.3)

242.6
104.1
1.4
(27.7)
-

320.4
200.5
1.4
(31.1)
(1.4)
489.8

2007
Number
Million

2006
Number
Million

3.3
(0.4)
2.9

3.3
-
3.3

Minority
interest

Total
equity

£m

0.4
-
-
-
-

0.4
0.1
-
-
-
0.5

£m

291.0
104.1
1.4
(27.7)
3.1

371.9
200.6
1.4
(31.1)
2.4
545.2

Total
£m

290.6
104.1
1.4
(27.7)
3.1

371.5
200.5
1.4
(31.1)
2.4
544.7

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

25. Share capital & reserves (continued)

At 30 December 2005
Total recognised income & expense for the period
Cost of share-based payments
Dividends

At 29 December 2006
Total recognised income & expense for the period
Cost of share-based payments
Dividends
LTIP awards
At 28 December 2007

Capital redemption reserve

Capital
redemption
reserve
£m

Foreign
currency
translation
reserve
£m

Hedge
accounting
reserve
£m

Retained
earnings
£m

Total
reserves
£m

0.5
-
-
-

0.5
-
-
-
-
0.5

9.9
(12.8)
-
-

(2.9)
3.1
-
-
-
0.2

(3.7)
7.2
-
-

3.5
-
-
-
-
3.5

235.9
109.7
1.4
(27.7)

319.3
197.4
1.4
(31.1)
(1.4)
485.6

242.6
104.1
1.4
(27.7)

320.4
200.5
1.4
(31.1)
(1.4)
489.8

The capital redemption reserve was created by a repurchase and cancellation of own shares during the 53 weeks ended 1 January 1999.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁnancial statements of foreign operations.
Included in the £3.1m movement in the year is a charge of £7.9m (2006: £nil) in respect of the Group’s hedge of its net investment in foreign operations.

Hedge accounting reserve

This reserve records the portion of the gains or losses on hedging instruments used as cash ﬂow hedges that are determined to be effective. Gains (net)
transferred from equity into proﬁt or loss during the period are included in the following line items in the income statement.

Revenue
Cost of sales
Proﬁt for the period from discontinued operations (revenue)
Proﬁt for the period from discontinued operations (exceptional items)

2007
£m

0.4
1.3
0.2
4.3
6.2

2006
£m

-
-
1.1
-
1.1

The Weir Group PLC Annual Report 2007

26. Additional cash ﬂow information

Continuing operations
Net cash generated from operations
Operating proﬁt
Exceptional items
Share of results of joint ventures
Depreciation & amortisation
(Gains) losses on disposal of property, plant & equipment & investments
Funding of pension & post-retirement costs
(Gains) losses on derivatives that have been taken to operating proﬁt
Employee share schemes
Increase in provisions
Increase in inventories
Increase in trade & other receivables & construction contracts & derivative ﬁnancial instruments
Increase in trade & other payables & construction contracts & derivative ﬁnancial instruments

Cash generated from operations
Additional pension contributions paid
Fundamental restructuring costs paid
Income tax paid
Net cash generated from operating activities

Acquisitions of subsidiaries
Current year acquisitions (note 13)
Previous year acquisitions deferred consideration paid

Disposals of subsidiaries & associate
Current year disposals (note 8)
Previous year disposals

Reconciliation of net (decrease) increase in cash & cash equivalents to movement in net debt
Net (decrease) increase in cash & cash equivalents from continuing operations
Net increase in cash & cash equivalents from discontinued operations
Net (increase) decrease in debt

Change in net debt resulting from cash ﬂows
Lease acquired
Foreign currency translation differences

Change in net debt during the period
Net debt at beginning of period
Net debt at end of period

Net debt comprises the following
Cash & short term deposits (note 19)
Current interest-bearing loans & borrowings (note 20)
Non-current interest-bearing loans & borrowings (note 20)

2007
£m

2006
£m

115.9
-
(3.4)
23.7
(0.6)
(1.2)
(1.9)
1.4
7.3
(16.1)
(20.7)
47.4

151.8
(6.5)
(0.4)
(33.1)
111.8

(317.7)
(0.1)
(317.8)

125.2
2.1
127.3

(96.0)
0.9
(50.6)

(145.7)
(0.2)
(18.3)

(164.2)
(7.1)
(171.3)

54.2
(8.5)
(217.0)
(171.3)

91.1
(15.7)
(2.4)
17.5
0.2
(0.9)
-
1.4
1.9
(6.6)
(20.1)
44.6

111.0
(7.0)
(3.3)
(16.5)
84.2

(0.8)
(1.3)
(2.1)

-
(1.8)
(1.8)

17.2
20.2
19.5

56.9
-
12.4

69.3
(76.4)
(7.1)

146.3
(7.5)
(145.9)
(7.1)

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

27. Commitments & contingencies

Operating lease commitments

The Group has entered into commercial leases for land and buildings, motor vehicles and plant and equipment. Land and building leases have an average
term of between three and ten years, motor vehicles leases have an average term of between three and four years and plant and equipment leases have
an average term of between ﬁve and six years. Certain leases have terms of renewal, at the option of the lessee, but there are no purchase options or
escalation clauses. Future minimum rentals payable under non-cancellable operating leases are as follows.

Within one year
After one year but not more than ﬁve years
More than ﬁve years

Finance lease commitments

2007
£m

8.1
18.3
6.1
32.5

2006
£m

6.5
12.8
2.3
21.6

The Group has ﬁnance leases for various items of plant and equipment and purchased software. Future minimum lease payments under ﬁnance leases
together with the present value of the net minimum lease payments are as follows.

Within one year
After one year but not more than ﬁve years
More than ﬁve years
Total minimum lease payments
Less amounts representing ﬁnance charges
Present value of minimum lease payments

2007

2007
Minimum Present value
of payments
payments
£m
£m

2006
Minimum
payments
£m

2006
Present value
of payments
£m

0.3
0.6
-
0.9
(0.1)
0.8

0.3
0.5
-

0.8

0.3
0.5
0.1
0.9
(0.1)
0.8

0.2
0.5
0.1

0.8

It is the Group’s policy to lease certain of its assets under ﬁnance leases. The weighted average outstanding lease term is 3.48 years (2006: 4.45 years). For
the 52 weeks ended 28 December 2007, the weighted average effective borrowing rate was 5.55% (2006: 5.55%). All leases are on a ﬁxed repayment
basis and no arrangements have been entered into for contingent rental payments.

Capital commitments

Outstanding capital commitments contracted but not provided for - property, plant & equipment

The Group’s share of the capital commitments of its joint ventures amounted to £0.3m (2006: £0.1m).

2007
£m

6.8

2006
£m

2.5

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.
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.

The Weir Group PLC Annual Report 2007

28. Equity settled share-based payments

LTIP

Three types of award may be made under the LTIP to senior executives: performance shares, matching shares and investment shares. All awards vest over
a three year period.

Performance shares

Performance shares are conditional awards to acquire free shares subject to Group performance. In 2007, conditional awards of performance shares were
made worth 70% (2006: 70%) of salary to the chief executive, 45% (2006: 100%) of salary to the Group ﬁnance director and 80% (2006: 45%) to the
legal and commercial director. Other conditional awards of performance shares made in 2007 were 40% (2006: 40%) of salary to other senior executives
who participate in the matching shares awards, and 25% (2006: 25%) of salary to other senior executives who do not participate in that plan. At the
2008 annual general meeting of the Company, shareholder approval will be sought to amend the terms of the LTIP to (i) increase the annual limit on
performance shares from 80% of salary to 100% of salary and (ii) provide ﬂexibility to increase such limit to 150% of salary in such circumstances as the
Remuneration Committee determine exceptional (currently the exceptional limit is restricted for use in connection with recruitment). The changes are
being proposed following the Remuneration Committee concluding that the current annual limits constrain the Company’s ability to make market
competitive performance share awards. No other changes to the terms of the LTIP are envisaged.

Matching & investment shares

Matching shares are conditional awards to acquire free shares, subject to Group performance. The chief executive, other executive directors and senior
executives are required to compulsorily defer an element of any Group bonus earned for the preceding ﬁnancial year in exchange for which they are
awarded investment shares. They are also allowed to voluntarily invest the balance of the Group bonus (subject to any cap imposed by the Remuneration
Committee, currently 20%) in shares. In return, they receive a conditional award of matching shares worth a maximum of 2.5 times the pre-tax value of
the bonus invested.

The value of shares for this purpose will be the average published closing price of a share for the three dealing days immediately preceding the date
of grant of the award of shares.

The conditional awards of performance shares and matching shares only vest if a highly demanding performance condition is achieved. For awards granted
in 2004, 2005, 2006 and 2007, the performance condition is based on the growth in the Company’s Total Shareholder Return (“TSR”) over a single
three year performance period (three consecutive ﬁnancial years beginning with the year in which the grant is made) relative to the growth in the TSR of
a comparator group, to comprise the following 20 companies: AGA Foodservice Group, Bodycote International, Cookson Group, Domnick Hunter Group,
Enodis, FKI, Halma, IMI, Kidde, Meggitt, Mitie Group, Morgan Crucible Company, Rolls-Royce, Rotork, Senior, Smiths Group, Spirax-Sarco Engineering,
Tomkins, Wood Group and WS Atkins, except that Domnick Hunter Group and Kidde were not included in the comparator group for the 2006 and
2007 awards as they were de-listed from the London Stock Exchange in December 2005 and April 2005 respectively. Only if the Company’s TSR ranks
in the upper quintile of this group will the full awards vest. This reduces on a sliding scale so that for median performance, 25% of the awards will vest.
For below median performance, none of the awards will vest.

In addition to TSR performance, for any of the performance and matching shares to vest, the growth in the Company’s earnings per share over the
performance period must be equal to or greater than the growth in the UK Retail Price Index over the same period.

The following table illustrates the number and weighted average share prices (WASP) of shares awarded under the LTIP.

Outstanding at the beginning of the period
Awarded during the period
Exercised during the period
Forfeited during the period
Outstanding at the end of the period

2007
Number
Million

2.3
0.5
(0.6)
(0.3)
1.9

2007
WASP

£3.55
£7.27
£7.22
£6.01
£4.75

2006
Number
Million

1.7
0.7
-
(0.1)
2.3

2006
WASP

£3.15
£4.45
-
£4.15
£3.55

An amount of £1.4m (2006: £1.3m) has been charged to the income statement in respect of the number of awards which are expected to be made at the end of
the vesting period. This comprises an amount of £0.5m (2006: £0.4m) in respect of parent company employees and £0.9m (2006: £0.9m) in respect of employees
of subsidiaries. Subsidiary companies made a cash contribution to the parent company of £0.9m (2006: £0.9m) in the year in respect of their LTIP awards.

The remaining contractual lives of the outstanding LTIP awards at the end of the period are as follows.

Year of award

2004
2005
2006
2007

2007
Number
Million

2007
Remaining
contractual life

2006
Number
Million

2006
Remaining
contractual life

-
0.7
0.7
0.5

-
3 months
15 months
30 months

0.8
0.8
0.7
-

5 months
15 months
27 months
-

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

28. Equity settled share-based payments (continued)

Share option schemes

The Company operated a discretionary executive share option scheme (“the Executive Scheme”) under which options could be granted to those senior
executives of the Group whose skills and experience the Remuneration Committee believed to be important to the success of the Group.

The Executive Scheme, which was approved in 1994, expired in May 2004. Under the rules of the Scheme, share options could be granted up to a
maximum value of four times a participant’s earnings. Options were granted at the mid market price of the share at the date of grant. The right to exercise
an Executive Scheme option is subject to performance conditions as determined by the Committee at the date of grant.

The performance criteria applicable for the options granted after 2000 were for the growth in the Company’s normalised earnings per share over a three
year period, to either exceed by nine percent the growth in the retail price index of the UK over that three year period, or exceed the weighted average
growth during that three year period of the normalised earnings per share of those companies in the FTSE All Share Industrial Engineering sector. This is
re-tested every year from the third anniversary of the grant of the option to the date the option lapses.

In addition, the Company operated a savings-related share option scheme in the UK which was not subject to performance criteria. This scheme was closed
in 2004.

The following table illustrates the number and weighted average exercise prices (WAEP) of share options.

Outstanding at the beginning of the period
Expired during the period
Exercised during the period
Outstanding at the end of the period*
Exercisable at the end of the period

2007
Number
Million

1.3
(0.2)
(0.9)
0.2
-

2007
WAEP

£2.45
£2.43
£2.54
£2.03
£2.29

2006
Number
Million

2.8
(0.2)
(1.3)
1.3
0.6

2006
WAEP

£2.40
£2.43
£2.35
£2.45
£2.51

*Included within this balance are options over 13,246 (2006: 804,225) shares that have not been recognised in accordance with IFRS2 as the options were
granted on or before 7 November 2002. These options have not been subsequently modiﬁed and therefore do not need to be accounted for in accordance
with IFRS2.

The weighted average share price during the period was 707.3p (2006: 458.4p).

Share options outstanding at the end of the period have the following exercise prices.

Executive Share Option Scheme 1994

Savings Related Share Option Scheme 2001

Price per
share

246.50p
251.50p
262.50p
273.00p

260.00p
201.00p

2007
Number

2007
Remaining
Million contractual life

2006
Number
Million

2006
Remaining
contractual life

-
-
-
-

-
0.2

-
12 months

0.2
0.2
0.2
0.2

0.2
0.3

39 months
63 months
80 months
99 months

12 months
24 months

Fair value of equity settled share-based payments

The fair value of the conditional awards under the LTIP has been estimated using the Monte Carlo simulation model. The following table gives the
assumptions made during the 52 weeks ended 28 December 2007 and the 52 weeks ended 29 December 2006.

2007

Weighted average dividend yield (%)
Weighted average expected volatility (%)
Weighted average expected life (years)
Weighted average risk free rate (%)
Weighted average share price (pence)
Weighted average fair value (pence)

1.99
24.00
3.00
5.70
727p
495p

2006

4.11
23.11
3.00
4.44
445p
219p

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility
reﬂects the assumption that the historical volatility is indicative of future trends which may also not necessarily be the actual outcome. Market related
performance conditions have been taken into account in the calculation of fair values.

The Weir Group PLC Annual Report 2007

29. Related party disclosures

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.

Related party

Joint ventures

Associate

Group pension schemes

2007
2006

Management
charge to
related parties
£m

Sales to
related parties
- goods
£m

Sales to
related parties
- services
£m

Amounts owed Amounts owed
to related
parties
£m

by related
parties
£m

-
-

0.4
0.7

-
-

-
0.2

0.1
0.3

-
-

0.1
0.4

0.7
1.1

-
-

-
0.2

-
-

0.4
0.6

Contributions to the Group pension plans are disclosed in notes 4 and 24.

Terms & conditions of transactions with related parties

Sales to and from related parties are made at normal market prices. Outstanding balances at the year end are unsecured and settlement occurs in cash.
There have been no guarantees provided or received for any related party balances. For the 52 weeks ended 28 December 2007, the Group has not raised
any provision for doubtful debts relating to amounts owed by related parties as the payment history has been excellent (2006: £nil). This assessment is
undertaken each ﬁnancial year through examining the ﬁnancial position of the related party and the market in which the related party operates.

Compensation of key management personnel

Short-term employee beneﬁts
Share-based payments

2007
£m

2.9
0.5
3.4

2006
£m

2.4
0.4
2.8

Key management comprises the Board of directors. Further details of their remuneration can be found in the Remuneration Committee Report on page 34.

30. Financial instruments

Financial risk management objectives & policies

The Group’s principal ﬁnancial instruments comprise bank overdrafts and short-term borrowings, loans, cash and short-term deposits as well as ﬁnancial
derivatives. The main purpose of these ﬁnancial instruments is to manage the Group’s funding and liquidity requirements. The Group has other ﬁnancial
instruments such as trade receivables and trade payables which arise directly from its operations. The principal ﬁnancial risks to which the Group is exposed are
those relating to foreign currency, commodity price, credit, liquidity and interest rate. These risks are managed in accordance with Board approved policies.

Foreign currency risk

The Group has invested in operations outside the United Kingdom and also buys and sells goods and services in currencies other than in the functional
currency of its subsidiary operations. As a result, the Group's non sterling revenues, proﬁts, assets, liabilities and cash ﬂows can be affected by movements in
exchange rates.

Foreign currency risks may exist in respect of ﬁnancial instruments which are denominated in a currency that is not the functional currency of the Group’s
subsidiary operations and which are of a monetary nature. The Group seeks to minimise these risks by ensuring that major non-derivative monetary ﬁnancial
instruments (receivables, payables, cash and short-term deposits and interest-bearing loans and borrowings) are either directly denominated in the functional
currency of the Group’s subsidiary operations or are transferred to the functional currency through the use of derivatives. Exchange rate ﬂuctuations in
respect of these ﬁnancial instruments therefore have no signiﬁcant effects on proﬁt or loss or shareholders’ equity.

The exception to the above is the US$100.0m variable rate loan which is not denominated in the functional currency of the borrowing entity. This borrowing
forms part of the Group’s hedge of its net investment in foreign operations and, as such, exchange rate ﬂuctuations in respect of this borrowing have no
effect on proﬁt or loss and would be offset within shareholders’ equity.

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

30. Financial instruments (continued)

Similarly, the Group’s cross currency swaps, amounting to US$403.0m, and certain forward foreign currency contracts, amounting to US$150.0m, are
not denominated in the functional currency of the borrowing entity. These derivative ﬁnancial instruments also form part of the Group’s hedge of its net
investment in foreign operations and therefore exchange rate ﬂuctuations in respect of these ﬁnancial instruments have no effect on proﬁt or loss and would
be offset within shareholders’ equity.

The Group also maintains a policy that all operating units hedge using forward foreign currency contracts to eliminate exposures on material committed
transactions. In addition, it is Group policy that those companies where the most signiﬁcant concentration of foreign currency risk has been identiﬁed also
apply hedge accounting. It is Group policy not to engage in any speculative transaction of any kind. Therefore, some of the Group’s forward foreign currency
contracts form part of an effective cash ﬂow hedge. Exchange rate ﬂuctuations in respect of the forward foreign currency contracts which form part of a cash
ﬂow hedge will have an impact on shareholders’ equity. Exchange rate ﬂuctuations in respect of the other forward foreign currency contracts will have an
impact on proﬁt or loss.

The Group considers the most signiﬁcant foreign currency risk relates to the Australian dollar, Canadian dollar, Euro and US dollar. The following table
demonstrates the sensitivity of outstanding forward foreign currency contracts to a reasonably possible change in these foreign currency exchange rates
with all other variables held constant. The sensitivity analysis shows the effect on proﬁt or loss in respect of the outstanding forward foreign currency
contracts in those subsidiary operations which are not required by the Group to apply hedge accounting and the effect on shareholders’ equity in respect
of the outstanding forward foreign currency contracts in those subsidiary operations which do apply hedge accounting, both analysed by the relevant foreign
currency. The sensitivity analysis adjusts their translation at the year end for a 5% strengthening of sterling against the relevant exchange rates.

2007
Australian dollar
Canadian dollar
Euro
United States dollar

2006
Australian dollar
Canadian dollar
Euro
United States dollar

Increase in
currency rate

Effect on
proﬁt
£m

Effect on
equity
£m

+5%
+5%
+5%
+5%

-
0.4
0.2
1.0

0.1
0.1
0.1
0.1

-
-
(0.7)
3.3

-
-
(1.0)
7.0

A 5% decrease in currency rate would have an equal and opposite effect.

Commodity price risk

The Group’s exposure to raw material price risk is generally diminished by restricting bid validity to periods within those quoted by suppliers and by
material price escalation clauses.

Credit risk

The credit risk on liquid funds and derivative ﬁnancial instruments is limited because the counterparties are ﬁnancial institutions with high credit-ratings
assigned by international credit rating agencies. The Group’s credit risk is primarily attributable to its trade receivables and amounts due under construction
contracts. The Group is exposed to risk over a large number of countries and customers and there is no signiﬁcant concentration of risk. Where appropriate,
the Group endeavours to minimise risk by the use of trade ﬁnance instruments such as letters of credit and insurance. Credit worthiness checks are also
undertaken before entering into contracts with new customers and credit limits are set as appropriate. Due to long established relationships with the majority
of customers, the Group does not consider there to be a signiﬁcant credit quality issue. The amounts presented in the balance sheet are net of allowance for
doubtful receivables. An allowance for impairment is made where there is an identiﬁable loss event which, based on previous experience, is evidence of a
reduction in the recoverability of cash ﬂows.

The Weir Group PLC Annual Report 2007

30. Financial instruments (continued)

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and ﬂexibility through the use of bank overdrafts and bank loans. Further
details of the Group’s borrowing facilities are disclosed in note 20.

The tables below summarise the Group’s remaining contractual maturity for its ﬁnancial liabilities at 28 December 2007 and 29 December 2006. The tables
have been drawn up based on the undiscounted cash ﬂows of ﬁnancial liabilities based on the earliest date on which the Group can be required to pay.
The tables include both interest and principal cash ﬂows.

52 weeks ended 28 December 2007

Trade payables & construction contracts
Obligations under ﬁnance leases
Bank overdrafts & short-term borrowings
Bank loans

Cross currency swaps
Forward foreign currency contracts

52 weeks ended 29 December 2006

Trade payables & construction contracts
Obligations under ﬁnance leases
Bank overdrafts
Bank loans

On demand
£m

Less than
3 months
£m

3 to 12
months
£m

1 to 5 years
£m

More than 5
years
£m

-
-
(2.7)
-
(2.7)

-
-

(155.0)
(0.1)
(5.4)
(3.8)
(164.3)

(2.7)
(214.7)

(43.0)
(0.2)
-
(9.1)
(52.3)

(45.7)
(267.7)

-
(0.6)
-
(222.1)
(222.7)

(175.5)
(4.5)

-
-
-
-
-

-
-

On demand
£m

Less than
3 months
£m

3 to 12
months
£m

1 to 5 years
£m

More than 5
years
£m

-
-
(7.2)
-
(7.2)

(139.0)
(0.1)
-
(2.1)
(141.2)

(35.7)
(0.2)
-
(6.3)
(42.2)

-
(0.5)
-
(158.5)
(159.0)

-
(0.1)
-
-
(0.1)

Total
£m

(198.0)
(0.9)
(8.1)
(235.0)
(442.0)

(223.9)
(486.9)

Total
£m

(174.7)
(0.9)
(7.2)
(166.9)
(349.7)

Forward foreign currency contracts

(66.6)

(271.5)

(58.1)

(396.2)

Interest rate risk

The majority of the Group’s borrowings are at variable rates of interest. Interest rate risk is regularly monitored to ensure that the mix of variable and ﬁxed
rate borrowing is appropriate for the Group in the short to medium term.

Interest rate maturity proﬁle of ﬁnancial assets & liabilities

The following tables set out the carrying amount, by maturity, of the Group’s ﬁnancial instruments that are exposed to interest rate risk.

52 weeks ended 28 December 2007

Fixed rate
Obligations under ﬁnance leases
Bank loans

Floating rate
Cash & short-term deposits
Bank overdrafts & short-term borrowings
Bank loans
Cross currency swaps

Within 1 year
£m

1-2 years
£m

2-3 years
£m

3-4 years
£m

4-5 years
£m

More than 5
years
£m

(0.3)
(0.1)

54.2
(8.1)
-
(1.0)

(0.2)
-

-
-
(216.5)
(1.0)

(0.1)
-

-
-
-
(1.0)

(0.1)
-

-
-
-
(1.0)

(0.1)
-

-
-
-
(0.9)

-
-

-
-
-
-

Total
£m

(0.8)
(0.1)

54.2
(8.1)
(216.5)
(4.9)

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

30. Financial instruments (continued)

52 weeks ended 29 December 2006

Within 1 year
£m

1-2 years
£m

2-3 years
£m

3-4 years
£m

4-5 years
£m

More than 5
years
£m

Total
£m

(0.8)
(0.3)

Fixed rate
Obligations under ﬁnance leases
Bank loans

Floating rate
Cash & short-term deposits
Bank overdrafts
Bank loans

(0.2)
(0.1)

146.3
(7.2)
-

(0.2)
(0.2)

(0.1)
-

-
-
-

-
-
(145.1)

-
-
-

146.3
(7.2)
(145.1)

Interest on ﬁnancial instruments classiﬁed as ﬁxed rate is ﬁxed until the maturity of the instrument. Interest on ﬁnancial instruments classiﬁed as ﬂoating
rate is repriced at intervals of less than one year. The other ﬁnancial instruments of the Group that are not included in the above tables are non-interest
bearing and are therefore not subject to interest rate risk.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, on the Group’s
proﬁt before tax through the impact on ﬂoating rate borrowings and cross currency swaps. There is no impact on the Group’s equity. Currency derivatives
have not been included in the sensitivity analysis below as they are not considered to be exposed to interest rate risk.

2007
Australian dollar
Canadian dollar
United States dollar
UK sterling

2006
Australian dollar
Canadian dollar
United States dollar
UK sterling

A decrease of 25 basis points would have an equal and opposite effect.

Increase
in basis
points

Effect on
proﬁt
before tax
£m

+ 25
+ 25
+ 25
+ 25

(0.2)
(0.2)
(0.6)
0.5

(0.2)
(0.2)
n/a
n/a

The Weir Group PLC Annual Report 2007

30. Financial instruments (continued)

Fair values

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s ﬁnancial instruments that are carried in the ﬁnancial statements.

Financial assets
Fair value through proﬁt or loss

Held for trading

Derivative instruments in designated hedge accounting relationships
Loans & receivables (cash & short-term deposits)

Financial liabilities
Fair value through proﬁt or loss

Held for trading

Derivative instruments in designated hedge accounting relationships
Amortised cost
Bank overdrafts & short-term borrowings

Obligations under ﬁnance leases
Floating rate borrowings
Fixed rate borrowings

Carrying
amount
2007
£m

Fair value
2007
£m

Carrying
amount
2006
£m

Fair value
2006
£m

5.8
6.0
54.2

1.4
10.0
146.3

(10.8)
(6.1)

(8.1)
(0.8)
(216.5)
(0.1)

(10.8)
(6.1)

(8.1)
(0.8)
(216.5)
(0.1)

(0.5)
(4.3)

(7.2)
(0.8)
(145.1)
(0.3)

(0.5)
(4.3)

(7.2)
(0.8)
(145.1)
(0.3)

The fair value of forward foreign currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity proﬁles.
The fair value of cross currency swaps is calculated by reference to market values. The fair value of all other items has been calculated by discounting the
expected future cash ﬂows at prevailing interest rates. The carrying amount of the other ﬁnancial instruments of the Group, i.e. short-term trade receivables
and payables that are not included in the above table, is a reasonable approximation of fair value. The carrying amount recorded in the balance sheet of
each ﬁnancial asset, including derivative ﬁnancial instruments, represents the Group’s maximum exposure to credit risk.

Derivative ﬁnancial instruments

Included in non-current assets
Forward foreign currency contracts designated as cash ﬂow hedges
Other forward foreign currency contracts

Included in current assets
Forward foreign currency contracts designated as cash ﬂow hedges
Other forward foreign currency contracts

Included in current liabilities
Forward foreign currency contracts designated as cash ﬂow hedges
Forward foreign currency contracts designated as net investment hedges
Cross currency swaps designated as net investment hedges
Other forward foreign currency contracts

Included in non-current liabilities
Forward foreign currency contracts designated as cash ﬂow hedges
Cross currency swaps designated as net investment hedges
Other forward foreign currency contracts

2007
£m

1.0
0.2
1.2

5.0
5.6
10.6

0.9
0.2
1.0
9.7
11.8

0.1
3.9
1.1
5.1

2006
£m

4.9
-
4.9

5.1
1.4
6.5

2.5
-
-
0.5
3.0

1.8
-
-
1.8

The net credit included in the income statement in respect of the change in fair value of forward foreign currency contracts that have not been subject to
hedge accounting was £1.1m (2006: £1.5m).

The Weir Group PLC Annual Report 2007

Notes to the Group Financial Statements (Continued)

30. Financial instruments (continued)

Cash ﬂow hedges

At 28 December 2007, the Group held over 500 (2006: over 900) forward foreign currency contracts designated as hedges of expected future sales or
purchases for which the Group has ﬁrm commitments. The forward foreign currency contracts are used to eliminate currency risk of material ﬁrm commitments.
The terms of the contracts are negotiated to match the terms of the commitments. Any gains and losses on ineffective hedges were taken to the income
statement in the year. The weighted average terms of the contracts are as follows.

Forward foreign currency contracts to hedge expected future sales & purchases

52 weeks ended 28 December 2007

Euro

Danish kroner

Norwegian kroner

Swiss franc

United States dollar

Yen

52 weeks ended 29 December 2006

Canadian dollar
Euro

Danish kroner

Norwegian kroner

Swiss franc

United States dollar

Yen

Sell
currency
m

Sterling
equivalent

Weighted
average
£m exchange rate

Buy
currency
m

Sterling
equivalent

Weighted
average
£m exchange rate

Maturity
dates

4.1
0.8
-
-
2.0
-
-
-
119.5
38.4
-
-

2.8
0.5
-
-
0.2
-
-
-
63.6
20.1
-
-

1.46
1.47
-
-
11.24
-
-
-
1.88
1.92
-
-

24.5
4.7
121.5
33.1
28.5
11.8
20.8
4.2
7.5
-
590.1
121.3

17.2
3.3
11.5
3.1
2.5
1.0
9.4
1.9
3.9
-
2.8
0.6

1.42
1.43
10.57
10.69
11.48
11.89
2.20
2.21
1.93
-
208.71
204.31

2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009

Sell
currency
m

Sterling
equivalent
£m

Weighted
average
exchange rate

Buy
currency
m

Sterling
equivalent
£m

Weighted
average
exchange rate

Maturity
dates

0.6
11.8
2.9
-
-
-
-
2.0
2.0
-
-
-
-
126.9
135.6
45.5
0.6
3.0
48.6
-
-

0.3
8.2
2.0
-
-
-
-
0.2
0.2
-
-
-
-
77.7
73.5
24.0
0.4
1.7
0.3
-
-

2.14
1.43
1.42
-
-
-
-
11.30
11.24
-
-
-
-
1.63
1.84
1.89
1.80
1.83
190.59
-
-

-
16.1
24.4
5.7
70.0
121.5
33.1
11.4
28.5
11.8
27.9
19.7
4.2
3.2
0.6
-
-
-
334.7
328.1
106.3

-
11.5
17.2
4.0
6.7
11.5
3.1
1.0
2.5
1.0
13.0
9.0
1.9
2.2
0.3
-
-
-
1.7
1.6
0.5

-
1.41
1.43
1.43
10.40
10.57
10.69
11.25
11.48
11.89
2.15
2.19
2.21
1.47
1.94
-
-
-
193.55
199.91
202.48

2007
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
2010
2011
2007
2008
2009

Certain of the Group’s cash ﬂow hedges were deemed to be ineffective during the year resulting in a net credit to the income statement of £4.6m (2006:
£0.1m). Included in the £4.6m was £4.3m in respect of Weir Pumps which was recycled to the income statement in accordance with IAS39 on disposal
of the business and this is included within proﬁt for the period from discontinued operations.

Net investment in foreign operation

The US dollar variable rate loan included in interest-bearing loans and borrowings, amounting to US$100.0m, plus cross currency swaps and forward foreign
currency contracts amounting to US$553.0m have been designated as a hedge of the net investment in SPM Flow Control, Inc. and are being used to hedge the
Group’s exposure to foreign exchange risk on this investment. Gains or losses on the retranslation of this borrowing and the fair value of the cross currency swaps and
forward foreign currency contracts are transferred to equity to offset any gains or losses on translation of the net investment in this subsidiary. The US$403.0m cross
currency swaps mature between 2008 and 2012 and the US$150.0m forward foreign currency contracts mature in 2008.

The Weir Group PLC Annual Report 2007

31. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise
shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group monitors
capital using the following indicators.

Gearing ratio

Gearing comprises net debt divided by total equity. Net debt comprises cash and short-term deposits and interest-bearing loans and borrowings (see note 26).

Net debt (£m)
Total equity (£m)
Gearing ratio (%)

Net debt to EBITDA cover

2007

2006

171.3
545.2
31

7.1
371.9
2

Net debt to EBITDA comprises net debt divided by operating proﬁt from continuing operations before exceptional items, depreciation and amortisation.

Net debt (£m)
Operating proﬁt (£m)
Exceptional items (£m)
Depreciation & amortisation (£m)
EBITDA (£m)
Net debt to EBITDA cover (ratio)

Interest cover

2007

2006

171.3
115.9
-
23.7
139.6
1.2

7.1
91.1
15.7
17.5
124.3
0.1

Interest cover comprises operating proﬁt from continuing operations before exceptional items and intangibles amortisation divided by net ﬁnance costs
(excluding other ﬁnance income).

Operating proﬁt before exceptional items & intangibles amortisation (£m)
Net ﬁnance costs (£m)
Interest cover (ratio)

32. Exchange rates

The principal exchange rates applied in the preparation of these ﬁnancial statements were as follows.

Average rate
United States dollar (per £)
Australian dollar (per £)
Euro (per £)
Canadian dollar (per £)

Closing rate
United States dollar (per £)
Australian dollar (per £)
Euro (per £)
Canadian dollar (per £)

2007

122.1
5.1
23.9

2006

77.7
5.5
14.1

2007

2006

2.01
2.39
1.46
2.14

2.00
2.27
1.37
1.96

1.86
2.45
1.47
2.10

1.96
2.48
1.49
2.28

The Weir Group PLC Annual Report 2007

Directors Statement of Responsibilities

The directors are responsible for preparing the annual report and
the Company ﬁnancial statements in accordance with applicable
law and regulations.

Company law requires the directors to prepare Company ﬁnancial
statements for each ﬁnancial year. Under that law the directors
have elected to prepare the ﬁnancial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law).
The Company ﬁnancial statements are required by law to give a
true and fair view of the state of affairs of the Company and of
the proﬁt or loss of the Company for that period. In preparing
those ﬁnancial statements, the directors are required to

• select suitable accounting policies and then apply them

consistently;

• make judgements and estimates that are reasonable and

prudent; and

• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the Company ﬁnancial statements.

The directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
ﬁnancial position of the Company and enable them to ensure that
the Company ﬁnancial statements comply with the Companies
Act 1985. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The Weir Group PLC Annual Report 2007

Independent Auditors Report

Independent Auditors Report to the members of
The Weir Group PLC

We have audited the Company ﬁnancial statements of The Weir
Group PLC for the 52 weeks ended 28 December 2007 which
comprise the Company Balance Sheet and the related notes
1 to 15. These Company ﬁnancial statements have been prepared
under the accounting policies set out therein. We have also audited
the information in the Remuneration Committee Report that is
described as having been audited.

the Operational Review, the Financial Review, the Board of Directors,
the Directors Report, the Corporate Governance Statement, the
Audit Committee Report, the Nomination Committee Report,
the unaudited part of the Remuneration Committee Report and
the Corporate Social Responsibility Report. We consider the
implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the Company
ﬁnancial statements. Our responsibilities do not extend to
any other information.

We have reported separately on the Group ﬁnancial statements
of The Weir Group PLC for the 52 weeks ended 28 December 2007.

This report is made solely to the Company's members, as a body,
in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to
them in an auditors report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members
as a body, for our audit work, for this report, or for the opinions
we have formed.

Basis of audit opinion

We conducted our audit in accordance with International Standards
on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the Company ﬁnancial
statements and the part of the Remuneration Committee Report
to be audited. It also includes an assessment of the signiﬁcant
estimates and judgments made by the directors in the preparation
of the Company ﬁnancial statements and of whether the
accounting policies are appropriate to the Company’s
circumstances, consistently applied and adequately disclosed.

Respective responsibilities of directors & auditors

The directors responsibilities for preparing the annual report,
the Remuneration Committee Report and the Company ﬁnancial
statements in accordance with applicable United Kingdom law
and Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the Directors Statement
of Responsibilities.

Our responsibility is to audit the Company ﬁnancial statements
and the part of the Remuneration Committee Report to be audited
in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Company ﬁnancial
statements give a true and fair view and whether the Company
ﬁnancial statements and the part of the Remuneration Committee
Report to be audited have been properly prepared in accordance
with the Companies Act 1985. We also report to you whether
in our opinion the information given in the Directors Report is
consistent with the Company ﬁnancial statements. The information
given in the Directors Report includes information that is contained
in the Charman’s Statement, the Chief Executive’s Review, the
Operational Review, the Financial Review and the Corporate Social
Responsibility Report that is cross referred from the Directors Report.

In addition we report to you if, in our opinion, we have not
received all the information and explanations we require for our
audit, or if information speciﬁed by law regarding directors
remuneration and other transactions is not disclosed.

We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufﬁcient evidence to give reasonable
assurance that the Company ﬁnancial statements and the part
of the Remuneration Committee Report to be audited are free
from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the
Company ﬁnancial statements and the part of the Remuneration
Committee Report to be audited.

Opinion

In our opinion

• the Company ﬁnancial statements give a true and fair view,
in accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the Company’s affairs
as at 28 December 2007;

• the Company ﬁnancial statements and the part of the

Remuneration Committee Report to be audited have been
properly prepared in accordance with the Companies Act
1985; and

• the information given in the Directors Report is consistent

with the Company ﬁnancial statements.

We read other information contained in the annual report and
consider whether it is consistent with the audited Company
ﬁnancial statements. The other information comprises only
the Financial Highlights 2007, 2007 Highlights, the Chairman’s
Statement, Our Geographic Footprint, the Chief Executive’s Review,

Ernst & Young LLP
Registered Auditor
Glasgow
11 March 2008

The Weir Group PLC Annual Report 2007

28 December 2007
£m

29 December 2006
£m

Notes

3
4

10
11
11
11
11
11

0.5
731.2
731.7

17.2
4.9
1.5
23.6

50.5
19.4
6.2
76.1
(52.5)

0.5
422.7
423.2

16.5
0.5
92.6
109.6

46.4
26.3
0.5
73.2
36.4

679.2

459.6

273.6
3.9

8.3

393.4

0.8

392.6

26.5
37.7
(9.3)
0.5
1.8
335.4
392.6

134.8
-

13.4

311.4

0.8

310.6

26.4
35.4
(10.7)
0.5
1.8
257.2
310.6

Company Balance Sheet

at 28 December 2007

Fixed assets
Tangible assets
Investments
Total ﬁxed assets

Current assets
Debtors
Derivative ﬁnancial instruments
Cash at bank & in hand

Creditors falling due within one year
Bank overdrafts & short-term borrowings
Other creditors
Derivative ﬁnancial instruments

Net current (liabilities) assets

Total assets less current liabilities

Creditors falling due after more than one year
Loans
Derivative ﬁnancial instruments

Provisions

Net assets excluding retirement beneﬁts

Retirement beneﬁts

Net assets including retirement beneﬁts

Capital & reserves
Share capital
Share premium
Treasury shares
Capital redemption reserve
Special reserve
Proﬁt & loss account
Total equity

Approved by the Board of Directors on 11 March 2008

Mark Selway Director

Keith Cochrane Director

The Weir Group PLC Annual Report 2007

Notes to the Company Financial Statements

1. Accounting Policies

The accounting policies which follow have been applied consistently to all periods presented in these ﬁnancial statements.

Basis of preparation

The Company ﬁnancial statements have been prepared in accordance with UK GAAP and applicable accounting standards.

Foreign currency translation

The presentation and functional currency of the Company is sterling. Transactions denominated in foreign currencies are translated into the Company’s
functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognised in the proﬁt and loss account.

Tangible assets

Tangible assets are stated at cost and the cost is depreciated over the estimated useful life by equal annual instalments at rates of 7.5% for ofﬁce equipment
and 25% for computer equipment.

Investments

Investments in subsidiaries and associate are held at historical cost less a provision for impairment.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events
have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the exception that deferred tax
assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable proﬁts from which the
future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.

Post-employment beneﬁts

The Company and other major UK subsidiaries of the Group participate in multi-employer deﬁned beneﬁt pension plans which are set up under separate
trusts. These plans are operated on a basis that does not enable individual companies to identify their share of the underlying assets and liabilities and,
in accordance with FRS17, the Company accounts for its contributions to the plans as if they are deﬁned contribution plans.

In addition, the Company has unfunded unapproved pension promises. Contributions are made to the plans on the advice of an independent qualiﬁed
actuary. Pension plan liabilities are measured using the projected unit method and discounted at the current rate of return on a high quality corporate
bond of equivalent term and currency to the liability. Any increase in the present value of the liabilities of the Company’s unfunded unapproved pension
promises expected to arise from employee service in the period is charged against operating proﬁt. The increase in the period in the present value of the
plan’s liabilities, arising from the passage of time, is included in other ﬁnance income. Actuarial gains and losses are recognised in the statement of total
recognised gains and losses.

Contributions to deﬁned contribution pension plans are charged to the proﬁt and loss account when they become payable.

Leases

Rentals paid under operating leases are charged to income on a straight-line basis over the term of the lease.

Share-based payments

Equity settled share-based incentives are provided to employees under the Company’s executive share option scheme, the savings-related share option
scheme and the Long Term Incentive Plan. The Company recognises a compensation cost in respect of these schemes that is based on the fair value of the
awards. For equity-settled schemes, the fair value is determined at the date of grant and is not subsequently remeasured unless the conditions on which the
award was granted are modiﬁed. The fair value at the date of the grant is calculated using appropriate option pricing models and the cost is recognised on
a straight-line basis over the vesting period. Adjustments are made to reﬂect expected and actual forfeitures during the vesting period due to failure to
satisfy service conditions or non-market performance conditions.

As permitted by FRS20, the Company has applied FRS20 “Share-based Payment” retrospectively only to equity-settled awards that had not vested as at 1
January 2005 and were granted on or after 7 November 2002.

The Weir Group PLC Annual Report 2007

Notes to the Company Financial Statements (Continued)

1. Accounting Policies (continued)

Derecognition of ﬁnancial assets & liabilities

The Company's principal ﬁnancial assets and liabilities comprise bank overdrafts and short-term borrowings, loans, cash and short-term deposits as well as
ﬁnancial derivatives.

A ﬁnancial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.

A ﬁnancial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing ﬁnancial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modiﬁed, such an exchange or modiﬁcation is
treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with
any costs or fees incurred are recognised in proﬁt or loss.

Financial instruments

The Company uses derivative ﬁnancial instruments, principally forward foreign currency contracts and cross currency swaps, to reduce its exposure to
exchange rate movements. The Company does not hold or issue derivatives for speculative or trading purposes. Derivative ﬁnancial instruments are
recognised as assets and liabilities measured at their fair values at the balance sheet date. The fair value of forward foreign currency contracts is calculated
by reference to current forward exchange rates for contracts with similar maturity proﬁles. The fair value of cross currency swaps is calculated by reference
to market values. Changes in their fair values have been recognised in the proﬁt and loss account.

Treasury shares

The Weir Group PLC shares held by the Company are classiﬁed in shareholders equity as ‘treasury shares’ and are recognised at cost. Consideration
received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken
directly to revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.

2. Proﬁt attributable to the Company

The proﬁt dealt with in the accounts of the Company was £109.1m (2006: £18.2m). In accordance with the concession granted under Section 230 of the
Companies Act 1985, the proﬁt and loss account of the Company has not been separately presented in these ﬁnancial statements.

Dividends paid & proposed

Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2006: 10.75p (2005: 9.65p)
Interim dividend for 2007: 4.15p (2006: 3.75p)

Proposed for approval by shareholders at the AGM
Final dividend for 2007: 12.35p (2006: 10.75p)

2007
£m

22.4
8.7
31.1

25.8

2006
£m

19.9
7.8
27.7

22.3

The proposed dividend is based on the number of shares in issue, excluding treasury shares, 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.

Directors

Details of directors remuneration, pension beneﬁts, share options and LTIP awards are included in the Remuneration Committee Report on pages 34 to 39.

Auditors remuneration

The total fees payable by the Company to Ernst & Young LLP for work performed in respect of the audit of the Company were £12,000 (2006: £11,000).
Fees paid to Ernst & Young LLP for non-audit services to the Company itself are not disclosed in these accounts as the Company’s consolidated accounts
are required to disclose such fees on a consolidated basis.

100

The Weir Group PLC Annual Report 2007

3. Tangible assets

Cost
At 29 December 2006
Additions
At 28 December 2007

Aggregate depreciation
At 29 December 2006
Charge for year
At 28 December 2007
Net book value at 28 December 2007
Net book value at 29 December 2006

4. Fixed asset investments

Cost
At 29 December 2006
Additions
Disposals / repayments
At 28 December 2007

Impairment
At 29 December 2006 and 28 December 2007
Net book value at 28 December 2007
Net book value at 29 December 2006

The principal subsidiaries of the Company are listed on page 107.

5. Debtors

Amounts recoverable within one year
Amounts owed by subsidiaries
Tax recoverable
Deferred tax recoverable
Other debtors
Prepayments & accrued income

6. Other creditors

Amounts owed to subsidiaries
Other taxes & social security costs
Tax payable
Other creditors
Accruals & deferred income

7. Loans

Amounts due are repayable as follows
in more than one year but not more than two years

- bank loan

in more than two years but not more than ﬁve years

- loans from subsidiaries

Ofﬁce & computer
equipment
£m

0.9
0.1
1.0

0.4
0.1
0.5
0.5
0.5

Subsidiaries

Shares
£m

Loans
£m

Associate
£m

Total
£m

443.9
15.1
-
459.0

99.4
359.6
344.5

97.6
330.1
(35.0)
392.7

21.1
371.6
76.5

1.7
-
(1.7)
-

-
-
1.7

543.2
345.2
(36.7)
851.7

120.5
731.2
422.7

2007
£m

9.7
0.3
2.1
3.8
1.3
17.2

2007
£m

9.6
1.4
-
1.2
7.2
19.4

2007
£m

50.1

223.5
273.6

2006
£m

4.3
-
2.3
7.7
2.2
16.5

2006
£m

16.0
0.6
3.1
0.8
5.8
26.3

2006
£m

134.8
134.8

The Weir Group PLC Annual Report 2007

101

Notes to the Company Financial Statements (Continued)

8. Provisions

At 29 December 2006
Additions
Unutilised
Utilised
At 28 December 2007

Subsidiaries

Subsidiaries
£m

2.0
-
-
-
2.0

Discontinued
operations
warranty &
indemnity
£m

11.4
2.0
(1.2)
(5.9)
6.3

Total
£m

13.4
2.0
(1.2)
(5.9)
8.3

As at 28 December 2007, a provision of £2.0m (2006: £2.0m) has been made against the deﬁciency of underlying net assets in certain subsidiaries.
It is anticipated that this amount will be settled within two years of the balance sheet date.

Discontinued operations warranty & indemnity

During 2005, the Company provided in full for residual liabilities of discontinued operations for which the Company retains responsibility. Provisions amounting
to £5.9m were utilised during 2007 and, following the expiry of certain warranty periods, an amount of £1.2m has been released to the income statement as
it is no longer required. Provisions have increased by £2.0m during 2007 in respect of the current year disposal.

The provision as at 28 December 2007 is based on management’s current best estimate of the remaining liabilities. The actual outcome may differ, and in some
cases, this may be dependent on the outcome of legal proceedings. It is expected that the majority of these costs will be incurred within two years of the balance
sheet date with the remaining costs expected to be incurred within ﬁve years of the balance sheet date.

Further details of the current year disposal of the company’s investment in Devonport Management Limited can be found in note 8 to the Group
ﬁnancial statements.

9. Retirement beneﬁts

The Company participates in the deﬁned beneﬁt plan arrangements within The Weir Group Pension and Retirement Savings Scheme and The Weir Group
1972 Pensions and Life Assurance Plan for Senior Executives. These deﬁned beneﬁt plans are multi-employer plans which are operated by The Weir Group
PLC and which are run on a basis that does not enable individual companies to identify their share of the underlying assets and liabilities. In accordance
with FRS17, the Company accounts for its contributions to these plans as if they were deﬁned contribution plans.

As at 28 December 2007, there is an overall surplus of £44.6m (2006: £5.3m) in these pension plans. The latest full actuarial valuation of the deﬁned
beneﬁt plan within The Weir Group Pension and Retirement Savings Scheme was as at 31 December 2005 and this has been adjusted to reﬂect the
positions at the 2006 and 2007 year ends by a qualiﬁed independent actuary. The latest full actuarial valuation of The Weir Group 1972 Pensions and Life
Assurance Plan for Senior Executives was as at 31 December 2004 and this has been adjusted to reﬂect the positions at the 2005, 2006 and 2007 year ends
by a qualiﬁed independent actuary. It is intended that the next full actuarial assessment of The Weir Group 1972 Pensions and Life Assurance Plan for Senior
Executives will be as at 31 December 2007.

Resulting from the latest actuarial assessment of the deﬁned beneﬁt plan section of The Weir Group Pension and Retirement Savings Scheme, on the advice
of the actuary, the employer contribution rate increased from 12.5% to 13.5% of total contribution salaries with effect from 1 January 2007. For these
closed plans, the current service cost is expected to increase under the projected unit method as the members of the plan approach retirement.

The assumptions used by the actuary were (in nominal terms).

Rate of increase in salaries
Rate of increase in pensions in payment

Pre 6 April 2006 service
Post 6 April 2006 service

Discount rate
Inﬂation assumption

102

The Weir Group PLC Annual Report 2007

2007
%

3.3

3.3
2.5
5.9
3.3

2006
%

3.1

2.8
2.5
5.2
3.1

2005
%

3.9

2.8
2.8
4.8
2.8

9. Retirement beneﬁts (continued)

The assets and liabilities of the plans and the long term expected rates of return are as follows.

Equities
Insurance policy
Bonds

Total market value of assets
Actuarial value of plan liabilities
Net surplus (deﬁcit) in the plans

2007
%

7.7
5.9
4.3

2007
£m

209.1
218.5
159.2

586.8
(542.2)
44.6

2006
%

7.7
n/a
4.5

2006
£m

398.2
-
188.2

586.4
(581.1)
5.3

The movement in the surplus (deﬁcit) during the period is analysed as follows.

Surplus (deﬁcit) in plans at beginning of period
Movement in year

Current service costs
Negative past service cost
Other ﬁnance income
Proﬁt before tax impact
Contributions
Actual return less expected return on pension plan assets
Experience gain (loss) arising on retirement beneﬁts plan liabilities
Changes in ﬁnancial assumptions underlying retirement beneﬁts plan liabilities
Variance between actuarial assumptions & actual experience

Surplus in the plans at end of period

Company unapproved plan

The major assumptions used by the actuary for the Company unapproved plan were as follows.

Rate of increase in pensions in payment
Discount rate
Inﬂation assumption

The liabilities of the Company unapproved plan are as follows.

Actuarial value of plan liabilities
Related deferred tax asset
Net pension liability

The movement in the deﬁcit during the period is analysed as follows.

Deﬁcit in plan at beginning of period
Movement in year

Interest on pension liabilities being proﬁt before tax impact

Contributions
Deﬁcit in the plan at end of period

2007
%

3.3
5.9
3.3

2007
£m

(1.1)
0.3
(0.8)

2005
%

7.1
n/a
3.9

2007
£m

5.3

(2.9)
-
3.5
0.6
9.6
(21.0)
1.7
48.4
29.1
44.6

2006
%

3.1
5.2
3.1

2006
£m

(1.1)
0.3
(0.8)

2007
£m

(1.1)

(0.1)
0.1
(1.1)

2005
£m

382.6
-
166.7

549.3
(595.4)
(46.1)

2006
£m

(46.1)

(4.5)
10.7
5.1
11.3
10.7
12.5
(0.4)
17.3
29.4
5.3

2005
%

2.8
4.8
2.8

2005
£m

(1.1)
0.3
(0.8)

2006
£m

(1.1)

(0.1)
0.1
(1.1)

The Weir Group PLC Annual Report 2007

103

Notes to the Company Financial Statements (Continued)

9. Retirement beneﬁts (continued)

History of experience gains & losses

Experience gains & losses on plan liabilities
Amount (£m)
Percentage of present value of plan liabilities

Total gross amount recognised in statement of total recognised gains & losses
Amount (£m)
Percentage of present value of plan liabilities

2007

2006

2005

2004

2003

(0.1)
10%

-
-

(0.1)
9%

-
-

(0.1)
8%

(0.1)
7%

(0.1)
14%

10. Share capital

Authorised share capital
Ordinary shares of 12.5p each

Allotted, called up & fully paid
Ordinary shares of 12.5p each

Shares allotted

Issued during the year for cash on exercise of share options
Issued during the year in respect of LTIP awards

Aggregate nominal value of share options exercised
Share premium
Consideration received on exercise of share options

Treasury shares

At beginning of period
Issued during the year in respect of LTIP awards
At end of period

Equity settled share-based payments

Share options outstanding at the end of the period
LTIP awards outstanding at the end of the period

2007
£m

2006
£m

36.0

26.5

26.4

2007
Number
Million

2006
Number
Million

0.9
0.2
1.1

2007
£m

0.1
2.3
2.4

2007
Number
Million

3.3
(0.4)
2.9

2007
Number
Million

0.2
1.9

1.3
-
1.3

2006
£m

0.2
2.9
3.1

2006
Number
Million

3.3
-
3.3

2006
Number
Million

1.3
2.3

Further details of the equity settled share-based payments and the associated cost for the year can be found in note 28 to the Group ﬁnancial statements.

104

The Weir Group PLC Annual Report 2007

11. Reserves

At 30 December 2005
Proﬁt for year
Dividends
Cost of share based payment

net of deferred tax

Exercise of options

At 29 December 2006
Proﬁt for year
Dividends
Cost of share based payment

net of deferred tax

Exercise of options & LTIP awards
At 28 December 2007

Share
premium
£m

Treasury
shares
£m

Capital
redemption
reserve
£m

Special
reserve
£m

Proﬁt & loss
account
£m

32.5
-
-

-
2.9

35.4
-
-

-
2.3
37.7

(10.7)
-
-

-
-

(10.7)
-
-

-
1.4
(9.3)

0.5
-
-

-
-

0.5
-
-

-
-
0.5

1.8
-
-

-
-

1.8
-
-

-
-
1.8

265.0
18.2
(27.7)

1.7
-

257.2
109.1
(31.1)

1.6
(1.4)
335.4

Total
£m

289.1
18.2
(27.7)

1.7
2.9

284.2
109.1
(31.1)

1.6
2.3
366.1

The proﬁt and loss account above is stated after deducting an accumulated loss in respect of retirement beneﬁts of £0.8m (2006: £0.8m).

12. Balance sheet - deferred tax

At 29 December 2006
Included in proﬁt for the year
Credit for the year included in equity
At 28 December 2007

Included in debtors (note 5)
Included in retirement beneﬁts (note 9)

Other timing differences
Retirement beneﬁts

Deferred tax asset
£m

2.6
(0.5)
0.3
2.4

2006
£m

2.3
0.3
2.6

2007
£m

2.1
0.3
2.4

The Weir Group PLC Annual Report 2007

105

Notes to the Company Financial Statements (Continued)

13. Operating lease commitments

As at 28 December 2007, annual commitments under non-cancellable operating leases amounted to
- ofﬁce equipment

of which payable in respect of operating leases ending in the second to ﬁfth years inclusive

2007
£000

2006
£000

14. Contingent liabilities & guarantees

Guarantees

The Company has given guarantees in relation to the bank and other borrowings of certain subsidiary companies. The net debt of the companies party to these
facilities as at 28 December 2007 amounted to £30.2m (2006: £94.1m).

Legal claims

The Company is, from time to time, party to legal proceedings and claims which arise in the normal course of business. 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 Company’s ﬁnancial position.

15. Financial risk management objectives & policies

A description of the Group’s ﬁnancial risk management objectives and policies is provided in note 30 to the Group ﬁnancial statements. These ﬁnancial risk
management objectives and policies also apply to the Company.

106

The Weir Group PLC Annual Report 2007

Principal Companies of the Group

The principal subsidiaries and joint ventures of the Group are as follows.

Name

Subsidiaries

EnviroTech Pumpsystems Inc.
Liquid Gas Equipment Ltd *
Specialised Petroleum Manufacturing Ltd
SPM Flow Control, Inc.
Strachan & Henshaw Ltd
Vulco S.A.
Weir Canada Inc.
Weir do Brasil Ltda
Weir Engineering Services (India) Ltd
Weir Engineering Services Ltd (formerly Weir Pumps Ltd)
Weir Floway Inc.
Weir Gabbioneta S.r.L.
Weir Group Trading (Shanghai) Co Ltd
Weir Hazleton Inc.
Weir Minerals Africa (Pty) Ltd
Weir Minerals Australia Ltd
Weir Minerals China Co. Ltd
Weir Minerals Europe Ltd
Weir Minerals France S.A.S.
Weir Minerals (India) Private Ltd
Weir Minerals Netherlands B.V.
Weir Minerals RFW
Weir Minerals Services (Africa) (Pty) Ltd
Weir Services Australia Pty Ltd
Weir Services USA Inc.
Weir Slurry Group Inc.
Weir Valves & Controls France S.A.S.
Weir Valves & Controls (Suzhou) Co Ltd
Weir Valves & Controls UK Ltd *
Weir Valves & Controls USA Inc.

Joint ventures

Weir Arabian Metals Company
Wesco Abu Dhabi L.L.C.

* Companies whose shares are owned directly by The Weir Group PLC

Country of registration
or incorporation

% equity interest
2007

USA
Scotland
Scotland
USA
England
Chile
Canada
Brazil
India
Scotland
USA
Italy
China
USA
South Africa
Australia
China
England
France
India
Netherlands
Russia
South Africa
Australia
USA
USA
France
China
England
USA

Saudi Arabia
U.A.E.

100
100
100
100
100
100
100
100
74
100
100
100
100
100
100
100
100
100
100
97
100
100
75
100
100
100
100
100
100
100

49
49

The Weir Group PLC Annual Report 2007

107

Shareholder Information

Takeovers Directive

Following the implementation of the EU Takeovers Directive
into UK law, the following description provides the required
information for shareholders where not already provided
elsewhere in this report. This summary is based on the
Company's current articles of association (the "current articles")
but please note that the Company will propose that a new
set of articles of association be adopted at this year's annual
general meeting, details of which are set out in the notice
of the annual general meeting.

Share capital
As at 28 December 2007, the Company’s issued share capital
comprised a single class of shares referred to as ordinary shares.
Details of the ordinary share capital can be found in note 25
to the Group ﬁnancial statements.

Voting rights
The Company's current articles provide that on a show of hands at
a general meeting of the Company every holder of ordinary shares
present in person and entitled to vote shall have one vote and on
a poll, every member present in person or by proxy and entitled to
vote shall have one vote for every ordinary share held. The notice
of the annual general meeting speciﬁes deadlines for exercising
voting rights and appointing a proxy or proxies to vote in relation
to resolutions to be passed at the annual general meeting. All proxy
votes are counted and the numbers for, against or withheld in
relation to each resolution are announced at the annual general
meeting and published on the Company’s website after the meeting.

Transfer of shares
There are no restrictions on the transfer of ordinary shares in the
Company, other than as contained in the current articles:

• The Board may, in its absolute discretion and without giving

any reason for it, refuse to register any transfer of any
certiﬁcated share which is not fully paid up (but not so as to
prevent dealings in listed shares from taking place) and on
which the Company has a lien as a result of such share not
being fully paid up. The Board may also refuse to register any
instrument of transfer of a certiﬁcated share unless it is lodged
at the registered ofﬁce, or such other place as the Board may
decide, for registration, accompanied by a certiﬁcate for the
shares to be transferred and such other evidence as the Board
may reasonably require to prove title of the intending transferor;

• Certain restrictions may from time to time be imposed by laws

and regulations (for example, insider trading laws);

• Pursuant to the Listing Rules of the Financial Services Authority

whereby certain employees of the Company require the
approval of the Company to deal in the Company’s
ordinary shares.

108

The Weir Group PLC Annual Report 2007

Appointment and replacement of directors
The current articles require that at the annual general meeting
one third of the directors shall retire from ofﬁce but shall be
eligible for re-appointment. Any director who has been appointed
by the Board since the previous annual general meeting or has
held ofﬁce for three years or more since he was appointed or
last re-appointed by the Company in general meeting shall
retire at the next following annual general meeting and be
eligible for re-appointment.

The current articles authorise the Board to appoint directors
and remove a director from ofﬁce.

Shares held by the Employee Beneﬁt Trust
Kleinwort Benson (Guernsey) Trustees Limited, as Trustee of The
Weir Group Employee Trust, holds through their nominee K.B.
(CI) Nominees Limited 0.02% of the issued share capital of the
Company as at 28 December 2007 in trust for the beneﬁt of
certain executive directors and senior executives of the Group.
The voting rights in relation to these shares are exercised by the
Trustee. The Trustee may vote or abstain from voting the shares
or accept or reject any offer relating to shares, in any way it sees
ﬁt, without incurring any liability and without being required to
give reasons for its decision.

Amendment of the Company's articles of association
The current articles may only be amended by a Special Resolution
passed at a general meeting of shareholders. At the 2008 annual
general meeting a Special Resolution will be put to shareholders
proposing amendments to the Company’s current articles to take
into account provisions of the new Companies Act 2006.

Repurchase of shares
The Company obtained shareholder authority at the last annual
general meeting held on 9 May 2007 to buy back up to 20.8m
ordinary shares which remains outstanding until the conclusion
of the next annual general meeting on 7 May 2008. The directors
will only use this power after careful consideration, taking into
account market considerations prevailing at the time, other
investment opportunities, appropriate gearing levels, and the
overall position of the Company. The directors will only purchase
such shares after taking into account the effects on earnings
per share and the beneﬁts for shareholders.

Signiﬁcant agreements
The Company is not aware of any agreements between
shareholders that may result in restrictions on the transfer
of securities and/or voting rights.

There are no agreements between the Company and its directors
or employees providing for compensation for loss of ofﬁce or
employment (whether through resignation, purported redundancy
or otherwise) that occurs because of a takeover bid. The Company’s
banking arrangements are terminable upon a change of control
of the Company. Certain other indebtedness becomes repayable
if a change of control leads to a downgrade in the credit rating
of the Company.

Powers of the directors
The business of the Company will be managed by the Board
who may exercise all the powers of the Company, subject to the
provisions of the Company's memorandum of association, the
current articles and any ordinary resolution of the Company.

Registrars

The Company’s registrars are Computershare Investor Services
PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol,
BS99 7NH.

Shareholder enquiries relating to shareholding, dividend payments,
change of address, loss of share certiﬁcate, etc. should be addressed
to Computershare Investor Services PLC at the above address.

The registrars provide an on-line service that enables shareholders
to access details of their Weir Group shareholdings. A shareholder
wishing to view the information, together with additional
information such as indicative share prices and details of recent
dividends, should visit www-uk.computershare.com.

Dividends – payment direct to banks

Dividends can be paid direct to your bank or building society
account using the Bankers Automated Clearing Service (BACS).
This means that your dividend will be in your account on the same
day the Company makes the payment. Your tax voucher will be
posted directly to your own address. Shareholders who have not
yet arranged to use this method of payment, can telephone the
registrars on 0870 702 0010. The Company encourages you to
have your dividends paid direct to a bank or building society.

Annual general meeting

The annual general meeting will be held in the Lecture Room,
The Burrell Collection, Pollok Park, Glasgow on 7 May 2008 at
11am. Details of the resolutions to be proposed at the annual
general meeting are contained in the shareholders circular.

Taxation

For the purpose of capital gains tax, the market value of The
Weir Group PLC ordinary shares as at 31 March 1982 was 29.75p.
Rights issues of ordinary shares took place in April 1987 at 157p
per share on the basis of one new ordinary share for every seven
ordinary shares held, in July 1990 at 250p per share on the basis
of one new ordinary share for every ﬁve ordinary shares held and
in September 1994 at 252p per share on the basis of one new
ordinary share for every four ordinary shares held.

With effect from 28 June 1993, each ordinary share of 25p was
sub-divided into two ordinary shares of 12.5p and the market
value of an ordinary share as at 31 March 1982 takes account
of the sub-division.

Shareholder communications

You can now register to receive shareholder communications
(annual reports, interim reports and other company communications)
electronically (and also appoint a proxy and vote electronically)
provided you have internet access and a valid e-mail address.
To register, you will need your Shareholder Reference Number
(SRN), which is given on your share certiﬁcate or tax dividend
voucher. This service is provided in conjunction with our registrars,
Computershare Investor Services PLC. To obtain more
information and register for this service, please visit
www-uk.computershare.com.

Website

You may wish to view the Company website containing details
of Group activities and investor information including the notice
of the annual general meeting and the full annual report.
The address is: www.weir.co.uk.

Share dealing services

Share dealing services have been established with the Company’s
registrars, Computershare Investor Services PLC which provide
shareholders with an easy way to buy or sell Weir Group shares
on the London Stock Exchange.

Internet share dealing commission is just 0.5%, subject to a
minimum charge of £15. In addition, stamp duty, currently 0.5%,
is payable on purchases. There is no need to open an account in
order to deal. Real time dealing is available during market hours.
In addition, there is a convenient facility to place your order outside
of market hours. Up to 90 day limit orders are available for sales.
To access the service, log on to www.computershare.com/dealing/uk.
Shareholders should have their SRN available. The SRN appears
on share certiﬁcates and tax dividend vouchers. A bank debit card
will be required for purchases. Please note that, at present, this
service is only available to shareholders in certain European
jurisdictions. Please refer to the website for an up-to-date list
of these countries.

Telephone share dealing commission is 1%, subject to a
minimum charge of £15. In addition, stamp duty, currently
0.5%, is payable on purchases. The service is available from
8am to 4.30pm Monday to Friday, excluding bank holidays,
on telephone number 0870 703 0084. Shareholders should have
their SRN ready when making the call. The SRN appears on share
certiﬁcates and tax dividend vouchers. A bank debit card will be
required for purchases. Detailed terms and conditions are available
on request by telephoning 0870 703 0119. Please note this
service is, at present, only available to shareholders resident in
the UK and Ireland.

The Weir Group PLC Annual Report 2007

109

Shareholder Information (Continued)

These services are offered on an execution only basis and subject to
the applicable terms and conditions. This is not a recommendation
to buy, sell or hold Weir Group shares. Shareholders who are
unsure of what action to take should obtain independent ﬁnancial
advice. Share values may go down as well as up which may result
in a shareholder receiving less than he/she originally invested.

To the extent that this statement is a ﬁnancial promotion for the
share dealing service provided by Computershare Investor Services
PLC, it has been approved by Computershare Investor Services PLC
for the purpose of Section 21 (2) (b) of the Financial Services and
Markets Act 2000 only. Computershare Investor Services PLC is
authorised and regulated by the Financial Services Authority.
Where this has been received in a country where the provision
of such a service would be contrary to local laws or regulations,
this should be treated as information only.

Voting

Information on how you can vote electronically can be obtained
through our registrars by visiting
www-uk.computershare.com/investor/proxy.

Online share management

As part of our commitment to improve shareholder communications
our registrars now offer you a free, secure share management
website. Managing your shares online means you can access
information quickly, securely and minimise postal communications.

This service will allow you to:

• view your share portfolio and see the latest market price of

your shares;

• elect to receive your shareholder communications online;

• calculate the total market price of each shareholding;

• view price histories and trading graphs;

• update bank mandates and change address details; and

• use online dealing services.

To take advantage of this service, please log in at
www-uk.computershare.com/investor and enter your Shareholder
Reference Number and Company Code (this information can be
found on the last tax dividend voucher or your share certiﬁcate).

110

The Weir Group PLC Annual Report 2007

111

112

The Weir Group PLC Annual Report 2007

(1) Calculated at 2007 average exchange rates

(2) Adjusted to exclude intangibles amortisation and exceptional items

*shareholders on the register at this date will receive the dividend

Financial Highlights 2007

Group results - continuing operations

Revenue

£1,060.6m

Up 22%

Operating profit (2)

£122.1m

Up 57%

Pre-tax profit (2)

£120.2m

Up 56%

Order input (1)

£1,095.3m

Up 10%

Earnings per share (2)

41.4p

Up 49%

Dividend

16.5p

Up 14%

Net debt

£171.3m

2006
27.8p

2007
41.4p

2006
14.5p

2007
16.5p

Contents:

The Reports

Group Financial Statements

2007 Highlights

46 Directors Statement of Responsibilities

Chairman’s Statement

47 Independent Auditors Report

4 Our geographic footprint

48 Consolidated Income Statement

Chief Executive’s Review

49 Consolidated Balance Sheet

9 Operational Review

19 Financial Review

22 Board of Directors

24 Directors Report

29 Corporate Governance Statement

32 Audit Committee Report

33 Nomination Committee Report

34 Remuneration Committee Report

40 Corporate Social Responsibility Report

50 Consolidated Cash Flow Statement

51 Consolidated Statement of Recognised

Income & Expense

52 Notes to the Group Financial Statements

Company Financial Statements

96 Directors Statement of Responsibilities

97 Independent Auditors Report

98 Company Balance Sheet

99 Notes to the Company Financial

Statements

107 Principal Companies of the Group

108 Shareholder Information

Inside back cover - Financial Calendar

Financial Calendar

Ex-dividend date for final dividend

30 April 2008

Record date for final dividend*

2 May 2008

Annual General Meeting

7 May 2008

Final dividend paid

2 June 2008

Registered office & company number

Clydesdale Bank Exchange
20 Waterloo Street
Glasgow G2 6DB, Scotland
Registered in Scotland
Company Number 2934

The Weir Group PLC
Clydesdale Bank Exchange
20 Waterloo Street
Glasgow G2 6DB, Scotland

Telephone: +44 (0)141 637 7111
Facsimile: +44 (0)141 221 9789

Email: investor-relations@weir.co.uk
Website: www.weir.co.uk

The Weir Group PLC
Annual Report 2007

Excellent
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Solutions

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