The Weir Group PLC
Annual Report and Financial Statements 2021
CONTENTS
Strategic Report
Introduction
We see smarter ways to…
We see more efficient ways to
We see sustainable working…
Group at a Glance
‘We are Weir’ Framework
Chairman’s Statement
150 Years of Weir
Fulfilling our Purpose
Chief Executive’s Strategic Review
Our Strategy
Our Business Model
Our Markets
Engaging with our stakeholders
Our 2021 Key Performance Indicators
Our Year in Review
2021 Summary Results
2021 Market Review
Operating Review
Financial Review
Sustainability Review
Sustainability and Non-financial Reporting
Risk Management
Principal Risk and Uncertainties
Corporate Governance
Introduction from the Chairman
Governance at a Glance
Governance Framework
Board of Directors
Group Executive
Board Statements
Division of Responsibilities
Board Meetings
Board Activities and Our Board Strategy Review Process
Meet the Board Sessions
Shareholder Engagement
Boardroom Practice
Board Effectiveness
Accountability
Viability Statement
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
Financial Statements
Independent Auditors’ Report to the Members of The Weir Group PLC
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Group Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Additional Information
Subsidiary Undertakings
Shareholder Information
Glossary
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1 Continuing operations.
2 2020 restated at 2021 average exchange rates.
3 Before adjusting items (note 2 of the Group Financial Statements).
4 2020 has been restated for SaaS adjustments (note 2 of the Group Financial Statements).
5 Total incident rate is an industry standard safety indicator that measures lost time and
recordable incidents per 200,000 hours worked.
6 Defined as revenues from new products introduced in the last three years.
7 eNPS (Employee Net Promoter Score) is an index used to measure employee
satisfaction levels.
8 Based on Peakon’s Manufacturing sector benchmarks.
9 Market based greenhouse gas emissions, for definition, see page 61.
FINANCIAL &
NON-FINANCIAL SUMMARY
ORDERS1
£2.2bn
+22%2
REVENUE1
£1.9bn
+2%2
ADJUSTED PROFIT BEFORE TAX1
£249m
0%3,4
STATUTORY PROFIT AFTER TAX
£259m
+£414m4
TOTAL INCIDENT RATE1,5
0.45
0.41 in 2020
REVENUES FROM NEW SOLUTIONS1,6
£117m
+30%2
EMPLOYEE NET PROMOTER SCORE (eNPS)1,7
48
In the top 10% of our industry8, up from 42 in 2020
GREENHOUSE GAS EMISSIONS1,9
81.0 tonnes CO2e/£m
-15% reduction since 2019
2021 HIGHLIGHTS
• Strong orders driven by highly active end markets and strategic
growth initiatives.
• Operational execution across the Group delivered 40 bps1,2,3,4
operating profit margin expansion.
• Accelerated delivery of smart, efficient, sustainable
solutions strategy.
• On track to deliver medium-term targets.
DELIVERING FOR ALL STAKEHOLDERS
• Extended our service capabilities with seven new facilities across
four continents.
• Colleagues across all regions took part in My Day of Purpose to
celebrate Weir’s 150th anniversary.
• Committed to Science Based Targets initiative (SBTi) to set
emissions reductions targets aligned with Paris Agreement.
• >700 colleagues and their families received Covid-19 vaccine at
Weir-organised clinics in India.
WEIR: MAKING MINING
SMARTER, EFFICIENT
AND SUSTAINABLE
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Metals power the world. They are
the backbone of our modern society.
And metals are vital for a sustainable
future too – copper for decarbonising
and electrifying transport; lithium,
nickel and cobalt for batteries and
energy storage; iron and aluminium
for the infrastructure to support
widespread electrification.
Today, much of the metal used each
year is extracted from our earth, and
that is set to continue for decades
to come.
That’s why our customers in the mining
industry are transforming to more
sustainable practices and striving for
Net Zero emissions. And that presents
an incredible challenge.
How to get more of those metals
from less. Less water, less waste,
less energy and less CO2.
That is where Weir comes in.
Our technologies are the beating heart
of critical processes in mines across
the globe. And we have made it our
purpose to ensure the sustainable
and efficient supply of the vital natural
resources essential for a better world
today, and for the future.
How? By challenging the norm
with expertise in innovative
engineering technology.
Using our 150 years of experience
of powering progress in the world’s
major industries; by adapting and
seeing things differently. Today our
expertise and experience have never
been more relevant as we help our
mining customers transform, with
technology to achieve the productivity
and sustainability goals needed for
us all to enjoy a low-carbon future.
For more information visit our website
www.global.weir
The Weir Group PLC Annual Report and Financial Statements 2021
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Strategic Report
WE SEE SMARTER WAYS
TO TRANSFORM MINING
TECHNOLOGY
Combining our knowledge
of engineering with Artificial
Intelligence technology
to deliver a fully digitised
offering for our customers.
The acquisition of Motion Metrics for £88m
in December 2021 was a hugely significant
step in strengthening our industry leadership
in making mining smarter, more efficient and
sustainable. Headquartered in Vancouver, Canada,
Motion Metrics is the market leading developer
of innovative Artificial Intelligence (AI) and 3D
rugged Machine Vision Technology used in
mines worldwide.
Miners are increasingly focused on improving
the safety, efficiency and sustainability of their
operations. Motion Metrics has developed
proprietary products and solutions that support
these critical ambitions leveraging innovative
Machine Vision, distributed AI and machine
learning. Motion Metrics produces smart, rugged
cameras that monitor and provide valuable and
timely data on equipment performance, faults,
payloads and rock fragmentation. This data is
then analysed using embedded and cloud-based
machine learning to provide real-time feedback
to the mining operation, enabling immediate
identification of potential issues that could impact
safety and cause expensive unplanned downtime.
Upon joining Weir, Motion Metrics became part
of the ESCO Division. Combining ESCO’s deep
knowledge of mining operations with the data-led
insights from Motion Metrics’ AI capabilities will
enable us to create new solutions that integrate
and extend the technological differentiation of our
best-in-class offerings across the mine.
LINK TO STRATEGY
We shape the next generation of
smart, efficient and sustainable
solutions with cutting-edge
science and a tradition
of innovation.
READ MORE: PAGES 20-21
Image: Motion Metrics joins Weir’s ESCO Division
The needs of customers today have changed and
we have pivoted with their needs to provide them
with the best solutions.
Weir has consistently evolved its services and offerings over the
past 150 years. When James and George Weir moved to Glasgow
in 1874, the River Clyde was at the centre of the shipbuilding
universe. Our proximity to this powerhouse of shipping fuelled our
early success and customers included all of the major shipyards
on the Clyde and many of the world’s navy fleets.
CELEBRATING
150 YEARS
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Strategic Report
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The Weir Group PLC Annual Report and Financial Statements 2021
WE SEE MORE
EFFICIENT WAYS TO
PROVIDE ENERGY-
SAVING SOLUTIONS
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LINK TO STRATEGY
We will be the most admired
business in our sector.
Working in partnership,
we deliver distinctive solutions
and compelling value.
READ MORE: PAGES 20-21
When a mine in the North of
Chile asked the Weir Minerals team
to increase plant capacity while also
increasing equipment availability,
our engineering team rose to
the challenge.
The mine is located 170km north of the city of Antofagasta in Chile.
Annually, it produces 108,000 tonnes of copper concentrate and
9,000 tonnes of molybdenum concentrate. Weir Minerals has been
one of the mine’s key strategic partners since the operation began in
2015, and last year, our on-site team were challenged to participate
in a long-term project at the mine to increase plant capacity while
increasing equipment availability in a large brownfield project.
The key challenges set were to increase plant throughput above
2,200 tonnes per hour and increase equipment availability. The Weir
team set to work.
Weir Minerals Chile presented the customer with a new plant
design, replacing one of the clusters of ten Cavex® 800CVX
hydrocyclones with one of 15, which was to be manufactured
entirely in Weir’s Antofagasta facilities and installed in the same
footprint. The pumping requirements also changed and a Warman®
760 MCR pump was installed. All of these changes were key factors
in achieving the targets originally set out by the customer.
The new hydrocyclone battery and the incorporation of Synertrex®
initially allowed for a 10% increase in the plant’s classification
capacity, allowing the mine to increase throughput to over 2,000
tonnes per hour. The addition of the Warman® 760 MCR pump
increased plant availability and service life by 67%, reaching 2,200
tonnes per hour. One of the major success factors of the project
was the ability of the Weir Minerals Chile team to integrate the
customer’s needs with our mining equipment, providing a solution
that not only met their needs, but exceeded them.
CELEBRATING
150 YEARS
For 150 years,
we have shaped a
better world through
highly-engineered,
sustainable solutions.
James Weir’s patented closed
feed heating system further
improved efficiency and
fuel consumption in triple
expansion steam engines.
By allowing steam to be bled
off after expansion and by
helping to avoid corrosion by
removing air from the feed
water, it set the standard in
design and functionality. It is
still a fundamental element in
modern power stations.
The Weir Group PLC Annual Report and Financial Statements 2021
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Strategic Report
WE SEE
SUSTAINABLE WORKING
PARTNERSHIPS AND
INTEGRATED SOLUTIONS
Working in partnership
with our customers, we
are using innovative
engineering and our
market-leading technology
to increase productivity
and reduce emissions.
Weir-commissioned independent research,
released in full in 2021, estimates that the mining
industry consumes c.3.5% of the world’s total
final energy, with comminution, or the grinding
and crushing of rock, one of the most energy-
intensive processes in a typical mine. This is an
area where we can make a significant impact
through our Enduron® high pressure grinding roll
(HPGR) technology which is up to 40% more
energy efficient than traditional ball mills. In fact,
the estimated carbon saving of each HPGR in
operation is equivalent to taking more than 3,600
petrol fuelled cars off the roads each year.
After record-breaking orders from Iron Bridge
in both 2019 and 2020 which extensively use
this technology, we won a further £36m order
in April 2021 to provide industry-leading energy
saving solutions to Ferrexpo, one of the world’s
largest exporters of iron ore pellets to the global
steel industry. The initial order, which included
orders for a range of Weir comminution products
including HPGRs and screens, will reduce
energy consumption on the site compared
with traditional mining technologies, bringing
substantial reductions in carbon emissions.
Helping to power the modern world
The direct acting steam-driven reciprocating
pump was the cornerstone of Weir’s early
success. Patented in 1881, James Weir's design
transformed the efficiency of the steam engine
and became the industry standard. An elegant
and complex design, the direct acting feed pump
helped to power everything from coal boats,
to cotton mills, to the most luxurious ocean
going liners.
More generally, we saw orders for our
comminution technologies increase by 60% in
2021 as miners recognised the benefits of this
more efficient and sustainable solution. We have
completed the investment to expand our
technology centre in Venlo, The Netherlands to
support expected future demand.
LINK TO STRATEGY
We will be the most admired business in our
sector. Working in partnership, we deliver
distinctive solutions and compelling value.
READ MORE: PAGES 20-21
Sustainability
spotlight
Image: Our Enduron® High Pressure
Grinding Rolls technology
CELEBRATING
150 YEARS
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GROUP AT A GLANCE
WE ARE
A MINING
TECHNOLOGY
BUSINESS WITH
A GLOBAL
FOOTPRINT
Customers rely on our technology and
our service to keep their mission critical
operations running efficiently and drive
their sustainability footprint down.
We are located close to them, never
more than 200km away, wherever
they are in the world. And with our
integrated network of technology hubs,
manufacturing operations and local
service centres, it is Weir technology,
Weir brands and Weir people that are at
the heart of the global mining industry.
2021 REVENUE1
£1,934m
2021 ADJUSTED OPERATING PROFIT1
£296m
A PREMIUM AND HIGHLY RESILIENT MINING TECHNOLOGY BUSINESS
HIGHLY RESILIENT THROUGH THE CYCLE
BROAD GLOBAL CUSTOMER BASE
77% OF REVENUES FROM RECURRING AFTERMARKET
REVENUES BY GEOGRAPHY %
Aftermarket (AM)
Original Equipment (OE)
77%
23%
North America
South America
Asia Pacific
Australasia
Europe & FSU
Middle East & Africa
FOCUSED ON ATTRACTIVE MARKETS
BIASED TOWARDS FUTURE-FACING COMMODITIES
78% OF REVENUES ARE FROM MINING APPLICATIONS
REVENUES BY COMMODITY/MARKET
Mining applications
Infrastructure & Other
78%
22%
Copper
Iron
Gold
Infrastructure
Oil Sands
Coal
Nickel, Lithium, Cobalt
Other
30%
20%
12%
16%
10%
12%
21%
13%
13%
10%
6%
6%
2%
29%
1 Continuing Operations.
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Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 WORLD-LEADING BRANDS FOR THE MOST CRITICAL MINE OPERATIONS
EXTRACTION:
ESCO®
#1 in Ground Engaging Tools
COMMINUTION:
Enduron®
#1 in High Pressure
Grinding Rolls
MILL CIRCUIT:
Warman®
#1 in Slurry Pumps
TAILINGS MANAGEMENT:
GEHO®
#1 in Positive
Displacement Pumps
Data-driven insights from Motion Metrics & Synertrex® technologies.
GLOBAL PRESENCE, CLOSE TO OUR CUSTOMERS
We have c.11,000 employees in over 60 countries around the world.
NORTH AMERICA
2,673 colleagues
30% of sales
SOUTH AMERICA
2,393 colleagues
20% of sales
EUROPE
1,841 colleagues
10% of sales
ASIA PACIFIC
1,486 colleagues
12% of sales
MIDDLE EAST & AFRICA
AUSTRALASIA
1,284 colleagues
12% of sales
1,186 colleagues
16% of sales
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The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report ‘WE ARE WEIR’ FRAMEWORK
WE HAVE A STRATEGIC
FRAMEWORK THAT CONNECTS
OUR PURPOSE WITH OUR
STRATEGY, OUR DISTINCTIVE
COMPETENCIES AND OUR VALUES
It’s what we call ‘We are Weir’ and is there to help us
operate consistently, efficiently and effectively, shaping
the culture we need to deliver for our customers, for
each other and in line with our purpose.
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PEOPL E
here to enable the
sustainable and efficient
delivery of the natural
resources essential to
create a better future
for the world.
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PEOPLE
CUSTOMER
TECHNOLOGY
PERFORMANCE
We are a global family. We are
proud of our unique blend of
talent, technology and culture.
We are here to inspire our people
to do the best work of their life.
We will be the most admired
business in our sector. Working in
partnership, we deliver distinctive
solutions and compelling value.
We shape the next generation
of smart, efficient and
sustainable solutions with
cutting-edge science and our
tradition of innovation.
We deliver excellence for all
of our stakeholders, through
strong leadership, performance
culture and rigorous standards
of governance.
READ MORE ON OUR STRATEGY AND BALANCED SCORECARD: SEE PAGES 20-21
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Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 WE BELIEVE IN
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TO UNDERSTAND MORE ABOUT HOW WE LIVE OUR VALUES: SEE PAGES 14-15
WE WORK THIS WAY
• We always seek to improve and innovate.
• We care for, challenge and encourage each other.
• We’re passionately, authentically ourselves.
• We work together to enhance our global communities.
• We speak up and take ownership for our shared success.
• We can’t wait.
TO UNDERSTAND MORE ABOUT HOW WE OPERATE AS A BUSINESS: SEE PAGES 22-23
WE DELIVER
R I T I C A L
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T CARE
C O M P
G L O B
TO UNDERSTAND MORE ABOUT THE VALUE WE DELIVER: SEE PAGE 23
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The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
CHAIRMAN’S STATEMENT
WE ARE
A STRONGER
MORE FOCUSED
GROUP
WE HAVE MADE STRONG
STRATEGIC PROGRESS IN
HELPING TO MAKE MINING
SMARTER, MORE EFFICIENT
AND SUSTAINABLE.
CHARLES BERRY
Chairman
DEAR SHAREHOLDER,
In this, my last statement as Chairman of this special company, I want
to begin by saying thank you to every single Weir colleague for their
tremendous effort throughout 2021 – our 150th anniversary year.
It has certainly been an eventful 12 months in which we have
continued to think safety first, taken some critical decisions and shown
the real strength of our culture throughout.
A STRONGER, MORE FOCUSED GROUP
We have made strong strategic progress in helping to make mining
smarter, more efficient and sustainable. In February, we reached a
major milestone in our transformation to a mining technology business
when we completed the sale of our Oil & Gas Division. We are now
firmly focused on the mining sector with our world leading technology
and solutions that help customers maximise efficiency and lower their
environmental footprint. We have also invested to strengthen our core
capabilities in artificial intelligence and machine vision technologies
with the acquisition of Motion Metrics. This is a significant step that
accelerates the digitisation of our engineering technology portfolio
to drive future growth. As such, we move forward into 2022 as a
stronger, more focused and more digitally enabled organisation.
The world of business is rarely smooth and 2021 has not been without
its challenges. The Covid-19 pandemic has not gone away, and we have
continued to deal successfully with its evolving impact, prioritising the
safety and wellbeing of our employees. Then, in September, we found
ourselves the target of an attempted cyber attack.
A GREAT TEAM THAT GETS EVEN BETTER IN THE FACE
OF A CHALLENGE
When presented with something as complex as a cyber attack,
its impact on ways of working is felt across the whole organisation.
As a board, we knew we needed to be utterly clear on our course
of action and completely supportive of our colleagues. We decided,
strongly, that we would not engage with the attacker. And for our
colleagues, we ensured we were visible.
Adversities such as these are the real tests of a team, and the way
the whole organisation came together to face the incident head on
has made me incredibly proud. I’ve also been hugely impressed at the
leadership shown by Jon and the Group Executive over the past few
months, managing the inevitable tensions between getting systems
back up as quickly as possible so we can serve customers, while
making absolutely sure of a secure IT environment to protect us in the
future. These are good tensions – tensions which have helped us find
the best answer and made Weir an even stronger team.
The role of a Board is, of course, to act as the ultimate decision-making
body in a company, and the representative of its stakeholders. But the
Board also has to walk the talk, must be unswerving and supportive
of the team in tough times, and take brave decisions in good times.
We have done all of the above this year.
ACCOUNTABLE TO OUR COLLEAGUES, LISTENING TO,
AND LEARNING FROM THEM
In October, the Board visited colleagues at our Todmorden plant in the
UK where we heard first-hand about their experiences as they handled
the cyber incident. We saw for ourselves how they had adapted to
keep the facility running and our customers’ orders moving through.
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The Weir Group PLC Annual Report and Financial Statements 2021
Strategic Report We also continued our ‘Meet the Board’ sessions this year with
employees from our operations in India. Despite having to ‘go
virtual’, it was no less valuable as we heard on ‘a range’ of topics,
from health and wellbeing, to technology and sustainability.
Throughout our interactions, we consistently hear from colleagues
about the importance of inclusion, diversity and equity ID&E as a route
to harness the great talent and potential in Weir. Our updated I,D&E
strategy, which was approved by the Board in December 2021, will
allow us to focus on activities that continue our journey of educating
and embedding ID&E throughout Weir.
SEEING THINGS DIFFERENTLY IN OUR 150TH YEAR
Covid-19 has meant we have not been able to bring people together
to celebrate our 150th anniversary in quite the way we would have
anticipated, but we adapted – as Weir always has – to mark our
milestone year. My highlight was our Royal Gala event in April when
over 7,000 colleagues joined a live online celebration in the presence of
Her Royal Highness The Princess Royal, who is also Royal Fellow of the
Royal Academy of Engineering. It was an honour, and extremely fitting,
that she joined us to hear Weir’s people around the world speak with
such pride about the work they do. I was also delighted that Lord Weir,
the great grandson of one of our founders, was present at the event.
Connecting with purpose is very important to our people and to Weir
as a corporation. So, to mark our anniversary, every employee was
encouraged to take a ‘Day of Purpose’ to allow them see something
from a different perspective and connect, at a very personal level, with
their purpose. I chose to spend time with students at a local school in
Glasgow, exploring with them the opportunities a career in engineering
can bring.
Several colleagues also share how they spent their own Day of
Purpose on page 15. These inspiring personal stories really do show
our culture in action and reinforce how the values of individuals at
Weir align with the values of the Group.
A CLEAR OPPORTUNITY TO CREATE A BETTER FUTURE
The macroeconomic environment remains highly uncertain. Yet there is
one enduring long-term certainty – and that is the need to take action
against climate change.
At Weir, we are very deliberately positioned to address this need,
with our technology-led strategy and specific focus on the mining sector.
This is a sector with a long-term structural imperative to decarbonise
and operate more sustainably to provide minerals, like copper and
lithium, that are critical for a low-carbon society. This sector-wide
transformation, which will likely take several decades, will see our
customers reduce their energy consumption, water use and production
of waste, and we have the capabilities they require to achieve it. It’s
a highly attractive commercial opportunity for us that is totally in sync
with our purpose to enable the sustainable and efficient delivery of the
natural resources essential to create a better future for the world.
FINANCIALLY RESILIENT AND CONFIDENT
IN OUR PROSPECTS
I am delighted to see a good set of results, despite the impact of the
cyber incident, and the great momentum we have going into 2022.
The opportunity in front of us is in no way diminished and with high
levels of confidence in our strategy and future prospects, combined
with our strengthened balance sheet, the Board resumed dividend
payments at the half year. In addition to the interim dividend of 11.5
pence per share, we are proposing a final dividend of 12.3 pence per
share. This makes a total dividend for the year of 23.8 pence per share,
which is 33% of adjusted earnings per share (EPS) for the period.
BOARD CHANGES
At the start of the year Ben Magara and Srinivasan Venkatakrishnan,
known as Venkat, joined our Board. It has been wonderful to
welcome them both and we have certainly benefited from their great
knowledge, experiences and perspectives of international mining.
Having served my full nine-year term on the Board, including eight as
your Chairman, I will be retiring at the end of the next AGM in April
2022 and will be succeeded by Barbara Jeremiah. Barbara has played
an important role in our strategic journey since joining the Board back
in 2017 and is an excellent choice for Chair. For me, having served on
the Hampton-Alexander Review, it is great to be handing the baton
to the first woman to Chair Weir in our 150-year history and I wish
Barbara every success. I am also delighted that Sir Jim McDonald
will succeed Barbara as Senior Independent Director on the Board.
FINAL REFLECTIONS
As society’s need for sustainable solutions accelerates, Weir’s
contribution is, arguably, more relevant than it has ever been. We have
the right foundations in place and I am confident that the Company will
continue to go from strength to strength, embracing the opportunities
ahead and harnessing the full capability of its global family.
Being Chairman of Weir has been a huge privilege and the opportunity
of a lifetime. I’d like to thank our major Shareholders for their
constructive input and support over many years. I also express my
gratitude to everyone who has done so much for this business, past
and present.
Weir, and its people, will always be special for me. It was the first
company I worked for, and it will be the last. And without a doubt,
it is also the best.
CHARLES BERRY
Chairman
2 March 2022
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The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report Strategic Report
150 YEARS OF WEIR
WE HAVE
BEEN LIVING
OUR PURPOSE
FOR 150 YEARS
CELEBRATING
150 YEARS
In 2021, we celebrated 150 years of
innovation and enterprise. Born in the
golden age of steam, Weir continues
to thrive in the digital era. Over the
last year, colleagues past and present
came together virtually and in person
to celebrate the many thousands
of people whose hard work, brilliant
ideas and determination have helped
to shape the business we are today.
We’ve come a long way since 1871. From a start-up founded by two
brothers, James and George, in Glasgow in the 19th Century to one
of the world’s leading engineering businesses with around 11,000
colleagues and operations in more than 60 countries. It is a journey
fuelled by innovation, agility and passionate people. From our earliest
days, we have written our story based on one simple but powerful
idea: at Weir we ‘see things differently’.
Despite the challenges presented by the Covid-19 pandemic, on
29 April 2021, the Group was honoured to host its first ever Virtual
Royal Visit when we were joined by Her Royal Highness, The Princess
Royal. The event was attended by over 7,000 colleagues, making it one
of the biggest gatherings in Weir’s history. Princess Anne was joined
by the Lord-Lieutenant of Glasgow, the Right Honourable Philip Braat,
to hear from colleagues from across our global operations about our
commitment to safety, manufacturing excellence, customer service,
and supporting our communities around the world.
14
The Weir Group PLC Annual Report and Financial Statements 2021
FULFILLING OUR PURPOSE
In celebration of our 150th anniversary
My Day of Purpose was officially
launched across Weir; an exciting
initiative aimed at encouraging everyone
to personally connect with the concept
of ‘purpose’ inviting us all to see things
from a different perspective. Read how
some colleagues across the Group spent
their Days of Purpose.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
MY DAY OF PURPOSE
VIVIEN, WEIR ESCO CHINA
MY DAY OF PURPOSE
PETR, WEIR MINERALS CZECH REPUBLIC & SLOVAKIA
Vivien Zhou, Weir ESCO China, spent her ‘Day of Purpose’ in a
local kindergarten school teaching children about the Solar System.
Vivien prepared slides with pictures, interactive display models and a
quiz to test the children’s knowledge at the end of the day. Vivien loved
her experience, which not only benefited the school, but also helped
her learn more about effective ways of teaching children and the
importance of preschool education.
Petr Hroch, Weir Minerals Czech Republic & Slovakia, decided to
collectively celebrate ‘World Environment Day’ and ‘My Day of
Purpose’. Petr is a Beekeeper, meaning he actively helps to protect
these useful and important insects. Petr spent his day inspecting and
completing maintenance work on a local beehive, before collecting
some natural honey to share with friends and family.
I SPENT MY DAY OF PURPOSE
IN A LOCAL KINDERGARTEN
SCHOOL TEACHING CHILDREN
ABOUT THE SOLAR SYSTEM.
I SPENT MY DAY OF PURPOSE
INSPECTING AND COMPLETING
MAINTENANCE WORK ON
A LOCAL BEEHIVE.
VIVIEN ZHOU,
Weir ESCO, China
PETR HROCH
Weir Minerals, Czech Republic & Slovakia
The Weir Group PLC Annual Report and Financial Statements 2021
15
CHIEF EXECUTIVE’S STRATEGIC REVIEW
WE HAVE
A CLEAR
PURPOSE AND
STRATEGY TO
DELIVER VALUE
FOR ALL OUR
STAKEHOLDERS
JON STANTON
Chief Executive Officer
2021 has been a year of strong
execution and significant strategic
progress at Weir.
Market trends have been favourable, and order momentum is strong.
Economic and external factors have made for a complex operating
environment – one in which our resilience has shone through.
At the time of writing, we have seen a rapid escalation of events in
Ukraine and Russia. Our first priority is the safety of our impacted
colleagues; our thoughts are with them and we are doing all we can
to support them.
Reflecting on 2021, I am very pleased that we have delivered a
good set of results in our 150th anniversary year. That is down to
the phenomenal efforts of our employees who have worked safely
and tirelessly to serve our customers, protect our communities
and support each other through the ongoing Covid-19 pandemic,
and during the last quarter when we also responded to a major
cybersecurity incident. This performance demonstrates the strength of
our culture and I’d like to thank all my colleagues around the world for
their commitment and hard work over the last year.
That dedication is also reflected in a creditable set of safety results.
Our total incident rate5 of 0.45 (2020: 0.41) keeps us among the safest
companies in our sector. Another year of life and work through the
pandemic was not without its challenges, and I am pleased that we
have not wavered on our journey to becoming a zero harm workplace.
CELEBRATING OUR 150TH ANNIVERSARY
In 2021, we marked 150 years since brothers James and George Weir,
both Scottish engineers, established the Company. Throughout 2021
we celebrated James and George’s innovation, agility and passion for
seeing things differently and while our celebrations took a different
form to what we had originally planned, given restrictions due to the
pandemic were still largely in place, we adapted, kept our trademark
Weir passion and have many special personal memories as a result.
STRONG END MARKETS AND STRATEGIC GROWTH
INITIATIVES DRIVES ORDER MOMENTUM
2021 saw the global economy continue to recover supporting
strong demand for a wide range of commodities, with nearly all well
above incentive prices and several at record levels. Across our main
exposures of copper and iron ore, average prices were up c.50%
on 2020 and average gold prices remained at multi-year highs.
Demand for commodities was supported by the economic recovery
in the many sectors that had been impacted by Covid-19, underpinned
by global stimulus spending, whereas physical inventory shortages
and production constraints meant supply struggled to keep up.
Given the strength of commodity prices, customers were almost
entirely focused on maximising ore production with volumes and
machine utilisation continuing to normalise, reaching pre-Covid levels
in Q3 and accelerating further in Q4.
Our mining market order growth was strong across all regions, with
the exception of Australia, which saw good growth in the previous year
but suffered ore production constraints in 2021. Growth was supported
by two large OE orders for high pressure grinding rolls (HPGRs) and
electric-powered mine dewatering pumps. Infrastructure markets
continued their strong recovery with sand and aggregates markets
benefiting from residential housing activity, particularly in North
America. We also saw very strong growth in industrial markets with
orders up by nearly 50%.
16
The Weir Group PLC Annual Report and Financial Statements 2021
Strategic Report The Group’s continuing operations delivered strong order1 growth with
a 22% improvement year-on-year. Original equipment orders1 were
up 45% as we continued to see miners prioritise both sustainability
and efficiency. This was reflected in demand for our differentiated
technology with Integrated Solutions orders up 32%. The £36m
Ferrexpo order for our Enduron® HPGRs is an excellent example of
this. It will support a significant increase in production while reducing
energy consumption by around 40% compared to alternative solutions.
Comminution orders increased by 60% this year and we have
completed investment in expanding our technology centre in Venlo,
The Netherlands to support expected future demand.
Aftermarket demand, on a constant currency basis, continued
to improve and returned to growth, increasing 16% year-on-year.
Momentum accelerated in Q4, with orders up 10% sequentially on
Q3, as market conditions improved and we leveraged our global
service network to fully capture the growth opportunities.
GOOD OPERATIONAL EXECUTION ACROSS THE GROUP
Thanks to the resilience of our people and operations we were able to
deliver revenues 2% higher than last year on a constant currency basis
against a relatively strong comparator, while there was a 5% increase
in adjusted operating profit. Adjusted operating margins1,2,4 were up
40bps year-on-year benefiting from strong operational execution and
full mitigation of inflationary pressures. This improvement in margins
was delivered after absorbing a headwind of c.60bps from the
impact of the cybersecurity incident and the net effects of ongoing
Covid-19 costs.
The continuing improvement in end market conditions was seen
alongside an increasingly challenging global logistical and inflationary
backdrop. In regions where vaccination programmes are less
advanced, we saw continued workforce constraints on miners and
reduced access for third-party suppliers. Covid-related disruptions also
included government-mandated restrictions and enforced shutdowns
that reduced capacity in the period at Weir facilities in India, Peru,
Malaysia and Australia. In addition, our operations dealt with several
adverse weather events, political instability in South Africa and Peru,
and significant supply chain disruption that increased materials and
freight costs and lead times from the Group’s suppliers.
From September we have successfully managed the consequences
of a sophisticated attempted ransomware attack on our business.
On detecting the threat, our cybersecurity systems and controls
responded quickly and we took robust action to protect our
infrastructure and data. System restoration across the Group was
broadly completed by the end of January 2022 and we have taken
further steps to improve our future resilience. The consequences
of the attack caused us significant temporary operational disruption
including engineering, manufacturing and shipment rephasing, but
our teams responded magnificently to the challenge, pulling together
to keep the business running and minimising the impact on our
customers throughout. I am pleased to report that the financial impact
of the attack was at the lower end of the range we set out in October,
in large part due to the resilience inherent in our operating model.
WINNING THROUGH OUR ‘WE ARE WEIR’
STRATEGIC FRAMEWORK
We have made strong progress against our strategic initiatives for the
year across the four pillars of our ‘We are Weir’ framework – People,
Customers, Technology and Performance.
Safety remains our number 1 priority and throughout Weir, we
continue to do everything we can to ensure we all have a safe start,
safe finish, and safe journey home – always. As I have mentioned
at the start of this review, our total incident rate for 2021 continues
to place us among the leaders in our sector, but our absolute goal
remains zero harm, and in 2022 we are upping our focus on further
embedding the right safety behaviours in order to drive a further
breakthrough in performance.
As well as maintaining a safe workplace, we want Weir to be a place
where people can do the best work of their lives. 2021 has thrown
a lot at the organisation and so I was delighted to see participation
reach 90% in our employee survey. Our employee net promoter score
increased again too, and colleagues continued to provide us with rich
and constructive comments about what we are doing well and where
we can improve. This pleasing result on engagement is supported by
good progress in streamlining and enhancing our people processes.
The completed deployment of the Workday HR system has been a
major step forward and gives us a great platform from which to drive
further progress in 2022. Communication has been critical, particularly
through the cyber incident, and we have drawn on the strong and
effective two-way networks we have in place at both a Group-wide
and local level, to keep people informed and engaged.
We acutely recognise the benefits of an inclusive, diverse and
equitable workplace where people can be themselves and feel like
they belong. So it has been great to see the expansion of our global
affinity groups as more and more colleagues engaged in our ID&E
activities. This enthusiasm has been matched by an improvement
in gender diversity among our senior manager population. Here we
have seen the percentage of women increase by 4% to 26% over the
year. There is clearly more for us to do, not only on gender diversity
throughout the whole company, but also across all forms of diversity,
creating a workforce that increasingly reflects the diversity of the
markets in which we operate. Our recently updated ID&E strategy
provide us with focus for our activities.
We saw our purpose come alive in 2021, most notably in our 150th
anniversary ‘Day of Purpose’ celebrations. We continued to support
our people and their families in other ways, with company-organised
vaccine clinics, such as the one at our site in India where over 700
individuals took part. Our caring and purposeful culture continues
to be an enormous asset to Weir. It is the absolute bedrock of our
ongoing success as an organisation, and underpins our ability to
deliver outperformance.
This time last year we announced new medium-term targets which
were to grow faster than our end markets, expand Group operating
margins by 150bps and deliver a 30% reduction in scope 1&2
emissions by 2024. I am pleased to say that we are on track to deliver
all of these. The strength of our order intake this year is demonstrating
the growth potential of the business while the margin progression
delivered was particularly pleasing in the face of the significant
headwinds discussed above. We now expect to deliver a constant
currency operating margin2,3 of 17% in 2023, and have added medium-
term operating cash conversion targets of 90-100% reflecting the
importance of cash generation to create the balance sheet flexibility
to enable us to invest in the opportunities that lie ahead. However,
capex is likely to be elevated above normal levels for the next two
years resulting in cash conversion of between 80% and 90% over
that period.
We have made significant progress with our sustainability strategy,
remaining on track to deliver a 30% reduction in CO2e in 2024, and
have now pledged our commitment to the Science Based Targets
initiative. This means we will set strengthened emissions reduction
targets aligned with the Paris Agreement on climate change across
scope 1, 2 and 3. We expect to announce those more ambitious,
externally validated emissions targets later this year.
17
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report CHIEF EXECUTIVE’S STRATEGIC REVIEW
CONTINUED
ACCELERATING DELIVERY OF SMARTER, MORE
EFFICIENT AND SUSTAINABLE SOLUTIONS
Over the past five years we have repositioned the Group to focus
on mining technology, enabling us to take advantage of powerful
market trends and strong structural drivers, leveraging our leading
market positions and resilient aftermarket model. The sale of the Oil
& Gas Division in February 2021 was a significant milestone in our
transformation, following which we have continued to strengthen our
foundations and drive growth aligned to our purpose – to enable the
sustainable and efficient delivery of the natural resources essential to
create a better future for the world.
We have completed this transformation because of the multi-decade
growth opportunities that exist in partnership with the mining industry.
Demand for metals will always increase with the demographic
drivers of population growth and urbanisation but these factors have
now been overtaken by expected demand from the clean energy
transition. The rise of electric vehicles and transition to renewable
energy generation in the form of wind and solar is now translating
into significant increases in demand for metals like copper, nickel
and lithium.
While the outlook for demand remains extremely strong, significant
longer-term supply deficits are emerging in these commodities where
it is becoming evident that current and planned production will not be
adequate to meet the levels of electrification and renewable power
generation required to get to Net Zero. At the same time, the mining
sector is facing the ongoing challenge of ore grade declines that
mean more material needs to be mined and processed, consuming
more energy and water and creating more waste, just to stand still on
production. These supply challenges are intensifying at the same time
that miners are under increasing pressure to decarbonise and reduce
their broader environmental impact so that they can maintain the social
licence to operate in the communities where natural resources exist.
These trends mean the mining industry will need to invest
significantly in expanding capacity while also meaningfully reducing its
environmental impact through the adoption of new technologies and
novel processes. I expect this to trigger a surge in new exploration,
the expansion of existing resources, and accelerated investment
in the development of new breakthrough technologies, all of which
will provide tremendous future growth opportunities for innovative
engineering partners like Weir.
Our goal is to play a leading role in developing and deploying the
technologies that will support our customers on this journey.
That means we will continue to invest in maintaining the competitive
advantages of our existing products through advances in materials
science and the mechanical/hydraulic properties of our equipment.
We will invest more in developing new sustainable solutions to help
customers reduce their emissions and water consumption, building
on the success we have had with HPGRs in comminution, where we
are now the clear market leader. We will also continue to focus on
Integrated Solutions where we can combine our existing technologies
to solve difficult problems as we are doing with technologies such as
hydro-hoisting. At the same time we are increasing our investment in
scouting and technology foresighting to identify new opportunities that
have the potential to be transformational in mining processes, such as
ore fragmentation and characterisation, and coarse particle floatation.
Underpinning our technology strategy we have invested in integrating
our engineering expertise with digital technology. This means digitising
the business as it is today, transforming business systems and
processes to drive increased automation and enhance the customer
experience. For example, in our Minerals Division we are close to
completing the roll out of our digital Field Service Management
system which is further enhancing our service offering, and all our
main product lines are now enabled for Synertrex, Weir’s proprietary
digital analytics platform.
Beyond this we are investing in ways to further enhance our solutions
offering through data insights. In November, we acquired Motion
Metrics, which has added world class expertise in Artificial Intelligence
(AI) and 3D Machine Vision technology and data science to the Group.
Motion Metrics technology is already used in mines worldwide
and its model is highly complementary to our aftermarket-based
business. Motion Metrics has become part of the ESCO Division and
will serve as Weir’s global centre of excellence for AI and Machine
Vision technology, supporting the increased digitisation of the broader
Weir product portfolio. We have already secured early orders as we
leverage Weir’s global sales network and ESCO’s large installed base
to expand adoption of this value enhancing technology and drive
significant revenue growth. We are making good early progress and I
am excited by the opportunities this acquisition brings to drive growth
and accelerate our journey to include data and insight as a core offering
to our customers across the Group.
2021 STRATEGIC PROGRESS IN NUMBERS
DISTINCTIVE COMPETENCY
MEDIUM-TERM TARGET
PEOPLE
CUSTOMER
TECHNOLOGY
PERFORMANCE
• Improving TIR5
• Increasing Employee Net Promoter Score (eNPS)
• TIR of 0.41
• eNPS of +42
• TIR of 0.45
• eNPS of +48
• Growing ahead of our markets through the cycle
• Ore production6 c.-3%; Group AM revenues2 -6%
• Ore production6 c.+3%; Group AM revenues2 +5%
• Increase R&D as a percentage of revenues
• Growth in sustainable solutions
• Operating margin progression
• Expansion in ROCE
• R&D4: 1.3% of revenues
• Integrated Solutions orders +3%
• Operating margin2,3,4 of 14.9%
• ROCE4 of 12.2%
• R&D: 1.7% of revenues
• Integrated Solutions orders +32%
• Operating margin2,3,4 of 15.3%
• ROCE of 12.0%
• 30% reduction in tCO2e per £m revenue by 2024 vs 2019 baseline2,7
• -12% reduction in tCO2e/£m to 84.4
• -15% reduction in tCO2e/£m to 81.0
1 Continuing operations.
2 2020 restated at 2021 average exchange rates.
3 Profit figures before adjusting items.
4 2020 restated for SaaS adjustments.
5 Total incident rate is an industry standard safety indicator
that measures lost time and recordable incidents per
200,000 hours worked.
18
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
BOARD CHANGES
In April 2022, Charles Berry, our Chairman, will step down from the
Board after completing his nine year term and will be succeeded by
Barbara Jeremiah. Sir Jim McDonald will take over from Barbara as
Senior Independent Director. The Group has undergone a bold and
highly value adding transformation under Charles’ Chairmanship and I
can’t thank him enough for all the support he has given me personally
during that time. His deep rooted passion for Weir will be missed
by everyone in the business and beyond, so on behalf of us all, I’d
like to thank Charles for all he has done and wish him the very best
for his retirement. Of course, Barbara has been there throughout
our transformation too and I am delighted that she will take over as
our Chair. The next phase of our journey – driving the technology-
led transition to Net Zero in mining – is sure to be as exciting as the
last and I am looking forward to working with Barbara as we rise to
the opportunity.
DIVIDEND
Reflecting the high levels of confidence in our strategy and future
prospects, the Board has announced a total dividend for the year of
23.8 pence per share, which is 33% of adjusted EPS for the period,
in line with our capital allocation policy of returning a third of EPS
through the cycle.
OUTLOOK
2022 has started well and the impact of September’s cyber incident
is now behind us. We have a record order book and our markets are
buoyant, supported by long-term structural growth drivers. In common
with most global businesses we are managing ongoing disruption from
Covid-19, as well as inflationary and logistics challenges in the supply
chain, and remain vigilant of the heightened geopolitical risk.
Specifically, the rapid escalation of events in Ukraine and Russia has
created significant uncertainty about our operations and trading in
those countries. Our overall exposure is small, with combined Ukraine
and Russia net assets of around 2% of the Group total and combined
revenue and profit being less than 5%. We are actively accessing the
situation closely and will update further as required.
Subject to the ongoing geopolitical uncertainty, in 2022, we expect
to deliver strong growth in constant currency revenue and profit
in line with our medium-term targets. Looking beyond the current
year, medium-term growth prospects are exciting, underpinned by
underlying macro trends which remain extremely favourable. With our
strong and resilient business, we are well positioned to grow faster
than our markets and deliver sustainable margin improvement in the
long term.
ENABLING A SUSTAINABLE FUTURE
I am in no doubt that there is a technology-led transition in mining
underway as our customers look to achieve Net Zero and fulfil their
ESG promises while producing more of the essential natural resources
needed for a sustainable future.
Our mining technology focus places Weir at the heart of an exciting
multi-decade growth opportunity. I see a bright future ahead,
working in partnership with the global mining industry to deliver the
minerals essential for the clean energy transition more efficiently
and sustainably.
JON STANTON
Chief Executive Officer
2 March 2022
1 2020 restated at 2021 average exchange rates.
2 Continuing operations excludes the Oil & Gas Division which was sold to Caterpillar Inc.
in February 2021 and the Saudi-Arabian joint venture which was sold to Olayan Financing
Company in June 2021.
3 Profit figures before adjusting items. Continuing operations statutory operating profit was
£257m (2020 restated: £228m). Total operations operating cash flow (cash generated from
operations) excludes additional pension contributions, exceptional and other adjusting cash
items, and income tax paid. Total operations net cash generated from operating activities
was £156m (2020 restated: £266m).
4 2020 restated for SaaS adjustments.
5 As measured by Total Incident Rate (TIR) which represents the rate of any incident that
causes an employee, visitor, contractor, or anyone working on behalf of Weir to require off-
site medical treatment per 200,000 hours worked.
6 Weir-weighted commodity exposure – source McKinsey 2021.
PEOPLE
CUSTOMER
TECHNOLOGY
PERFORMANCE
• Improving TIR5
• Increasing Employee Net Promoter Score (eNPS)
• TIR of 0.41
• eNPS of +42
• TIR of 0.45
• eNPS of +48
• Growing ahead of our markets through the cycle
• Ore production6 c.-3%; Group AM revenues2 -6%
• Ore production6 c.+3%; Group AM revenues2 +5%
2020 BENCHMARK (CONTINUING OPERATIONS)
2021 PROGRESS (CONTINUING OPERATIONS)
• Increase R&D as a percentage of revenues
• Growth in sustainable solutions
• Operating margin progression
• Expansion in ROCE
• R&D4: 1.3% of revenues
• Integrated Solutions orders +3%
• Operating margin2,3,4 of 14.9%
• ROCE4 of 12.2%
• R&D: 1.7% of revenues
• Integrated Solutions orders +32%
• Operating margin2,3,4 of 15.3%
• ROCE of 12.0%
• 30% reduction in tCO2e per £m revenue by 2024 vs 2019 baseline2,7
• -12% reduction in tCO2e/£m to 84.4
• -15% reduction in tCO2e/£m to 81.0
6 Weir-weighted commodity exposure – source
McKinsey 2021.
7 Revenue for 2019 and 2020 is based on 2021 average
exchange rates. 2019 constant currency revenue is
£1,917m. Market based greenhouse gas emissions.
19
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
OUR STRATEGY
Our strategic ambitions ensure that we focus on the areas that will deliver against the opportunities for our business, accelerating
sustainable, profitable growth in the future.
They are aligned to our ‘We are Weir’ Framework and its four pillars of People, Customer, Technology and Performance.
The table below summarises the good progress we made in 2021 towards realising these ambitions, and outlines our priorities for 2022.
PEOPLE
CUSTOMER
We are a global family. We are proud of
our unique blend of talent, technology and
culture. We are here to inspire our people
to do the best work of their life.
We will be the most admired business in our
sector. Working in partnership, we deliver
distinctive solutions and compelling value.
OUR GOALS
• Improve safety
• Improve employee engagement, inclusion, equity
and diversity
OUR 2021 PRIORITIES
• Continue our journey to zero TIR
• Build further digital capabilities
OUR GOALS
• Outgrow our markets through the cycle
OUR 2021 PRIORITIES
• Extend service capability to new geographies
• Leverage Integrated Solutions revenue
• Increase the number of women in management
• Extend adoption of Nemisys® technology
• Launch global affinity groups
• Provide solutions for our customers’ key
sustainability challenges
OUR 2021 PERFORMANCE
OUR 2021 PERFORMANCE
• Maintained a world-class safety record with a TIR of 0.45
• Extended service capabilities in the UK, Australia, Ukraine,
• Achieved ISO45001 accreditation at 21 sites
• Executed programmes to deliver key
organisational capabilities
the Philippines, the USA, Canada and Kazakhstan
• Delivered integrated solutions with orders of £210m
• Grew Nemisys® upgrades/conversions by 60% and mining
• Increased women in senior management bands by 4%
bucket bookings by 62%
• Launched global affinity groups
• Improved mean employee engagement score to outperform
Top Quartile Manufacturing benchmark
• Implemented sustainable-focused customer solutions and
published case studies
OUR 2022 PRIORITIES
• Deliver on zero harm
• Accelerate our purpose-driven culture
• Lead in inclusion, equity and diversity
• Create talent and capabilities for the future
OUR 2022 PRIORITIES
• Outgrow our markets through voice-of-customer led initiatives
• Solve our customers’ biggest smart, sustainable and
efficient challenges
• Show leadership in our industries’ pathway to Net Zero
OUR 2022 STRATEGIC MEASURES
OUR 2022 STRATEGIC MEASURES
• Retain our talent
• Build our digital capability
• Maintain top quartile engagement score
• Execute our top 3 strategic growth initiatives in each Division
• Establish new strategic alliances that enhance our customer
value proposition significantly
OUR 2022 ESG MEASURES
OUR 2022 ESG MEASURES
• Improve our safety Total Incident Rate (TIR)
• Develop our scope 4 value proposition
• Improve our gender diversity
20
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 OUR PURPOSE
We are here to enable the sustainable and efficient delivery of the
natural resources essential to create a better future for the world.
TECHNOLOGY
PERFORMANCE
We shape the next generation of smart,
efficient and sustainable solutions with cutting-
edge science and tradition of innovation.
We deliver excellence for all of our
stakeholders, through strong leadership,
performance culture and rigorous standards
of governance.
OUR GOALS
OUR GOALS
• Increase investment in R&D as a % of revenues
• Reduce scope 1&2 CO2e by 30% by 2024 and 50% by 2030
• Grow sustainable solutions
• Improve operating margins
OUR 2021 PRIORITIES
OUR 2021 PRIORITIES
• Expand digitalisation of our products and services
• Complete Information Systems & Technology (IS&T)
• Grow pipeline of products and solutions that deliver
sustainability benefits
transformation programme
• Execute Oil and Gas separation post close
• Launch next generation core flagship products
• Reduce scope 1&2 CO2e footprint
• Conduct scope 3 evaluation
OUR 2021 PERFORMANCE
OUR 2021 PERFORMANCE
• Tier 1 Synertrex® enabled on all new HPGR, crushers,
• Progressed IS&T Transformation programme
GEHO and large MC pumps
• Four additional digital control centres established
• Increased water and energy-focused innovation projects
and field performance testing
• Launched next generation of mill circuit pumps, Cavex® 2 and
other core flagship products and materials, and First G.E.T.
ToolTek® delivered
• Acquired Motion Metrics and established global centre of
excellence for AI and machine vision
• Successfully completed the sale of Oil & Gas Division
• Further realised ESCO acquisition revenue synergies
• 14.7% absolute and 15.4% intensity CO2e reductions (per
£m revenue in constant currency vs 2019)
• Scope 3 CO2 footprint study completed and workstreams
launched to address the top 2 findings
OUR 2022 PRIORITIES
OUR 2022 PRIORITIES
• Invest in innovating transformational solutions
• Drive clean, lean and agile operations and supply chain
• Digitally enable everything we do
• Deliver high quality, efficient back-office functions
• Create new business and business models from data
• Expand margins and deliver strong cash conversion
and insights
OUR 2022 STRATEGIC MEASURES
OUR 2022 STRATEGIC MEASURES
• Secure market acceptance of our top 3 horizon 1 innovations
• Improve our LEAN scores
in each Division
• Digitise our current business model
• Create and deploy our long-term digital vision
• Grow the percentage of Group revenue covered by
Global Business Services Finance shared services
OUR 2022 ESG MEASURES
OUR 2022 ESG MEASURES
• Build pipeline and commercialise sustainability-focused
• Reduce scope 1&2 CO2e vs 2019 base aligned with
technologies and solutions
Science Based Targets initiative
• Progress our priority acceleration R&D projects
• Evaluate SBTi scope 3 targets
21
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report OUR BUSINESS MODEL
WE HAVE A BUSINESS
MODEL THAT CREATES
LONG-TERM VALUE
OUR PURPOSE
OUR UNIQUE STRENGTHS
HOW WE USE THEM
EXPERTISE IN MATERIALS,
ENGINEERING AND DATA
Our engineers have a deep understanding of materials science,
engineering and digital technology and how to apply it to create
products, services and solutions that help our customers
operate smarter, more efficiently and sustainably.
BRIGHT AND PASSIONATE PEOPLE
We employ the brightest and best people around the world
who have a deep pride in both our company and what we do
for customers and the planet.
INTEGRATED MANUFACTURING
AND SERVICE FACILITIES
Through our integrated network of foundries, manufacturing
operations and service centres we can leverage our technology
across our global customer base and provide a responsive,
reliable and rapid service.
UNMATCHED CUSTOMER FOCUS
We have built a customer service network that is second to
none so that we have people on the ground where and when
our customers need them.
WORLD LEADING BRANDS
Through decades of investment in technology and a focus on
service, we have an established suite of world leading brands.
From Warman® to Enduron®, our brands are synonymous with
performance, quality and reliability.
FINANCIAL STRENGTH
Through continued careful management, we are focused on
maintaining a strong and resilient balance sheet with low
leverage to support future growth.
R I T I C A L
N S
N-C
LU TI O
SIO
O
IS
S
M
A
F
T
I
E
N
R
T
M
E
N
HIGHLY E
EQ
N
U
IP
G
I
M
N
E
E
N
E
T
R
E
D
E
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T
SI
R
O
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A
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T CARE
C O M P
G L O B
Our Divisions provide highly engineered original equipment,
which incorporate consumable parts, to the mining and
infrastructure industries. This gives us a large installed base of
equipment, which is mission-critical to our customers and which
is operating in some of the world’s most abrasive environments.
Consumable parts wear out and this, in turn, drives demand
for aftermarket spares and services, which gives us resilience
through the mining investment cycle.
SUPPORTED BY OUR VALUES AND RISK MANAGEMENT FRAMEWORK
22
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 Our understanding of materials science, engineering and digital
technology helps us develop mission-critical products and integrated
solutions to withstand the harshest conditions. We locate ourselves
close to our customers and provide both new pieces of original
equipment, and replacement components when parts wear out.
This combination of technology and service helps our customers
run their operations smarter, more efficiently and sustainably so that
together, we ensure the continued supply of the essential natural
resources for a better world today, and in the future.
OUR PURPOSE
To enable the sustainable and efficient delivery of the natural
resources essential to create a better future for the world.
OUR CULTURE
At Weir, we always seek to improve and innovate and have a
tradition where we care for, challenge and encourage each other.
We are passionately, authentically ourselves and work together to
enhance our global communities. We speak up and take ownership
for our shared successes and can’t wait for what the future brings.
HOW WE USE THEM
HOW WE DELIVER VALUE
HIGHLY ENGINEERED EQUIPMENT
We produce highly engineered equipment that is designed
to solve some of our customers toughest operating challenges.
MISSION-CRITICAL SOLUTIONS
Our equipment is mission-critical to our customers. If it fails,
their production can stop, making us a vital technology partner.
COMPREHENSIVE GLOBAL SUPPORT
Our customers rely on us to provide them with the technology
they need quickly and efficiently, supported by our global
service network.
FOR THE PLANET
AND SOCIETY
Sustainable and efficient
delivery of natural resources
essential to create a better
future for the world.
15%
reduction in CO2e1 emissions
1 Relative to revenue, since 2019.
FOR OUR
CUSTOMERS
Market-leading technologies
and excellent service
that helps them run
smarter, more efficient,
sustainable operations.
£2.2bn
in orders in 2021
FOR GOVERNMENTS
£82m
paid in corporation
taxes in 2021
FOR OUR OWN PEOPLE
AND COMMUNITIES
A rewarding place where
people are enabled to do the
best work of their lives and
support local communities.
£510m
paid in employee benefits
in 2021
INTENSIVE AFTERMARKET CARE
Our technology is used in high abrasion applications such as
crushing rock that generates recurring demand for aftermarket
spares and services.
FOR OUR SHAREHOLDERS
An opportunity to invest in a low-carbon future through
the essential technology driving the global mining industry
transition to Net Zero.
£30m
total dividends paid in 2021
23
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report OUR MARKETS
WE SEE
TRENDS THAT
DRIVE OUR
MARKETS
Our markets are supported by
long-term structural trends that will
underpin growth in the decades
ahead. But they are also subject to
cyclical influences that can impact
demand in the shorter-term, both
positively and negatively.
STRUCTURAL TRENDS
GLOBAL
DEMOGRAPHICS
CLIMATE CHANGE
As the recent COP26 Conference in Glasgow
showed, there is an increasing move from the
world’s governments and businesses towards
reaching the goal of Net Zero to combat the
lasting effects of climate change. Along with
companies, cities and financial institutions,
more than 130 countries have now set or are
considering a target of reducing emissions to
Net Zero by 2050. While Net Zero is a critical
longer-term goal, steep emissions cuts are
imperative in the next five to ten years in
order to keep global warming to no more than
1.5°C and safeguard a liveable climate.
THE NEED
FOR MINING
TECHNOLOGY
As natural resources are produced they
deplete current supplies and mean further
exploration is necessary. However, accessing
high quality deposits is getting harder as ore
grades decline meaning more rock needs to
be excavated and processed for any given
quantity of mineral. The increased impact this
has on equipment used in this highly abrasive
environment drives demand for aftermarket
spares and services.
By working in partnership with the world’s
major mining companies, our technology can
significantly improve operational efficiencies
on mining sites, allowing our customers to
make these crucial savings.
PERCENTAGE OF THE WORLD’S TOTAL GDP
COMMITTED TO NET ZERO BY 2050:
AMOUNT OF ORE NEEDED TO PRODUCE
1KG COPPER IN 2018:
c.80%
200kg
In their latest analysis in 2021, the UN
estimated there were approximately 7.7bn
people on the planet. By 2030, they project
that number will rise to 8.5bn, and reach
10bn by 2050 with cities housing two-thirds
of residents. At the same time economic
development is supporting a significant rise
in the middle class, particularly in Asia.
As living standards rise and migration into
urban areas increases, demand for key
commodities is also likely to increase,
particularly those metals that are used
in consumer goods and infrastructure
development such as copper and iron ore.
These trends will drive demand for resources
and ultimately the technology that helps to
produce them.
BY 2050 THE WORLD’S
POPULATION WILL BE:
10bn
24
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 THESE TRENDS MEAN THE MINING INDUSTRY WILL NEED
TO INVEST SIGNIFICANTLY IN EXPANDING CAPACITY WHILE
ALSO MEANINGFULLY REDUCING ITS ENVIRONMENTAL
IMPACT THROUGH THE ADOPTION OF NEW TECHNOLOGIES
AND NOVEL PROCESSES.
JON STANTON
Chief Executive Officer
SHORTER-TERM TRENDS
COMMODITY PRICES
MINING CAPEX
PRODUCTION
VOLUMES
Commodity prices are determined by a
range of complex factors including economic
confidence and availability of supply.
While this can impact shorter-term sentiment
and decision-making, larger investments by
miners tend to be based on more structural
trends. c.75% of Weir’s revenues are from
aftermarket sales that are linked to ongoing
production at current mines rather than new
projects. Further resilience is provided by the
Group’s bias towards high-volume, low-cost
producers in South America, Australia and
Africa, which account for c.50% of revenues.
Supportive and sustained commodity
prices incentivise miners to expand and
purchase new equipment while lower price
environments lead to a focus on maximising
productivity of current assets. Weir can
increase its installed base under either
scenario due to its lowest total cost of
ownership value proposition which applies
to both expansion projects and productivity
upgrades. The Group’s operating margins
are also counter-cyclical increasing in low
capex environments due to an increased
proportion of higher-margin aftermarket (AM)
products, whereas in high capex conditions
mix is impacted by elevated original
equipment sales, which in turn drive future
aftermarket sales.
Ore production volumes at individual mines
are subject to a number of variables from
geology through to technology and labour
availability. At a global level, however, they
tend to reflect demand trends and the impact
of ore grade declines. Weir’s technology is
primarily production-focused and even in
downturns miners tend to keep their assets
running to generate cash flow. Ore grade
declines also support aftermarket demand
for spares and services as increased material
volumes lead to higher wear on equipment.
As a result aftermarket demand tends to grow
in mid-single digits percent annually over the
long term.
25
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report ENGAGING WITH OUR STAKEHOLDERS
STAKEHOLDER
ENGAGEMENT
How we listen and engage with our
stakeholders to forge positive long-
term relationships.
Our success depends on creating and nurturing positive relationships
with the people, communities and organisations that have an interest
in our business and may be impacted by the decisions we take.
These stakeholders are at the heart of ‘We are Weir’, the strategic
framework that sets out our purpose, business model, strategic
priorities, values and culture. It makes clear that we want to be
a business that provides excellent outcomes for our employees,
customers, Shareholders, suppliers, communities, environment,
government and non-governmental organisations (NGOs).
SECTION 172 OF THE COMPANIES ACT 2006
Effective engagement of stakeholder groups supports the principles of
Section 172 of the Companies Act which sets out that directors should
have regard to stakeholder interests when discharging their duty to
promote the success of the company. A director of a company must
act in the way he considers, in good faith, would be most likely to
promote the success of the company for the benefit of its members as
a whole, and in doing so have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the company’s employees;
(c) the need to foster the company’s business relationships with
suppliers, customers and others;
(d) the impact of the company’s operations on the community and
the environment;
(e) the desirability of the company maintaining a reputation for high
standards of business conduct; and
(f) the need to act fairly as between members of the company.
At Weir, we identify our key stakeholders through our strategic
planning process which is focused on delivering long-term sustainable
value. Stakeholder engagement and analysis is also key to our
approach to risk management. We engage with these important
groups in a variety of ways from direct discussions to surveys
and participating in community, industry and government forums.
This provides valuable insights that inform the Board’s deliberations.
The table below sets out how we engage with our key stakeholders,
the issues most material to them and how the Group has responded.
You can read more about our ‘We are Weir’ strategic framework
on page 10. Our business model sets out the value we generate
for stakeholders on pages 22 to 23 and the Group’s sustainability
strategy is noted on pages 44 to 45. Further information on the
Board’s approach to stakeholder engagement is noted below and in
the Corporate Governance Report. The Board decisions table on page
83, highlights the key decisions made by the Board during 2021, the
stakeholders and strategic factors taken into consideration when
making decisions, and the outcomes.
EMPLOYEES
How we engage
What matters to them most?
Our response
• Board members responsible for
representing employee voice
• All-employee survey
• ‘Meet the Board’ sessions
• Monthly ‘CEO Briefing’ and ‘Ask Jon’
• Knowing their voice is heard
• Ensuring everyone is treated fairly
• No compromise on our Safety,
Health or Environmental standards
• Alignment between personal and
CEO email address
company values
• Global webcasts and social media
channels, global and local intranets
• Active local engagement, including town
hall meetings, newsletters and safety
toolbox talks
CUSTOMERS
• Continuous prioritisation of safety above
all else to become a zero-harm workplace
• ‘Employee Voice’ strategy
• Commitment to building a truly
inclusive culture
• Ongoing engagement with our
‘We are Weir’ framework
• Continuous communication framework
embedded in the aftermath of the cyber
security incident, including CEO and CIO
How we engage
What matters to them most?
Our response
• Embedded sales and engineering teams
• Key account management
• Voice of Customer insights
• Technology partnerships
• Safety
• Efficiency
• Quality and on-time delivery
• Smart technologies
• Sustainability
• Trusted long-term partnerships
• Ever-present service
• Investment in research and development
• Technology roadmaps developed through
Voice of Customer processes
• Sustainability Roadmap assessment
• Comprehensive global service network
covering every major mining region in
the world
26
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 SUPPLIERS
How we engage
What matters to them most?
Our response
• Clearly defined supplier quality policy
• Supplier visits
• Technology trials and collaborations
• Trusted partnerships
• Collaborative relationships
• Responsive communication
• Face-to-face meetings with suppliers
• Key account support
• Equal opportunity policies for all suppliers
• Strong safety culture
SHAREHOLDERS
How we engage
What matters to them most?
Our response
• Annual Report and General Meeting
• One-to-one meetings
• Investor conferences
• Capital Markets Days
• Visits to company facilities
• Good environmental & social governance
• Strategy and execution
• Prospects for future growth
• Returns through the cycle
• Investment and capex plans
• Market and other risks
• Environmental, social and governance
(ESG) performance
• Regular communication of performance
• Providing guidance when appropriate
• Robust business model
• Executing our Sustainability Roadmap
COMMUNITIES & ENVIRONMENT
How we engage
What matters to them most?
Our response
• Local open days to better understand
our operations
• Jobs and investment
• That we are good neighbours, operating
• Providing direct employment to
c.11,000 people
• Collaborations with local schools
safely and ethically
• Investing in our facilities to provide a safe,
and universities
• Supporting employment and
apprenticeship schemes
• Encouraging our people to use their
‘Day of Purpose’ in their local community
• That we actively help and support
nurturing and stretching environment
local communities
• Investing in school, graduate and
• Reducing environmental impact
PhD programmes
• Executing our Sustainability Roadmap
GOVERNMENTS & NGOS
How we engage
What matters to them most?
Our response
• Direct engagement with national
and local politicians and officials
• Membership of industry bodies
• Supporting NGO efforts to improve
STEM education opportunities
• Creating and sustaining employment
• Investing in R&D and productivity
• Business contributing towards
• Providing direct employment for
c.11,000 people
• Investing in R&D including partnerships
educational opportunities
• Environmental, social and
governance policies
with universities
• Investing in programmes that support
STEM education amongst women and
other under-represented groups
27
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report OUR 2021 KEY PERFORMANCE INDICATORS
2021 Financial and Strategic measures aligned to ‘We are Weir’.
FINANCIAL
ADJUSTED PROFIT BEFORE TAX
£m
OPERATING CASH
CONVERSION RATIO
BALANCE SHEET EFFICIENCY –
NET DEBT TO EBITDA
333
247
269
249
249
63%
(2020: 91%)
1.9x
Net debt to EBITDA
20171
20181
20192
20202,3
20212
1 Total Group.
2 From continuing operations.
3 Restated for SaaS adjustments.
Strong operating cash conversion ensures a focus
on working capital efficiency and optimal levels
of capital expenditure to ultimately allow free
cash generation to invest in growth opportunities
and meet our commitment to return 33% of net
adjusted earnings by way of dividend and a full
investment grade credit rating.
To support future growth, we have set a disciplined
capital allocation policy within which we will keep
net debt to EBITDA between 0.5x to 1.5x, with up to
2.0x for acquisitions and result in 33% of net adjusted
earnings being distributed by way of dividend.
We believe that this provides us with the financial
strength necessary to be a leader in cyclical markets
while retaining sufficient capital flexibility to invest in
the exciting growth opportunities we see ahead.
2021 performance
2021 performance
2021 performance
Continuing operations adjusted profit before tax
was £249m (2020: £249m), after a translational
foreign exchange headwind of £15m.
READ MORE IN THE FINANCIAL REVIEW
ON PAGE 40 AND THE OPERATING REVIEW
SECTIONS ON PAGES 36-39
Operating cash conversion was 63% (2020: 91%)
as a result of working capital outflow increase due
to the inventory build in Q4 to support the growing
order book. Over the medium-term we are targeting
operating cash conversion of 90% to 100% driven
by working capital efficiency and maintaining capex
and lease costs close to 1 times depreciation.
Capex is likely to be elevated above this level
for the next two years as we construct our new
ESCO foundry in China and complete our roll out
of SAP and other digital initiatives resulting in cash
conversion between 80% and 90% over that period.
READ MORE IN THE FINANCIAL REVIEW ON
PAGE 40
Net debt to EBITDA on a lender covenant basis was
1.9x (2020 restated: 2.8x) compared to a covenant
level of 3.5x.
READ MORE IN THE FINANCIAL REVIEW ON
PAGE 40
Link to Strategy
Link to Strategy
Link to Strategy
Link to Remuneration4
Link to Remuneration4
Link to Remuneration5
Associated risks
• Market
• Technology
• Digital
Associated risks
• Market
• Technology
• Digital
• Value Chain Excellence
• Value Chain Excellence
• Competition
• Climate
• Political and Social
• Competition
• Climate
• Political and Social
Associated risks
• Technology
• Competition
• Political and Social
In 2021, 70% of Executive Director annual bonus was directly linked to outcomes against financial KPIs. For 2022, this is proposed to become 60%. You can read more in the Directors’
Remuneration Report on pages 121-145.
In 2021, 30% of Executive Director annual bonus was directly linked to progress against strategic measures. For 2022, this is proposed to become 20% with 20% being directly linked to
ESG measures. You can read more in the Directors’ Remuneration Report on pages 121-145.
4
5
28
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
FINANCIAL
STRATEGIC
REVENUE GROWTH
£bn
R&D INVESTMENT AS A
PERCENTAGE OF REVENUES
2.8
2.3
2.0
2.0
1.9
1.7%
Percentage revenues invested
in R&D
(2020: 1.3%3)
OPTIMISE OPERATIONAL
LEVERAGE – ADJUSTED OPERATING
MARGIN PROGRESSION
15.3%
adjusted operating margin
(2020: 14.9%3,6)
20171
20181
20192
20202
20212
1 Total Group.
2 From continuing operations.
The growth prospects for our markets are attractive
and underpinned by structural trends but we believe
the distinctive value we offer will enable us to grow
ahead of the anticipated 3% annual growth in ore
production. We expect to deliver mid-to-high single-
digit annual growth through the cycle supported by
our organic initiatives.
Increasing long-term demand for metals will
drive a technology transformation in mining.
Increased innovation will be required which presents
a commercial opportunity for Weir. To reflect this,
we are increasing our research and development
investment relative to revenues and focusing our
spend on technologies that make mining operations
smarter, more efficient and sustainable.
As we grow we are focused on delivering
attractive returns through the cycle. We see
further opportunities to leverage our global
operations and streamline functions and have set
a target to expand constant currency adjusted
operating margins to 17% in 2023, from a
restated baseline of 14.9% in 2020.
2021 performance
2021 performance
2021 performance
Continuing operations revenue of £1,934m was up
2% on a constant currency basis. Growth in ESCO
revenue was offset by Minerals where revenue was
slightly down following strong prior year comparator
due to a large contract order.
READ MORE IN THE FINANCIAL REVIEW
ON PAGE 40 AND THE OPERATING REVIEW
SECTIONS ON PAGE 36
Research & development costs for continuing
operations amount to £32.6m (2020 restated:
£26.1m) of which £30.6m (2020: £24.8m) was
charged directly to cost of sales in the income
statement and £2.0m (2020 restated: £1.3m)
was capitalised (note 12 to the Group financial
statements) on page 191.
READ MORE IN THE CASE STUDIES ON
PAGES 37 AND 39
Continuing operations adjusted operating margin
of 15.3% is up 40bps versus last year on a
constant currency basis and up 10bps as reported.
We saw an underlying improvement in margins
of 40bps, in keeping with our medium-term
targets. This underlying benefit was offset by
c.60bps as a result of inefficiencies and overhead
under-recoveries related to the cyber incident
as processes were disrupted. Together the net
20bps reduction was offset by a favourable 60 bps
movement due to mix.
READ MORE IN THE SUSTAINABILITY
REVIEW ON PAGES 44 AND 45
Link to Strategy
Link to Strategy
Link to Strategy
Link to Remuneration5
Link to Remuneration5
Link to Remuneration5
Associated risks
• Technology
• Digital
• Value Chain Excellence
• Competition
• Climate
• Safety, Health and Wellbeing
6 2020 restated at 2021 average exchange rates.
Associated risks
• Technology
• Digital
• Competition
• Climate
Associated risks
• Technology
• Digital
• Value Chain Excellence
• Safety, Health and Wellbeing
• Safety, Health and Wellbeing
• People
• Information Security and Cyber
29
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
OUR 2021 KEY PERFORMANCE INDICATORS
CONTINUED
NON-FINANCIAL
SAFETY (TOTAL INCIDENT RATE)
EMPLOYEE ENGAGEMENT (eNPS)
0.53
0.45
0.48
0.45
0.41
48
42
34
28
18
20171
20181
20191
20202
20212
2019 (H1)1
2019 (H2)1
2020 (H1)1
2020 (H2)2
2021 (H1)2
1 Total Group.
2 Continuing operations.
1 Total Group.
2 Continuing operations.
We believe that beyond the obvious imperative of “safe start, safe finish, safe
home” a deeply embedded safety culture is a key indicator of organisational
effectiveness. Our overall aim is a zero-harm workplace and we measure our
progress through continuous improvement in our TIR.
To ensure that we have access to a broad range of talent and that colleagues
choose Weir to do the best work of their lives, we continue to prioritise
engagement. We seek to improve our employee Net Promoter Score (eNPS),
targeting against an external benchmark.
2021 performance
2021 performance
Our Total Incident Rate of 0.45 is broadly in line with 2020 and puts us among
the safest companies in our sector, after another year of substantial disruption
to our employees’ life and work through the Covid-19 pandemic.
YOU CAN READ MORE IN THE SUSTAINABILITY REVIEW ON
PAGES 44 AND 45
We saw another improvement in our levels of engagement which have increased
our eNPS score from 42 in our previous survey in 2020 to 48 in 2021.
YOU CAN READ MORE IN THE SUSTAINABILITY REVIEW ON
PAGES 44 AND 45
Link to Strategy
Link to Strategy
Link to Remuneration5
Link to Remuneration5
Associated risks
• Safety, Health and Wellbeing
• People
• Information Security and Cyber
Associated risks
• Climate
• Safety, Health and Wellbeing
• People
• Ethics and Governance
30
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 NON-FINANCIAL
INCLUSION, DIVERSITY AND EQUITY
– FEMALE REPRESENTATION
GREENHOUSE GAS EMISSIONS – REDUCTION IN SCOPE 1&2 CO2e
Tonnes CO2e/£m revenue
17%
Female representation
(2020: 15%)
95.8
84.4
81.0
2019
2020
2021
Employees tell us that they want Weir to be more inclusive and diverse and we
are committed to achieving this. We measure female representation at all levels
as one aspect of achieving an inclusive, diverse and equitable organisation.
A major part of our strategy is to provide technology to reduce our customers’
environmental impact and, in turn help society decarbonise in order to
address climate change. Our targets are a 30% reduction in scope 1&2 CO2e
intensity by 2024, relative to revenue and a 2019 baseline, and SBTi-aligned
reduction in absolute scope 1&2 CO2e by 2030.
2021 performance
2021 performance
Just 17% of our global workforce is female, which is a small but important 2%
improvement on the prior year. This change was driven by recruitment with 23%
of new hires being female. Whilst we are encouraged by the progress made with
female senior hires over the last couple of years, we recognise we need to also
focus on volume recruitment of females across the entirety of our workforce,
which tend to comprise mostly of Production and Field roles.
YOU CAN READ MORE IN THE SUSTAINABILITY REVIEW ON
PAGES 44 AND 45
In 2021, our continuing operations and market based GHG emissions
(relative to revenue) have reduced by 15%2 on a constant currency basis
compared to our 2019 baseline. This occurred due to manufacturing efficiency
improvements, behavioural changes, process and technology upgrades, along
with an increase in renewable energy usage.
Link to Strategy
Link to Strategy
Link to Remuneration5
Link to Remuneration5
Associated risks
• People
• Ethics and Governance
Associated risks
• Technology
• Climate
• Ethics and Governance
31
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report OUR YEAR IN REVIEW
WE DELIVERED
A YEAR OF
STRATEGIC
PROGRESS
Our 150th year saw us continuing
to deliver our strategy while adapting
well in a complex environment.
Q1
JANUARY – MARCH
Q2
APRIL – JUNE
TRANSFORMATION TO A MINING TECHNOLOGY
PURE PLAY IS COMPLETED
As our 150th year began, February saw the business complete
the sale of the Oil & Gas Division to Caterpillar Inc for an
enterprise value of $375m. The sale of the Division marked the
transformation of the Group to becoming a premium mining
technology business.
Continuing in our tradition of innovative engineering, Weir
Minerals launched the new Cavex® 2 hydrocyclone in early
January. Marking a new era in separation technology, the new
Cavex® 2 classifies up to 30% more feed slurry, while occupying
the same footprint as Cavex® 1 or competitor cyclones.
A VIRTUAL ROYAL VISIT AND A £36M CONTRACT WIN
On the day of our 127th Annual General Meeting on 29 April
2021, The Group celebrated by hosting a Virtual Royal Visit with
HRH Princess Royal. Attended by over 7,000 colleagues from
all corners of the world, it was one of the largest gatherings in
our history.
A £36m order to provide industry-leading energy saving solutions
to Ferrexpo, one of the world’s largest exporters of iron ore pellets
to the global steel industry was also announced in late April.
The initial order, which includes a range of Weir comminution
products including Enduron® High Pressure Grinding Rolls
(HPGRs) and screens, will reduce energy consumption by more
than 40% compared with traditional mining technologies, bringing
substantial reductions in carbon emissions.
Colleagues around the globe started taking part in their ‘Day
of Purpose’ after the initiative was launched early in the
second quarter.
32
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 Q3
JULY – SEPTEMBER
Q4
OCTOBER – DECEMBER
VACCINATING AGAINST COVID-19 AND THE
APPOINTMENT OF A NEW CHAIR-DESIGNATE
2021 continued to be a year dominated by the Covid-19
pandemic. As vaccination efforts ramped up across the globe,
in countries where governments had given companies the
opportunity to purchase vaccines privately, we worked with our
partners on the ground to procure vaccinations for employees
and their families in India and in the Philippines. In early Q3 over
400 Weir employees and 300 of their family members were
vaccinated at the Weir facility in Brigade Rubix, Bangalore.
Another historic moment in our 150th year came in early
September when Barbara Jeremiah was appointed as Chair-
Designate, and will become the first ever woman to chair
Weir. Barbara will succeed Charles Berry who is retiring after
completing his nine-year tenure as Chairman at the 2022 AGM.
COP26 AND ACQUISITION OF MOTION METRICS
The eyes of the world were on our home city of Glasgow in
late October as the COP26 climate conference took place.
Delegates from 197 countries came to the city, agreeing a new
global climate pact by the end of the event. During COP, Weir
welcomed the Australian Prime Minister Scott Morrison to our
headquarters in the centre of Glasgow. Alongside Chairman
Charles Berry and CEO Jon Stanton, PM Morrison was joined by
a number of investors in clean energy technologies. PM Morrison
also took time to acknowledge one of the greatest Australian
inventions: the Warman® pump which was originally designed by
Charlie Warman in Kalgoorlie, Western Australia in 1938. For more
than 80 years this great Australian success story has been at the
forefront of innovation in mining.
The Group completed the acquisition of Motion Metrics, a leading
Canada based global mining technology business in November
for an enterprise value of £88m. Motion Metrics is the market
leading developer of innovative Artificial Intelligence (AI) and 3D
rugged Machine Vision Technology used in mines worldwide.
Its technology helps miners increase safety, efficiency and
sustainability of their operations and as part of the agreement,
Motion Metrics Vancouver headquarters will become Weir’s global
centre for excellence in AI and Machine Vision technology.
33
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report 2021 SUMMARY RESULTS
Positive order momentum and
strong operational delivery.
STRONG ORDERS DRIVEN BY HIGHLY ACTIVE END
MARKETS AND STRATEGIC GROWTH INITIATIVES
• FY: Original Equipment (OE) orders1 +45%; Aftermarket (AM)
orders1 +16%
• Q4: orders1 +26% year-on-year and +10% sequentially on Q3
OPERATIONAL EXECUTION ACROSS THE GROUP
DELIVERED +40BPS MARGIN1,2,3,4 EXPANSION
• Swift response to cyber incident in September; financial
impact at lower end of range
• Margin expansion delivered after mitigating cyber and Covid-19
headwinds of c.60bps
• Adjusted PBTA2,3 of £249m in line with last year despite
FX headwinds
• £266m operating cash flow3 impacted by inventory build and
disruption from cyber incident
ACCELERATED DELIVERY OF SMART, EFFICIENT,
SUSTAINABLE SOLUTIONS STRATEGY
• Acquisition of Motion Metrics accelerates technology and
digital strategy
• New products2 increased to 6% of revenues and R&D as a
percentage of revenue2,4 +40 bps
• 15%2 reduction in CO2e emissions since 2019, science-based
targets to be set in 2022
ON TRACK TO DELIVER MEDIUM-TERM TARGETS
• Clear path to 17% operating margins in 2023; adding cash
conversion targets
• Subject to ongoing geopolitical uncertainty, strong growth in
constant currency revenue and profit expected in 2022
• Full year dividend of 23.8p in line with capital allocation policy
In 2021, we navigated successfully through a number of significant
external challenges to deliver a strong performance for the year.
Order momentum was strong, with a significant acceleration in
Q4, and demand for recurring aftermarket consumables has now
surpassed pre-Covid levels.
Climate change and the need for Net Zero solutions is accelerating
demand for critical metals such as copper, nickel and lithium, just
at the time that longer-term supply constraints are emerging, and
we have continued to invest in new technologies that make mining
smarter, more efficient and sustainable. We boosted our digital
capabilities in the year with the acquisition of Motion Metrics,
enhancing our ability to offer value-adding data insights with our
engineering solutions.
We start 2022 with a record order book and market conditions
continue to be favourable.
Subject to ongoing geopolitical uncertainty, and with Covid-19,
inflationary and supply chain pressures likely to persist, we currently
expect to deliver strong growth in constant currency revenue and
profit this year and further progress towards our medium-term
performance goals.
Longer term, our mining technology focus places Weir at the heart
of a multi-decade growth opportunity in partnership with the global
mining industry as it delivers the minerals essential for the clean
energy transition more efficiently and sustainably.
c.75% OF REVENUES FROM RECURRING AFTERMARKET (AM)
WEIR
Revenues of
c.£1.9bn
AM revenues of
c.£1.5bn
=
MINERALS DIVISION
Total revenues of
c.£1.4bn
AM revenues of
c.£1bn
+
ESCO DIVISION
Total revenues of
c.£0.5bn
AM revenues of
c.£0.5bn
1 2020 restated at 2021 average exchange rates.
2 Continuing operations.
3 Profit figures before adjusting items.
4 2020 restated for SaaS adjustments.
34
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 2021 MARKET REVIEW
Mining markets recovered throughout 2021 exceeding pre-Covid
levels in the fourth quarter, supporting strong order momentum.
Global commitments to take action on climate change have
strengthened during the year, supporting longer-term demand for
metals required for the clean energy transition.
Economic recovery supported commodity demand
The global economy continued to recover in 2021 which supported
strong demand for a wide range of commodities. Most were well
above incentive prices and several reached record levels during the
year. Across our main exposures, average prices of copper were up
50%, iron ore increased by 48% and average gold prices remained
at multi-year highs. Infrastructure markets, which account for c.10%
of our revenue, also continued their strong recovery with sand and
aggregates markets benefiting from residential housing activity,
particularly in North America.
COPPER PRICES
)
n
o
t
/
D
S
U
(
r
e
p
p
o
C
12,000
10,000
8,000
6,000
4,000
2,000
Copper incentive estimate $6,350
2019
2020
2021
Production levels returned to, and exceeded pre-Covid levels
IRON ORE PRICES
Strong demand for commodities drove increased production. However,
physical inventory was constrained due to a range of factors, from
water restrictions to extreme weather, and from continued disruption
due to Covid-19. With strong demand and restricted production,
customers were almost entirely focused on maximising ore production
with volumes and machine utilisation continuing to normalise, reaching
pre-Covid levels in Q3 and accelerating further in Q4. This supported
underlying demand for aftermarket spares and service.
Mining capex mostly focused on quick payback opportunities
Smaller brownfield opportunities were active during the year, especially
those that debottlenecked operations and provided quick paybacks
without disrupting ongoing production. On the other hand, large
brownfield opportunities were plentiful in the pipeline but proved
slow to convert, given that typically they are disruptive to the existing
operations. The pipeline of new, greenfield projects have also been
slow to convert, despite emerging supply shortages and customers
focusing more on supply.
Structural trends from sustainability continued to accelerate
Global action on climate change and the broader sustainability
agenda continued to gather pace, supported by the high profile
COP26 conference in November and pressure from a wide group of
stakeholders. Investment in development and roll out of low-carbon
technologies and processing continued to grow, all of which supported
longer-term projected demand for future facing commodities. At the
same time, the global mining industry is increasingly prioritising
sustainability and production – as evidenced by strong demand for
integrated solutions and OE orders for sustainable technology.
250
200
150
100
50
Iron Ore incentive estimate $58
)
n
o
t
/
D
S
U
(
e
r
O
n
o
r
I
2019
2020
2021
GOLD PRICES
Gold incentive estimate $1,500
2,500
2,000
1,500
1,000
500
)
n
o
t
/
D
S
U
l
(
d
o
G
2019
2020
2021
FURTHER COPPER INVESTMENT REQUIRED TO MEET FUTURE DEMAND1
30.0
25.0
20.0
15.0
10.0
5.0
0
7
8
9
1
5
8
9
1
6
8
9
1
4
5
0
1
0
0
2
2
■ Base Production ■ Expansions/Projects ■ Demand
9
0
0
2
8
0
0
2
3
0
0
2
5
0
0
2
2
0
0
2
7
0
0
2
6
0
0
2
0
0
0
2
1
0
0
2
8
9
9
1
9
9
9
1
0
1
0
2
3
1
0
2
4
1
0
2
2
1
0
2
1
1
0
2
1 UBS and WoodMac 2021.
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
2
0
3
0
2
35
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
OPERATING REVIEW
WEIR MINERALS
AT A GLANCE
Weir Minerals is a global leader
in engineering, manufacturing
and servicing processing
technology used in abrasive,
high-wear mining applications.
Its differentiated technology is
also used in infrastructure and
general industrial markets.
2021 REVENUE
£1,422m
-1%1
2021 ADJUSTED OPERATING PROFIT
£251m
0%1,2,3
DIVISIONAL ORDERS
BY END MARKET %
DIVISIONAL ORDERS BY
GEOGRAPHY %
Mining
Industrial
Oil & Gas
Naval & Marine
Power Generation
Infrastructure
77%
11%
6%
2%
1%
3%
South America
North America
Asia Pacific
Australasia
Europe & FSU
Africa
Middle East
REVENUE BY ORIGINAL
EQUIPMENT/AFTERMARKET %
NUMBER OF FACILITIES
Aftermarket
Original Equipment
71%
29%
Europe & FSU
South America
Asia Pacific
Australasia
North America
Africa
Middle East
1 2020 restated at 2021 average exchange rates.
2 Before adjusting items (note 2 of the Group financial statements).
3 Restated for SaaS adjustments.
36
22%
22%
17%
14%
13%
11%
1%
49
25
24
23
20
22
1
HIGHLIGHTS
2021 Operating Review
The Division benefited from both the strength of its market positions
and its comprehensive global service network as mining markets
recovered through the year, exceeding pre-Covid production levels in
Q4. At the same time, efficiency programmes and roll out of new ERP
systems supported margin progression, despite inflation in input costs,
global supply chain disruptions and the impact of the cybersecurity
incident. This performance was achieved while also making significant
strategic progress.
People
In terms of safety performance, the total incident rate (TIR) across
the Division was 0.36 (2020: 0.25). While this represented an increase
on prior year, it remained at a low rate and we made good progress in
catching hazards, particularly at remote service areas, and in reducing
common, lower severity incidents such as hand and finger injuries and
first aid events. Leading indicators were also positive with a marked
increase in the number of safety conversations.
Customers
Customer intimacy and our global footprint is a differentiator for us and to
support our customers in expanding their operations in existing and new
geographies, we continued to extend our service network. During the
year we opened seven new service centres including two that are co-
located with ESCO. We also opened a new £2m manufacturing plant in
Turkey to support our growing customer base in Central Asia.
Technology
We made strong progress with our Integrated Solutions strategy
through delivering tailored solutions that enhance productivity for our
customers. In 2021, Integrated Solutions orders of £210m were up
32% on prior year, driven by strong demand for our comminution and
dewatering technologies. In October we opened a second technology
centre in Venlo, The Netherlands to support further development
of sustainable mining solutions. The new facility represents a £4m
investment and extends our capacity for the development and
manufacture of tailings solutions and comminution technologies.
Comminution is one of the most energy-intensive processes in
the mine and Weir’s technologies enable customers to improve
their energy efficiency by 40%, to achieve significant reductions in
emissions. These technologies continue to gain traction with orders
up by 60% in the year.
Performance
We continued to drive operational efficiency across the Division to support
the Group margin expansion targets. Major investments in 2021 include
the upgrade to our foundry in Artarmon, Australia and a new modern plant
in China, where we consolidated our operations into a world class facility
in Binhu for slurry pumps and comminution which is already benefiting
efficiency and recoveries. We have also continued to standardise our IT
platforms with 80% of the Division now operating on SAP.
We implemented a number of energy efficiency projects during 2021
and have further reduced emissions via renewable energy purchasing
and installation. The annualised savings of efficiency projects
implemented in 2021 by the Division would equate to a 6% saving
of Minerals’ 2021 CO2e.
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 WE SEE
COMPELLING,
INNOVATIVE
SOLUTIONS
Warman® MCR® 650
pumps outperform two
different competitors at
copper and gold mine.
At the Batu Hijau mine, an open-pit copper
gold mine in Indonesia, Weir Minerals
has worked together with the customer
since 1997 and has completed many on-
site projects including installations and
maintenance of over 40 Warman® pumps.
In 2007, the Minerals team was offered an
opportunity to replace four cyclone feed pumps
installed by a competitor supplier at Batu Hijau.
The Warman® MCR® pumps ran successfully
on site for several years. Changes in ore grade
and throughput requirements meant another
competitor was contracted to trial their pump.
By 2013, three of the Warman® pumps were
replaced by this competitor’s unlined pumps,
leaving just one rubber-lined Warman® MCR®
650 pump installed.
At this time, Batu Hijau was dissatisfied with the
campaign life of the competitor’s unlined pumps.
The plant wanted to move from three-month to
six-month campaigns between major shutdowns.
Looking for a solution, the Weir Minerals pump
specialists worked in partnership with Batu Hijau
to perform a series of Warman® MCR® 650 pump
upgrades and manufactured bespoke pump
components for the Warman® MCR® 650 pumps
installed on site.
By July 2021, Warman® MCR® 650 pumps had
replaced all three of the competitor’s cyclone
feed pumps. Weir Minerals is targeting wear life
of 12 months per pump campaign, more than
double that of the replaced competitor’s pumps.
With this increase in the pump life, Batu Hijau
was able to avoid its three month minor shutdown
and now works on a consistent maintenance
schedule that no longer requires additional minor
work such as pump realignments.
Image: The LINATEX® LOCTITE® – LINA 88™
adhesive range
WEIR MINERALS PARTNERS WITH HENKEL TO RELEASE
INDUSTRY-FIRST ZERO VOC ADHESIVE RANGE
With sustainability being a key issue for the mining industry,
operators are looking for safer and more sustainable products.
To address this growing need, Weir Minerals, manufacturer of
Linatex®, the world’s leading brand of premium natural rubber,
partnered with the world’s number one adhesive producer,
Henkel, to develop LINATEX® LOCTITE® – LINA 88™ products.
The LINATEX® LOCTITE® – LINA 88™ adhesive range sets a new
industry benchmark: while being solvent-free and zero volatile
organic compounds, these innovative products produce a bond
strength significantly stronger than other products presently used
within mining applications. The range is designed for use in a wide
range of mining applications, and from 2021 onwards, Weir Minerals
will be specifying the new solvent-free products for all our Linatex®)
applications around the world.
37
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report OPERATING REVIEW
WEIR ESCO
AT A GLANCE
ESCO is a global leader in the
provision of Ground Engaging Tools
(G.E.T.) for large mining machines.
Its highly engineered technology
improves productivity through
extended wear life, increased safety
and reduced energy consumption.
2021 REVENUE
£512m
+11%1
2021 ADJUSTED OPERATING PROFIT
£83m
+11%1,2,3
DIVISIONAL ORDERS
BY END MARKET %
DIVISIONAL ORDERS BY
GEOGRAPHY %
HIGHLIGHTS
• Orders1 +25%, Q4 +37% year-on-year and delivered sixth quarter
of sequential order growth
• Revenues1 +11% year-on-year as mining and infrastructure markets
recovered strongly
• Operating margins1,2,3 up 10bps year-on-year; strong operational
leverage offset by the reversal of temporary cost savings
2021 Operating Review
The Division benefited from its strong market position to capture
growth in infrastructure markets in both North America and Europe,
alongside entering other global construction markets in the Southern
Hemisphere. The Division also continued to extend its product offering
in mining markets, driving increased customer relevance and market
share gains.
People
Our continued focus on safety delivered further improvements in
performance in 2021 with TIR reducing by a further 19% to 0.85.
This marks a reduction in TIR of over 50% since the Division was
acquired in 2018. We introduced hazard identification training for our
operators during the year to reinforce safe behaviours and help drive
continuous improvement. More broadly, we continued to invest in
training and development of employees, for example, with sales skills
and sustainability training for our sales teams.
Customers
We made good progress in establishing our Nemysis© G.E.T.
system as the market leader across all mining systems, delivering 215
net conversions in 2021. We also expanded our share of large mining
buckets with orders up by over 50%, and made further progress
towards our revenue synergies target of $50m. We opened new joint
facilities with Minerals in Nevada, USA, and in Almaty, Kazakhstan,
and are in the final stages of permitting for our new foundry in China,
which will move into construction in 2022.
Mining
Infrastructure
Oil & Gas
General Industrial
56%
32%
7%
5%
North America
South America
Australasia
Europe & FSU
Africa
Asia Pacific
Middle East
REVENUE BY ORIGINAL
EQUIPMENT/AFTERMARKET %
NUMBER OF FACILITIES
Technology
The acquisition of Motion Metrics has strengthened our capability
in digitally enabled solutions. Based in Vancouver, Canada, Motion
Metrics adds patent-protected technology to our portfolio which
reduces expensive downtime in G.E.T. applications, helping improve
our differentiated technology offering even further. The additional
capability in AI and Machine Vision will also accelerate our expansion
into adjacent markets including developing smart eco-system offerings
encompassing the load and haul operations of our customers.
58%
12%
10%
9%
7%
3%
1%
Performance
Continuous improvement activities at our foundry in Portland,
USA enabled us to quickly respond to market changes, benefiting
operational leverage. Additionally, the integration of digital visualisation
at our facilities improved overall energy efficiencies. The annualised
savings of efficiency projects implemented in 2021 by the Division
would equate to a 4% saving of ESCO’s 2021 CO2e.
Aftermarket
Original Equipment
94%
6%
North America
South America
Asia Pacific
Africa
Europe & FSU
Australia
21
9
4
5
6
5
1 2020 restated at 2021 average exchange rates.
2 Before adjusting items (note 2 of the Group financial statements).
3 Restated for SaaS adjustments.
38
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 WE SEE
IMPROVED MACHINE
PRODUCTIVITY AND
SUSTAINABILITY
Conversion of competitor’s bucket
to the Nemisys® mining tooth system
improves machine productivity.
When a Brazilian copper mine upgraded a primary production
excavator to the ESCO Nemisys® tooth system using N5
intermediate bridge adapters, the outcome was a substantial
increase in production while reducing adapter usage and the
downtime required to service the system.
The overall reduction in adapter consumption per million
metric tonnes mined, combined with the reliability of the
Nemisys® tooth system, resulted in reduced downtime for
G.E.T. related maintenance. Less system maintenance reduces
worker exposure to the associated hazards.
The mine reported a 32% increase in metric tonnes produced
per tonne of points and adapters used, and a 60% reduction
in G.E.T. related downtime per million metric tonnes produced.
The reduction in parts and maintenance contributed to lower
use of natural resources and less residual waste.
THE DIVISION
BENEFITED
FROM ITS
STRONG MARKET
POSITION
TO CAPTURE
GROWTH IN
INFRASTRUCTURE
MARKETS IN BOTH
NORTH AMERICA
AND EUROPE.
ANDREW NEILSON
Division President,
Weir ESCO
WEIR ESCO DREDGE CUTTERHEADS USED TO FREE
THE EVER GIVEN SHIP IN THE SUEZ CANAL
In March 2021, the Suez Canal was blocked for six days after
the grounding of ‘Ever Given’, a 400m long container ship.
The vessel met strong winds on the morning of 23 March,
and ended up wedged across the waterway, blocking all traffic
until it could be freed. As one of the world’s busiest trade
routes, the obstruction had a significant negative impact on
trade between Europe, Asia and the Middle East and prevented
an estimated US$9.6bn worth of trade.
On 29 March 2021, the ship was finally set free, with Weir
ESCO cutterheads fitted to the dredger that was used in the
operation. As a trusted supplier, Weir ESCO has provided this
vital trade route with sophisticated dredge technology for the
past two decades.
39
Image: Weir ESCO equipment being
used to help free the Ever Given ship
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report FINANCIAL REVIEW
WE SAW
STRONG ORDER
GROWTH AND
OPERATING
MARGIN
IMPROVEMENT
THE QUALITY OF OUR
BUSINESS SHONE THROUGH
WITH REVENUE, OPERATING
PROFITS AND MARGINS ALL
SHOWING PROGRESS WHILE
LEVERAGE REDUCED.
JOHN HEASLEY
Chief Financial Officer
40
The Weir Group PLC Annual Report and Financial Statements 2021
OVERVIEW
2021 saw us build a record order book while managing the complexity
of raw material and freight inflation and a serious cybersecurity
incident. Revenue, adjusted operating profits and margins all showed
progress on a constant currency basis while leverage reduced to
1.9 times following receipt of the proceeds from the sale of our
Oil & Gas Division. The margin progress was especially pleasing
as we fully mitigated inflationary pressures and realised initial
benefits from our efficiency programme. The strong order growth
and margin performance and operational focus means we are
well placed to deliver our medium-term growth, margin and cash
conversion objectives.
FINANCIAL HIGHLIGHTS
Continuing operations order input increased 22% on a constant
currency basis with less Covid-19 related mine site disruption and
supportive commodity prices which drove aftermarket (AM) demand.
We also saw higher demand for our more sustainable solutions
as we started to see our strong original equipment (OE) project
pipeline convert, as customers became more confident in the global
macroeconomic backdrop and Covid recovery.
Continuing operations revenue increased 2% on a constant currency
basis, with Minerals revenue 1% lower on a constant currency basis
following the non-repeat of the large Iron Bridge contract last year
being offset by positive aftermarket growth and underlying OE activity.
ESCO increased 11% on a constant currency basis reflecting a strong
recovery in infrastructure markets in North America and Europe and
significantly reduced Covid disruptions to mining customer operations.
On a reported basis revenue decreased 2%, impacted by a foreign
exchange translation headwind of £70m. Overall book-to-bill at 1.14
reflects the phasing of orders and an element of revenue slippage
related to the cybersecurity incident, meaning that we enter 2022 with
a record order book.
Continuing operations adjusted profit before tax of £249m was
in line with prior year, after a translational foreign exchange
headwind of £15m and prior year restatement as explained below.
Continuing operations adjusting items reduced by £31m to £40m
(2020: £71m) and mainly relates to intangibles amortisation in the
current year. Statutory profit for the year after tax from total operations
of £259m (2020: loss of £155m) reflects the increases in profit from
both continuing operations of £22m and discontinued operations of
£392m. The latter reflecting the impairment of the Oil & Gas Division
in 2020 and subsequent gain on sale in 2021, which includes the
recycling of £103m of cumulative net foreign exchange gains from the
foreign currency translation reserve to the income statement, which is
only accounted for following completion.
Cash generated from operations decreased by £99m to £266m in the
year, including a decrease of £27m from discontinued operations, and
reflects an increase in trade and other receivables due to back-end
loading of revenues at the end of the year as operations recovered
from the cybersecurity incident, together with an increase in inventory
as operations geared up to execute a record closing order book.
Our reported net debt decreased by £279m to £772m (2020: £1,051m)
following a free cash inflow of £62m, plus net proceeds of £283m
from the sale of the Oil & Gas Division and the Saudi Arabia based
Arabian Metals Company (AMCO) joint venture and an associated
reduction in lease liabilities due to the Oil & Gas disposal of £65m.
These movements are partially offset by consideration paid for the
acquisition of Motion Metrics of £68m, the interim dividend of £30m
and foreign exchange retranslation of £32m. Net debt to EBITDA on a
lender covenant basis was 1.9 times5 compared to a covenant level of
3.5 times.
Strategic Report CONTINUING OPERATIONS ORDER INPUT
Order input at £2,196m increased 22% on a constant currency basis
with growth in both operating Divisions. Original equipment orders
were £568m and aftermarket orders were £1,628m.
ORDERS2
£2.2bn
+22%
Minerals orders increased by 22% on a constant currency basis to
£1,651m (2020: £1,358m) with a book-to-bill of 1.16 reflecting strong
growth in the order book which will underpin future revenue growth.
OE orders increased by 45% reflecting higher demand for our more
sustainable solutions as we started to see our strong project pipeline
convert, as customers became more confident in the global macro
backdrop and the continuing recovery of the global economy from the
impact of Covid-19. As well as the two large contracts for our more
sustainable technology (initial £36m Ferrexpo order for Enduron®
HPGRs and screens and a £33m order in Indonesia to replace diesel
dewatering pumps with electric alternatives) we also saw strong
growth in demand for our core Warman© centrifugal pumps. AM orders
increased by 13% with strong growth across all spares products
including pump, mill circuit and comminution. Q4 was sequentially
19% higher than Q3, delivering an all-time AM record for the
Division and reflects activity now above pre-Covid levels. AM orders
represented 68% of total orders (2020: 73%). In total, mining end-
market orders accounted for 77% of the total (2020: 79%), as we saw
a strong recovery in industrial and oil & gas end-markets.
ESCO orders increased 25% on a constant currency basis to £545m
(2020: £436m), reflecting a strong recovery in both mining and
infrastructure markets globally, as we saw significantly reduced Covid-19
disruptions to customer operations. The Division had strong growth in
most major regions, particularly North America and Asia. The Division
also delivered a book-to-bill of 1.07 as order patterns normalised after
the destocking seen in 2020 and the Division has now delivered six
straight quarters of sequential order growth. AM represented 94% of
orders (2020: 94%) in line with ESCO’s position as a provider of highly
engineered consumables used in abrasive operating environments.
CONTINUING OPERATIONS REVENUE
Revenue of £1,934m increased 2% on a constant currency basis.
Aftermarket accounted for 77% of revenues, up from 75% in the
prior year. Reported revenues decreased 2%, impacted by a foreign
exchange translation headwind of £70m.
REVENUE
£1.9bn
-2%
Minerals revenue was 1% lower on a constant currency basis at
£1,422m (2020: £1,433m), primarily driven by a £35m reduction in
OE revenues as 2020 included the majority of the deliveries for the
c.£100m Iron Bridge project. AM revenues were up 2% on a constant
currency basis reflecting the positive mining production trends.
Product mix was also impacted by the non-repeat of the Iron Bridge
revenues with OE reducing to 29% of total revenues compared to
31% last year.
ESCO revenue, which was not impacted by the destocking seen
in 2020, increased 11% on a constant currency basis to £512m
(2020: £462m). Mining represented 57% of revenues (2020: 59%)
and infrastructure was 31% (2020: 28%).
CONTINUING OPERATIONS PROFIT
Adjusted operating profit from continuing operations decreased by
£3m (-1%) to £296m on a reported basis (2020: £299m). Excluding a
£16m foreign currency translation headwind, the constant currency
increase was £13m.
Prior year operating profit has been restated to reflect a change in
accounting treatment for Software as a Service (SaaS) arrangements
following the publication of an agenda decision during the year by the
International Financial Reporting Standards Interpretations Committee,
which led to a £7m reduction in 2020 adjusted operating profit with an
equivalent £4m in 2021. Further details are provided in note 2 of the
Group financial statements.
Minerals adjusted operating profit increased slightly on a constant
currency basis to £251m (2020: £250m) as the Division benefited
from more favourable mix, strong operational execution and initial
benefits from our efficiency programme. The reversal of the prior year
temporary savings related to bonus and travel were largely offset by
lower under-recoveries as our plants faced less Covid-related disruption
in the period. However, the Division’s operations were impacted by
the cybersecurity incident impacting the Group, which resulted in an
estimated £10m of under-recoveries as plants were disrupted, and also
led to the slippage of c.£10m of operating profit as some Q4 revenues
were deferred into 2022. Adjusted operating margin on a constant
currency basis was 17.7% (2020: 17.5%), with the +20bps increase
driven by more favourable product mix and initial efficiency programme
benefits offset by higher spend on R&D and the impact of the cyber
incident outlined above.
ESCO adjusted operating profit increased by 11% on a constant
currency basis to £83m (2020: £75m), as the Division benefited from
further operating efficiency and strong operating leverage from higher
volumes which were partially offset by the reversal of the temporary
cost savings last year to bonus and travel. We saw significant
increases in freight and raw material costs which were fully mitigated
through sales price increases. Adjusted operating margin of 16.3%
was up 10bps on a constant currency basis (2020: 16.2%), reflecting
the operational leverage from the additional revenues largely offset by
the impact of the reversal of the temporary cost reductions to bonus
and travel.
Across both Divisions, we saw significant inflation in raw material
and freight costs. These were fully mitigated with sales price
increases underpinning our market leading positions and ability to
price accordingly.
Unallocated costs are £4m lower than the prior year at £38m primarily
due to a reduction in SaaS costs.
Statutory operating profit for the period of £257m was £29m
favourable to the prior year, with the decrease in adjusted operating
profit of £3m being offset by a reduction in adjusting items.
CONTINUING OPERATIONS ADJUSTING ITEMS
Continuing operations adjusting items reduced by £31m to £40m
(2020: £71m). Intangibles amortisation decreased by £4m to
£35m (2020: £39m). Exceptional items reduced by £19m to net nil
(2020: £19m), with acquisition and integration costs relating to Motion
Metrics of £3m and costs of £5m directly related to the cybersecurity
incident response, being offset by a £5m gain on sale of land in
Malaysia and other small unutilised provision releases totalling £3m.
Other adjusting items which mainly relate to the Group’s legacy US
asbestos-related provision reduced by £8m to £4m (2020: £12m).
41
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report FINANCIAL REVIEW
CONTINUED
RESULTS SUMMARY
Continuing operations1
Orders2
Revenue
Adjusted operating profit4
Adjusted operating margin4
Statutory operating profit4
Net finance costs
Adjusted profit before tax4
Statutory profit before tax4
Adjusted effective tax rate4
Adjusted earnings per share4
Total Group
Statutory profit (loss) after tax4
Statutory earnings (loss) per share4
Operating cash flow3,4
Dividend per share
Net debt
2021
£2,196m
£1,934m
£296m
15.3%
£257m
£47m
£249m
£209m
25.6%
71.3p
£259m
99.7p
£266m
23.8p
£772m
2020
£1,794m
£1,965m
£299m
15.2%
£228m
£50m
£249m
£178m
24.5%
72.3p
(£155m)
(59.6p)
£365m
0.0p
£1,051m
As reported
n/a
-2%
-1%
+10bps
+13%
-6%
–%
+18%
+110bps
-1%
+£414m
+159.3p
-27%
n/a
+£279m
Constant currency2
+22%
+2%
+5%
+40bps
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
The Financial Review includes a mixture of GAAP measures and those which have been derived from our reported results in order to provide a useful basis for measuring our operational
performance. Adjusted results are for continuing operations before adjusting items as presented in the Consolidated Income Statement. Details of alternative performance measures are
provided in note 2 of the Group financial statements.
1 Continuing operations excludes the Oil & Gas Division which was sold to Caterpillar Inc.
in February 2021 and the Saudi-Arabian joint venture which was sold to Olayan Financing
Company in June 2021.
4 2020 has been restated to reflect a change in accounting treatment for Software as a
Service (SaaS) arrangements following the publication of an Agenda Decision during
the year by the International Financial Reporting Standards Interpretations Committee.
Details of the restatements are provided in note 2 of the Group financial statements.
5 Calculation is on a lender covenant basis with net debt at average rates.
2 2020 restated at 2021 average exchange rates.
3 Operating cash flow (cash generated from operations) excludes additional pension
contributions, exceptional and other adjusting cash items and income tax paid. Net cash
generated from operating activities was £155m (2020 restated: £266m).
CONTINUING OPERATIONS NET FINANCE COSTS
Net finance costs were £47m (2020: £50m) with the reduction mainly
due to reduced net debt levels following receipt of proceeds from the
sale of the Oil & Gas Division in February 2021.
CONTINUING OPERATIONS PROFIT AFTER TAX
The continuing operations profit after tax before adjusting items is
£185m (2020: £188m). The statutory profit after tax for the year from
continuing operations is £155m (2020: £133m).
Net finance costs (excluding retirement benefit related costs) were
covered 7.3 times by adjusted operating profit from continuing
operations on a lender covenant basis (2020: 6.5 times), compared
to a covenant level of 3.5 times.
CONTINUING OPERATIONS PROFIT BEFORE TAX
Adjusted profit before tax from continuing operations was £249m
(2020: £249m), after a translational foreign exchange headwind of
£15m. The statutory profit before tax from continuing operations of
£209m compares to £178m in 2020, the increase primarily due to the
reduction in adjusting items.
CONTINUING OPERATIONS TAXATION
The adjusted tax charge for the year of £64m (2020: £61m) on
profit before tax from continuing operations (before adjusting items)
of £249m (2020: £249m) represents an adjusted effective tax
rate (ETR) of 25.6% (2020: 24.5%). Our ETR is principally driven
by the geographical mix of profits arising in our business and, to
a lesser extent, by the impact of Group financing and transfer
pricing arrangements.
A tax credit of £9m has been recognised in relation to continuing
operations adjusting items (2020: £16m).
In terms of cash tax, the total Group paid income tax of £82m in 2021
across all of its jurisdictions compared to £63m in 2020. The increase
is due to a combination of extended phasing of payments permitted
in 2020 during Covid-19 in certain territories, together with the
non-recurrence of tax refunds obtained in 2020 as well as one-off
non-recurring cash tax payments in 2021.
DISCONTINUED OPERATIONS
The statutory profit after tax for the year from discontinued operations
was £104m (2020: loss of £288m) reflecting an adjusted loss of £2m
(2020: loss of £27m) and a gain from adjusting items of £106m (2020:
charge of £261m). The profit in the year of £104m is primarily due to
the gain on disposal of the Oil & Gas Division (excluding AMCO) of
£99m and a small net gain of £6m on the sale of the joint venture.
This compares to a loss in the prior year of £288m, which included an
exceptional impairment of £209m.
On 1 February 2021, the Group completed the sale of the Oil & Gas
Division, excluding AMCO, to Caterpillar Inc. (CAT) for an enterprise
value of $375m. Consideration received totalled £283m. The sale of
AMCO to the Group’s joint venture partner, Olayan Financing Company
(Olayan), completed on 30 June 2021 for an enterprise value of $30m.
Net consideration received was £24m.
Following last year’s exceptional impairment, the overall gain was finalised
in 2021 following the completion of customary working capital and debt-
like adjustments, tax and recycling of net cumulative foreign exchange
gains from the foreign currency translation reserve to the income
statement. The latter, which is only accounted for following completion,
amounted to £103m and was the main driver of the gain in the year.
ACQUISITION OF MOTION METRICS
The Group completed the acquisition of Motion Metrics on 30 November
2021 for an enterprise value of CAD$150m (£88m), which represents
initial equity value consideration of £68m paid in cash and adoption
of £20m of vendor liabilities primarily relating to tax, settlement of an
employee growth participation plan and disposal costs. Motion Metrics
contributed £0.6m to revenue and an operating loss of £0.3m (before
adjusting items) in the period from acquisition to 31 December 2021.
42
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 CAPITAL EXPENDITURE
Net capital expenditure reduced by £28m to £39m (2020: £67m),
including £12m net proceeds from the sale of a property in China,
as spending was restricted in the final quarter as a result of the
cybersecurity incident.
Lease payments of £28m reduced from £43m last year mainly due to
the disposal of the Oil & Gas Division.
CASH FLOW AND NET DEBT
Cash generated from total operations decreased by £99m to £266m
(2020: £365m) in the year, including a decrease of £27m from
discontinued operations (2021: outflow of £14m vs 2020: inflow of
£13m). The cash generated from continuing operations decreased
by £72m primarily driven by an outflow of working capital in the
period of £103m (2020: £37m). This reflects an increase in trade and
other receivables due to back-end loading of revenues at the end of
the year as operations recovered from the cybersecurity incident,
together with an increase in inventory as operations geared up to
execute a record closing order book. As a result, working capital as
a percentage of sales increased to 27.9% from 22.9% in the prior
year. Continuing operations utilised non-recourse invoice discounting
facilities of £19m (2020: £3m) and suppliers chose to utilise supply
chain financing facilities of £33m (2020: £33m). Net cash generated
from operations is £156m (2020: £266m).
Operating cash conversion (refer to note 2 of the Group financial
statements) was 63% (2020: 91%) as a result of the above noted
working capital outflow. Over the medium-term we are targeting
operating cash conversion of 90% to 100% driven by working capital
efficiency and maintaining capex and lease costs close to 1 times
depreciation. Capex is likely to be elevated above this level for the
next two years as we construct our new ESCO foundry in China and
complete our roll out of SAP and other digital initiatives resulting in
cash conversion between 80% and 90% over that period.
Free cash flow (refer to note 2 of the Group financial statements) from
total operations was an inflow of £62m (2020: £132m). In addition to
the movements noted above this was impacted by an increase in tax
payments of £19m reflecting a higher tax charge and some payment
deferrals last year, an increase in purchases of shares for employee
share plans of £4m to £15m (2020: £11m), offset by a reduction
in interest payments of £8m on lower net debt and refinancing
costs and a £6m increase in proceeds on settlement of derivative
financial instruments.
Net debt improved by £279m to £772m (2020: £1,051m) and includes
£105m (2020: £179m) in respect of IFRS 16: Leases. The decrease
was a result of free cash inflow of £62m, plus net proceeds from the
sale of the Oil & Gas Division and the AMCO joint venture of £283m,
a reduction in lease liabilities due to the disposal of the Oil & Gas
Division of £65m, an exceptional cash inflow from the disposal of land
in Malaysia of £16m and a net decrease in continuing IFRS 16: Leases
of £10m. These movements are partially offset by the acquisition of
Motion Metrics for £68m, interim dividend of £30m, exceptional cash
costs from operating activities of £9m, foreign exchange retranslation
of £32m and other movements of £7m. Net debt to EBITDA on a
lender covenant basis was 1.9 times5 (2020 restated: 2.8 times)
compared to a covenant level of 3.5 times.
In May 2021, the Group successfully completed the issuance of
five-year US$800m Sustainability-Linked Notes. This, together with
the successful refinancing in June 2020 of the Group’s US$950m
Revolving Credit Facility (RCF), secures significant levels of liquidity
over an extended maturity profile. The RCF matures in June 2023 with
the option to extend for up to a further two years. These refinancing
actions plus the reduction in net debt in the period, resulted in the
Group having c.£800m of immediately available committed facilities
and cash balances following the maturity of US$590m of US Private
placement debt in February 2022.
PENSIONS
The Group has a mixture of defined benefit pension plans and
other employee compensation or medical plans in both the UK and
North America.
The net pension deficit decreased to £57m from £161m at
December 2020. The decrease is primarily due to changes in financial
assumptions which resulted in a gain of £54m, mainly due to the rise
in discount rates over the period, partially offset by an increase in
inflation expectations. In addition, experience gains on the liabilities
of £41m, reflected the results of the latest UK Main Scheme triennial
valuation as at 31 December 2020. These movements contributed
to a credit of £96m (2020: charge of £35m) being recognised in the
Consolidated Statement of Comprehensive Income. Employer pension
contributions in the year totalled £12m.
Insurance policy assets held for the two largest UK schemes now
cover 35% (2020: 36%) of the UK’s total funded obligation, reducing
the Group’s exposure to actuarial movements.
ASBESTOS-RELATED PROVISION
Certain of the Group’s US-based subsidiaries are co-defendants in
lawsuits pending in the United States in which plaintiffs are claiming
damages arising from alleged exposure to products previously
manufactured which contained asbestos. At the end of 2021, there
were 1,765 asbestos-related claims outstanding in the US (2020: 1,586).
We have recognised a US asbestos-related provision of £59m
(2020: £65m) which reflects expected future settlements based
on the triennial actuarial review of estimated future indemnity and
defence costs which was completed in December 2020. The Group
has insurance cover in place for claims with a pre-1981 date of first
exposure and, as a result, recognises a corresponding insurance asset
of £42m (2020: £52m). The net result is a £16m liability (2020: £12m).
A charge of £4m (2020: £12m) has been recognised as an other
adjusting item in the year (note 5 of the Group financial statements).
Full details of the provision, plus related insurance receivable, are
provided in note 21 to the Group financial statements.
KEY ACCOUNTING AND POLICY JUDGEMENTS
The key accounting and policy judgements are contained within note 2
to the Group financial statements on page 165.
EARNINGS PER SHARE
Adjusted earnings per share from continuing operations decreased by
1% to 71.3p (2020: 72.3p) reflecting the higher effective tax rate in the
year. Statutory reported earnings per share from total operations is
99.7p (2020: loss per share 59.6p). The weighted average number of
shares in issue was 259.3m (2020: 259.5m).
DIVIDEND
The Board is recommending a final dividend of 12.3p resulting in a
total dividend of 23.8p for the year. If approved at the Annual General
Meeting, on 28 April 2022, the final cash dividend will be paid on
6 June 2022 to Shareholders on the register as at 22 April 2022.
JOHN HEASLEY
Chief Financial Officer
2 March 2022
43
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
WE SEE
SOLUTIONS
THAT ARE
SMARTER,
MORE
EFFICIENT AND
SUSTAINABLE
OUR ROADMAP IS RAPIDLY
COMING TO LIFE ACROSS
WEIR AS WE PIVOT TO
DELIVER OUR PURPOSE
AND A MORE SUSTAINABLE
FUTURE FOR MINING.
PAULA COUSINS
Chief Strategy and Sustainability Officer
44
The Weir Group PLC Annual Report and Financial Statements 2021
Sustainability Roadmap
ZERO TIR
ENABLING
NET ZERO
LEADING
eNPS SCORE
SBTi-aligned
REDUCTION
IN CO2e
BY 2030
CONSCIOUSLY FOCUSING ON WHAT REALLY MATTERS…
We have focused our Sustainability Roadmap on what we believe
are the most strategic priorities that are right for the world and for
our business. We developed and launched the roadmap in 2020, after
extensive engagement with our customers, our employees and our
investors where we listened to what really matters to each of them.
Our acute focus in 2021 has been to deliver against it. We have made
great headway and, while we still have much to do, I’m delighted
with this progress on all strategic priority areas (see pages 46-53).
We are where we committed to be at this stage in our journey. We will
continue to share our progress, next steps and longer-term ambitions
and commitments with our stakeholders and engage them to make
sure we consciously keep our focus on what really matters.
…FOR OUR CUSTOMERS
For our customers, the road to decarbonisation presents a huge
challenge: how do we help them produce more of the vital resources
required for the energy transition, while keeping their people safe,
using significantly less energy and water, creating less waste and
ensuring a just transition? It is arguably the biggest innovation
challenge in our 150-year history but one we are already seeing our
business rise to with innovative solutions, products and initiatives that
are not only supporting our own Sustainability Roadmap goals but also
those of our customers.
OPERATIONAL TRANSFORMATION IS
NOT A TOMORROW EFFORT; WE ARE
READY NOW.
WEIR CUSTOMER
SOLUTIONSCREATING SUSTAINABLEFOOTPRINTREDUCING OURZERO HARMCHAMPIONINGNURTURING OURUNIQUE CULTUREStrategic Report We already have some great products and solutions that improve our
customers’ safety and environmental impact but we recognise that
more needs to be done. We need to continue pushing boundaries
and pace to develop smarter, more efficient and more sustainable
solutions that deliver both incremental and transformational technology
improvements and take people out of harm’s way. Our target is to
increase R&D spending to at least 2% of revenues and are continuing
to forge strategic technology partnerships across the globe. By finding
the next generation of young engineers and broadening our talent pool,
we are ensuring that Weir stays at the forefront of tackling society’s
biggest challenge at the pace required. You can read more about our
Creating Sustainable Solutions priority on pages 52-53.
1/3 miners
Committed to set scope 1&2 emissions goals to achieve
Net Zero by 20501.
…FOR OUR EMPLOYEES
We’ve heard loud and clear from our own people how important it is
for them to be part of an organisation that cares about people and the
environment. I’ve been hugely impressed with the level of energy and
engagement across the whole business. In June 2021, we received
the first results from specific sustainability-focused questions in our
global all employee survey and scored very highly. It was a particular
pleasure to read the anecdotal feedback to see where employees are
challenging us to go further.
8.6/10 score
I believe Weir is committed to being
a sustainable business
8.1/10 score
I feel empowered to take actions to make
Weir more sustainable
We’ve seen particularly strong engagement in our Inclusion, Diversity
& Equity (ID&E) and Safety Leadership training programmes, our
Day of Purpose (read more on page 48) and actions aligned with
external events such as World Safety Day and World Environment Day.
Weir businesses across the globe are showing palpable energy to
identify, evaluate and collaboratively deliver sustainability projects both
in our own operations and on our customers’ sites. In 2021, we co-
developed and launched our own sustainable product design course, in
partnership with the Sustainable Minerals Institute at the University of
Queensland in Australia, which encourages our engineers to see things
differently and design with sustainability in mind. In 2022, we plan to
build on the impact of that course and launch additional modules to
help empower many more Weir employees to play a part in delivering
our Sustainability Roadmap.
I’M ALREADY SEEING RELEVANCE
IN MY DAILY WORK. EVERYONE SHOULD
HAVE THIS LEVEL OF UNDERSTANDING.
…FOR OUR INVESTORS
Throughout 2021, we have also engaged directly with key investors
to understand their evolving priorities. The consistent message is that
our four Sustainability Roadmap priorities of Championing Zero Harm,
Nurturing our Unique Culture, Reducing our Footprint and Creating
Sustainable Solutions remain the most material. Our investors want
us to continue to deliver against our goals on each, progressively
embedding into our core strategy and ways of working, and to
transparently share our progress.
From an investor perspective, we also want to align our sustainability
strategy more closely to our financing strategy. Our first sustainability
linked bond was a significant milestone that demonstrated our
commitment to back our footprint reduction targets with hard cash.
This historic move for the Weir Group firmly endorsed that sustainable
business is better business by reducing our interest charges.
In 2022, we will start the transition to make our global.weir website a
more comprehensive, user friendly and real-time source of all things
Environment, Social and Governance (ESG) related. We will continue to
use measurement to refine our most material sustainability issues and
to further underpin our disclosures. To read more on our approach to
sustainability reporting see page 56.
…FOR OUR WORLD
The recent COP26 Conference in our home city of Glasgow has
built further consensus that the world needs to act fast to reduce its
energy footprint to avert catastrophic climate change. Ambitious CO2e
emissions targets combined with robust and transparent reporting are
a key component of a climate strategy. Aligned with this ambition, we
are publishing the following for the first time in this report:
• Scope 3 emissions: The results of our first scope 3 CO2e emissions
study (see page 61). This first pass evaluation confirmed that by
far the greatest scope 3 component for Weir is from our products
in use on customer sites. This validates our focus on Creating
Sustainable Solutions (see page 53).
• Task Force on Climate-related Financial Disclosures (TCFD): In 2020,
we began work to align to TCFD and in line with the UK Listing
Rules, we are pleased to confirm that the disclosures included in the
Annual Report are consistent with the TCFD Recommendations and
Recommended Disclosures (see pages 62-67).
• Science Based Targets Initiative (SBTi) commitment: We already
have ambitious scope 1&2 CO2e targets, covering Weir’s own
operations, but in December 2021 committed to the SBTi in which
the Group will set emissions reduction targets aligned with the
Paris Agreement on climate change across scopes 1, 2 and 3
(see pages 54-55).
We believe doing this is right for the world and for our business.
We have a responsibility, and a shared interest, to minimise carbon
emissions to help protect the future of the planet. That’s why we
have made it our business to see things differently and enable the
sustainable and efficient delivery of the natural resources essential to
create a better future for the world (read more about our emissions
strategy on pages 54-55).
SUSTAINABLE PRODUCT DESIGN TRAINING PARTICIPANT
1
International Council on Mining and Metals (ICMM): Climate Change Statement (2021).
45
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
CONTINUED
CHAMPIONING ZERO HARM
ZERO TIR
IN SUPPORT OF UN SDGS
OUR GOALS
Safety First
• Aspire to zero TIR
Health and Wellbeing • Promote Health and Wellbeing tailored
to local needs
Environmental
Safeguarding
• Drive continuous
environmental improvement
Our Total Incident Rate of 0.45 is broadly in line with 2020 and
puts us among the safest companies in our sector, after another
year of substantial disruption to our employees’ life and work
through the Covid-19 pandemic.
We continue to drive towards a zero-harm culture across all
levels of the organisation, together with implementation of
Weir SHE Management System Standards and Protocols and
ISO certification.
TOTAL INCIDENT RATE (TIR)1,2,3
0.45
+10.0%
0.55
0.41
0.45
2019
2020
2021
(No. of recordable incidents x 200,000)/(Hours worked.)
1
2 Data shown on a continuing operations basis.
3 Full five-year comparative data for TIR is available on the graph on page 30.
46
PERFORMANCE IMPROVEMENT
Our Minerals’ Artarmon site in Sydney Australia, is one of our
largest and most challenging operational sites. It comprises the
foundry, machine shop, equipment assembly and warehouse
operations. In 2021, we carried out a significant expansion
in our foundry, but also experienced increased operational
challenges posed by Covid-19. Even under these conditions,
safety performance at Artarmon improved from an average of
seven recordable injuries over the previous three years to just
one recordable injury in 2021. This was achieved as a result
of a collective, targeted approach across the site to improve
safety performance in which 21 critical risk safety projects
were introduced, each with a project plan, team ownership and
allocated resources.
Everyone really supported each other. Our process to
understand what we did well, and where we could do
better, while making sure we remained focused on our
priorities with everybody included, worked well.
John Ruscio, Foundry Manager
In 2021, ESCO’s steel foundry in Port Hope Canada achieved the
best safety performance in the facility’s 60-year history with no
lost time injuries despite expanding capacity in the foundry and
managing the ramifications of Covid-19 on our employees and
suppliers. Since joining Weir in 2018, ESCO’s implementation
of Weir’s SHE Management System Standards and Protocols,
as well as regular investment at Port Hope to improve the site’s
equipment and building conditions, have led to fewer safety
incidents. In particular, a top to bottom renewal of all site risk
assessments and a focus on proactively addressing the areas of
high risk has allowed improved hazard controls to be introduced
to our operations. Furthermore, the continued focus on Weir zero-
harm training, safety conversations and hazard spotting as proactive
controls has only supported these gains and helped advance the
site safety culture towards zero harm.
Engaging with our leadership and production teams on
the hazards in the processes we all share has started
moving our workforce from a ‘can do’ to a ‘can do safely’
mentality that is showing up with fewer incidents and
more early identification of hazards.
Paul Thompson, Site Manager
WELLBEINGHEALTH &FIRSTSAFETYENVIRONMENTALSAFEGUARDINGZERO HARMCHAMPIONINGStrategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 Our vision is a zero-harm workplace
for people and the environment where
everyone goes home safe and healthy.
To further develop our safety culture, we have engaged with
behavioural safety specialists to develop standard behaviours for
everyone but particularly at middle management to operationalise
safety and define the behavioural expectations that will help us realise
our vision of ‘zero harm.’
THE JOURNEY TO ZERO-HARM
Our Total Incident Rate (TIR)1 for 2021 of 0.45 is broadly in line with
2020, and is a credible set of safety results after another year of
substantial disruption to our employees’ life and work through the
Covid-19 pandemic. Although we didn’t see a reduction in our score,
we are still among the safest companies in our sector and 86% of
sites recordable injury free during the year.
The Minerals Division TIR increased from 0.25 in 2020 to 0.36 in 2021
following an outstanding performance in 2020 which benefited from
individual cautionary behaviour, particularly in the early days of Covid-19.
We made another meaningful step forward in the ESCO Division with
a TIR at 0.85, 19% lower than 2020 and now less than half of the
score when we acquired the business in 2018. We also see a route
to continuous improvement and have a clear focus on improving the
safety performance in our North America foundries which currently
have higher TIR than the division as a whole.
Across the whole Group, there were pleasing improvements in other
key indicators such as first aid incidents (down 6%), hand and finger
injuries (down 12%) and eye injuries (down 25%). In addition we
saw a 95% increase in hazard reporting and a 44% increase in safety
conversations. This supports a culture of care and collaboration in
which all levels of the organisation are engaged in working towards
a zero-harm environment. Notwithstanding this good progress we
also regret to report a third-party fatality following an accident at the
entrance gate to a leased warehouse in Brazil.
The Weir SHE Management System Standards and Protocols were
reviewed, updated and implemented throughout 2021, ensuring
continual improvement and compliance with ISO45001 and ISO14001.
The overall Group performance was supported by a number of
initiatives including ‘Pause and Refocus’ activities which were
developed through leading indicators including hazard awareness,
near miss reporting and safety conversations driven by greater
understanding of trends and causes. Weir Safety Week held in March
was supported across the business by local site initiatives and kicked
off with Town Hall meetings and emphasis on mental health and
wellbeing. In 2021, 71% of our qualifying sites, which are defined
according to a site’s risk profile, are accredited to both ISO45001 and
ISO14001 with the number of sites accredited during the year offset
by an increase in number of qualifying sites. The Minerals Division
maintained ISO45001 and ISO14001 certification across nearly all
qualifying sites with the ESCO Division achieving certification at four
sites in the year. Further ISO certification with ISO9001 management
systems is planned at ESCO sites in 2022 and 2023.
HEALTH AND WELLBEING
Covid-19 remained a challenge in 2021 and our local leaders worked
with their teams and adapted our workplaces and processes while
maintaining effective controls to prevent the spread of Covid-19.
In addition to the physical changes made to protect employees, we
also prioritised mental health during a time of increased uncertainty
for colleagues and their families. Engaging employees, including those
working from home, was instrumental in supporting the changes in
work and life due to Covid-19. Initiatives enabling and encouraging
people to get vaccinated were launched across the business.
We developed a Group Health and Wellbeing strategic framework
to address employee wellbeing priorities and established health and
wellbeing metrics along with the promotion of existing assistance and
global support lines. Many health and wellbeing initiatives were also
launched at local site level throughout the Group.
ENVIRONMENTAL SAFEGUARDING
The management of environmental risks and opportunities is covered
by the SHE Management System Standards and Protocols which
were reviewed and updated during the year and set out the minimum
standards for controlling risks to air, land and water. We aim to protect
and improve the environment in which we operate and continue to
implement and maintain ISO14001 certification at qualifying sites
across the business.
During the year, International Environmental Management and
Assessment (IEMA) Sustainability Training was completed by a select
pilot group of employees. This provided participants with knowledge
and understanding of the main environmental and economic risks
and opportunities, compliance obligations and business drivers for
change. It also covered the main potential impacts on environment and
sustainability, to drive improved environmental performance. We aim
to deliver further training across the business.
No significant environmental incidents, penalties or fines were
reported at sites under the operational control of the Group during the
year ended 31 December 2021.
1
(No. of recordable incidents x 200,000)/(Hours worked.)
KEY NEXT STEPS
Safety First
Health and Wellbeing
Environmental Safeguarding
• Deliver the Group SHE Strategy and
• Deliver Group Health and Wellbeing
• Deliver continuous improvement in
continue to drive zero harm.
• Deliver Behavioural Safety Programme.
• Develop and deliver eLearning content
on SHE priority protocols.
strategic framework to address employee
wellbeing priorities.
• Promote and operationalise the wellbeing
framework; provide employees with
materials to support their wellbeing.
safeguarding our local environments.
• Continue to review and improve
the environmental section of SHE
management system.
• Continue implementing ISO14001 at
qualifying sites across the ESCO business.
47
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
CONTINUED
NURTURING OUR UNIQUE CULTURE
LEADING
eNPS SCORE
IN SUPPORT OF UN SDGS
OUR GOALS
Engagement
• Sustain leading eNPS in all
our employee surveys
Inclusion, Diversity
& Equity
• Foster equal opportunities for all
Community
Partnerships
• Make a positive contribution to the
communities in which we operate
Employee Net Promoter Score (eNPS) is a widely-adopted
measure of engagement in organisations.
We continue to achieve considerable progress since our first
global survey, demonstrating the value in listening to employees
and taking action together in our local teams across the globe,
all with the aim of making Weir an even better place to work.
EMPLOYEE NET PROMOTER SCORE (ENPS)1
48
Our score puts us in the top 10% of our industry2
48
42
34
28
18
2019 (H1)
2019 (H2)
2020 (H1)
2020 (H2)
2021 (H1)3
1 Continuing operations.
2 Based on Peakon’s Manufacturing sector benchmarks.
3 The 2021 H2 survey was delayed until January 2022 as a result of the impact of the
cyber incident.
48
MY DAY OF PURPOSE
In celebration and recognition of our 150th anniversary, we wanted
to give something back to our employees and the causes closest to
their heart as well as the communities in which we live and work.
In 2021, we introduced the #MyDayofPurpose campaign which
gave every Weir employee the opportunity to take one day to
apply their time and/or talents to do something with a healthy or
sustainable purpose. By doing this, we all had an opportunity to
think more about purpose (Weir’s purpose and our own personal
purpose), with the unique and personal interests chosen by
employees reflecting the rich diversity of our workforce.
During the year, we saw some tremendous examples from
employees across the globe who have spent their own
#MyDayofPurpose in a variety of different ways. From beekeeping,
to raising environmental awareness, to donating blood, to
volunteering for local causes, to meditating and tree planting and
cycling across the globe: we have been using our time and talents
to make a positive difference in our local communities.
Our Chairman, Charles Berry, alongside Paula Cousins, Chief
Strategy & Sustainability Officer, also celebrated his own ‘My Day
of Purpose’ with a visit to both Glasgow Caledonian University
and Drumchapel High School, Glasgow. Charles was keen to help
inspire the next generation of engineering talent at various stages
of their education and career paths, supported by Primary Engineer,
a charity with which we have a long-standing partnership.
During the visit, Charles and Paula met with Professor Pamela
Gillies CBE – Principal and Vice-Chancellor of Glasgow Caledonian
University alongside other senior representatives from the
university’s leadership team and teaching staff. They then went
on to meet some of the engineering teams to see how they
are bringing school pupils’ ideas to life through the Leaders
Award programme.
Charles and Paula also visited Drumchapel High School in Glasgow
where they met pupils and shared experiences to help encourage
them to consider engineering as a future study and career path.
It was an honour to visit both Glasgow Caledonian
University and Drumchapel High School in Weir’s home
city of Glasgow to celebrate my ‘My Day of Purpose’
and our ongoing industry partnership with Primary
Engineer. Having the opportunity to engage with young
people as they choose their subjects and explain to them
what a career in engineering has meant to me has been
a wonderful experience. I hope this is a lasting legacy
to the range of gifted individuals we have met during
our visits.
Charles Berry, Chairman
UNIQUE CULTURENURTURING OURPARTNERSHIPSCOMMUNITYENGAGEMENTINCLUSION,DIVERSITY & EQUITYStrategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
We are a global family. We are proud of
our unique blend of talent, technology
and culture. We are here to inspire our
people to do the best work of their life.
ENGAGEMENT
Engaging with our employees regularly is something we are
committed to and we have in place a broad range of ways we do
this. During 2021, we continued to work hard to develop a culture of
listening, where employees feel free to share their views, and where
they can see their feedback acknowledged and acted upon.
As we continued to navigate the global pandemic and in response
to the cyber incident later in 2021, employees expressed ongoing
appreciation for strong local and Group-wide communications.
Activities such as global Town Hall sessions and interactive Senior
Leader calls were particularly appreciated as were our Meet the Board
and other Board engagement sessions where employees benefit from
the chance to ask questions of and hear updates directly from our
most senior leaders.
In 2021, we also ran our fifth global engagement survey and achieved
our highest ever levels of survey participation (90%) which indicates
employees continue to believe in the value of completing the survey
and sharing their feedback. We also undertook a pulse survey mid-
year focusing on how supported employees feel when it comes to
their health and wellbeing, allowing us to gain insights across a range
of wellbeing areas such as mental, physical and social wellbeing.
The findings suggest we are in a strong position when it comes to
how supported our people feel across the full range of health and
wellbeing areas. As a company we sit above Workday Peakon’s overall
global benchmark. We also continued to measure feedback relating
to general engagement and saw a further improvement in our levels
of engagement which have increased our eNPS score from 42 in our
previous survey in 2020 to 48 in 2021.
As with all our previous surveys, all leaders across the organisation
reviewed their team’s feedback, discussed priority areas and
developed actions that teams now continue to work on together.
This local activity is driving informed and positive discussions around
how each of our employees can feel better supported when it comes
to their health and wellbeing.
INCLUSION, DIVERSITY & EQUITY
Weir is a welcoming, inclusive place where each individual’s
contribution is recognised and all employees are encouraged to
innovate, collaborate and be themselves. We believe in fairness,
honesty, transparency and are authentic in everything we do.
During 2021, we focused on educating our employees to celebrate our
differences via a number of channels such as our Inclusion, Diversity
& Equity (ID&E) Ambassadors, our global online ID&E learning
programme and through the growth and development of our affinity
groups. Our affinity groups are voluntary, employee-led groups that
come together in the workplace based on shared characteristics,
life experiences, common interests or shared needs. Each has an
executive sponsor and the full support of the organisation. Our Global
Weir Women’s Network (GWWN) is an affinity group dedicated to the
attraction, retention and continued development of women in Weir.
The group is open to all Weir women and their allies who are devoted
to working with, supporting, and championing the work of the GWWN.
Members can engage in quarterly events, networking opportunities,
and local-led events. Throughout the year it continued to expand and
now includes remote chapters in Australia, Brazil, China, Portland,
Manila, Peru, South Africa, Venlo and Women in Tech.
In June, we launched the Weir Pride Alliance which is dedicated to
raising awareness and visibility of the LGBTQ+ community and their
allies. The group aims to foster a safe and welcoming environment for
our LGBTQ+ colleagues enabling them to be their authentic selves in
the workplace. During 2021, we also focused on extending our external
relationships and in August we signed Business in the Community
‘Race at Work Charter’ committing to their seven key actions.
Recognising the critical role that data will play in enabling our ID&E
strategies going forward, in August we launched our ‘Global Diversity
Data Campaign’ which encourages all employees to voluntarily self-
declare their diversity data via the Group’s global HR system, Workday.
COMMUNITY PARTNERSHIPS
We focus our community partnership activity primarily on projects
with strong educational, health and community themes. We support
local communities through charitable contributions and by encouraging
employees to donate their time to community and charitable initiatives.
Our ‘My Day of Purpose’ campaign allowed us to make our greatest
ever contribution to our local communities, as employees participated
in a wide range of local community and sustainability focused activities
close to their hearts.
In terms of total charitable donations made, in 2021 this amounted
to £482,695 (2020: £464,811) split across Community (56%), Health
(32%) and Education (12%).
KEY NEXT STEPS
Engagement
Inclusion, Diversity & Equity
Community Partnerships
• Continue to analyse our global survey
insights to address our priority areas at a
Group level and to enable team-led action
at a local level.
• Conduct deeper listening to our people
across all channels and continue to monitor
feedback and insight trends to support
continuous improvement.
• Generate data driven insights that can help
deliver our ID&E strategy and continue to
foster an inclusive culture.
• Continue to build leadership commitment
and accountability for ID&E with a specific
focus on recruitment and retention.
• Develop a robust pipeline of high-potential
diverse talent.
• Continue support for employee-led local
community initiatives.
• Continue to develop local-led community
partnership activity.
49
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
SUSTAINABILITY REVIEW
CONTINUED
REDUCING OUR FOOTPRINT
SBTi-aligned
REDUCTION
IN CO2e
BY 2030
IN SUPPORT OF UN SDGS
CULTURAL CHANGE TO ACHIEVE
EMISSIONS REDUCTION
In 2021, the Divisions have been driving forward their strategies to
deliver our CO2e reduction targets. The actions taken across 2021
are a clear demonstration of Weir’s culture, where everyone in
Weir understands that they can act to reduce our carbon footprint
and are empowered to do so. The common goal of reducing
our emissions has strengthened our sense of belonging and
commitment to building a sustainable business.
ESCO
The Division has set ambitious plans to expand upon what we are doing
today and to follow a path of continuous improvement for reducing our
footprint. The journey ahead will involve every member of the team.
ESCO has reduced consumption in 2021 by rethinking energy use
within the heat-treating and melting processes, examining how to
reduce use of equipment with large motors such as air compressors
and upgrading systems. Annualised savings of efficiency projects
implemented in 2021 by ESCO equate to a 4% saving of ESCO’s 2021
CO2e. Through a monthly “Energy Champions” forum, sites are able
to share successes and learn from each other which helps to sustain
enthusiasm and progress across the division.
OUR GOALS
CO2e
• 30% reduction in scope 1&2 CO2e intensity
by 2024, relative to revenue and a 2019
baseline, and SBTi-aligned reduction in
absolute scope 1&2 CO2e by 2030
While focusing on reducing CO2e through process
efficiency, we will also reduce our production costs.
It is a win-win scenario where what is good for the
planet is also good for our customers and business.
Waste
• Deliver against Division specific zero
waste targets
Water
• Develop water stewardship programmes
in all water stressed locations
In 2021, our continuing operations and market based GHG
emissions (relative to revenue) have reduced by 15%1 on a
constant currency basis compared to our 2019 baseline.
This occurred due to manufacturing efficiency improvements,
behavioural changes, process and technology upgrades, along
with an increase in renewable energy usage.
Our scope 1&2 GHG emissions data for all years has been
externally verified to a limited level of assurance by Corporate
Citizenship (see page 61).
CONTINUING OPERATIONS MARKET BASED tCO2e/£M1,2
81.0
-15.0%
95.8
84.4
81.0
Ian Bingham, Senior Director of Sustainability
ESCO – Operations
Minerals
The incorporation of sustainability Kaizens in Minerals best practice
forums has created awareness and the teams are enthusiastically
embracing the opportunity to identify and take action to deliver
sustainability improvements. Minerals has set up a regional
champion network who promote and identify sustainability
projects, collecting information to help monitor and report progress.
More importantly, we have created two workstreams – one
is through the SHE community and the other through our best
practice forums to share experiences and ideas.
Minerals implemented a number of efficiency projects in 2021
and have further reduced emissions via renewable energy
purchasing and installation. Annualised savings of efficiency
projects implemented in 2021 by Minerals equate to a 6% saving
of Minerals’ 2021 CO2e.
It’s about creating a mindset that continually drives what
we can improve. This mindset brings another perspective
to the decisions that we make, the process we put in
place and how to better conduct our operations.
2019
2020
2021
1 Our continuing operations consists of our two Divisions (Minerals and ESCO) and
Group functions.
2 Management focus for 2022 will switch to absolute CO2e emissions in line with our
commitment to SBTi-aligned scope 1&2 CO2e targets.
Richard Hinsley, Vice President –
Global Operations at Weir Minerals
50
WASTECO2eWATERFOOTPRINTREDUCING OURStrategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 We want to lead by example and will
take actions to reduce our own footprint
including CO2e, waste and water.
During 2021, for our ten owned foundries, our total location based
GHG emissions were 122,465 tCO2e, and our total market based GHG
emissions were 107,976 tCO2e representing an absolute reduction
compared to 20192. Our full GHG emissions breakdown can be found
on pages 60-61.
CO2e AND ENERGY
Weir has committed to a 30% reduction in scope 1&2 CO2e intensity
by 2024, relative to revenue and a 2019 baseline, and SBTi-aligned
reduction in absolute scope 1&2 CO2e by 2030. In early 2022, we
revised the 2030 target to align with the requirements of the Science
Based Targets initiative (SBTi). We believe this new more ambitious
target will benefit us by incentivising both the drive to energy
efficiency and the switch to low-carbon energy sources. For more
information on our SBTi commitment, see pages 54-55.
In 2021, we focused on targeted actions in the areas we can make
the biggest difference, reducing our overall energy intensity and
increasing the proportion of energy from renewables. Our global
foundry operations are the most energy-intensive portion of our
footprint, representing 69% of our total 2021 consumption, so our
CO2e reduction strategy focuses on harnessing energy consumption
data and rethinking how we approach heat treatment and melting
processes used in the production of mining equipment.
Demonstrating the success of this approach our Chinese Foundry was
named a Green Foundry via a government-certified scheme in 2021,
and is setting the standard for more efficient and more sustainable
manufacturing operations across the province in which it operates.
To deliver our CO2e goals, we’ll need to combine this focus on
efficiency with a change in the source of our energy. In 2020, we
developed our Renewables Strategy to improve the indirect footprint
involved in our energy supply sources. In 2021, 8% (2020: 5%) of
our energy and 19% (2020: 11%)) of our electricity was sourced
from renewables including Power Purchase Agreements (PPAs),
Self-generation, Green Contracts, and Energy Attribute Certificates
(EACs). These included the Weir Minerals Chile Green Contract/PPA.
This agreement decreased the carbon footprint of electricity consumed
by our Chilean operations by 95% per annum.
The Group’s total (continued and discontinued operations) location
based annual Greenhouse (GHG) Gas emissions, for the year ending
31 December 2021 were 173,801 tCO2e, and market based GHG
emissions were 158,319 tCO2e. This total showed an absolute
reduction of 21% for location based GHG emissions, and a 26%
reduction for market based GHG emissions in comparison to 20191,2.
Our total location based GHG emissions from continuing operations
were 172,105 tCO2e and market based emissions were 156,600
tCO2e, which is a 9% and 15% absolute reduction respectively
compared to 20192.
WATER
Weir operates within, and supports customers in, a number of water
stressed regions of the world. Therefore effectively managing our
water consumption in these regions is a key priority. In 2021, we have
improved the quality and quantity of the water data which we hold and
included the emissions related to this water supply in our first scope 3
CO2e footprint.
Our water stewardship programme aligns with the Alliance for Water
Stewardship Standard (AWS) framework. It leverages our local service
presence and close understanding of the different regional issues.
In our most water stressed locations, water stewardship programmes
are underway, including in Chile, USA and Australia.
We have aligned our water stewardship programme to contribute
to the site sustainability objectives of our customers, proactively
partnering with local communities and engaging with environmental
interest groups. Water projects implemented include water
recirculation projects in some of our larger water usage facilities,
resulting in a lower need for water to be drawn from local supply
networks. An estimated 2,000,000 gallons of water were saved
in 2021.
WASTE
Our foundry operations are material intensive parts of our business,
so each Division of Weir runs Best Practice groups, and has
embedded lean methodology through the value chain to pursue zero
waste targets.
In 2021, Weir has improved systems and processes to enable greater
granularity of waste data collection and analysis. The Divisions are
focused on tackling their key waste streams which are: sand, metal
scrap, elastomer scrap and dust. In 2021,we have implemented
projects which focus on reducing, reusing or recycling the waste
produced. In 2021, we delivered against those targets by reusing over
48,365 tonnes of scrap metal, comprising 49% of all metal poured in
our foundries.
Within our Brazil operations in 2021 we sent c.800 tonnes of foundry
sand to be recycled which could then be reused within our processes.
Within our UK operations we are working with academia to understand
what other industries could use our waste sand, including trials in the
glass and construction industries.
1 The 2019 figures have been recalculated to remove the divested Flow Control Division.
2 2020 and 2019 comparatives have been restated to reflect improvements in data capture.
KEY NEXT STEPS
CO2e and Energy
• Implement further energy efficiency
improvements through process
and technology upgrades and
behavioural change.
• Continue to grow % of renewable energy
in global consumption footprint.
• Achieve CO2e reductions and show
• Expand water stewardship programme.
progress towards SBTi target reductions.
Waste
Water
• Investigate potential for transformational
gains through Green Foundry Technology
Assessment Project.
• Focus on highest impact waste reduction
and redirection projects.
• Further share and embed waste reduction
best practice as core component of
lean operations.
51
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
SUSTAINABILITY REVIEW
CONTINUED
CREATING SUSTAINABLE SOLUTIONS
ENABLING
NET ZERO
IN SUPPORT OF UN SDGS
OUR GOALS
Products in Use
• Enable Net Zero for customers
through innovative solutions
Purchased Goods & Services • Design and procure sustainably
Transport & Distribution
• Optimise logistics networks
ENDURON® HPGR
LINATEX® LOCTITE®
– LINA 88™ ADHESIVE
up to 40%
energy savings
Zero VOC
best in class
bond strength
NEMISYS® N1 LIP SYSTEM
GEHO® PUMPS
11% more
capacity for faster truck fill
up to 30%
water savings
52
ADDRESSING THE BIGGEST IMPACTS WITH
SUSTAINABLE DESIGN
We aim to enable Net Zero for customers by helping them reduce
energy and water consumption, while improving operator safety
and diversity. These are engineering challenges that we can address
through sustainable design. We focus on hot spots to identify the
greatest opportunities, such as load and haul, comminution and
tailings management, with our Divisions taking a lead role.
Customers increasingly want strategic partnerships
with suppliers to help them achieve their sustainability
goals on energy, water and safety. We’re building our
capability and tools to deliver a new generation of
smart, sustainable, efficient technology to meet this
need. In comminution, we’re driving breakthrough
innovation to reduce energy consumption,
building on the step-change delivered by HPGR.
And we’re helping miners address water challenges
through initiatives to reduce consumption
and improve tailings management.
John McNulty,
Vice President, Global Engineering
and Technology, Minerals
Our design process is focused on our vision
of the smart bucket to address energy consumption
and operator safety and diversity. We already know
ESCO G.E.T. lasts longer than competitors’ products.
Now we’re able to quantify energy, carbon and cost
benefits through new customer partnerships. And our
G.E.T. replacement systems are taking operators out
of harm’s way and making work more accessible
to diverse employees. With our acquisition of
Motion Metrics, we will embed the next generation
of smart technology to accelerate this work.
Chris Carpenter,
Vice President of Innovation
and Technology, ESCO
SOLUTIONSCREATING SUSTAINABLEPRODUCTS IN USEPURCHASED GOODSAND SERVICESTRANSPORT ANDDISTRIBUTIONStrategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 We believe we can enable Net Zero
for our customers with cutting-edge
science and our tradition of innovation.
PRODUCTS IN USE
We are shaping the next generation of smart, sustainable, efficient
solutions to reduce energy, water and waste for our customers and
improve safety. We target the use phase of our products because, as
our scope 3 carbon footprint study shows, this is where the greatest
environmental impact arises in the end-to-end lifecycle of our products.
In 2021, our Minerals Division launched LINATEX® LOCTITE® – LINA
88™, a mining-industry-first solvent-free adhesive range for rubber
lining applications with zero volatile organic compounds (VOCs).
Classified as non-flammable, the products are safer to use, cheaper
to transport and do not require special handling and storage facilities,
while offering extremely strong adhesion – exceeding the British
Standard for bond strength by up to four times – as well as time and
labour savings and UV protection.
Our GEHO® positive displacement pumps offer proven, reliable
performance and continual innovation across a range of demanding
applications. GEHO®’s Heart of the Mine campaign, launched in
2021, highlights these proven technical capabilities as well as
resulting sustainability benefits, including up to 50% reduced energy
consumption and carbon emissions, and up to 30% water savings.
We expanded the Cavex® 2 product line with the new 650 model,
delivering significant benefits to mining customers including up to
30% increased operational and circuit capacity. And by reducing
bypass returning to the mill, fewer fines are returned reducing energy
consumption and freeing up mill capacity. The range can operate at
lower pressure for further energy savings – or at higher feed density
for water savings.
Our Enduron® High-Pressure Grinding Rolls (HPGR) are becoming
well-established in the market, thanks to savings of up to 40% in
energy consumption and less water usage, as well as high wear life
and availability. A sustained HPGR marketing campaign during 2021
drove customer engagement and enabled opportunities such as a
£36m order to provide industry-leading energy saving solutions to
Ferrexpo, one of the world’s largest exporters of iron ore pellets, and
an order for the world’s largest HPGR in a gold hard rock application
with IAMGOLD.
Using superior alloys and sophisticated design, our ESCO Division
continues to optimise performance, energy consumption and
operating costs for miners, validated in customer studies. For example,
upgrading a primary production excavator to the ESCO Nemisys®
tooth system enabled a Brazilian copper mine to increase metric tons
produced per ton of points and adapters used by 32% and reduce
G.E.T. related downtime per million metric tons produced by 60%.
And replacing a cable shovel dipper lip with the lower profile ESCO
Nemisys® N1 integral nose lip increased dipper capacity by 11% at
a large North American coal mine. As a result, the modified dipper
is now able to fill haul trucks with only three passes versus the four
required previously.
To take this to the next level, we are continuing to build our
understanding of the resources our products consume during
operation by digging deeper into data from the field and extending
our analysis to the entire product lifecycle. This will enable us to drive
continuous improvement, further refine key performance indicators,
and quantify performance benefits and resulting sustainability impacts.
We aim to complete comprehensive studies across our major
product lines and build tools for designers to drive the next round
of improvements.
This work is enabled by the skill and commitment to sustainability of
our global network of engineers, scientists and designers. We have
a 150-year track record of innovation that has helped create state-
of-the-art technology for today’s mine and we are not standing still.
During 2021, more than 400 of our people completed our Sustainable
Product Design training course – this will ensure that we continue
to build our capability to design the mine of the future and to
communicate the benefits to customers.
PURCHASED GOODS AND SERVICES
Our product footprint analyses will help us to identify any embedded
carbon hotspots within our product ranges. This will in turn enable us
to design out embodied emissions by using alternative materials and
components, or to work with suppliers to reduce emissions.
This emphasis on the emissions embodied in our products from
purchased goods and services is supported by the results of our scope
3 study which found that emissions related to the supply of goods and
services are around 2% of total emissions across our value chain.
We continue to look upstream into our supply chain to find ways to
be more sustainable. Under our sustainable foundations, we set out
our supplier expectations for business ethics, how they treat their
workforce, legal and regulatory compliance, health and safety and
environmental standards.
TRANSPORT AND DISTRIBUTION
This category is the third most significant source of scope 3 emissions
from our wider value chain, after products in-use and purchased goods
and services. We are working with the supply chain teams in our
Divisions to analyse in-bound and out-bound logistics networks and the
relative locations of key suppliers, Weir facilities and key customers as
we seek to optimise our overall supply chain footprint.
KEY NEXT STEPS
Products in Use
Purchased Goods and Services
Transport and Distribution
• Continue to deepen analysis of
product footprint.
• Identify embodied carbon hotspots via
• Analyse logistics and supply
product footprint studies.
chain networks.
• Refine performance and sustainability
• Reduce supply chain emissions.
• Optimise overall supply chain footprint.
impact KPIs.
• Continue to build sustainable
design capability.
• Continue to build sustainable
sourcing foundations.
53
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY REVIEW
CONTINUED
OUR EMISSIONS STRATEGY
TRANSFORMING THE
ENVIRONMENTAL FOOTPRINT
OF THE MINING SECTOR
WILL NOT BE EASY BUT
IT IS ESSENTIAL.
JON STANTON
CEO
We are committed to taking action to tackle climate change. We believe
doing this is right for the world and for our business. We have a
responsibility, and a shared interest, to minimise carbon emissions
to help protect the future of the planet. This directly aligns with our
company purpose to enable the sustainable and efficient delivery of the
natural resources essential to create a better future for the world.
Our Emissions Profile
Completing our scope 3 study in 2021 gave us a complete profile
of GHG emissions across our full value chain and complements our
long-standing scope 1&2 reporting (see pages 60-61). This study
concluded that:
• The overwhelming majority, ~97%, of Weir Group’s end-to-end
carbon footprint is attributable to downstream value-chain scope 3,
specifically the use-phase of our long lifespan products and solutions
on our customers’ sites.
OUR IMPACT ACROSS THE VALUE CHAIN
• Upstream supply chain scope 3 emissions make up another
2.5%, predominantly purchased goods and services and transport
and distribution.
• Scope 1&2 emissions from our own operations make up ~0.5%.
This resolutely validates our Sustainability Roadmap strategic priority
of Creating Sustainable Solutions. We believe we can reduce our
scope 3 emissions and enable Net Zero for our customers operations
by shaping the next generation of smart, efficient and sustainable
solutions with cutting-edge science and our tradition of innovation.
However, as a company we are committed to measuring, reporting
and reducing emissions across our full value chain.
Scope 1&2 Emissions – Weir Group’s own operations
We’ve revised our 2030 scope 1&2 intensity target, relative to
revenue, to an absolute target aligned with the requirements of the
Science Based Targets initiative (SBTi). We believe this new more
ambitious target will benefit us by incentivising both the drive to
energy efficiency and the switch to low-carbon energy sources. It will
also increase the clarity of CO2e management in our facilities by
focusing on absolute emissions, rather than CO2e intensity. For more
detail on our progress and next steps see Reducing our Footprint
pages 50-51.
We will retain and report against our interim 2024 target of a 30%
reduction in scope 1&2 CO2e intensity, relative to revenue, because it
links to our financing via the sustainability linked bond.
One challenge for Weir is that we manufacture a high proportion
of products in our own foundries and therefore recognise a higher
proportion of emissions in scope 1&2 than if we were to export
emissions to scope 3 by contracting out manufacturing. This highlights
the importance of comprehensive emissions disclosure, and so we are
pleased to be able to report scope 3 emissions in this report for the
first time, including the impact of purchased goods and services (see
page 61).
54
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 Scope 3 Emissions – Weir Group’s upstream and downstream
supply chain
We’ve also committed to set scope 3 emissions targets and to seek
validation from SBTi during 2022. Since Weir Group’s scope 3 emissions
are dominated by the use of our products and solutions downstream
on our customers’ sites, meeting these targets will require strategic
action by Weir but also a broader energy transformation in mining.
Our objective is to set stretching targets that are relevant to our
customers’ emissions goals, enabling us to be part of a movement
to decarbonise our industry and the mining sector. We take our
commitments seriously, to ensure they have credibility and integrity,
and we are ready to work with customers, governments and the mining
industry on the strategic actions to help make it happen.
Pace of Innovation
We already have some great products and solutions to improve our
customers’ emissions but we recognise that more needs to be done.
Our target is to increase R&D spending to at least 2% of revenues
and are continuing to forge strategic technology partnerships across
the globe to develop smarter, efficient and more sustainable solutions
that materially reduce energy consumption and, therefore, emissions
per tonne of ore processed. For more detail on our progress and next
steps see Creating Sustainable Solutions pages 52-53.
Grid Greening and the Shift to Renewables
Unlike many capital equipment suppliers, we have no quick wins
from electrification as the great majority of our powered products
are already electrified. Eliminating emissions in the use-phase will
depend on a switch to low-carbon electricity on mine sites, via
grid decarbonisation and miners investing in low-carbon supplies.
These actions are controlled by others and we have no direct influence
over them but the International Energy Agency’s stated policy on
grid greening and the large proportion of our customers that have
made public emissions reduction commitments highlight the growing
collective action to address mine energy footprint.
Measurement and Disclosure
We have published the results of our first pass scope 3 study
breakdown in this 2021 Annual Report – see page 61. Changes in the
assumptions underpinning these calculations can have a substantial
effect on the outcome. For example, in accordance with the GHG
Protocol: Corporate Accounting and Reporting Standard, for each
Weir machine sold in the accounting year we have calculated
emissions based on power consumption over the lifetime of the
equipment – typically the life of the mine on which it operates. So we
are committed to collaborating with our supply chain partners and
customers to further develop a consistent approach for reporting,
target setting and progress tracking across our industry.
Scope 4 Emissions
From a customer point of view, we aim to measure, report and
increase scope 4 avoided emissions. We provide products that help
miners use less energy. Whether it’s more efficient G.E.T., better
grinding technology or more efficient pumps, we can reduce the
energy required to extract and process each tonne of ore mined.
This in turn will reduce the CO2 emissions associated with the use
of Weir products and we can quantify this by benchmarking against
alternatives that perform the same tasks less efficiently. Even though
scope 4 avoided emissions fall outside our corporate scope 1, 2
and 3 emissions reporting, we have a strong shared interest with
customers, investors and other stakeholders to quantify and report
scope 4 (tCO2e), along with associated energy consumption per tonne
of ore (kWh/t) metrics. For more detail on our next steps see Creating
Sustainable Solutions pages 52-53.
OUR KEY CLIMATE MILESTONES
2019
• Multi-stakeholder materiality assessment
• Roadmap design and key goals commitment
• Energy efficiency pilots across key operations
2020
• Roadmap launch
• Weir’s first Chief Strategy & Sustainability Officer role on
the Group Executive
• Global energy use in mining study
• Group-wide energy efficiency and renewable supply studies
• Sustainable solutions technology developments
• First Task Force on Climate-related Financial Disclosures
(TCFD) evaluation
2021
• Progress and disclosure against roadmap KPIs
• Sustainability Excellence Committee established, with CEO
as Executive Sponsor
• Continued focus on sustainable solutions R&D and
technology partnerships to address the mining industry’s
biggest challenges
• Scope 3 study and first evaluation of Science Based Targets
and Net Zero pathways
• Digitalisation of strategic sustainability disclosures
• Scope 1&2 intensity target revised to more ambitious SBTi-
aligned absolute target
2022
• Validate scope 1, 2 and 3 emissions targets with SBTi
• Publish new SBTi-aligned targets
2024
• 30% reduction in scope 1&2 CO2e intensity, relative to
revenue and 2019 baseline
2030
• SBTi-aligned reduction in absolute scope 1&2 CO2e1
2050
• Net Zero for scope 1&2 CO2e
1 Scope 3 2030 target to be validated in 2022.
55
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
Our aim in 2022 is to continue to improve the governance and
automation of sustainability data, with particular focus on the key
priority metrics that underpin our Sustainability strategy. We also
intend to support the transition to make our global.weir website a
more comprehensive, user friendly and real-time source of all things
sustainability. We will continue to use measurement to refine our most
material sustainability issues and to further underpin our disclosures.
SUSTAINABILITY GOVERNANCE ACCOUNTABILITIES
Underpinning the quality and reliability of our sustainability reporting
is accountability. Sustainability is core to our strategy and purpose and
accountability is therefore now held and felt across the Group with
all areas of our Sustainability Roadmap embedded in our governance
structures as outlined in the diagram opposite which shows
the following:
• The Sustainability Excellence Committee includes our CEO, Chief
Financial Officer and the Presidents and sustainability leads of
each Division, as well as our Chief Strategy and Sustainability
Officer (CS&SO) and Group Head of Sustainability. The CS&SO
took on accountability for ESG and sustainability in July 2017 and
was appointed to the Group Executive in January 2020. She has
a dedicated Sustainability team with experience of sustainability
dating back more than ten years in leading UK and international
organisations in private and public sectors, across sectors including
consumer goods and transport.
• There are several Excellence Committees in addition to the
Sustainability Excellence Committee who are accountable for the
Sustainability Roadmap priorities. These are supported by working
groups comprising management representatives from across the
organisation with responsibility to deliver and report against their
respective priorities. Each working group is assigned goals aligned
to the overall Sustainability Roadmap and reports directly into the
Excellence Committees. The governance framework is described
in more detail on page 85.
• There are several principal risks, and therefore risk owners, which
cover the Sustainability Roadmap priorities. Sustainability risk is
identified, assessed and managed in line with the risk process
overseen by the Risk Committee as summarised on pages 70-73.
• We apply a consistent approach to governance and risk across all
other areas of sustainability within Foundations which is overseen
and embedded within existing governance and risk processes.
In 2022, we will launch a dedicated Community of Practice with
representation from each of the Foundations priority areas in order
to identify policy and governance gaps to further improve our
sustainability performance.
• Sustainability matters are reported to the Board in dedicated agenda
items twice a year and proceedings of each Excellence Committee
are routinely reported by the CEO after respective meetings.
Additional details of our sustainability related policies and standards
can be found on page 69.
OUR APPROACH TO SUSTAINABILITY REPORTING
We designed our Sustainability Roadmap to support Weir’s purpose
“to enable the sustainable and efficient delivery of the natural
resources essential to create a better future for the world”. This
means we focus first on the major impact areas that matter most to
our stakeholders: Reducing our Footprint, Championing Zero Harm,
Nurturing our Unique Culture and Creating Sustainable Solutions for
customers (see pages 46-53).
Our reporting approach matches this philosophy: we focus on metrics
and targets most relevant to our objectives because these are the
ones that will drive the most positive impact and sustainability
value. We do not seek to cover every base or report every metric.
However, in addition to the strategic priorities within our Sustainability
Roadmap, we maintain and report on our high standards of Corporate
Governance across all other areas of sustainability within our
Foundations workstream (see pages 58-59).
We participate in frameworks that matter most to our stakeholders and
investors, with a strong emphasis on climate change. These include CDP
– Climate as well as the major Environmental, Social and Governance
(ESG) ratings providers. As a UK-listed company, we also comply with
financial and non-financial reporting legislation and requirements.
We strongly support efforts by regulators and international standard-
setting bodies to streamline and standardise sustainability reporting
frameworks, with an emphasis on providing information that is most
material to investors and other stakeholders. As this work progresses,
we anticipate further enhancing our sustainability disclosures and
will continue to monitor the developments with particular focus
on the International Sustainability Standards Board (ISSB) and the
UK Government’s Sustainability Disclosure Requirements. We are
taking steps to digitise our sustainability disclosures and make more
information available via our website to increase efficiency and
transparency of reporting during this period of increasingly customised
stakeholder requests.
We are pleased for the first time this year to report fully against the
Task Force on Climate-related Financial Disclosures (TCFD) climate
change disclosure framework – see pages 62-67. We also disclose our
greenhouse gas emissions in the tables on pages 60-61 and include
disclosures to the Sustainability Accounting Standards Board (SASB)
framework on page 68.
We have been a member of the FTSE4Good index series for over
ten years. FTSE4Good is designed to measure the performance of
companies demonstrating strong ESG practices. We are proud to have
been able to meet the rigorous requirements to be included within this
series for a full decade. This year we have put in place mechanisms to
be able to obtain and publish greater levels of data related to our ESG
actions and are committed to further improving our performance in
2022 and beyond.
We submit annually to CDP – Climate to share our risk management
approach to climate change and our greenhouse gas emissions
performance. In 2021, we were pleased to be awarded for the second
year in a row an A- score by CDP, one of the world’s leading research
groups focused on climate change governance and disclosure. It means
Weir has again been recognised for its leadership in our commitment to
best practice, particularly in governance, scope 1&2 emissions disclosure,
business strategy and emissions reduction initiatives. The score reflects
the progress we continued to make in 2021 despite the ongoing
challenges of a global pandemic, and our rating is a testament to the
outstanding work and dedication of our people who continue to put
sustainability at the heart of everything we do. Our CDP score is also
linked to remuneration policy which demonstrates our commitment to
maintain an appropriate score over the longer term (see page 129).
56
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 SUSTAINABILITY GOVERNANCE ACCOUNTABILITIES
MANAGEMENT
COMMITTEE
PRINCIPAL RISK
OTHERS
• CEO’s Safety Committee
• Safety, Health and Wellbeing
• SHE Excellence Committee
– led by CPO
• Divisional, Regional and
Local SHE Committees
ZERO TIR
LEADING
eNPS SCORE
SBTi-aligned
REDUCTION
IN CO2e
BY 2030
ENABLING
NET ZERO
• HR Excellence Committee
• People
– led by CPO
• Sustainability Excellence
Committee – including
CEO, CFO, CS&SO and
Divisional Presidents
• Climate
• Value Chain Excellence
• Safety, Health and Wellbeing
• Weir Technology Excellence
• Climate
Committee – including
CEO, CS&SO and
divisional Presidents
• Sustainability
Excellence Committee
• Technology
• Competition
• Inclusion, Diversity &
Equity Committee – led
by CFO
• Employee Voice Board –
with NED lead
• Third-party Employee
Engagement benchmarking
• Reducing our Footprint
Leads and Technical Group
• Divisional Sustainability
Committees and
Best Practice Groups
e.g. Foundry Best
Practice Forum
• Third-Party carbon
footprint verification
• Creating Sustainable
Solutions Working Group
• Divisional Technology
Committees
FOUNDATIONS
• Audit Committee
• Risk Committee
• Finance Excellence
Committee
• Sustainability Excellence
Committee
• Ethics and Governance
• Regular Group Executive
• Market
• Climate
and Board reviews
• Compliance, Internal Audit
and Risk functions
• Group Executive
remuneration linkage
via scorecard
57
WELLBEINGHEALTH &FIRSTSAFETYENVIRONMENTALSAFEGUARDINGZERO HARMCHAMPIONINGUNIQUE CULTURENURTURING OURPARTNERSHIPSCOMMUNITYENGAGEMENTINCLUSION,DIVERSITY & EQUITYWASTECO2eWATERFOOTPRINTREDUCING OURSOLUTIONSCREATING SUSTAINABLEPRODUCTS IN USEPURCHASED GOODSAND SERVICESTRANSPORT ANDDISTRIBUTIONThe Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
SUSTAINABLE FOUNDATIONS
In addition to the strategic priorities within our Sustainability Roadmap, we maintain high standards of Corporate Governance across all areas
of sustainability. You can read more about how the Directors have regard for stakeholder interests when discharging their duty to promote the
success of the Company, in the Strategic Report on pages 26-27.
Ethics Hotline
The Group maintains processes for persons to raise concerns
regarding unethical behaviour. This includes the ability to conduct
whistleblowing through our Ethics Hotline. The Ethics Hotline is
a 24-hour, multilingual service accessible via telephone or online
which allows concerns to be raised confidentially and anonymously.
The Compliance function has responsibility for acknowledging and
investigating as appropriate all matters raised through the Ethics
Hotline. The Group takes appropriate action in respect of any matters
raised via the Hotline which are substantiated. Weir does not
tolerate retaliation against anyone who raises concerns about ethical
behaviour, whether via the Ethics Hotline or otherwise.
The Compliance function works closely with the business to ensure
that matters raised via the Ethics Hotline are investigated in a
fair and impartial matter consistent with the Group Investigation
Protocol, and are resolved expeditiously. During 2021, the average
time to investigate and close out a matter after initial case
submission was 27 days, an improvement over 2020 (45 days).
Modern Slavery
We understand our role in trying to eradicate slavery or forced
labour of any kind. Each year, we publish on our website our Modern
Slavery Statement which details the steps we have taken and are
taking to try to ensure that slavery and human trafficking do not take
place in any of our supply chains or in any part of our business.
The Supply Chain function further embedded the principles of
our Human Rights Policy and Code of Conduct with human rights
principles integrated into the screening and appointment of
direct suppliers in 2021. Additional enhancements to supply chain
processes are expected following completion of Weir’s human rights
risk assessment, particularly to the risk-based approach to managing
human rights risk that was adopted in connection with Weir’s first
human rights risk assessment in 2016.
EMPLOYEES
Code of Conduct
We are dedicated to doing business in an ethical and transparent
manner, and this commitment has driven our legacy for almost 150
years. The Group’s Code of Conduct (Code) is based on this simple,
fundamental value. The Code sets out the Group’s commitment
to promoting and sustaining a strong ethical culture throughout its
operations, and provides direction on and a framework for how we
expect our people to conduct themselves on a day-to-day basis.
All employees are expected to make decisions in line with our
values and behaviours as set out in the Code.
Internal Audit performs (i) annual Code audits (including employee
expense reviews) at selected Group locations and (ii) an annual audit
of gifts, hospitality, and donations entered in the Group’s gifts and
hospitality approval portal. Additionally, Internal Audit, along with
Finance, tests compliance with and effectiveness of the Group’s
financial controls through the Internal Audit Annual Plan and the
biannual Group Compliance Scorecard process.
These assurance activities ensure adherence to compliance policies
and procedures and that those policies and procedures remain
robust. Internal Audit provides reports to the Compliance function,
Group Executive, and Board of Directors’ Audit Committee, and
the Compliance function manages any necessary improvements to
Weir’s compliance policies and procedures.
HUMAN RIGHTS
Human Rights
We respect the human rights of all those working for or with us,
and of the people in the communities where we operate. We will
not exploit anyone, wherever in the world we are working. We will
not do business with companies, organisations or individuals that
we believe are not working to comparable human rights standards.
We communicate our Human Rights Policy to our customers,
suppliers, investors, employees and the communities where
we operate.
In December 2021, Weir’s Board of Directors approved an updated
Human Rights Policy. The updated Human Rights Policy describes
our commitment to avoiding adverse human rights impacts
through our activities, addressing such negative impacts with
which we may be involved, and providing access to an effective
remedy where violations may have occurred. In conjunction with
the policy’s implementation, in 2022, the Compliance function will
work together with Human Resources and Supply Chain functions
to perform a global human rights risk assessment, with the results
expected to drive additional process improvements in managing
human rights risk. Furthermore, we plan to train employees who are
critical to promoting and monitoring human rights in our workforce
and supply chain.
In 2021, the Compliance function did not receive any reports
(internal or external) alleging violations of the Human Rights Policy.
We report on outcomes for safety on pages 47 and Inclusion,
Diversity & Equity on page 49.
58
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 ANTI-BRIBERY AND CORRUPTION
We are aware of the risk of bribery and corruption for companies
that operate globally and for our company specifically, and through
our Code of Conduct and Group Anti-bribery and Corruption
Policy (ABC Policy), we have a zero tolerance towards bribery
and corruption by Group personnel and third parties working on
our behalf.
PRIVACY & DATA PROTECTION
Our privacy programme is designed to meet all applicable data
and data protection laws, including the General Data Protection
Regulation (GDPR) and UK Data Protection Act 2018. New data
protection laws and regulations in the countries where we operate
require us to continually review and update our privacy programme.
SUPPLIERS AND THIRD PARTIES
We source raw materials, components and services across
the globe. Our suppliers play a critical role in our business and
our relationships with them are based on achieving the best
performance, product delivery, service and total cost in an ethical
and sustainable manner.
We recognise that our responsibilities extend to our supply chain.
We have a Supply Chain Policy which sets out the minimum
standards we expect our suppliers to abide by with respect to:
• business ethics;
• how they treat their workforce;
• legal and regulatory compliance;
• health and safety; and
• environmental standards.
TAX TRANSPARENCY
Our approach to tax is governed by five key principles which are set
and adopted by the Board and are stated as follows:
• We are committed to compliance with all applicable tax laws
and regulations, including timely submission of tax returns and
tax payments;
• We aim to develop and maintain effective, collaborative and
cooperative working relationships with tax authorities in all
territories where we operate based on openness, honesty and
transparency, and by providing all relevant information in a timely
manner with a view to resolving any disputes early;
• Our businesses make use of legitimate tax incentives,
exemptions and statutory alternatives offered by governments.
Tax planning is undertaken only where it is consistent with the
substance of our business and with full regard to the aims of our
stakeholders, our reputation and our broader commercial and
economic goals;
Our Code of Conduct training includes a module on anti-bribery.
For those employees in high-risk roles and/or geographies, we
provide targeted training on the ABC Policy as well. Our Gifts Policy
and Hospitality Policy supplements the Code of Conduct by further
describing the requirements and process for providing business
courtesies to customers and other third parties. In February 2021,
the Compliance function launched an improved Gifts & Hospitality
Register for seeking approval of gifts and hospitality.
This year, we modified aspects of our privacy programme in
compliance with new privacy laws and regulations in Brazil, South
Africa, and China, with additional work anticipated for 2022.
In some of our markets, we rely upon agents and distributors
to increase our reach to customers. We choose to work only
with agents and distributors that meet our company standards
and expectations for compliance. During 2021, we improved
the management of our third-party intermediaries, such as
agents, distributors and certain service providers, through the
implementation of the new Agents and Business Partner Policy, an
enhanced due diligence policy and procedure designed to enhance
our risk assessment and mitigation, and improve our lifecycle
management of these third-party intermediaries.
During 2021, we also revamped our standard for screening third
parties, such as our customers and suppliers, against economic
sanctions and other denied party lists. We aim to implement the
standard in 2022 and will work closely with the business on aligning
their existing processes with the standard.
• We adhere to the standards for the disclosure of tax information
in our published financial statements, in accordance with industry
and generally accepted practice; and
• We ensure compliance with our tax obligations by maintaining
appropriate tax management arrangements including the roles
and responsibilities taken on by our people, our systems,
processes and technology and the tax control environment.
These five principles are reflected and more information about our
approach to tax are set out in our Tax Strategy which can be found
on our website.
59
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
TOTAL ANNUAL GHG EMISSIONS
We have provided below our GHG emissions as required under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and
have reported the requirements of the Streamlined Energy & Carbon Reporting (SECR) framework. In 2021, we identified and implemented energy
efficiency measures across our business which included manufacturing efficiency improvements, behavioural change, process upgrades and selecting
energy efficient technology such as LED lighting. Our total identified and implemented energy savings in 2021 are estimated to be 13,352,898kWh
(2020: 6,225,469kWh).
SCOPE 1&2 ANNUAL GHG EMISSIONS
UK & Offshore area Annual GHG
emissions (tCO2e)
Global Annual GHG
emissions (tCO2e)
Global GHG emissions intensity
(tCO2e per £m revenue)
2021
2020
2019
2021
2020
2019
2021
2020
2019
2,488
2,793
3,602
62,070
61,448
67,547
32.1
32.4
35.2
3,650
3,973
4,951
110,035
107,108
121,807
56.9
56.5
63.5
2,509
2,895
3,745
62,896
69,176
81,834
32.1
31.6
32.9
3,653
4,016
5,010
110,905
118,840
138,788
56.6
54.3
55.8
6,162
6,911
8,755
173,801
188,016
220,622
88.7
85.9
88.7
6,138
6,766
8,553
172,105
168,556
189,354
89.0
88.9
98.8
24
145
202
1,696
19,460
31,268
66.9
66.1
54.9
208
229
275
94,530
98,621
116,079
48.9
52.0
60.5
208
229
275
95,423
110,673
133,537
48.7
50.5
53.7
2,717
3,124
4,020
158,319
179,849
215,371
80.8
82.1
86.6
2,696
3,022
3,877
156,600
160,069
183,626
81.0
84.4
95.8
21
102
143
1,719
19,780
31,745
67.9
67.2
55.7
UK & Offshore area Annual
Energy Use (kWh)
Global Annual
Energy Use (kWh)
2021
2020
2019
2021
2020
2019
30,704,570 32,758,754 39,590,603 541,275,901 586,723,794 678,666,543
30,579,960 32,034,297 38,601,875 535,185,731 525,118,880 578,199,219
Location Based Emissions
Scope 1 emissions: fuel
combustion and operation of
facilities (continuing operations)
Scope 2 emissions: purchased
electricity, heat and steam
(continuing operations)
Scope 1 emissions: fuel
combustion and operation
of facilities (continuing and
discontinued operations)
Scope 2 emissions: purchased
electricity, heat and steam
(continuing and discontinued
operations)
Total scope 1&2 (continuing and
discontinued operations)
Total scope 1&2
(continuing operations)
Total scope 1&2
(discontinued operations)
Market Based Emissions
Scope 2: purchased electricity,
heat and steam market based
emissions (continuing operations)
Scope 2: purchased electricity,
heat and steam market based
emissions (continuing and
discontinued operations)
Total scope 1&2 (market based);
continuing and discontinued
operations
Total scope 1&2 (market based);
continuing operations
Total scope 1&2 (market based);
discontinued operations
Energy
Energy consumption used to
calculated emissions; continuing
and discontinued operations
Energy consumption used to
calculated emissions; continuing
operations
60
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 ANNUAL GHG EMISSIONS FROM FOUNDRIES
Annual GHG emissions (tCO2e)
Proportion of Global
(continuing operations)
annual emissions (%)
GHG emissions intensity
(tCO2e per tonne of metal poured)
2021
2020
2019
2021
2020
2019
2021
2020
2019
Scope 1 emissions:
fuel combustion and operation
of facilities
Location based scope 2 emissions:
purchased electricity and heat
Market based scope 2 emissions:
purchased electricity and heat
Location Total
Market Total
41,914
40,763
45,151
24.4%
24.2%
23.8%
80,551
77,141
85,019
46.8
45.8
44.9
66,062
122,465
107,976
69,939
117,904
110,702
80,452
130,170
125,603
42.2
71.2
69.0
43.7
69.9
69.2
43.8
68.7
68.4
0.4
0.8
0.7
1.2
1.1
0.4
0.8
0.8
1.3
1.2
0.4
0.8
0.8
1.2
1.2
SCOPE 3 TOTAL ANNUAL GHG EMISSIONS
Scope 3 Category – Continuing Operations only
1 Purchased Goods & Services
2 Capital Goods
3 Fuel & Energy Related Activities
4 Upstream Transportation & Distribution
5 Waste Generated in Operations
6 Business Travel
7 Employee Commuting
8 Upstream Leased Assets
9 Downstream Transportation & Distribution
10 Processing of Sold Products
11 Use of Sold Products
12 End of Life Treatment of Sold Products
13 Downstream Leased Assets
14 Franchises
15 Investments
Total
Evaluation Status
Relevant, calculated
Relevant, calculated
Relevant, calculated
Relevant, calculated
Relevant, calculated
Relevant, calculated
Relevant, calculated
Not relevant, explanation provided
Relevant, calculated
Not relevant, explanation provided
Relevant, calculated
Relevant, calculated
Not relevant, explanation provided
Not relevant, explanation provided
Not relevant, explanation provided
2021 tCO2e
580,050
11,686
43,472
110,679
17,408
1,976
6,258
0
21,477
0
28,562,932
915
0
0
0
29,356,853
Methodology and Notes
Scope 1&2
Our 2019 and 2020 data has been restated due to improvements in data capture. In calculating our 2019, 2020 and 2021 Location GHG emissions we have followed the principles of the
‘GHG Protocol: Corporate Accounting and Reporting Standard’ (revised edition) and emissions are reported based on an operational control approach. We have used emission factors from
the UK Government’s ‘GHG Conversion Factors for Company Reporting 2019 & 2020 & 2021’ and other region-specific where available to calculate our Scope 1&2 Location footprint.
In calculating our 2019 and 2020 Market Based Emissions we have followed the principles of the GHG Protocol: Corporate Accounting and Reporting Standard’ (revised edition), the GHG
Protocol Scope 2 Guidance (an amendment to the GHG Protocol Corporate Standard) and emissions are reported based on an operational control approach. We have used emission factors
from the UK Government’s ‘GHG Conversion Factors for company Reporting 2019 & 2020 & 2021’ and other contractual, market, residual or location based emissions factors where
available to calculate our Scope 1&2 Market footprint. We report on all emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations
2013. These sources fall within our Consolidated Financial Statement. We do not have responsibility for emission sources that are not included in our Consolidated Financial Statements.
Reported scope 1 emissions cover emissions from liquid fuel and gas – used for heat, transportation and process and refrigerants. Scope 2 emissions cover emissions generated from heat,
steam and purchased electricity for own use, calculated using both the location and market based methodologies. Our continuing operations consist of our Divisions (Minerals and ESCO)
and Group functions. Our discontinued operations comprise our Oil & Gas Division which was sold in February 2021.
In line with SECR energy consumption data has been provided for the UK & Offshore and globally, this data was used in the creation of our GHG emissions. Our Foundry GHG emissions
are provided globally and do not contain any discontinued operations so no differentiation is required. Revenue for 2019 and 2020 is based on 2021 average exchange rates. 2020 constant
currency revenue is disclosed in note 3 (continuing operations) and note 8 (discontinued operations) of the Group financial statements. 2019 constant currency revenue is £1,917m
(continuing operations) and £570m (discontinued operations). For our foundries, the scope 1 proportion of Global (continuing operations) annual emissions is a proportion of total Location
Based GHG emissions. Therefore the % shown in the Market based Total row does not equal the sum of the scope 1 and Market based scope 2 rows.
Our scope 1&2 GHG emissions data for 2019, 2020 and 2021 have been externally verified to a limited level of assurance by Corporate Citizenship. The assurance work covered an
understanding of processes for management, reporting and performance improvements as well as a review of underlying data sources, year-on-year performance trends, calculation
accuracy and consistency with best practice guidelines, consolidation of data and the calculation methodologies used for market based scope 2 emissions.
Scope 3
In calculating our scope 3 emissions we have followed the principles of the Corporate Value Chain (Scope 3) Accounting and reporting standard and Technical Guidance for calculating scope 3
emissions (version1). We will endeavour to improve the data quality and methodology for calculating our scope 3 emissions in the future.
Prior to calculating scope 3 emissions, categories were screened for relevance using the GHG Protocol criteria. Those listed as “not relevant” above were all considered to make non-material
or no contribution to Weir’s scope 3 emissions. It is not always possible to distinguish upstream and downstream transport so categories 4 and 9 should be considered in aggregate.
The method used for our most material category Use of Sold Products has been to calculate the energy usage of equipment from motors procured for our products across their assumed
lifetime (20 years) whilst considering utilisation, load and motor efficiency. It is anticipated that this method will enable a ±20% estimation of total Weir product electrical power consumption.
IEA 2021 emissions factors were then applied to this data, by country, to calculate CO2e across the assumed lifetime of the products. For the very limited number of diesel-powered
products in our portfolio, we used fuel consumption data to estimate diesel use and applied UK Government’s GHG Conversion Factors for Company Reporting 2021 emissions factors to
calculate CO2e. All other categories have been calculated using spend, tonnage, distance and headcount methods with the most appropriate emissions factors applied.
Our Use of Sold Products emissions category is the most material part of our scope 3 footprint and we have had this externally verified to a limited level of assurance by SLR Consulting.
The assurance work included a review of the Use of Products Sold data and supporting methodology for completeness, accuracy and appropriateness as well as a high level review of other
scope 3 category calculations to confirm that Use of Products Sold represent over 90% of total scope 3 emissions.
61
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
TCFD
We believe that companies should be transparent about how they
plan to mitigate and be resilient in the face of climate change.
Therefore, we support efforts, such as the Task Force on Climate-
related Financial Disclosures (TCFD), to increase transparency and
to promote investors’ understanding of companies’ strategies to
respond to the risks and opportunities presented by climate change.
In 2020, we began work to align to TCFD and in line with the UK
Listing Rules, we are pleased to confirm that the disclosures included
in the Annual Report are consistent with the TCFD Recommendations
and Recommended Disclosures. We acknowledge, in particular, that
the disclosures around the metrics to assess our climate risks and
opportunities can be improved and this is an evolving process that we
will work on further in 2022.
GOVERNANCE
Our Board has clear oversight over climate-related matters,
supported by a clear governance structure and informed by
inputs from key stakeholders, including employees, customers
and investors
The governance framework on page 85 sets out the Group’s
governance structure and includes a case study on how climate-
related risks and opportunities are embedded within the Board
processes, as part of the wider sustainability theme. The Board’s
skills in relation to climate change are listed on page 105. The Board
actively embedded climate within its strategy review process during
the year taking account of input from stakeholder groups including
customers, investors and employees see page 96 and were informed
on numerous climate-related issues in the year such as the emissions
strategy and updates on Reducing Our Footprint and Creating
Sustainable Solutions priorities (see page 95).
The Sustainability Excellence Committee and other groups
provide direction to our climate-related programmes and link
directly to the Board
Management have an important role to play in assessing and
managing climate-related risks and opportunities with the Sustainability
Excellence Committee and other groups providing direction and linking
directly to the Board through the governance framework (see page 85).
The Excellence Committees also link into operational working groups
with responsibility to deliver against their respective priorities and
areas of expertise. Considerable focus was placed during 2021 on the
development of our emissions strategy (see pages 54-55), based on
ongoing scope 1&2 emissions monitoring and the findings of our first
scope 3 study. Further information on the management governance
structure to support the Sustainability priorities, which include climate,
is on pages 56-57.
Climate-related matters are considered in an integrated manner
We consider climate impacts across a range of integrated business
processes, including risk assessment, strategic planning, viability
testing, financing and due diligence during mergers and acquisitions
– such as during the acquisition of Motion Metrics during 2021 – as
well as our existing Sustainability Roadmap and emissions target
processes. Details are explained across the TCFD section of this report
as well as various references it contains to other pages.
STRATEGY
We have considered the impacts on our business of climate
change and the transition to a low-carbon economy
Climate change will affect Weir directly through its impacts on
our customers and markets as well as the impact on our own
performance. We therefore focus on three areas: reducing the footprint
of our own operations (page 51) and protecting our operations against
physical risks; providing smarter, more efficient and more sustainable
technology to enable Net Zero for customers; and aligning our strategy
to maximise long-term structural growth opportunities for minerals
needed to support the transition to a low-carbon economy. As a result,
climate change mitigation and adaptation are very much embedded in
our ‘We Are Weir’ strategic framework (pages 10-11) and related KPIs
(pages 28-31).
We have a resilient strategy which has already embedded
anticipated trends in the market resulting from the transition to
a low-carbon economy, and includes actions to mitigate risks and
leverage opportunities
The market analysis on pages 24-25 sets out the long-term structural
trends in commodity markets that underpin our growth. During the
year we have performed a detailed scenario analysis which included
models of anticipated markets for key metals resulting from the
low-carbon transition (see case study on page 67). The outputs from
this analysis have also been incorporated into our Group Budget and
Strategic plan during the year as well as Viability Statement testing
(page 103).
Our emissions strategy is focused on how we reduce CO2e in our
own operations as well as our customers
The emissions strategy on pages 54-55 sets outs our underlying
approach for meeting our climate-related objectives, with a
commitment to align with the Science Based Targets initiative (SBTi)
in 2022. The emissions strategy process is overseen by the Chief
Strategy and Sustainability Officer who also has responsibility for
strategy, innovation and research which ensures these areas are
aligned. Underpinning our strategy are the two priority roadmap
areas of Reducing Our Footprint by increasing energy efficiency in
operations, seeking new sources of renewable supply, managing
TCFD ALIGNMENT TIMELINE
2020
2021
2022
2023+
• Initial TCFD study:
quantitative assessment
of physical risks; qualitative
review of transition risks
• Quantitative market risks
and opportunities review
aligned to Strategic Plan
and risk process
• Initial TCFD alignment steps
reported in 2020 Annual
Report and Accounts
• Environmental Sustainability
principal risk renamed
Climate Risk
• Ongoing alignment with
strategic planning and risk
management processes
• Acceleration of climate
transition activities
• Comprehensive TCFD
reporting in 2021 Annual
Report and Accounts
• Alignment with climate
change risk reporting
in CDP
• Further work to evolve
KPI tracking, reporting and
target setting linked to
climate risks
62
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 water and waste (see page 51); and Creating Sustainable Solutions
where we are designing smart, sustainable, efficient products to
reduce energy, water and waste for our customers and focusing
on measuring and reducing the in-use footprint of products (see
page 53). Our acquisition of Motion Metrics in 2021 will strengthen
our leadership in making mining smarter, more efficient and more
sustainable (see page 18). These sections set out the key next steps
and in 2022 we expect to provide more information on our transition
plans as we confirm SBTi-aligned targets.
We are aligning our financing to climate change objectives
During the year, climate has become further embedded within our
financial structure with the completion of the issuance of five-year
US$800m Sustainability-Linked Notes linked to our performance
against our 2024 scope 1&2 CO2e target.
We have disclosed our climate-related risks and opportunities
Our risk and opportunities table overleaf includes the key outputs of
the scenario analysis as well as other material risks and opportunities
linked to our overall strategy. These have been identified following
the process outlined in the risk section and incorporated within our
existing risk management processes.
HOW WE HAVE EMBEDDED TCFD RECOMMENDATIONS IN OUR REPORTING
Pillar/description
Recommendation
Statement on Implementation – where reported
Governance
Disclose the organisation’s
governance around climate-
related risks and opportunities.
Strategy
Disclose the actual and
potential impacts of climate-
related risks and opportunities
on the organisation’s
businesses, strategy, and
financial planning where such
information is material.
Describe the Board’s oversight of climate-related
risks and opportunities.
Governance Framework – pg 85
Board Activities – pg 95
Our Board Strategy Review Process – pg 96
Board Skills and Attributes – pg 105
Describe management’s role in assessing and managing
climate-related risks and opportunities.
Sustainability Governance Accountabilities – pgs 56-57
Governance Framework – pg 85
Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and
long term.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy,
and financial planning.
Strategy section: Risks and Opportunities – pgs 64-65
Our Strategy – pgs 20-21
Chief Executive’s Strategic Review – pgs 18-19
Our 2021 KPIs – pgs 28-31
Reducing Our Footprint – pg 51
Creating Sustainable Solutions – pg 53
Emissions Strategy – pgs 54-55
Risk management
Disclose how the organisation
identifies, assesses, and
manages climate-related risks.
Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Market Review – pgs 24-25
Strategy section: Risks and Opportunities – pgs 64-65
Viability Assessment – pg 103
Describe the organisation’s processes for identifying and
assessing climate-related risks.
Risk Management – pgs 70-73
Strategy section: Case Study – pg 67
Describe the organisation’s processes for managing climate-
related risks.
Sustainability Governance Accountabilities – pgs 56-57
Strategy section: Risks and Opportunities – pgs 64-65
Metrics and targets
Disclose the metrics and
targets used to assess and
manage relevant climate-
related risks and opportunities
where such information
is material.
Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
and risk management process.
Disclose scope 1, scope 2, and, if appropriate, scope 3
greenhouse gas (GHG) emissions, and the related risks.
Risk Management – pgs 70-73
Technology principal risk – pg 75
Climate principal risk – pg 76
Market principal risk – pg 77
Strategy section: Risks and Opportunities – pgs 64-65
Strategy section: Case Study – pg 67
Our 2021 KPIs – pgs 28-31
Reducing Our Footprint – pg 51
Creating Sustainable Solutions – pg 53
Our Approach to Sustainability Reporting – pg 56
Strategy section: Risks and Opportunities – pgs 64-65
Directors Remuneration Report – pgs 128-129
Financial Statements: Basis of Preparation – pg 165
Reducing Our Footprint – pg 51
Creating Sustainable Solutions – pg 53
Scope 1&2 Annual GHG Emissions – pgs 60-61
Scope 3 Annual GHG Emissions – pg 61
Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Our 2021 KPIs – pgs 28-31
Emissions strategy – pgs 54-55
63
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
TCFD
RISKS
Heading/
Description
CHANGING CUSTOMER
BEHAVIOUR
Decreased revenues due to reduced
demand for products and services
from declining mining sectors
INCREASED SEVERITY AND
FREQUENCY OF EVENTS
Impact of extreme weather events
such as cyclones and floods
CARBON PRICING
Costs of complying with
carbon prices
?
!
?
!
?
!
Category
Transition – market
Physical
Transition – policy & legal
c.£100 million per annum revenue
£0-30 million one-off cost
£0.2-0.5 million per annum cost
We have foundries and other
manufacturing facilities which
produce the majority of the
CO2e emissions from our own
operations. As well as monitoring
and reporting these emissions, we
track our exposure to carbon taxes in
jurisdictions such as Canada which
have taxes in place, and potential
exposure to new carbon taxes in
other countries such as China where
we have facilities. The low figure
above represents current costs and
the high figure estimates potential
impact of taxes at similar levels in
three additional markets.
We are aligning our scope 1&2 CO2e
targets to the Science Based Targets
initiative (SBTi). The range of cost
of response is the average annual
capital and operating expenditure
costs expected between 2020-30 to
enable us to meet SBTi requirements
through energy efficiency measures
and purchasing low-carbon energy.
These measures would serve to
mitigate potential new carbon taxes
in jurisdictions where we have
significant emissions.
Weir sells products and services to
customers producing fossil fuels and
certain minerals which are projected
to decline during the transition to
a low-carbon economy. While the
impact of existing policies under a
Business as Usual (BAU) scenario
is already anticipated in forecasts,
a faster transition under a Well
Below 2 Degrees (WB2C) scenario
may accelerate these declines and
negatively impact Weir’s revenue.
During 2021, we modelled the
difference between BAU and WB2C
scenarios for coal, oil sands and iron
ore in a study with WTW. The study
identified a potential recurring annual
revenue decrease of £100 million
by 2031, without taking account of
any mitigation. This potential impact
would develop over a number of
years, not as a one-off event.
Our business model already embeds
our response through our pure-play
mining focus, strong customer
relationships and presence in every
mining region, giving us good
protection against risk and ability
to benefit from opportunities.
In addition, we track end-market
exposures and review planned
responses by Divisions as part of
annual strategic planning.
We have not identified additional
costs under a WB2C scenario.
In addition, we do not consider there
to be an impact on the carrying value
and useful lives of tangible assets,
as disclosed in accounting policies
in note 2 of the Group financial
statements on page 165.
As a business with operations across
the world, we are exposed to risks of
extreme weather events disrupting
our facilities or supply chain
networks. We modelled potential
increases in extreme weather risk
under scenarios for <2°C and +4°C
of warming and then assessed the
maximum foreseeable one-off loss,
based on potential costs of damage
and business interruption at facilities
most exposed to flood risk under
a +4°C scenario beyond 2040.
Analysis identified an aggregate
one-off loss range across the Group
of between £0-30m, reflecting a
combination of replacement physical
assets and gross profit exposed to
climate risks.
The results were shared across the
Group’s operations, to reinforce both
the appropriateness of our existing
physical risk mitigation strategies
and inform decisions on future risk
initiatives and expansion plans.
Note the loss range identified in the
report reflected potential gross losses
before taking into consideration
the Group’s controls environment.
Through a combination of existing
physical defence measures, cross
Divisional manufacturing capacity and
the applications of insurance the net
loss forecast would reduce to a low
figure. We therefore categorise the
magnitude of impact as low.
The cost of response reflects third-
party loss control engineering advice
to assist facilities identify risks and
develop mitigation solutions.
£0 per annum cost
£0-0.1 million per annum cost
£0.5-1 million per annum cost
Financial
Impact3
Explanation/
management
response
Cost of
response
64
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 OPPORTUNITIES
Heading/
Description
CHANGING CUSTOMER
BEHAVIOUR
Increased revenues due to greater
demand for products and services
from growing mining sectors
PRODUCTS AND SERVICES
– REDUCED ENERGY AND
WATER USAGE
Increased revenues due to greater
demand for more sustainable solutions
COST OF CAPITAL
Secure lower cost of capital by
meeting green finance expectations
?
!
?
!
?
!
Category
Transition – market
Transition – technology
Transition – reputation
Financial
Impact
Explanation/
management
response
c.£100 million per annum revenue
£50 million per annum revenue
c.£2 million one-off cost
We target mid-to-high single digit
growth above market per year, driven
by four factors: sustainable solutions,
integrated solutions, expanding
our product range and geographic
expansion. A 5% revenue uplift on
annual continuing operations revenue
of c.£2bn would deliver increased
annual revenues of around £100m
per annum, from the four factors
combined. We’ve assumed 50% of
this uplift in our calculations.
Weir continues to target at least 2%
of revenues investment on research
and development in line with the
corporate strategy to bring new and
improved products and technologies
to market. We aim to unlock
opportunities by focusing research
and development investment on
making mining operations smarter,
more efficient and sustainable
through developing technologies
that use resources more efficiently.
The cost of response range reflects
up to approximately 2% of revenue
Weir sells products and services to
customers producing metals which
are projected to grow during the
transition to a low-carbon economy.
While the impact of existing policies
under a BAU scenario is already
anticipated in forecasts, a faster
transition under a WB2C scenario
may accelerate growth and positively
impact Weir’s revenue. During 2021,
we modelled the difference between
BAU and WB2C scenarios for copper,
nickel and lithium in a study with
WTW. The study identified potential
recurring annual revenue increase of
£100 million by 2031, without taking
account of any additional action to
exploit this opportunity. This potential
impact would develop over a number
of years, not as a one-off event.
As described in Risk 1: Changing
Customer Behaviour, our business
model already embeds our response
to this opportunity, we track end-
market exposures and review
planned responses by Divisions to
benefit from opportunities; and we
have not identified additional costs,
or material impact on our existing
asset base under a WB2C scenario at
this stage.
As providers of debt capital
increasingly come under pressure to
support only sustainable businesses
and comply with the Paris Agreement
and other requirements, more capital
will be allocated to ESG compliant
funding. By incorporating metrics
linked to our climate change targets
into financing terms, we are able to
attract a diverse portfolio of investors
and help us achieve a lower cost
capital on average. We also have an
incentive to meet our targets and
avoid a potential 25bps interest on
our $800m sustainability-linked bond
from 1 January 2025. This will ensure
long-term liquidity availability to the
Group at competitive cost.
We are aligning our scope 1&2 CO2e
targets to the Science Based Targets
initiative (SBTi). The range of cost
of response is the average annual
capital and operating expenditure
costs expected between 2020-30 to
enable us to meet SBTi requirements
through energy efficiency measures
and purchasing low-carbon energy.
These measures enable us to meet
the conditions of our sustainability
linked bond and to benefit from
reduced cost of capital.
Cost of
response
£0m per annum cost
£0-40 million per annum cost
£0.5-1 million per annum cost
1 Our Risk Horizons as defined in our Risk Assessment Criteria are: up to 3 years – short; 3 to 5 years – medium; 5+ years – long
2 Our Risk Assessment Criteria for the magnitude impact of a risk are based on operating profit: : >20% profits – high; 10-20% profits – medium to high; 5-10% of profits – moderate ;
0-5% profits – low Impact Score.
3 Financial impact is shown as increase or decrease in revenue or cost. Risk 2 also includes estimated profit impact.
KEY
Time horizon1
Short
Medium
Long
Likelihood
Magnitude2
?
!
Unlikely
Low
?
!
About as likely as not
?
Likely
?
Very Likely
Medium
!
High
65
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
TCFD
RISK
Climate-related risks are identified in a structured process to
consider the impact of physical and transition risks
The process for identifying the climate-related risks and opportunities
on pages 64-65 was incorporated into our scenario analysis,
described on page 67. The two key transition risks relating to market
and technology, were then selected for a more detailed qualitative
scenario analysis deep dive in 2021 and are included in our risk listing.
Other transition risks such as current and emerging regulation were
considered as part of the initial workshop reviews, though some of
these only become material on a consolidated basis or are solely
managed by Group functions such as financing. We have identified
regulatory risk on page 79.
A detailed quantitative scenario analysis of physical risk was performed
in 2020 as outlined in the case study. As a business with operations
across the world, we are exposed to risks of extreme weather events
disrupting our facilities or supply chain networks. We modelled
potential increases in extreme weather risk under scenarios for less
than 2 and 4 degrees of warming and then assessed the maximum
foreseeable one-off loss for facilities most at risk under the 4 degrees
scenario. This was based on potential costs of damage and business
interruption at facilities most exposed to flood risk under a +4°C
scenario beyond 2040.
METRICS
Targets and metrics to manage climate-related risks and
opportunities are integrated within our Sustainability Roadmap
and associated programmes
As set out in Our Approach to Sustainability Reporting (page 56), we
focus on metrics and targets most relevant to our objectives because
these are the ones that will drive the most positive impact and
sustainability value. Our key performance indicators (KPIs) and results
for 2021 are disclosed on pages 28-31 with the following relating
to climate:
• Reduce our scope 1&2 CO2e emissions intensity by 30% by 2024,
relative to revenue and a 2019 baseline, and reduce absolute CO2e
emissions in line with SBTi requirements by 2030. Note we’ve
revised our existing targets for 2030 to align with the requirements
of SBTi (see pages 54-55 respectively) with performance monitored
and reported through the governance framework outlined earlier.
• Increasing our research and development investment relative to
revenues, with focus on making mining smarter, more efficient
and sustainable.
These metrics, as well as our associated CDP score, contribute to
executive remuneration via the balanced scorecard and underpin the
restricted share awards to the CEO and CFO (pages 128-129).
In 2021, this included torrential rainfall and flooding in Europe and
China, an extended drought in Chile, extreme heat and wildfires in
western Canada, and cyclones hitting Indonesia, the Philippines and
western Australia. The USA was also impacted by heatwaves, seven
hurricanes and a very active tornado season. We were fortunate that
very little disruption has occurred at our sites due to these incidents.
In the case of such events occurring the Group maintains robust
business continuity plans and specific insurance protection to mitigate
against the extent of any operational impact that may occur.
We have assessed the impact on our financial statements
In addition, note 2 to the Group financial statements (page 165)
outlines how we have considered potential climate impacts in our
financial statements, of which there is no material impact to current
financial performance or position. The outputs from our scenario
analysis have also been used in our viability assessment and
impairment modelling. The disclosure on pages 64-65 considers the
potential impact our risks and opportunities could have on financial
performance in the future.
Key climate risks and opportunities have management plans
in place
Mitigating actions for our key climate-related risks and opportunities
are summarised on pages 64-65. Transition-related climate actions
have also been incorporated within our principal risks for Technology
(page 75) and Market (page 77). This provides a framework to address
the impact of climate-related risks across all risk areas.
Climate risks are well-integrated with our principal risk framework
and consider the impact of physical and transition risks
We recognise that climate change will likely increase the frequency
and severity of extreme weather impacts upon our business.
Climate has been identified as a principal risk (see page 76) and is
managed in accordance with our existing risk management framework
as described on pages 70-73. This risk was first added as a principal
risk in 2019 and was previously called ‘Environmental Sustainability’.
It was updated and renamed in 2021 and it incorporates the
transitional and physical risks identified on page 64. Transition-related
climate actions have also been incorporated within our principal risks
for Technology (page 75) and Market (page 77). The risk management
process, overseen by the Risk Committee, ensures the different risks
are managed in parallel with each other. Updates, such as sharing
outcomes of the scenario analysis, are given to the Group Executive
on a regular basis through our governance framework so relevant
information reaches owners of all principal risks in a timely way.
We disclose our scope 1&2 CO2e emissions and working with
a recognised third-party expert, we have conducted an initial
assessment of our scope 3 emissions
Scope 1&2 results are published on pages 60-61 with further details
on underlying initiatives on pages 50-51. We have also published the
results for our first pass scope 3 study breakdown, see page 61.
We are continuing to evolve our metric and target framework
As outlined in our emissions strategy on pages 54-55, we are
committed to set scope 3 targets and to seek validation from SBTi
during 2022 having already updated our scope 1&2 targets from
emissions intensity (relative to revenue) to absolute emissions.
Furthermore, we have a strong shared interest with various
stakeholders to quantify and report scope 4 avoided emissions along
with associated energy consumption per tonne of ore (kWh/t), and
to use these metrics to support tracking of revenue from products
with lower carbon footprint. We will continuously review metrics
and targets that may help us to manage all climate-related risks
and opportunities.
66
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 Integrating climate scenarios
into our strategic planning
Our first TCFD assessment in 2020 considered risks and
opportunities related to quantified physical impacts of climate –
such as direct damage to property or ability to supply customers.
Key findings were built into risk management. The review also
included a qualitative evaluation of the risks and opportunities
from the transition to a low-carbon economy and identified market
and technology changes as biggest risks and opportunities.
In 2021, therefore, our work focused on quantifying transition
risk and opportunity by looking deeper into transition risks related
to markets for key minerals from the transition to low-carbon
economy under two scenarios – Business as usual (BAU) and
Well Below 2 degrees Centigrade (WB2C).
The BAU scenario assumed the world continues along its
existing carbon path – and included the impact of all existing
policies in the first half of 2021.
WB2C considers a transition to a low-carbon economy in line
with the Paris Agreement. It is based on interventions needed to
enable Net Zero emissions by 2050 in developed nations, with
global Net Zero by 2070, and shows a forced (pushed by policy),
but economically optimised, trajectory constrained to a WB2C
carbon budget.
Third-party consultants from Willis Towers Watson supported the
work with analysis of potential impacts of the carbon transition on
markets for six key commodities: copper, nickel, lithium, iron ore,
coal and oil sands. It considered consequent impacts on Weir’s
business in terms of revenue trends from customers operating in
each commodity.
While neither scenario can be considered a forecast,
we anticipated that BAU would be closer to existing industry
expectations than WB2C. This was supported by the
analysis which showed unabated revenue projections for the
commodities assessed to be broadly in line with the market
impact assumptions in our 2022-2026 Strategic Plan.
The assessment also indicated that overall revenue in ten years’
time would be broadly similar under the WB2C scenario – but with
a significantly larger revenue downside of about £100m in coal, oil
sands and iron ore, together with a correspondingly greater upside
also of about £100m in copper, nickel and lithium. Our ESCO division
is proportionately more exposed to downside risks.
These conclusions do not take account of any strategic actions
to mitigate risks or leverage opportunities. Overall, therefore,
the analysis suggests that Weir is well positioned against market
risks and opportunities but needs to be poised to act faster if the
transition to a low-carbon economy accelerates.
The findings were reviewed with business unit leadership teams,
the Group Executive and the Board and were used as an input to
Weir’s annual Strategic Planning process in 2021.
Since the analysis was completed, the international community’s
focus shifted significantly at COP26 towards policies to limit
warming to 1.5 degrees. Future scenario exercises will need to
take this potentially faster transition into account.
Copper mining: demand for metals such as copper, nickel and lithium
is projected to grow during the transition to a low-carbon economy
67
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report SUSTAINABILITY AND NON-FINANCIAL REPORTING
CONTINUED
SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB)
Topic
Accounting metric
Category
Unit of
measure
Code
2021
Response
2020
Response
Total energy consumed1,2
Quantitative
GJ
RT-IG-130a.1
1,926,669
1,890,428
Energy
management
Employee
health and
safety
Percentage grid electricity1,2 Quantitative %
RT-IG-130a.1
42%
Percentage renewable1,2
Quantitative %
RT-IG-130a.1
8%
Total recordable incident
rate1
Quantitative
Rate
RT-IG-130a.1
0.45
Fatality rate1,3
Quantitative
Rate
RT-IG-130a.1
0
Near miss frequency rate1
Quantitative
Rate
RT-IG-130a.1
9.34
Fuel economy
and emissions
in use phase
Sales-weighted fleet fuel
efficiency for medium- and
heavy-duty vehicles
Quantitative
RT-IG-410a.1
n/a
Quantitative
RT-IG-410a.2
24.51
19.33
Gallons
per 1,000
ton-miles
Gallons
per hour
42%
5%
0.41
0
10.34
n/a
Sales-weighted fuel
efficiency for non-road
equipment4
Sales-weighted fuel
efficiency for stationary
generators
Sales-weighted
emissions of4: (1) Nitrogen
oxides (NOx) and (2)
Particulate matter (PM) for5:
(a) Marine diesel engines,
(b) Locomotive diesel
engines,
(c) On-road medium- and
heavy-duty engines, and
(d) Other non-road diesel
engines
Description of the
management of risks
associated with the use
of critical materials
Materials
Sourcing
Quantitative Watts
RT-IG-410a.3
n/a
n/a
Quantitative
per gallon
Grams
per
kilowatt-hour
RT-IG-410a.4
1) 4.0
2) 0.2
1) 4.0
2) 0.2
Discussion
& Analysis
n/a
RT-IG-410a.1 Weir purchases small quantities
of one material listed on the US National
Research Council list, together with
components that use the same material
as part of their composition. We do not
consider either to pose a significant risk.
Our normal practice is to seek diversified
supply of materials and components.
Remanufacturing
Design
& Services
Revenue from
remanufactured products
and remanufacturing services
Quantitative
Reporting
Currency
RT-IG-440b.1
Not currently material
Number of units
produced by
product category
Number of
employees1
Quantitative
Number
RT-IG-000.A We produce a very broad range of
products across the mining value chain,
therefore the intensity metrics we use
are per GBP£m and tonnes of metal
poured in our foundries, as can be seen
on pages 60-61 of our Annual Report
Quantitative
Number
RT-IG-000.B
11,994
11,175
1 Data shown on a continuing operations basis.
2 2020 data has been restated due to improvements in data capture.
3 Response has been assessed on SASB definitions covering work-related incidents involving employees.
4 Data for Multiflo pumps, Weir’s only diesel-powered product range.
5 Data for Multiflo pumps, Weir’s only diesel-powered product range. Based on compliance limits for US EPA tier 3 standard.
68
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 NON-FINANCIAL REPORTING TABLE
The Non-Financial Reporting table below meets the requirement of the Companies, Partnerships and Groups (Accounts and Non-Financial
Reporting) Regulations 2016. The required information about the business model can be found on pages 22-23. Details of our sustainability
governance accountabilities can be found on pages 56-57.
Policies and standards which govern our
approach and due diligence
Relevant Group
Principal Risks
KPIs3
Code of Conduct¹
SHE Charter¹
SHE Management System¹
Sustainability Roadmap¹
Safety, Health and
Wellbeing2
Climate2
Outcomes and additional
information
Sustainability Review
pages 46-69
Sustainability Review
pages 46-69
Rating within the SHE
performance measurement
process
GHG Emissions
CDP score
Reducing our Footprint Goals
Rating within the SHE
performance measurement
process
Total Incident Rate
Gender pay gap results
Employee engagement survey
participation rates
Employee engagement eNPS
People2
Safety, Health and
Wellbeing2
Information Security
& Cyber2
Ethics & Governance2
Non-Financial
Reporting
Requirement
Environmental
matters
Employees
Human rights
Code of Conduct¹
SHE Charter¹
SHE Management System¹
Sustainability Roadmap¹
Inclusion, Diversity & Equity Policy¹
Board Diversity Policy¹
Global Recruitment Policy
Global Learning and Development
Policy
Data Protection Policy
Incident Response Policy
Data Subject Request Response
Procedure
Human Rights Policy¹
Code of Conduct¹
Supply Chain Policy¹
Modern Slavery Statement¹
Sustainability Roadmap¹
Ethics & Governance2
FTSE4Good score
Code of Conduct Training
completion
Inclusion Diversity and Equity
Policy¹
Sustainability Review
pages 46-69
Social matters
Code of Conduct¹
Gifts & Hospitality Policy¹
Anti-Bribery and Corruption Policy¹
Sustainability Roadmap¹
Ethics & Governance2 Charitable giving
FTSE4Good score
Other ESG Ratings
Anti-corruption
and anti-bribery
Code of Conduct¹
Anti-Bribery and Corruption Policy¹
Gifts & Hospitality Policy¹
Agents and Business Partner Policy¹
Sustainability Roadmap¹
Ethics & Governance2 Group Compliance Scorecard
FTSE4Good score
Code of Conduct Training
completion
Other ESG Ratings
Sustainability Review
pages 46-69
Sustainability Review
pages 46-69
1 These policies are available on our website https://www.global.weir/sustainability/policies/.
2 More information about our principal risks can be found on pages 74-80.
3 More information about medium-term Key Performance Indicators and priorities which are aligned to our ‘We are Weir’ strategic framework and the Group’s remuneration policy can be
found on page 128.
69
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report RISK MANAGEMENT
We operate in a complex global
environment where the effective
management of risk is fundamental to
the delivery of our strategic objectives.
Our global risk management system
is designed to provide both the
necessary level of oversight and a
consistent framework in which our
Group operations can take advantage
of attractive opportunities whilst
ensuring we are not exposing the
organisation to excessive risk.
OUR KEY ACTIVITIES IN THE YEAR
• Invoked our robust crisis management plans in response to an
attempted ransomware incident.
• Execution of the Group’s first ever sustainability linked public
bond placement, further strengthening our balance sheet and
environmental commitments.
• Reinforced our Covid-19 employee response through the
provision vaccine support and an increased emphasis on health
and wellbeing.
• The Weir SHE (Safety, Health and Environment) management
systems protocols were further updated, ensuring continual
improvement and compliance with international standards.
• Review and refresh of our risk appetite to ensure
continued alignment with our evolving principal risks and
strategic objectives.
• Quantitative review of the market risks and opportunities for
the Group linked to the transition to a low-carbon economy,
with the findings then integrated directly into the strategic
planning process and principal risk framework.
OUR PRIORITIES FOR 2022
• Continue to proactively manage the impact of new Covid-19
variants and implications on our operations.
• Continue to increase cyber resilience in line with our Cyber
Security Strategy, approved by the Board.
• Continue to monitor the geopolitical risk landscape and
develop appropriate mitigation strategies to ensure continued
Group resilience.
• Delivery of our new behavioural safety programme to further
underpin our journey to zero harm.
• Development and implementation of a new global
occupational health policy to standardise provision across the
business globally.
RISK AGENDA
During the year, the Board has reviewed the effectiveness of the
systems of risk management and internal control and conducted a
robust assessment of the principal risks affecting the Group in line
with the Risk Appetite Statement.
Through an established process for identifying emerging risks, and
horizon scanning for risks that may arise over the medium to long
term the Board has remained alert to both the internal and external
environments, allowing for the assessment of those exposures which
warranted further investigation and action.
The risk appetite statement is the level of risk that the Board are
willing to take or tolerate to achieve our strategic objectives.
It articulates what is an acceptable level of loss, relative to the amount
of reward we are seeking, and helps us to determine how much
control or mitigating actions may be required.
The Groups risk appetite statement which is detailed on page 72,
considers several different dimensions, which balance commercial
performance with managing our business in a sustainable and
compliant manner.
Our appetite may vary from area to area. For example, it may be
higher where we are prepared to tolerate more risk to achieve
a specific outcome, e.g. grow the business, or lower where
we need to reduce an exposure as low as possible to protect
ourselves, e.g. our commitment to a zero-harm workplace and
environmental safeguarding.
The key principles underpinning the Group’s risk appetite
statement are:
• Risk appetite needs to be measurable, involving the use of our Key
Risk Indicators (KRI’s)
• Risk appetite is not a single fixed concept.
• There must be a range of appetites for the different risks that the
Group faces.
• Risk appetite must be integrated with the control culture of
the Group.
• Appetite must consider differing views at a strategic, tactical and
operational level.
• The defined risk appetite has been signed off by the Board.
Compliance with the risk appetite statement is monitored through
the Group’s functional and front-line controls, including oversight and
reporting mechanisms.
The Board will continue to review and update the risk appetite
statement annually to ensure it remains consistent with the Group’s
strategy and environment in which we operate.
All these activities meet the Board’s responsibilities in connection with
Risk Management and Internal Control set out in the UK Corporate
Governance Code 2018.
Details of the review of the internal control and risk management
systems undertaken during the year are contained in the Audit
Committee Report on page 110.
70
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 RISK MANAGEMENT
The Group’s Enterprise Risk and Internal Controls Frameworks remain
a core element of its Governance model. Our risk management policy
defines how we expect risks to be identified, assessed and managed
throughout the organisation.
Risks are assessed and quantified in terms of impact and likelihood
of occurrence, both before and after control mitigation. Assessing the
gross risk before control mitigation allows the business to review the
relative impact of the existing controls by comparing the gross and
net risk assessment. Also, it allows the business to avoid expending
resources on mitigating controls and actions, which have a negligible
impact on the risk assessment.
The impact of risks is quantified across a range of factors including
financial; strategy; reputation; people and property; ability to perform
services; regulation; Safety, Health and Environment; investors
and funding. The risk management policy includes defined criteria
for each risk impact all the way up to Group level assessments,
thereby providing an integrated bottom-up and top-down approach to
risk management.
Ultimately, the Board is responsible for the Group’s risk and internal
control framework. It has set out the decisions, and hence the level
of risk, which can be delegated to the Group Executive and Divisional
and operational company management without requiring escalation.
This is articulated in a series of Group policies and delegated authority
matrices, as well as the parameters within the approved Risk Appetite
Statement. The Board and Committee structure can be viewed on
page 85.
The bottom-up risk reporting approach requires key risks identified
and reported at project level to be escalated to the operating
company management, which in turn may be escalated to Divisional
management, and ultimately to the Risk Committee and the Board.
This is achieved through risk dashboard reports, which are maintained
at Divisional and Group levels. The dashboards provide a summary of
the major gross risks at each respective level, as well as a summary of
the key controls and actions and resulting net risk, and any further risk
mitigation actions required.
RISK MANAGEMENT CYCLE
DEFINE
RISK
IDENTIFY
FURTHER
RISK
MITIGATIONS
IDENTIFY
THE RISK
QUANTIFY
THE NET RISK
DEVELOP
KEY RISK
INDICATORS
The Risk Committee has oversight of the Group Risk Dashboard, along
with a routine review of key controls identified to manage each risk
and the sources of controls assurance.
The Board obtains assurance over risks and risk management through
the internal control framework. More information on the internal
control framework can be found within the Corporate Governance
Report on page 102 and within the Audit Committee Report on pages
110-120.
INTERCONNECTED RISK UNIVERSE
In scanning the risk landscape for new and emerging risks, the
Group seeks to adopt a holistic view, which acknowledges the
inter connectivity of the global environment in which we operate.
Seeking to gain a thorough understanding of potential global events
helps position the Group’s risk response and it’s overarching risk
mitigation strategies.
The Following chart maps the Group’s principal risk and
their interplay.
STR A T E
G I C
B
A
E
T
E
C
H
N
O
L
O
G
Y
STRATEGIC
A. Market
B. Climate
C. Political & Social
FINANCIAL
D. Competition
O
P
E
R
A
T
I
O
N
A
L
I
J
C
H
L
K
D
F
G
N CIAL
A
F I N
TECHNOLOGY
E. Technology
F. Digital
G. Information Security & Cyber
OPERATIONAL
H. Covid-19
I. Value Chain Excellence
J. Safety, Health & Wellbeing
K. People
L. Ethics & Governance
MONITOR
ASSURANCE
& REPORT
QUANTIFY
THE GROSS
RISK
IDENTIFY
EXISTING
CONTROLS &
MITIGATING
ACTIONS
RISK APPETITE STATEMENT
The Weir Group is strategically positioned in markets with good
long-term growth prospects. We will pursue ambitious growth targets,
and we are willing to accept a higher level of risk to increase the
likelihood of achieving or exceeding our strategic priorities, subject to
the parameters overleaf.
71
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report RISK MANAGEMENT
CONTINUED
Risk appetite
1. Safety, Health & Wellbeing
We will not undertake or pursue activities that pose unacceptable
hazard or risk to the health and wellbeing of our people or the
communities in which we operate or the broader environment.
2. People
We will support, develop and reward our people in keeping with
local market conditions and will encourage behaviour in line with
our values and purpose.
3. Climate
We will evaluate and consider material climate transition and
physical risk in all major strategic decisions and take adaptation
and mitigation actions to minimise their impact.
Risk parameters
• No tolerance for breaches of Weir Group Safety, Health and Environmental Charter.
• Target zero harm through continuous improvement.
• Adherence to our Health & Wellbeing Framework.
• Active community and environmental engagement.
No tolerance for breaches of:
• ‘We are Weir’ framework.
• Weir Code of Conduct.
• Group and Divisional HR policies.
We will maintain each of the following risk parameters within risk appetite:
• Physical.
• Policy and legal.
• Technology.
• Market.
• Reputation.
4. Technology & Innovation
We will invest in research and development across both
mechanical and digital technologies to innovate our customer
offering allowing us to maintain and expand our market share.
We will ensure strategically balanced technology portfolio through a basket of metrics:
• Headlines: R&D spend focused on our Smart, Sustainable, Efficient strategy (2% of
revenues target) and revenue from new products.
• Pipeline Health: R&D split defence vs growth, organic vs inorganic and % on key
strategic priorities.
• Strategic Outcomes: Sustainability impact, Digital impact and leveraged funding ratio.
5. Information Security & Cyber
We have no tolerance for material cyber security incidents
which impact our ability to operate as a business, damage our
reputation or lead to financial penalties.
No tolerance for breaches of:
• Group cyber security policies.
• Group security and education training.
6. Governance
We have no tolerance for breaches of external legal governance
frameworks or internal control systems.
No tolerance for breaches of:
• Legislative/statutory requirements.
• Weir Code of Conduct.
• International sanctions.
• Delegated authority levels.
• Group and Divisional policies
7. Market
We will primarily operate in mining and infrastructure markets
and accept the associated cyclicality but will seek to minimise
this risk as far as possible.
Focus growth and investment on businesses which demonstrate a high aftermarket
and offer a technology differentiator.
8. Country Presence
We are prepared to enter new countries which offer
opportunities for growth consistent with our overall strategy.
We will not enter, or will exit, countries which present a high risk
of harm to our people, damage to our reputation, or breach of
international sanctions.
No tolerance for breaches of:
• Legislative/statutory requirements.
• Weir Code of Conduct.
• International sanctions.
• Delegated authority levels.
• Group and Divisional policies
9. Organic Growth
We will rigorously pursue Divisional organic growth strategies to
meet our market growth objectives.
Investment of resources will be consistent with Divisional strategies and expected
Divisional compound annual growth rates over five-year plans.
10. Mergers and Acquisitions (M&A)
Post-Tax returns should exceed our cost of capital within three years of the acquisition.
We will actively pursue M&A opportunities that enhance our
strategic platform subject to meeting investment criteria.
11. Returns & Profitability
We will not pursue growth at all costs; however, we expect high
margins, strong returns on capital and working capital discipline
together with cash generation.
12. Capital Allocation
We will encourage capital expenditure in pursuit of our growth
ambitions subject to Internal Rate of Return (IRR) hurdles and
capital structure targets.
13. Capital Structure
We are prepared to use leverage in pursuit of our growth agenda
and will actively seek low-cost debt to fund the Group but,
recognising cyclicality in our end markets, will maintain significant
headroom against our financial covenants
72
Short-term margin dilution is acceptable in gaining market entry but over the cycle we
aim for top quartile operating margins and returns on capital.
Local country cash flow projections for investment appraisal purposes discounted at
country specific rates to account for risk weighted returns.
We will seek to maintain the ratio of net debt/EBITDA between 0.5 and 1.5 with up to
2.0 for M&A (current financial covenants 3.5 times) and will retain adequate headroom
within our debt facilities at all times.
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021 RISK MANAGEMENT ROLES & RESPONSIBILITIES
The key roles and responsibilities for risk management are set out below.
Group
Risk management responsibilities
Board
Overall responsibility for the Group’s risk
management and internal control frameworks, and
strategic decision within the Group.
• Annual review and ongoing monitoring of the effectiveness of the risk management and
internal control frameworks.
• Annual review of the Group’s risk appetite.
• Assessment of the Group’s principal and emerging risks.
• Three times a year receive a report from the Risk Committee which sets out the current
assessment of each principal risk, the effect of mitigating controls on each risk, the
direction of travel of each risk versus the prior year, the extent to which each could
potentially impact the Group’s strategic goals and any relevant findings relating to
significant control failings or weaknesses which have been identified.
• Taking decisions in accordance with the delegated authority matrices.
Audit Committee
Delegated responsibility from the Board to review
the effectiveness of the Group’s risk and internal
control frameworks.
• Annual assessment of the effectiveness of the risk management and internal
control frameworks.
• Review of reports from the internal and external auditors.
• Review of the results from the six-monthly self-assessment compliance scorecards.
E
C
N
E
F
E
D
F
O
E
N
L
D
R
H
T
I
I
Group Executive
Executive Committee with overall responsibility
for managing the Group to ensure it achieves its
strategic objectives.
Risk Committee
Management Committee responsible for
governance of the Group’s Risk Management
Policy and Framework.
Chief Executive’s Safety Committee
Safety Committee with responsibility to set
and monitor the Group’s SHE principles,
priorities and actions.
Excellence Committees
• Weir Technology
• Safety, Health and Environment
• Sustainability
• Finance
• HR
• People & Culture
• Inclusion & Diversity
• Compliance
• IS&T Control Board
Management Committees with representatives from
across the Group in their respective areas of focus.
The Committees govern activities and performance
in the individual functional areas.
Divisional management
Responsible for managing the businesses within
the Divisions to ensure Divisional strategic
objectives are achieved and there is compliance
with Group policies and standards throughout
their Division.
Operating company management
Responsible for ensuring company objectives are
achieved and business activities are conducted in
accordance with Group policies and standards.
E
C
N
E
F
E
D
F
O
E
N
I
L
D
N
O
C
E
S
E
C
N
E
F
E
D
F
O
E
N
L
T
S
R
I
F
I
• Managing risks which have the potential to impact the delivery of the Group’s
strategic objectives.
• Monitoring business performance, in particular key performance indicators relating to
strategic objectives.
• Taking strategic decisions in accordance with the delegated authority matrices.
• Escalating issues to the Board as required.
• Review of the design and operation of the Group’s Risk Management Policy and Framework.
• Identification and assessment of the key risks facing the Group, identification of the key
controls mitigating those risks and identification of further actions where necessary.
• Review of the Divisional Risk Dashboards, considering the appropriateness of
management’s responses to identified risks and assessing whether there are any gaps.
• Reporting key Group and divisional risks to the Board.
• Executive Committee representation to drive improvements in our safety performance
throughout the Group.
• Champion the Group’s Safety, Health and Environmental (SHE) charter, reinforcing our
commitment to maintaining a zero-harm workplace
• Ensure the strategy for SHE improvements is comprehensive, risk based, deliverable and
balanced and built on best practice from peers, customers and suppliers.
• Monitoring the management of key risks across the Group associated with the respective
remits of the Excellence Committees.
• Monitoring performance and compliance with Group objectives, policies and standards
related to the respective remits of the Excellence Committees.
• Taking decisions in accordance with the delegated authority matrices.
• Escalating issues to the Group Executive as required.
• Reviewing the results from relevant assurance activities.
• Design and administration of the Group’s compliance programme covering core areas
including anti-bribery, anti-corruption, anti-trust, privacy, trade controls and human rights.
• Identifying and managing risks which have the potential to impact the delivery of the
Division’s strategic objectives.
• Monitoring performance and compliance with Group objectives, policies and standards
within the Divisions and with regard to the outputs from the Excellence Committees.
• Taking decisions in accordance with the delegated authority matrices.
• Escalating issues to the Group Executive as required.
• Reviewing the results from relevant assurance activities
• Identifying and managing risks which have the potential to impact the delivery of their
company’s strategic objectives.
• Monitoring performance and compliance with Group objectives, policies and standards
within their company.
• Taking decisions in accordance with the delegated authority matrices.
• Escalating issues to Divisional management and Excellence Committees as required.
• Reviewing the results from relevant assurance activities.
73
The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
PRINCIPAL RISK AND UNCERTAINTIES
PRINCIPAL RISK AND UNCERTAINTIES
The Board has conducted a robust assessment of the principal risks,
alongside the Risk Appetite Statements set out on page 72, meeting
the Board’s responsibilities in connection with Risk Management and
Internal Control details in the UK Corporate Governance Code 2018.
Each of the principal risks is assigned an owner from amongst the
Board or Group Senior Management team and a detailed review of
each principal risk has been completed in the year.
The Group’s risk dashboards were reviewed, and validity of the existing
prior year principal risks were reassessed, and consideration was given
as to whether any new principal risks have emerged, or certain risks
are no longer considered to be a principal risk. This review resulted in
changes being made to the principal risks in 2021.
The identified principal risks were subjected to a detailed assessment
based on the following considerations:
• Potential severity of each risk relative to the Group’s stated
risk appetite.
• Existence and effectiveness of actions and internal controls which
serve to mitigate the risk.
• The overall effectiveness of the Group’s control environment,
including assurance and any identified control weakness; and
• The extent to which each of the principal risks could impact the
Group’s viability in financial or operational terms, due to their
potential effects on the business plan, solvency, reputation
or liquidity.
The principal risks set out on pages 74-80 are those which we believe
to have the greatest potential to impact our ability to achieve the
Group’s strategic objectives or which have the greatest potential
impact on the Group’s solvency, liquidity or reputation.
As in any business, there are risks
and uncertainties which could impact
the Group’s ability to achieve its
objectives in the future. The Group’s
risk management and assurance
framework is designed to make this
less likely by clearly identifying and
seeking to mitigate these keys risks.
KEY
Strategy
Impacted
Not impacted
People
Technology
Performance
Customers
Risk Trend
Increasing
Decreasing
No change
Viability Statement
V Viability Statement
READ MORE: PAGE 103
COVID-19 V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Risk of subsequent pandemic waves
giving rise to further plant closures
and heightened workforce exposures
both for the Group and its key
customers and suppliers which could
lead to a loss of productivity and/or
loss of life.
Impact on strategy
Whilst the emergence of new variants
such as Omicron are demonstrating
significantly milder symptoms, the
health and wellbeing threat posed to
the Group’s people and operations
remains in the near-term, particularly
in those countries with lower
vaccination rates.
Risk owner:
Chief Executive Officer
74
The Group has continued to adapt
and innovate throughout 2021, whilst
ensuring the constant protection of
our people and ability to serve our
customers safely and reliably.
Underpinned by the Group’s vision
of being a zero-harm workplace, our
risk mitigation focus has remained
on reinforcing our previously
developed health and wellbeing
workplace protocols and Covid-19
specific response plans which are
cognoscente of locality and emerging
local authority restrictions.
Key initiatives rolled out in the
last year have included the Group
providing vaccination support for all
employees where possible, combined
with a continued emphasis on mental
health, which is a core element of the
Group’s recently launched Health and
Wellbeing framework.
Risk trend
Ongoing vaccination roll outs,
booster programmes and heightening
immunity levels are all regarded as
positive indicators that society is likely
to be better protected in the future
from further Covid-19 disruption.
The Group, however, continues to
adopt a cautious outlook, and this
is reflected in the assessed risk as
unchanged from the prior year.
Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
TECHNOLOGY V
Description
Why we think this is important
How we are mitigating the risk
Key changes during 2021
Continued investment in our
technology strategy aligned on smart,
sustainable, efficient (SSE) priorities.
Use of new emergent technologies
radar software/process with
embedded Artificial Intelligence (AI)
scanning capability to assess potential
risks & opportunities.
The Group’s acquisition of Motion
Metrics, a market leading developer
of innovative Artificial Intelligence
and machine vision technology
will significantly boost our highly
engineered, digitally enabled mining
products proposition to support our
customers sustainability, productivity
and safety agendas.
Strong governance around intellectual
property and new material/
product launches.
Risk trend
The impact and likelihood of this risk
is assessed to have not changed
since last year.
Evolving WARC (Weir Advanced
Research Centre) model with
strategic international research,
academic and technology scanning
partnerships and funding.
Maturing of the Weir Innovation
Network (WIN) approach to further
promote, celebrate and reward a
culture of innovation.
Failure of the Group to embrace
technology, innovate and continue to
develop and invest in both our core
and next generation solutions and
services for our customers, leaves
the Group’s market leading positions
and ability to deliver on growth
ambitions exposed.
Impact on strategy
Risk owner:
Chief Strategy &
Sustainability Officer
We need to continue to drive
innovation across the Group through
investment in talent and collaboration
with research partners, thus ensuring
there is a sustainable and evolving
product offering leveraging new and
adjacent technologies.
Failure to achieve this could give
rise to:
An inability to give sufficient priority
to outer horizon technology leading
to an under investment/delayed
development to meet our medium
to long-term performance goals.
Failure to identify and mitigate
potentially disruptive technology
trends as they appear in mining or
adjacent industries and/or failure to
adapt at the required pace to gain/
sustain market competitiveness.
Failure to leverage our deep
customer/market insights to develop
products and solutions which meet
the most strategic needs of our
customers and other stakeholders.
Failure to adapt our business
model to capture economic value/
prevent economic loss from
technological advances.
Failure to leverage new technology
to reduce costs/improve our own
operational performance, resulting
in increased costs and/or lower
responsiveness relative to our peers.
VALUE CHAIN EXCELLENCE V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Failure to achieve Value Chain
Excellence improvements and the
associated reduction in costs and
enhanced capital efficiency
Impact on strategy
Risk owner:
Divisional Presidents
If we fail to improve our value chain
management, we risk:
Losing the opportunity to meet our
customer needs in terms of product
volume, quality and delivery, through
a failure in internal and external
supply chains resulting in a low of
reputation and sales.
Failure to optimise our inventory
thus inhibiting the Group investment
strategy and creating slow moving
and obsolete inventory ultimately
impacting our results.
Failure to manage potential above
inflationary increases in procurement
costs as commodity prices
increasing thereby reducing our cost
competitiveness and margins.
Failure to develop organisational
capability to sustain and improve
operational performance results.
Regular KPI monitoring of the value
chain throughout the organisation.
Value Chain Excellence initiatives
have been operating throughout
the Group to drive value chain
improvements including expanding
production in best cost countries.
The Group’s forward purchase
commitments are being
closely monitored to manage
inventories at levels appropriate
to market conditions.
Our credit risk management
procedures are under continuous
appraisal and review.
We regularly monitor market activity
to ensure we remain competitive.
Improved demand planning and
forecasting including Sales and
Operations Planning within VCE.
Realising value from shared
service initiatives.
Key mitigation initiatives in the year
have centred on increasing our
volume aggregation plans to best
costs countries and a reduction in
selling, general & administrative
(SG&A) expense as a percentage of
sales through greater utilisation of
our shared services network.
Risk trend
Despite some short-term challenges
experienced in the areas of
procurement and supply chain
disruption, these have not been
deemed sufficiently material to
change the risk weighting since
last year.
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The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
PRINCIPAL RISK AND UNCERTAINTIES
CONTINUED
CLIMATE V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Failure to adapt to and mitigate
climate change and the associated
impact on our current or
future business
Impact on strategy
Risk owner:
Chief Strategy &
Sustainability Office
Failure to manage this risk has
significant impacts on us, our
customers and our supply chain.
These impacts can be physical
or relate to the transition to a
low-carbon economy and they
can be both acute and chronic.
Physical risks include the potential
impact of extreme weather events
on our operations. Failure to manage
transition risks may have political
and legal implications following
increased Governmental focus,
such as the costs of complying with
carbon prices.
There are also wider implications
of this risk including changes in
revenue due to reduced demand
from declining market sectors, loss
of market share if we were not able
to meet demand for products with
reduced energy and water usage,
negative impact on reputation
leading to increased cost of capital
and failure to attract talent into
the organisation.
Sustainability Roadmap developed
via extensive multi-stakeholder
materiality assessment
encompassing Environmental,
Social & Governance (ES&G).
Two of the four Sustainability
Roadmap priority areas focus on
Environmental Sustainability.
Creating sustainable solutions: with
targets for increased sustainability
impact of our products in use,
sustainable design and supply
and end-of-life stewardship for
our products.
Reducing our footprint: with
targets for CO2 reduction (both
efficiency and renewable supply
optimisation), water stewardship,
waste elimination.
We are continuing strong
engagement with stakeholders
in this area.
This risk was reclassified from
previously Environmental
Sustainability to Climate in order
to fully reflect the Group’s climate
change agenda and the role we must
play in reducing our own footprint.
Key activities in 2021 involved a
quantitative review of the market
risks and opportunities for the
Group linked to the transition to
a low-carbon economy, with the
findings then integrated directly into
the strategic planning process and
principal risk framework.
Execution of the Group’s first ever
sustainability linked public bond
placement, further strengthened
our balance sheet and wider
climate commitments.
Risk trend
The impact and likelihood of this risk
is assessed to have not changed
since last year.
SAFETY, HEALTH AND WELLBEING V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
The Group’s SHE charter was
refreshed in 2021 and has been
instrumental in empowering individuals
and teams to focus first on safe
behaviours, proactively identifying
risks through safety conversations and
articulating clearly what is expected
and required from us all to achieve our
collective vision.
SHE also became an integral part of
our employee engagement programme
with pulse surveys undertaken
to promote active participation in
employees own and other’s health,
wellbeing and safety. The survey’s
findings led to the Group launching its
new Health and Wellbeing framework
focusing on the Culture & Leadership,
Safety & Environment, Mental
Wellbeing, Physical Wellbeing and
Financial Wellbeing.
Risk trend
The impact and likelihood of this risk
is assessed to have not changed since
last year.
Failure to adequately protect our
people and customers from harm
presents a significant threat to the
physical and mental wellbeing of
the Group’s existing and available
workforce leading to a resultant
impact on productivity and our
ability to meet customer demands
and expectations.
Our commitments to a zero-harm
workplace and environmental
safeguarding are at the very core
of our sustainability strategy and
purpose, with policies and processes
in place to ensure the continued
health, safety and physical &
mental wellbeing of all employees,
customers and third parties.
Impact on strategy
The Group’s SHE charter sets out
the guiding principles, priorities and
actions, each of which play a vital
role in supporting our shared vision
of achieving zero-harm workplace
where everyone of our people has
a safe start, a safe finish and a safe
journey home.
The Weir SHE management system
then establishes a common set
of standards and expectations for
addressing risk throughout our
operations globally.
Risk owner:
Chief People Officer
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Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
PEOPLE
Description
Failure of the Group to build an
ever more inclusive and diverse
culture and adopt new ways of
working which give rise to an
inability to attract and retain the
very best workforce.
Impact on strategy
Risk owner:
Chief People Officer
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Our people represent our biggest
asset and so the ability of the
Group to attract, develop and
retain talent and build capability at
the pace required is fundamental
to the delivery of the Group’s
strategic objectives.
Promotion of the Weir Group Values
& Behaviours, Code of Conduct
and HR Policies sets the standards
and expectations for all our staff,
reinforcing our stated commitment
to attracting and retaining the very
best people.
Our ambition to foster an inclusive
and diverse workforce that
increasingly reflects the diversity of
the markets in which we operate,
is key to creating a purpose driven
culture where we can all do the best
work of our lives.
High performer assessments are
undertaken to identify and develop
our very best talent.
Succession plans are in place and
periodically reviewed for all of our
key management.
Personal Development Plans are
set and reviewed for the effective
development of all of our staff.
We continue to offer
competitive compensation and
benefits packages.
Inclusion and Diversity Training and
Steering Committee.
2021 saw the introduction Workday,
the Group’s new global HR
management system which forms an
integral part of our ongoing discovery
programme designed to modernise,
standardise and digitise our HR
processes to ultimately deliver an
even better employee experience.
In the key area of Inclusion and
Diversity the Group launched its
global I&D education programme,
which also included the creation
of I&D ambassadors, global online
learning programmes and the
promotion of affinity groups.
Risk trend
Given the prevailing competitive
labour market conditions which are
manifesting themselves in labour
shortages and increased attrition
rates in certain pockets, this risk was
elevated during the year to reflect
the potential short-term impediment
to growth.
MARKET V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Changes in key mining markets,
including commodity prices
and macroeconomic conditions
have an adverse impact on
customers’ expenditure plans.
Fundamental market structure
changes could alter the long-term
economics of the business.
Impact on strategy
Cyclical nature of the Group’s
end markets, including continued
exposure to oil sands, giving rise to
downturns and resultant pricing and
operational pressures.
Risk of credit markets tightening
limiting access to capital.
Failure of the Group to maximise
upturn opportunities and meet
customer demands.
Our aftermarket focused business
model and enhanced focus on
technology to reduce cost and
improve efficiency combine
to mitigate the risk of future
down turns.
The Group’s strategy planning
process utilises extensive market
intelligence to assist in forecasting
opportunities and dips in markets.
Completion of the Group first
ever sustainability linked public
bond in our 150-year history
further strengthened our balance
sheet whilst also reaffirming our
commitment to reducing our
environmental impact by 30%
by the end of 2024.
Risk trend
With key commodities remaining
at multi-year highs the impact and
likelihood of this risk is assessed to
have not changed since last year.
Risk owner:
Chief Financial Officer
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PRINCIPAL RISK AND UNCERTAINTIES
CONTINUED
COMPETITION V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Increasing presence of low-cost
competitors with improving quality in
our end markets leads to significant
pricing pressure and margin
deterioration. Disruptive technologies
or new entrants with alternative
business models could also reduce
our ability to sustainably win
future business, achieve operating
results and realise future growth
opportunities. Continuing threat from
third-party replicators.
Impact on strategy
Increasing presence of low-cost
competitors with improving quality in
our end markets leads to significant
pricing pressure and margin
deterioration. Alternatively, increased
competition forces a continual
release of longer wear life products
resulting in maintaining market
share but cannibalising our sales
volumes with difficulty in realising
commercial benefits.
Horizon scanning for competitor
threats including patent searches
and applications.
Collaboration with customers
on technology partnerships and
field trials.
Technology solutions with
differentiation on engineering
expertise, aftermarket service and
total cost of ownership.
Continued development of
operational efficiency and
improvement plans.
Continued investment in core
product design, process and
materials that provide high value.
The Group continued to focus on
the development of technology
solutions, its aftermarket services
proposition and emphasis on total
cost of ownership, delivered a series
of active product alliances with
several key customers.
Risk trend
The impact and likelihood of this risk
is assessed to have not changed
since last year.
Risk owner:
Divisional Presidents
DIGITAL STRATEGY AND ROADMAP V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Failure to exploit ‘digitalisation’
opportunities impacting the
Group’s ability to meet evolving
customer expectations.
Impact on strategy
Risk owner:
Chief Information Officer
To meet the needs of our customers,
the ambitions of our business and
the expectations of an increasingly
digital world, Weir must prioritise
and accelerate its digital evolution.
Failure to do so will negatively impact
Weir’s market position along with
our ability to attract the people, skills
and investment needed to become
a premium mining technology
business. If we fail to implement
a holistic, digitalised ecosystem
and culture quickly and effectively
competitors, who successfully
embed digitalisation, will benefit and
increase their market share.
Building on work which has taken
place in preceding years, a task
force of senior leaders from across
the Group has been put in place to
shape our digital vision and roadmap.
This three-month programme is
being complemented by additional
work to increase ‘digital fitness’
across the business and assess our
approach to digital talent recruitment.
Digital and IT leadership are also
now embedded in the Group
and Divisional strategic planning
processes to ensure digitalisation
is given due consideration.
Digital risk has been fully reviewed and
the associated key risk indicators have
been updated. Acquisition of Motion
Metrics and appointment of Chief
Data Officer align to digital strategy
ambitions and help to further mitigate
the associated risk.
Risk trend
The impact and likelihood of this risk
is assessed to have not changed since
last year.
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Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
INFORMATION SECURITY & CYBER V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Failure to adequately protect
Weir Group from cyber enabled
fraud and other information
security risks which can lead to
operational disruption, reputational
damage, regulatory fines and/or
financial impacts.
Impact on strategy
Risk owner:
Chief Information Officer
Weir’s global operations are
heavily reliant on its IT systems
and infrastructure. As the scale,
regularity and disruption of cyber-
attacks continues to increase we
must recognise this risk and take
steps to ensure the business is
protected against them.
We have an IT governance
framework which oversees our
technology operations. The IS&T
Control Board provides assurance
and oversight of our security posture
across the business and approves
policy and control assessments in
relation to cyber risk and IT Security.
In the last eighteen months, the
IT Transformation programme has
delivered a number of improvements
to reduce the impact of cyber
incidents on our business.
Our Cyber Security Strategy sets out
a three-year programme of activities
to further improve our cyber
defences and controls.
One of the key objectives of
the cyber security strategy is to
increase our resilience and reduce
the impact of a cyber incident in
addition to the implementation of
preventative measures.
Security incidents are managed
by the cyber security operations
team, and any significant cyber
security incidents are reported to
the Group Executive. Internal and
external audit activities are also
regularly undertaken to provide
additional governance around our
control environment as well as
highlighting opportunities to make
further improvements.
An annual cyber security education
and awareness plan is in place to
ensure colleagues are equipped
with the knowledge and awareness
they need to use technology safely
and securely.
The implementation of our IT
Transformation and the Cyber
Security Strategy roadmap are
delivering improvements across
multiple areas of the business which
in turn will help to reduce the impact
of any future cyber incidents.
We have invested in operational
capabilities and skills to support
the monitoring and resolution
of cyber security incidents.
These improvements include
the appointment of a new Cyber
Security Ops Director to lead the
transformation of our operational
cyber security capabilities. We have
also partnered with a highly skilled
threat hunting team who will look
for issues which cybercriminals
may be able to exploit. A number
of additional control enhancements
were also implemented following
the cyber security incident in
September 2021.
Risk trend
Our Cyber risk underwent a
thorough review following the
ransomware incident. The principal
conclusion was that our developed
risk treatment remained the same
and was further underpinned by
security control enhancements.
The completion of these initiatives,
and the continued execution of
our approved Cyber strategy, will
significantly reduce the impact of
any future cyber incident and as such
the risk is assessed as remaining
unchanged from the prior year.
ATTEMPTED RANSOMWARE INCIDENT
The attempted ransomware incident in September 2021 was a sophisticated, determined and prolonged assault on our business.
Our swift and robust response to the incident protected our infrastructure and data, meaning we were able to continue meeting the
needs of our customers throughout.
All Weir systems have now been restored and a number of improvements introduced in direct response to lessons learned from
the incident.
POLITICAL AND SOCIAL V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Adverse political action, or political
and social pressures, in territories
in which we operate may result in
strategic, financial or personnel loss
to the Group.
Impact on strategy
Given the global nature of the
Group’s operations we are exposed
to an ever changing political and
social landscape which requires
constant monitoring. Adverse events
may occur in the territories in
which we operate that may require
us to act swiftly to continue to
protect our people and property
and adjust to regulatory changes
which have the potential to impact
our competitiveness or have a
negative impact on our return on
capital employed.
Risk owner:
Chief Legal Officer and
Company Secretary
Positive proactive engagement with
a range of Governments/elected
representatives and trade and
industry bodies allows the Group to
contribute to policy decisions and
address specific concerns.
Our strategic planning process
allows for a regular review of market
attractiveness whilst also assisting in
the forecasting of potential political
and social instability in the regions
in which we operate. A combination
of risk horizon scanning, and third-
party intelligence sourced from
risk consultants allows the Group
to maintain flexibility and develop
appropriate contingency and exit
strategy plans.
The geopolitical risk landscape
remained unsettled throughout 2021
and consequently involved the Group
increasing its monitoring efforts in
several jurisdictions.
Risk trend
From political polarisation, to failing
states, to power repositioning and
rising fears of both traditional and
cyber terrorism, the potential risks to
the Group’s international operations,
people and reputation were seldom
higher, with the ongoing situation
involving Russia and the Ukraine
simply reinforcing the volatility of the
global landscape. As a consequence
this risk was elevated during
the year.
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The Weir Group PLC Annual Report and Financial Statements 2021Strategic Report
PRINCIPAL RISK AND UNCERTAINTIES
CONTINUED
ETHICS AND GOVERNANCE V
Description
Why we think this is important
How we are mitigating this risk
Key changes during 2021
Interactions with our people,
customers, suppliers and other
stakeholders are not conducted with
the highest standards of integrity and
in accordance with Group Policies
& Procedures which devalues
our reputation.
Impact on strategy
We are unwilling to accept dishonest
or corrupt behaviour from our
people, or external parties acting
on our behalf, whilst conducting
our business. If we fail to act with
integrity, we are at risk of:
Reputational damage leading to a
loss of business opportunity.
Increased scrutiny from regulators.
The Code of Conduct, supplemented
with Group policies on related
topics, provides a clear framework
for how we expect our business will
be conducted.
Regular training and re-enforcement
of principles is provided using a
range of mechanisms including Town
Hall style sessions and online and
induction training.
There were a number of areas of
focus for the Group’s compliance
function in 2021 and these included
the refreshing and updating of
our human rights policy and the
launch of an improved gifts and
hospitality register.
Risk trend
Risk owner:
Chief Legal Officer and
Company Secretary
Legal action from regulators
including fines, penalties
and imprisonment.
Exclusion from markets important
for our future growth.
Failure to meet required social
standards to maintain licence to
operate in our communities.
We expect all areas of the business
to do the right thing and conduct
business in compliance with
applicable laws, Weir Group policies
and procedures, and the highest
ethical standards.
The financial control framework
is continually monitored
for effectiveness.
The impact and likelihood of this risk
is assessed to have not changed
since last year.
Internal Audit’s remit includes
regular review of the anti-bribery
and corruption and financial controls
across the Group.
The Group compliance function
designs and administers our
global compliance programme and
assists Internal Audit in monitoring
adherence to enhance global focus
on compliance.
An Ethics Hotline is available to all
members of staff and the public.
Reports are investigated on a timely
basis and summary reports provided
to the Group Executive and Board.
The Strategic Report covering pages 1 to 80 of the Annual Report and Financial Statements 2021, has been approved by the Board of Directors in
accordance with the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.
On behalf of the Board of Directors
GRAHAM VANHEGAN
Chief Legal Officer and Company Secretary
2 March 2022
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Strategic ReportThe Weir Group PLC Annual Report and Financial Statements 2021
GOVERNANCE
CONTENTS
CHAIRMAN’S
INTRODUCTION
TO GOVERNANCE
READ MORE: PAGE 82
CHAIR SUCCESSION
READ MORE: PAGE 106
MEET THE BOARD
SESSION
READ MORE: PAGE 97
G
o
v
e
r
n
a
n
c
e
Introduction from the Chairman
Governance at a Glance
Governance Framework
Board of Directors
Group Executive
Board Statements
Division of Responsibilities
Board Meetings
Board Activities
Our Board Strategy Review Process
Governance in Action –
Meet the Board Sessions
Shareholder Engagement
Boardroom Practice
Board Effectiveness
Accountability
Viability Statement
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
82
84
85
86
90
91
92
93
94
96
97
98
99
100
102
103
104
110
121
146
149
OUR BOARD STRATEGY
REVIEW PROCESS
READ MORE: PAGE 96
The Weir Group PLC Annual Report and Financial Statements 2021
81
INTRODUCTION FROM THE CHAIRMAN
WE SEE
OUR ROBUST
CORPORATE
GOVERNANCE
FRAMEWORK
AS PROTECTING
SUSTAINABLE
VALUE
82
The Weir Group PLC Annual Report and Financial Statements 2021
THE BOARD LEADS BY EXAMPLE
TO PROMOTE AND UPHOLD
A CULTURE OF INTEGRITY
AND ACCOUNTABILITY.
CHARLES BERRY
Chairman
DEAR SHAREHOLDER,
I am pleased to present the Corporate Governance Report for 2021.
As Chairman, I continue to ensure that the Board leads by example
to demonstrate and promote the highest standards of integrity and
accountability. The Board oversees a robust Corporate Governance
Framework which operates effectively to promote our Company
values, support the delivery of our strategy and to protect sustainable
stakeholder value.
The Board continues to ensure ongoing engagement with our
stakeholders throughout the year and acknowledges the clear
responsibility that it has to promote the long-term success of the
Company. During 2021, we have continued to focus on assessing and
monitoring our Company culture, Inclusion and Diversity initiatives and
commitment to meeting our climate based targets.
Our diverse Board operates effectively, with an appropriate balance of
skills, experience, independence, knowledge and personal attributes.
Each member of the Board commits sufficient time to carry out their
duties and responsibilities.
The Board also ensures an open and transparent remuneration policy
for the effective recruitment and retention of Board members and
employees. A formal procedure exists to ensure the alignment on
remuneration with our strategic plan.
This report describes this Corporate Governance framework and
explains how the Board works with its Committees to ensure that
it remains robust, appropriate and effective. This prudent oversight
is essential to ensure a culture of transparency and accountability.
The following Corporate Governance Report, including the Committee
Reports and the Directors’ Report, set out how we apply our
governance standards in practice and demonstrates our compliance
with the UK Corporate Governance Code 2018.
CHARLES BERRY
Chairman
OUR PURPOSE
We are here to enable the sustainable and efficient delivery of the
natural resources essential to create a better future for the world.
Governance The Company Secretary is a key adviser to the Board and plays a
critical role in ensuring best practice and ongoing compliance with the
UK Corporate Governance Code 2018. Together with the Chairman, the
Company Secretary reviews the governance framework to ensure that
it remains effective. The Company Secretary also acts as Secretary
to the Board and its Committees and ensures that they function
efficiently and is available to all Directors, as required.
The Financial Conduct Authority’s Disclosure and Transparency Rule
7.2.6 (DTR 7.2.6) requires the Corporate Governance statement to
contain certain information required by Schedule 7 to the Large
and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (SI 2008/410). This information relates to significant
interests in the securities of the Company, securities carrying special
rights with regard to the control of the Company, restrictions on voting
rights, rules regarding the appointment and replacement of Directors,
rules regarding changes to the Company’s Articles of Association and
the Directors’ powers in relation to the issuing or buying-back by the
Company of its shares. The relevant information can be found within
the Directors’ Report on pages 146-149.
BOARD DECISIONS TABLE
The following table sets out some of the significant decisions taken by
the Board during the year and how our stakeholder’s interests were
taken into account. You can read more about how the Directors have
regard to stakeholder interests when discharging their duty to promote
the success of the Company, in the Strategic Report on pages 26-27.
UK CORPORATE GOVERNANCE CODE 2018
The UK Corporate Governance Code 2018, published by the
Financial Reporting Council, sets out the standards of good
practice in relation to matters such as Board composition and
effectiveness, the role of Board Committees, risk management,
remuneration and relations with Shareholders.
Key decisions
Stakeholders affected Strategic factors taken into consideration Outcome
Chair-
Designate
Appointed
Capital
Allocation;
Bond
Programme
and
reinstatement
of dividend
Cybersecurity
Incident
Response
Hybrid AGM
Sustainability
Excellence
Committee
and Climate
Change
Acquisition of
Motion Metrics
• Extensive and highly relevant
international Executive and Non-
Executive experience
• Commitment to building an inclusive
and diverse culture
Barbara contributes a wealth of highly relevant
experience to the Group as it transforms into a
focused, premium mining technology business.
Barbara will become the first woman to Chair Weir
in the Group’s 150-year history.
• Protecting Shareholder value,
Sustainability Strategy and
climate change
The structure of the Bond offering as Sustainability-
Linked Notes reaffirms our commitment to
reducing our environmental impact, including
delivering a 30% reduction in emissions by 2024.
The Board declared an interim dividend of 11.5
pence per share, in line with the capital allocation
policy of returning a third of Earnings Per Share
through the cycle.
• Protecting our infrastructure and data to
minimise the impact on our customers,
employees and Shareholders
Continued focus on the safe restoration of our
systems whilst strengthening our future resilience
even further
• Safety of our Shareholders and
employees of the utmost priority
in light of the Covid-19 pandemic
• Shareholder Engagement
• Putting Sustainability at the heart of
our strategy
• Minimising carbon emissions to help
protect the future of the planet and
ensure alignment with our purpose
In accordance with Government legislation and
to minimise public health risk, the AGM was held
as a hybrid meeting with a livestream to allow our
Shareholders to follow the meeting remotely and
ask questions in real time.
Commitment to set new Group-wide emission
reductions in line with climate science and the
Science Based Targets initiative (SBTi)
• Maximising value for Shareholders
• Delivering transformation of Weir into a
premium mining technology pure play
• Providing critical solutions for our
customers that are smarter, more
efficient and sustainable
Strengthening our industry leadership in making
mining more sustainable and efficient. Significantly
increases the Group’s capability in critical AI
and Machine Vision Technologies and highly
complementary to our aftermarket-focused
business model
STAKEHOLDERS KEY
Employees
Customers
Suppliers
Shareholders
Communities
& Environment
Governments
& NGOs
83
The Weir Group PLC Annual Report and Financial Statements 2021Governance Governance
GOVERNANCE AT A GLANCE
COMPLIANCE WITH THE UK CORPORATE
GOVERNANCE CODE 2018
The Company has complied in full during 2021 and to the date of
this report with the provisions of the UK Corporate Governance
Code published in 2018.
The UK Corporate Governance Code 2018 is publicly available at the
website of the Financial Reporting Council at www.frc.org.uk.
READ MORE: PAGES 81-104
ETHNIC MINORITY REPRESENTATION ON THE BOARD
AT 31 DECEMBER 2021
18%
A- SCORE BY CDP
A- CDP
EMPLOYEE ENGAGEMENT SURVEY
PARTICIPATION RATE
90%
ENGAGING WITH OUR WORKFORCE
The Board and Group Executive review and approve all key policies
and practices which could impact on our workforce and drive their
behaviours. We actively engage with our employees through activities
and initiatives which allows us to identify where our employees think
we do well, and where we can do better so we can work together
to ensure Weir becomes an even better place to work. You can read
more about these initiatives on pages 77.
OUR PURPOSE, CULTURE AND STRATEGY
OUR PURPOSE
We are here to enable the sustainable and efficient delivery
of the natural resources essential to create a better future for
the world.
OUR CULTURE
READ MORE: PAGES 10-11
OUR STRATEGY
READ MORE: PAGES 2-80
KEY BOARD AREAS OF FOCUS
• Safety, Health and Environment
• Sustainability and Climate Change
• Corporate Strategy Portfolio and Business Portfolio
• People Strategy
• Reassessing risk in light of Covid-19
• Performance
• Corporate Governance
• Succession Planning
KEY BOARD ACTIONS
• Chair Succession Planning
• Capital Allocation; Bond Programme and reinstatement
of dividend
• Cyber Incident response
• Hybrid AGM
• Sustainability Committee and Climate Targets
• Acquisition of Motion Metrics
READ MORE: PAGES 94-96
84
The Weir Group PLC Annual Report and Financial Statements 2021
GOVERNANCE FRAMEWORK
BOARD OF DIRECTORS
The Board has a number of Committees to assist in discharging its responsibilities. The principal Committees are the Nomination, Audit and
Remuneration Committees. The work of the Committees is essential to the effective operation of the Board. The Committees consider matters in
greater depth and detail on behalf of the Board. The Committee Terms of Reference are reviewed annually to ensure their continuing appropriateness.
The Board may also set up separate Committees to consider specific issues when the need arises.
BOARD COMMITTEES
The composition of the various Committees along with their accompanying Terms of Reference, the matters reserved to the Board for approval and
delegated authority matrices combine to create a clear governance framework and authority matrix across the Group for timely and effective decision-
making. This structure provides the Board with confidence that important decisions are being taken at the appropriate levels, and information flows both
up and down the reporting lines.
NOMINATION
COMMITTEE
YOU CAN READ MORE
IN THE NOMINATION
COMMITTEE
REPORT ON
PAGES 104-109
AUDIT
COMMITTEE
YOU CAN READ
MORE IN THE
AUDIT COMMITTEE
REPORT ON
PAGES 110-120
REMUNERATION
COMMITTEE
YOU CAN READ
MORE IN THE
REMUNERATION
COMMITTEE REPORT
ON PAGES 121-145
DISCLOSURE
COMMITTEE
THE TERMS OF
REFERENCE CAN
BE FOUND ON
OUR WEBSITE AT
WWW.GLOBAL.
WEIR/INVESTORS/
CORPORATE-
GOVERNANCE/BOARD-
COMMITTEES
GENERAL
ADMINISTRATION
COMMITTEE
THE TERMS OF
REFERENCE CAN
BE FOUND ON
OUR WEBSITE AT
WWW.GLOBAL.
WEIR/INVESTORS/
CORPORATE-
GOVERNANCE/BOARD-
COMMITTEES
CHIEF EXECUTIVE OFFICER
GROUP EXECUTIVE
The Group Executive is responsible for ensuring that each of the Group’s businesses and functions are managed effectively and that the key
performance indicators of the Group, as approved by the Board, are achieved. Biographical details of the members of the Group Executive can be found
on page 90. The Group Executive is chaired by the Chief Executive Officer. The Board delegates the execution of the Company’s strategy and the day-to-
day management of the business to the Group Executive. During 2021, the Group Executive had 12 scheduled meetings and two further unscheduled
meetings, in relation to the cyber incident and the acquisition of Motion Metrics.
MANAGEMENT COMMITTEES
In addition to the Board Committees, there are several management Committees, known as Excellence Committees. The Excellence
Committees have clearly defined remits and work across the Group to promote best practice and information sharing. The Executive Directors
and members of the Group Executive can delegate their responsibilities to these Committees and utilise the areas of expertise contained within
them. The Excellence Committees report to the Group Executive and to the Board as required.
Weir Technology
Excellence Committee
Risk Committee
Finance Excellence Committee
CEO Safety Committee
SHE Excellence Committee
Group IS&T Information
Systems Excellence Committee
People & Culture Committee
Inclusion and Diversity
Steering Committee
Treasury and Finance Risk
Committee
Sustainability Excellence
Committee
HR Excellence Committee
HOW THE BOARD ARE EMBEDDING SUSTAINABILITY
Sustainability is at the heart of Weir’s strategy and our purpose is to enable
the sustainable and efficient delivery of the natural resources essential
to create a better future for the world. The Board contributes to and then
approves the development of the Sustainability Strategy and monitors
the performance of this against the agreed climate change goals and
objectives. During 2021, sustainability and climate change were key topics
on the Board agenda and the Board’s activities, discussions and debate
focused on the overview of the Sustainability Roadmap, the effective
operation of the Sustainability Excellence Committee and its Terms of
Reference and the measures being taken across the Group to reduce our
carbon footprint and create sustainable solutions. The Board is supplied
with information from the Sustainability Excellence Committee and gains
insights from the Committee’s specialist expertise, which assists in
effective decision-making. The Board members also have the appropriate
skills to ensure that sustainability and climate change are embedded within
Weir’s purpose and strategy. You can read more about the Board’s skills on
page 105. The CEO is the Board Executive Sponsor for the Sustainability
Excellence Committee and has strategic oversight to ensure the effective
delivery of our sustainability and climate change strategies.
85
The Weir Group PLC Annual Report and Financial Statements 2021Governance BOARD OF DIRECTORS
BARBARA JEREMIAH
Chair-Designate and Senior
Independent Director
N
Nationality: American
Independent: Yes
Date of appointment: 1 August 2017
Senior Independent Director since
1 January 2020
Tenure: 4 years, 7 months
Ethnicity: White American
Age: 70
Gender: Female
Key strengths and experience
Barbara contributes considerable experience to the Board having spent over
30 years in a number of senior leadership roles within Alcoa Inc., the global
aluminium producer and as the Chairwoman of Boart Longyear Limited.
She was previously a Non-Executive Director and RemCo Chair of Premier
Oil plc and Aggreko plc and a Non-Executive Director of Russel Metals Inc.
Barbara’s leadership and governance experience allows her to effectively
contribute to the Board by providing support to the Chairman in his duties
where necessary.
Barbara has a BA in Political Science and is a qualified lawyer.
Key external appointments
• Non-Executive Director and Member of the Audit, Nominations and
Remuneration Committees of Senior plc
JON STANTON
Chief Executive Officer
Nationality: British
Independent: No
Date of appointment: Chief
Executive Officer since 1 October
2016, Finance Director from
April 2010 – October 2016
Tenure: 11 years, 10 months
Ethnicity: White British
Age: 55
Gender: Male
Key strengths and experience
Jon became CEO in 2016 and contributes a wealth of experience to the
Board. Since becoming CEO, he has led the Weir portfolio transformation
and oversees the delivery of the ‘We are Weir’ strategic framework to
create long-term sustainable performance improvement.
He provides leadership to deliver the strategy and ensure it aligns with our
purpose and values and in particular our zero-harm commitments. Jon is
committed to regular engagement with stakeholders and to ensuring
stakeholder views and concerns are heard, understood and considered.
Jon joined the Board as Finance Director in 2010. Prior to this he was a
partner with Ernst & Young, where he led global board-level relationships
with a number of FTSE 100 multi-national companies.
He is a Chartered Accountant and a member of the Institute of Chartered
Accountants in England and Wales.
Key external appointments
• Non-Executive Director and Audit Committee Chair of Imperial
Brands PLC
JOHN HEASLEY
Chief Financial Officer
Nationality: British
Independent: No
CLARE CHAPMAN
Non-Executive Director
Nationality: British
Independent: Yes
R*
A
Date of appointment:
Chief Financial Officer since
3 October 2016
Tenure: 5 years, 5 months
Ethnicity: White British
Age: 47
Gender: Male
Date of appointment:
1 August 2017
Tenure: 4 years, 7 months
Ethnicity: White British
Age: 61
Gender: Female
Key strengths and experience
John contributes financial expertise and significant management,
commercial and operational experience to execute the Group strategy,
while ensuring a robust and effective financial control environment which
is compliant with regulations. Previously John worked in financial practice,
before holding executive positions in the Renewable Energy Division and
corporate office of Scottish Power plc. Since joining Weir in 2008, John has
served as Group Financial Controller and Divisional President of the former
Flow Control Division, before being appointed to the Board in 2016.
John is also our Group Executive Sponsor for Inclusion & Diversity, chairing
the Group Inclusion and Diversity Steering Committee and our Global Weir
Women’s Network. John is a Chartered Accountant and a member of the
Institute of Chartered Accountants of Scotland.
Key external appointments
• Non-Executive Director and Honorary Treasurer of Royal Scottish National
Orchestra Society Limited
Key strengths and experience
Clare brings a wide range of people, governance and large scale business
transformation skills to the Board which allow her to contribute effectively
in her role as Remuneration Committee Chair. She has vast experience of
HR Management gained during her time as Group People Director of BT
Group plc and Tesco PLC and as Director General of Workforce for the NHS
and Social Care. Clare was also previously a Non-Executive Director and
Remuneration Committee Chair of Kingfisher plc, TUI Travel PLC and G4S
PLC. Clare was Group HR Director of Tesco PLC from 1999-2006, HR Vice
President of Pepsi Cola’s European operations from 1994-1999 and has
experience of working outside the UK with over ten years based in the USA
and mainland Europe. Clare’s considerable experience and expertise allows
her to contribute and challenge as well as to engage with stakeholders to
ensure that there is an appropriate and transparent Remuneration Policy
which is aligned with the Weir culture and strategy.
Key external appointments
• Non-Executive Director, Chair of the Remuneration Committee and a
member of the Risk and Nomination Committee of M&G plc
• Chair of the Advisory, Conciliation and Arbitration Service (Acas) Council
• Steering Group Member and Co-Chair of Purposeful Company
86
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 ROLE STATUS KEY
In the role currently
Outgoing
EBBIE HAAN
Non-Executive Director
Nationality: Dutch
Independent: Yes
A R
Date of appointment:
18 February 2019
Tenure: 3 years
Ethnicity: White
Age: 65
Gender: Male
COMMITTEE MEMBERSHIP KEY
* Committee Chair
A Audit Committee member
N Nomination Committee member
R Remuneration Committee member
S Secretary to the Board and Committees
MARY JO JACOBI
Employee Engagement
Non-Executive Director
N R
Nationality: American/British
Independent: Yes
Date of appointment: Non-
Executive Director since 1 January
2014, Employee Engagement
Non-Executive Director since
26 April 2018
Tenure: 8 years 2 months
Ethnicity: White Hispanic
Age: 70
Gender: Female
Key strengths and experience
Ebbie contributes considerable engineering expertise to the Board.
He spent 26 years working on global projects for Royal Dutch Shell
including holding senior leadership positions in the Middle East, Africa,
Europe, Asia and the US, where he gained extensive international
management experience. He was previously Managing Director of Sasol
Petroleum International before being appointed as Chief Growth Officer for
Maersk Oil, in 2015. Since 2018, Ebbie has run his own advisory firm and
was a Non-Executive Director of Orca Exploration Group from 2019-2020.
Ebbie’s valuable knowledge assists the Board to ensure that the Group
operates in an efficient way to maximise long-term growth for its
stakeholders. His experience of SHE best practice and commitment to
safety are also extremely valuable to the Company.
Ebbie has both an undergraduate degree and a Masters in Geology from
Utrecht University in the Netherlands.
Key external appointments
• External Energy Adviser for AP Møller Capital
• Chair at Lumika Renewables
• Visiting lecturer at Witts Business School in Johannesburg
Key strengths and experience
Mary Jo is an expert adviser on international affairs and reputation
management and contributes a unique skill set to the Board. She was
formerly a senior executive of BP America, Royal Dutch Shell, Lehman
Brothers, HSBC Holdings and Drexel Burnham Lambert and a Non-
Executive Director of Tate & Lyle PLC and Mulvaney Capital Management.
Mary Jo was Special Assistant to President Ronald Reagan, Assistant
US Commerce Secretary for President George H W Bush, a British Civil
Service Commissioner, a Member of the UK Advisory Committee on
Business Appointments and on the Board of Directors of the Foundation
to Restore Accountability. Her vast experience, trusted adviser credentials
and excellent communication skills allow her to effectively perform
her duties as Employee Engagement Non-Executive Director. Mary Jo
ensures engagement with employees and that their voice is heard in
the Boardroom.
Key external appointments
• Advisory Board of Rothermere American Institute at Oxford University
• International Advisory Board, IE University
• Member of Strathclyde University Court
BEN MAGARA
Non-Executive Director
R
Nationality: Zimbabwean
Independent: Yes
Date of appointment:
19 January 2021
Tenure: 1 year 1 month
Ethnicity: Black African
Age: 54
Gender: Male
SIR JIM MCDONALD
Non-Executive Director
Nationality: British
Independent: Yes
NA
Date of appointment:
1 January 2015
Tenure: 7 years 2 months
Ethnicity: White British
Age: 64
Gender: Male
Key strengths and experience
Ben is a seasoned mining industry leader. He contributes extensive
experience of leading global mining businesses, which is of critical
importance to the Board as the Group transforms into a focused, premium
mining technology business. Since 2019, Ben has run his own mining
advisory firm.
Prior to joining the Weir Board, Ben served from 2013-2019 as CEO
of Lonmin Plc, the then third largest global platinum mining company.
He was a senior mining executive at Anglo American plc, having served as
Executive Vice President of Engineering & Projects for Anglo Platinum from
2009-2013 and CEO of Anglo Coal SA from 2006-2009. Ben started his
career as a graduate with Anglo American plc after completing his mining
engineering degree at the University of Zimbabwe.
Key external appointments
• Non-Executive Director of Exxaro Resources Limited
• Non-Executive Director of Grindrod Limited
Note Biographies accurate as of 10th March 2021
Key strengths and experience
Sir Jim is a highly regarded expert in engineering and technology and
therefore contributes specialist technical knowledge to the Board. He is
currently the Principal and Vice Chancellor of the University of Strathclyde
and has held the Rolls-Royce Chair in Electrical Power Systems since
1993. He holds a number of Non-Executive Director roles and co-chairs the
Scottish Energy Advisory Board with the First Minister. Sir Jim draws on
his extensive experience to assist the Board to approve the development
of the Group’s technology agenda and to provide oversight and guidance
on the sustainable engineering solutions that promote the success of the
Company and build on its legacy of engineering excellence.
He is Chairman of the Scottish Engineering and Energy Research Pools and
is FREng, FRSE, FIET, FInstP, FEI.
Key external appointments
• Non-Executive Director of Scottish Power Limited
• Senior Adviser to the UK Offshore Renewable Energy Catapult Board
• Non-Executive Director of National Physical Laboratory
• President of the Royal Academy of Engineering
• Member to the Prime Minister’s Council for Science and Technology
87
The Weir Group PLC Annual Report and Financial Statements 2021Governance
BOARD OF DIRECTORS
CONTINUED
STEPHEN YOUNG
Non-Executive Director
Nationality: British
Independent: Yes
A* R
Date of appointment:
1 January 2018
Tenure: 4 years 2 months
Ethnicity: White British
Age: 66
Gender: Male
SRINIVASAN
VENKATAKRISHNAN
Non-Executive Director
A
Nationality: British/Indian
Independent: Yes
Date of appointment:
19 January 2021
Tenure: 1 year 1 month
Ethnicity: Asian Indian
Age: 56
Gender: Male
Key strengths and experience
Stephen is a skilled and experienced financial professional. He was
previously Chief Executive of Meggitt PLC from 2013-2017, having
previously served as Group Finance Director from 2004. Prior to joining
Meggitt PLC, Stephen was Group Finance Director of Thistle Hotels plc and
the Automobile Association.
Stephen’s financial background and his leadership experience allow him to
contribute effectively both as a Board member and as Chair of the Audit
Committee. His oversight of the Group’s Audit function helps the Board to
ensure the ongoing integrity of the financial information, internal controls
and risk management frameworks.
He is a Fellow of the Royal Aeronautical Society, a Fellow of the Chartered
Institute of Management Accountants and a council member of The
University of Southampton.
Key external appointments
Senior Independent Director, Audit Committee Chair and member of the
Nomination Committee and Sustainable Development Committee of
Mondi plc.
Key strengths and experience
Venkat brings a wealth of mining experience to the Board gained through
his vast experience of leading global mining businesses.
He served as CEO of Vedanta Resources plc from 2018-2020 and was CEO
of AngloGold Ashanti Limited between 2013-2018, having previously been
Chief Financial Officer of the business from 2005, and of Ashanti Goldfields
Limited from 2000. His earlier career was as a Chartered Accountant and
restructuring specialist with Deloitte & Touche in the UK and India.
Key external appointments
• Non-Executive Director of BlackRock World Mining Trust plc
• Non-Executive Director of Roscan Gold Corporation
GRAHAM VANHEGAN
Chief Legal Officer and
Company Secretary
S
Nationality: American British
Date of appointment:
1 May 2018
Tenure: 3 years, 10 months
Ethnicity: White
Age: 57
Gender: Male
RETIRING CHAIRMAN
CHARLES BERRY
Chairman
N*
Nationality: British
Independent: Yes
Date of appointment: Chairman
since 1 January 2014 and
Non-Executive Director since
1 March 2013
Tenure: 9 years
Ethnicity: White British
Age: 69
Gender: Male
Key strengths and experience
Graham joined Weir as Chief Legal Officer and Company Secretary in
2018. He brings extensive international legal experience and is a trusted
adviser to the Board on all Corporate Governance matters. During his
24-year career with international exploration and production company
ConocoPhillips, he held a number of senior positions for the company in
Asia and North America.
A graduate of the University of Glasgow, Graham is a solicitor qualified to
practice in both Scotland and England and is an attorney-at-law before the
State Bar of New York, USA.
Key strengths and experience
Charles brings broad governance and leadership experience to the Board
gained in senior management positions held within a variety of sectors.
Prior to joining Weir, Charles was an Executive Director of Scottish Power
plc and Chief Executive of its UK operations. He is a former Non-Executive
Director and Chairman of Centrica plc, Eaga plc, Drax Group plc, Senior
plc and Thus Group plc, a former Non-Executive Director of Impax
Environmental Markets plc and Securities Trust of Scotland plc. Charles was
also a member of the steering group of the Hampton-Alexander Review.
His extensive leadership and management experience is critical to lead the
Board and ensure it remains effective, to monitor and uphold the values
and purpose of the Company and to ensure that a robust and effective
framework of Corporate Governance exists to protect stakeholder value.
Key external appointments
• Honorary Air Commodore No.602 (City of Glasgow) Squadron, Royal
Auxiliary Air Force
88
As at 2nd March 2022
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BOARD AS AT 31 DECEMBER 2021
BOARD TENURE
NATIONALITY
0–1 year
2–3 years
3–4 years
4–5 years
5–6 years
6–7 years
7–8 years
8 –9 years
11–12 years
Asian Indian
Black African
White
White American
White British
White Hispanic
ETHNICITY
GENDER DIVERSITY
Non-Executive Directors
Male
Female
2
1
1
2
1
1
1
1
1
1
1
2
1
5
1
6
3
AGE
All Board
British
American
American/British
Dutch
British/Indian
Zimbabwean
40–49
50–59
60–69
70–79
Male
Female
5
1
2
1
1
1
1
3
5
2
8
3
89
The Weir Group PLC Annual Report and Financial Statements 2021Governance
GROUP EXECUTIVE
Jon Stanton, John Heasley and Graham Vanhegan are also members of the Group Executive. Their biographical information can be found
on the previous pages.
PAULA COUSINS
Chief Strategy and
Sustainability Officer
Nationality: British
Date of appointment:
1 January 2020
Tenure: 2 years 2 months
Ethnicity: White British
Age: 48
Gender: Female
ROSEMARY MCGINNESS
Chief People Officer
Nationality: British
Date of appointment:
31 July 2017
Tenure: 4 years 7 months
Ethnicity: White British
Age: 58
Gender: Female
Experience:
Paula joined the Group Executive as Weir Group’s first Chief Strategy &
Sustainability Officer in January 2020, having joined Weir in 2015 as Head
of Strategy. Prior to Weir, she held a number of strategy, commercial, and
engineering leadership roles with Petroineos, BP, McKinsey & Company,
ExxonMobil and Unilever.
Paula has a BEng Hons in Chemical and Process Engineering and an MPhil
in Chemical Engineering Research, both from the University of Strathclyde.
She is currently a Visiting Professor in the Department of Mechanical and
Aerospace Engineering at the University of Strathclyde.
Experience:
Rosemary joined Weir as Chief People Officer in 2017. Prior to this she was
Group HR Director of William Grant & Sons, the international premium
spirits group, for 12 years. Having started her career in line management
with Forte Hotels, Rosemary has held a range of positions covering all
aspects of Human Resources across the globe, including being based
in New York in her role as Senior Vice President of HR for document
management company Bowne Business Solutions.
Rosemary holds an MSc. in Organisational Change and is a Fellow of
the Chartered Institute of Personnel and Development. She is a Trustee
of Children 1st and an Advisory Board Member of the University of
Strathclyde Business School.
GARRY FINGLAND
Chief Information Officer
Nationality: British
Date of appointment:
1 January 2020
Tenure: 2 years 2 months
Ethnicity: White British
Age: 57
Gender: Male
Experience:
Garry joined Weir in April 2019 as Chief Information Officer (CIO). He has
more than 25 years’ experience with leadership roles in complex global
technology organisations. Before Weir he was CIO for healthcare provider
Bupa, serving on its executive committee. He has also held senior roles
with Serco and Diageo. A graduate of the University of Glasgow, he also
holds an MBA from the University of Strathclyde. Garry joined Weir’s Group
Executive in January 2020, retaining his title as CIO.
RICARDO GARIB
President of Weir Minerals
Nationality: Chilean
Date of appointment:
1 January 2016
Tenure: 6 years 2 months
Ethnicity: Hispanic/Latino
Age: 67
Gender: Male
Experience:
Ricardo joined the Group Executive in January 2016 and is the President
of Weir Minerals Division. Ricardo joined Vulco-Baker Hughes in 1980 and
became the Managing Director of Weir Chile following the purchase of
the Baker Hughes Minerals Division-LATAM in 1994 by the Weir Group.
In 2001, he was promoted to Regional Managing Director of Weir Minerals
Latin America. Ricardo was a founder and Vice President of the Mining
Suppliers Association and for two periods an elected council member of
the Board of the Chilean Federation of Industry.
He holds an MBA and is a Civil Mechanical Engineer from the Catholic
University in Chile.
90
ANDREW NEILSON
President of Weir
ESCO Division
Nationality: British
Date of appointment:
1 April 2020
Tenure: 1 year 11 months
Ethnicity: White British
Age: 46
Gender: Male
Experience:
Andrew joined Weir in 2010 as Head of Strategy, then taking over
responsibility for investor relations and corporate communications. He joined
the Group Executive in 2014 as Director of Strategy and Corporate Affairs
and served as Company Secretary in 2016. In 2017, Andrew moved to the US
to lead the Finance function of the Minerals Division, before taking on the
role of Chief Integration Officer and led the integration of ESCO into Weir.
Andrew then led the Europe, North Africa and Russia region for Minerals,
before returning to the United States in July 2020 as President of the ESCO
Division. Prior to Weir, Andrew held a variety of roles within banking, energy
and professional services companies, including HSBC, Lloyds Banking
Group, Scottish Power and KPMG. Andrew holds a Masters degree in
Manufacturing Sciences and Engineering from the University of Strathclyde
and is a Chartered Accountant.
ETHNICITY
GENDER DIVERSITY
White
White British
Hispanic/Latino
Male
Female
1
6
1
6
2
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BOARD STATEMENTS
OUR PURPOSE AND CULTURE
The Company has fully complied with all the principles of the
UK Corporate Governance Code 2018, for the year ended
31 December 2021, and from that date to the date of approval
of this Annual Report.
READ MORE IN OUR CORPORATE GOVERNANCE REPORT
PAGES 82-85
VIABILITY STATEMENT
In accordance with provision 31 of the UK Corporate Governance
Code 2018, the Directors have assessed the viability of the Group
over a three-year period, taking into account the Group’s current
position and the potential impact of the principal risks documented
on pages 74-80 of the Annual Report. Based on this assessment,
the Directors confirm that they have a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the period to 31 December 2024.
READ MORE IN OUR RISK MANAGEMENT SECTION PAGES 70-80
AND IN OUR VIABILITY STATEMENT ON PAGE 103
GOING CONCERN BASIS
The Directors have a reasonable expectation that the Group has
adequate resources to continue to operate for a period of at least
12 months from the date of approval of the financial statements.
For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
In forming this view, the Directors have reviewed the Group’s
budgets, plans and cash flow forecasts, including downside risk
scenarios and the impact of the Oil & Gas disposal.
In addition, the Directors have considered the potential impact of
credit risk and liquidity risk detailed in note 29 to the Group financial
statements on pages 216-222.
Each of these items has been considered in relation to the Group’s
banking facilities, including those refinanced during the year, as
described in note 19 on pages 198-199.
READ MORE IN OUR DIRECTORS’ REPORT PAGES 146-148
ROBUST ASSESSMENT OF THE PRINCIPAL RISKS
FACING THE GROUP AND ANNUAL REVIEW OF
SYSTEMS OF RISK MANAGEMENT AND INTERNAL
CONTROL
During the year, the Board has reviewed the effectiveness of the
systems of risk management and internal control and conducted a
robust assessment of the principal risks affecting the Group in line
with the Risk Appetite Statement. These activities meet the Board’s
responsibilities in connection with Risk Management and Internal
Control set out in the UK Corporate Governance Code 2018.
RISK MANAGEMENT SECTION PAGES 70-80
FAIR, BALANCED AND UNDERSTANDABLE
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for
Shareholders to assess the Group’s performance, business model
and strategy.
MODERN SLAVERY STATEMENT
As a Company, we understand our role in eradicating modern
slavery. Following an extensive review of our existing policies
and practices in light of the Modern Slavery Act, the Company
prepares an annual Modern Slavery Statement and has developed
a training programme.
READ MORE IN OUR STATEMENT OF DIRECTORS’ RESPONSIBILITIES
PAGE 149
A COPY OF THIS STATEMENT CAN BE FOUND ON OUR WEBSITE:
WWW.GLOBAL.WEIR/SITE-INFORMATION/MODERN-SLAVERY-
STATEMENT.PDF
91
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIVISION OF RESPONSIBILITIES
ROLES AND RESPONSIBILITIES
The Board of Directors has a collective duty to promote the long-
term success of the Company for its stakeholders. The Board sets
the strategic aims of the Group and provides entrepreneurial and
effective leadership. The Board provides oversight and guidance
to Senior Management to ensure that the necessary resources
are in place to achieve the agreed strategy. In determining the
long-term strategy and objectives of the Group, the Board is
mindful of its responsibilities not just to Shareholders but to all
the Company’s stakeholders. The Board reviews management and
financial performance and monitors the delivery of strategy and the
achievement of business objectives. At all times, the Board operates
within a robust framework of internal controls and risk management.
The Board has oversight over climate-related matters and develops
and promotes the collective vision of the Group’s purpose, culture,
values and behaviours.
BOARD COMPOSITION
During 2021, the Board comprised of two Executive Directors,
and up to nine Non-Executive Directors including the Chairman.
More than half of the Board are Non-Executive Directors who
are considered to be independent in character and judgement.
The roles and responsibilities of the Chairman, Chief Executive
Officer and Senior Independent Director are set out in writing and
available on the Company’s website global.weir/investors/corporate-
governance/matters-reserved-to-the-board/. Biographical information
on the Board of Directors, including their relevant experience,
continuing contributions to the Company, expertise and significant
appointments, can be found on pages 86 to 88. The key
responsibilities of the Board and the Company Secretary are set
out below.
CHAIRMAN
CHIEF FINANCIAL OFFICER
• Leading the Board in an ethical manner and promoting
• Ensuring an effective financial control environment which is
effective Board relationships
compliant with regulations
• Building a well-balanced Board, considering succession
• Ensuring effective management of Group capital structure
planning and the Board’s composition
and financing needs
• Ensuring the effectiveness of the Board and
• Provision of timely and accurate financial reporting
individual Directors
• Assisting in formulating the Group objectives and strategy
• Overseeing the Board evaluation and acting on its results
• Day-to-day management of the Company
• Ensuring appropriate induction and
development programmes
• Setting the Board agenda and chairing the Board meetings
• Ensuring effective communication with Shareholders and
other stakeholders
CHAIR-DESIGNATE & SENIOR INDEPENDENT
DIRECTOR
• Supporting the Chairman in his duties where necessary
• Leading the annual review of the performance of
the Chairman
• Being available to Directors and Shareholders with concerns
that cannot be addressed through the normal channels
CHIEF EXECUTIVE OFFICER
• Planning the Group objectives and strategy for
Board approval
• Ensuring the effective delivery of corporate strategy
• Board sponsor for the Sustainability Excellence Committee
• Providing leadership to the Group and communicating the
Company’s culture, values and behaviours
• Leading engagement with key stakeholder groups
including investors
• Leading the Group Executive and ensuring strong succession
and development plans are in place
• Day-to-day management of the Company
NON-EXECUTIVE DIRECTORS
• Contributing independent challenge and rigour
• Assisting in the development of the Company’s strategy
• Ensuring the integrity of financial information, controls and
risk management processes
• Monitoring the performance of the Executive Directors
against agreed goals and objectives
• Advising Senior Management
• Supporting succession planning for the Board and
Senior Management
COMPANY SECRETARY
• Advising the Board on governance, legislation and
regulatory requirements
• Ensuring the presentation of high quality information to the
Board and its Committees, in a timely manner
• Ensuring best practice in Board procedures
• Facilitating induction and development programmes
• Supporting the Chairman and other Board members as
necessary, including the management of the Board and
Committees and their evaluation
• Ensuring the provision of effective legal advice for the Group
and compliance with laws
92
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BOARD MEETINGS
BOARD MEETINGS
The Board meets regularly in order to effectively discharge its duties.
Due to the ongoing impact of Covid-19, Board meetings were held
virtually by Microsoft Teams and hybrid where possible. During 2021,
there were eight scheduled meetings. The table below details the
attendance at Board meetings of each Director during their term
of office for the period to 31 December 2021. One unscheduled
Board meeting was called at short notice in relation to the cyber
incident. On occasion, meetings called at short notice can result in
some Directors being unable to attend due to prior commitments.
Directors who are unable to attend still have the opportunity to review
the relevant Board papers, receive an individual briefing from the
Company Secretary and provide their feedback accordingly.
In addition to formal Board meetings, the Board maintains an open
dialogue throughout the year. Due to the restrictions imposed by
Covid-19, the Non-Executive Directors met with the Chairman virtually
during the year, without Executive Directors present.
The Board’s annual calendar is discussed at least 12 months prior to its
commencement to allow the Directors to plan their time accordingly.
The 2022 annual calendar was discussed at the Board meeting in 2020
and circulated as soon as it was finalised.
The 2023 timetable was reviewed during 2021. This process ensures
that the Chairman can be comfortable that each Director is able to
devote the time and resources required to act as a Director during
that period. The system for establishing the agenda items means that
both the Chairman and the Board have the confidence that all required
items are included at the most appropriate time of the year and there
is sufficient time allocated for discussion by the Board, allowing the
Directors to discharge their duties effectively.
During the year, the Chairman, supported by the Chief Executive
Officer and Company Secretary, maintained a rolling 12-month agenda
for Board and Committee meetings. At each meeting, the Board
received reports from the Chief Executive Officer and other members
of the Group Executive. This included updates on safety, strategy,
sustainability, technology, risk, legal and financial matters.
In order to effectively discharge their duties, the Non-Executive
Directors received presentations by members of the Group’s Senior
Management team and other external advisers, as required.
BOARD MEETING ATTENDANCE 2021
20 Jan
2021
22 Feb
2021
29 April
2021
22/23 Jun
2021
22 Jul
2021
2 Sep
2021
1 Oct
2021
26 Oct
2021
14 Dec
2021
Charles Berry
(Chairman)
Jon Stanton
John Heasley
Clare Chapman
Ebbie Haan
Mary Jo Jacobi
Barbara Jeremiah
Sir Jim McDonald
Stephen Young
Ben Magara
Srinivasan
Venkatakrishnan
Location
Scheduled/
Unscheduled
Virtual
Virtual
Hybrid
Hybrid
Hybrid
Hybrid
Virtual
Hybrid
Hybrid
Scheduled Scheduled Scheduled Scheduled Scheduled Scheduled Unscheduled Scheduled Scheduled
Total
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
93
The Weir Group PLC Annual Report and Financial Statements 2021Governance BOARD ACTIVITIES
The undernoted timeline summarises the Board's activities during
the course of the year ended 31 December 2021. Although this is by
no means exhaustive, it provides an example of Boardroom activities,
discussions and debates. The Board Agenda is split between standing
items, which are discussed at the start of every meeting and those
activities highlighted below. The Board is supplied in a timely manner
with the appropriate information to enable Directors to discharge
their duties. In addition, the Board normally meets once or more a
year at one of the Group’s operational sites. This allows the Board
the opportunity to meet employees across the global operations.
This continued to be impacted during 2021 by Covid-19, however,
the Board held a virtual ‘Meet the Board’ session during the year and
different Board members visited our sites in St Louis, Alrode and
Todmorden to engage with employees and gain insights.
BOARD MEETING STANDING ITEMS
• Committee Chairs updates
• CEO and CFO business reports
• Safety
• Conflicts of Interest
• S.172 duties
• Shareholder and Market analysis
• Balanced Scorecard Report
• Corporate Services Report
GOVERNANCE
• Chair Succession
• Sustainability Excellence Committee
• Annual Report and Accounts
• Hybrid AGM
• Conflicts of Interest
• Board Diversity Policy Update
• Board Performance Review
• Annual Matters Reserved to the Board Review
• Parker Review Update
• FTSE Women Leaders Review Update
• Virtual Meet the Board Session
WHAT WE DID IN 2021
FINANCIAL
• Dividend Consideration
• Quarterly Forecasts
• 2020 Results Feedback
• Half Year and Full Year Results
• Bond Issuance Programme
• Divisional Reviews
• Balanced Scorecards
94
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 PEOPLE
• Gender Pay Report
• Employee Insights
• Talent Development and Succession Planning
• Inclusion, Diversity & Equity Strategy
RISK
• Annual Risk Review and Risk Dashboard
• Cyber Incident
SUSTAINABILITY
STRATEGY
• Divisional Strategies
• People
• Sustainability – Emissions Strategy and Climate Strategy
• Digitalisation
• Technology
• Corporate Finance
• Corporate Development
• Acquisition of Motion Metrics
• Sale of Oil & Gas Division
• Sustainability Roadmap
• Sustainability Excellence Committee
• Reducing our Footprint
• Creating Sustainable Solutions
95
The Weir Group PLC Annual Report and Financial Statements 2021Governance Governance
OUR BOARD STRATEGY REVIEW PROCESS
Our 150th Anniversary in 2021, gave us the opportunity to take
pride in our heritage, celebrate our purpose and reflect on what we
have achieved in the last 150 years. We are also looking forward
to what we can achieve in the future for our customers, the planet
and all of our stakeholders. Our business model has changed, as
have our strategic priorities and areas of focus. Technology and
digitalisation are transforming the mining industry requiring new
operating models, knowledge and capabilities throughout Weir.
In 2021, the Board strategy review process covered a range of
topics in detail, including Divisional strategies, corporate finance,
people strategies, emissions and climate transition strategies and
innovation and technology strategies. The Board strategy review
process allowed the Board to reflect on our progress to date and to
review the strategic plans for the future. Each Division presented
their strategic plans to the Board, addressing strategic initiatives
and Divisional priorities. The discussions were interactive with
participation by Board colleagues throughout each of the sessions.
Some of the key strategic measures are highlighted below.
EMBEDDING SUSTAINABILITY
To date we have developed and executed a robust sustainability
strategy that will help our customers and our own operations
reduce energy, water and waste. The Board assessed the
climate scenarios presented at the Board strategy sessions and
the risks and opportunities to both Divisions of the transition
to a low-carbon economy were reviewed. The Board agreed
to continue to embed climate transition into strategic planning
to meet market and regulatory expectations, thus enabling a
climate ready Weir.
Key strategic highlights
• Maximise long-term growth opportunities from metals such
as copper that enable low-carbon transition
• Show leadership in our industries’ pathway to Net Zero
INNOVATION & TECHNOLOGY
Digital Transformation means Weir will become a future-ready
organisation that delivers smart and sustainable solutions that
delight our customers in a digital world.
Key strategic highlights
• Market-leading AI and IoT solutions to enable our customers
achieve greater operational performance from their assets
• Fully-digitised manufacturing and supply chain systems to
drive internal efficiencies and reduce customer lead-times
• A future-ready workforce, fully capable of leveraging
the opportunities provided through digitalisation across
our business
INCLUSION & DIVERSITY
Our people strategy is aligned with the business strategy and
is focused on the outcomes that drive business performance.
We strive to create a high-performance culture and to create an
environment where people can do the best work of their lives.
Key strategic highlights
• Building a truly inclusive, diverse business
• Deliver on zero harm for our people and the environment
• Accelerate purpose driven culture and lead in inclusion,
equity and diversity
• Create talent and capabilities for the future
PROGRESS & PERFORMANCE
We strive to deliver excellence for all of our stakeholders,
through strong leadership, a purpose driven culture and
rigorous standards of governance. Safety remains our number
one priority and we have made good progress in becoming a
zero-harm workplace and meaningfully enhanced our culture,
underpinned by the ‘We are Weir’ framework. Our absolute
goal remains zero harm.
Key strategic highlights
• Solve our customers’ biggest smart, efficient,
sustainable challenges
• Drive clean, lean and agile operations and supply chain
• Further transformed our portfolio to become a pureplay,
premium mining technology provider.
96
The Weir Group PLC Annual Report and Financial Statements 2021
MEET THE BOARD SESSIONS
MEET THE BOARD CASE STUDY
A core part of our wider employee voice strategy involves
developing Board and employee engagement activities, led
by Mary Jo Jacobi, our Non-Executive Director responsible for
employee engagement. We continue to strengthen the links
between Weir’s employees and the Board. This involves creating
opportunities for Weir Board members to hear the employee voice,
to further interpret the key messages from our diverse employee
population and to take them into account to inform the strategies
and policies that will continue Weir’s progress.
One example of this is our regular ‘Meet the Board’ sessions
which enable discussion to take place between small groups of
employees and the Board. During these sessions the Board and
participants will discuss together the topics closest to participants’
hearts such as what we do at Weir, how we do it and their
experience of working with Weir.
For example, in July 2021, we held Weir’s third virtual ‘Meet the
Board’ session, (and our fifth ‘Meet the Board’ session in total) with
colleagues in India. A diverse range of 12 employees attended from
EnSci and Weir Minerals and joined five Board members.
Before the session, the diverse range of participants were asked to
share the topic they would most like to discuss with the Board and
as such on the day, discussion focused on three key areas: ‘health &
wellbeing’, ‘technology-fuelled sustainability’ and ‘employee growth
& empowerment’.
A rich and meaningful discussion took place on each of these
employee-suggested topics following which key insights were
shared with the rest of the Board and relevant leaders to help inform
decision-making and action where appropriate.
We look forward to continuing and developing our Board and
employee engagement activities during 2022.
The Weir Group PLC Annual Report and Financial Statements 2021
97
Governance SHAREHOLDER ENGAGEMENT
The Board, including the Senior Independent Director and Chairs of the Board Committees,
will be available at the AGM to answer questions relevant to the work of the Board and the
Committees. During 2021, the Chairman, Chief Executive Officer, Chief Financial Officer
and Chair of the Remuneration Committee have had contact with analysts and institutional
Shareholders to keep them informed of significant developments and report to the Board
accordingly on the views of these stakeholders. These meetings covered both existing
Shareholders and potential holders, providing the Group with detailed feedback on how
investors perceive it across a broad number of key areas including strategy, financial
performance and structure, valuation, climate-related topics, Corporate Governance and ESG,
management, investor relations and communications. The results of this feedback have been
incorporated back into the Group’s strategy, planning and investor communications.
ANNUAL GENERAL MEETING VOTING RESULTS
The Annual General Meeting of The Weir Group PLC was held on Thursday 29 April 2021 at
2.30 pm. All resolutions were passed on a poll. Resolutions 18 to 21 were passed as special
resolutions. You can find the voting results on our website at www.global.weir/assets/files/
investors/AGM/2021/weir-group-2021-agm-results.pdf.
SHAREHOLDER EVENT CALENDAR 2021
JANUARY/
FEBRUARY
2021
MARCH/APRIL
2021
• Closed Period 1 January 2021 – 1 March 2021
• Investor roadshow London & Edinburgh
• Equity sales force meetings x2
• Virtual North American roadshow
• Virtual conference UBS
• Virtual conference Bank of America Merrill Lynch Full
Year results
• Q1 IMS
• Hybrid Annual General Meeting
• Virtual panel discussion JP Morgan
MAY/JUNE
2021
• Investor meetings post Q1 IMS
• US$800m Sustainability-Linked Notes issued
• Virtual European roadshow
JULY/AUGUST
2021
• Closed Period 28 June – 29 July 2022
• Interim Results
• Virtual London and Edinburgh roadshows
• Investor meetings post Interim results
SEPTEMBER/
OCTOBER
2021
• Equity sales force meetings x2
• Virtual Morgan Stanley conference
• Virtual Japanese roadshow
• Virtual RBC conference
• Q3 IMS and cyber update
NOVEMBER/
DECEMBER
2021
• Motion Metrics acquisition announced
• Virtual Jefferies conference
• Virtual JP Morgan conference
• Equity sales force meeting
SHAREHOLDER ENGAGEMENT
The Board recognises that the ongoing
success of the Group depends on developing,
establishing and maintaining strong
relationships with all our Shareholders.
The Company’s investor relations programme
includes formal presentations of full year and
interim results and meetings with individual
investors. As a result of the continuing impact
of Covid-19, the investor relations activity
including roadshows and conferences moved
to a virtual format.
SHAREHOLDER EVENTS IN 2021
The Company has directly engaged
with investors (182 meetings in 2021),
either face-to-face or via telephone or by
video-conferencing. The Company also
engages with its Shareholders through
its attendance (virtually and physically) at
investor conferences held by the financial
community and roadshows and investor
relations events held by the Company,
of which there were 21 during the year,
held virtually, in the UK, the US, Canada,
Chile, Denmark, France, Germany, Italy,
Japan, Spain, Sweden and Switzerland.
The primary means of communicating with
the Company’s Shareholders are the Annual
and Interim Reports. Both are available on
the Company’s website. The website also
contains information on the business of the
Company, Corporate Governance, Group
press releases, Company news, key dates in
the financial calendar, investor factsheets and
other important Shareholder information.
ANNUAL GENERAL MEETING
The Board is committed to the constructive
use of the AGM as a forum to meet with
Shareholders and to hear their views and
answer their questions about the Group
and its business. In 2021, we provided
our Shareholders a valuable opportunity to
communicate with us despite the pandemic
and our ability to meet with Shareholders at
the AGM. In 2020, we held a closed AGM,
however in 2021 we took the decision
to hold a Hybrid AGM to ensure that our
Shareholders were able to vote and submit
questions electronically and join the AGM
online. As part of the engagement process
we also had a dedicated email address that
our Shareholders could submit questions prior
to the AGM and all questions and answers
were also published on our website.
98
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BOARDROOM PRACTICE
BOARD APPOINTMENTS
New appointments to the Board are subject to a formal, rigorous and
transparent appointment procedure. Directors are recommended and
considered on merit against objective criteria and with due regard
for the benefits of diversity on the Board and their existing time
commitments to ensure they can effectively discharge their duties.
APPOINTMENT OF CHAIR-DESIGNATE
BARBARA JEREMIAH
Charles Berry will retire as Chairman following the 2022 Annual
General Meeting, having completed his full nine-year term with the
Board. Following a comprehensive search and selection process,
the Board was unanimous in viewing Barbara Jeremiah as the best
choice for Chair-Designate. Barbara has extensive and highly relevant
international Executive and Non-Executive experience alongside a
deep passion for Weir and its people. Barbara is currently appointed as
Chair-Designate and will succeed Charles as Chair at the conclusion of
the Company’s AGM, becoming the first female Chair in the Group’s
150-year history. At the close of the AGM in April 2022, the Board’s
female diversity percentage will increase to 30%.
You can read more about the search and selection process in detail,
in the Nomination Committee Report, on page 106.
BOARD INDUCTIONS AND TRAINING
When a new Director is appointed to the Board, they receive a tailored
induction programme which is designed to reflect the Non-Executive
Director’s background, experience, knowledge and their appointment
to the relevant Board Committee. The induction covers the Company’s
history, culture, purpose, strategy, structure, operations, policies and
other relevant documentation. The induction process also covers the
Corporate Governance Framework, the Board and Committee process,
Board and Committee calendars and training on the Code of Conduct
and Directors’ Duties. As part of their induction, new Directors also
meet with Senior Management of the Company, receive a formal
briefing on legal and governance matters from the Company Secretary
or his Deputy, and undertake visits to the Company’s operations.
The Chairman regularly reviews and agrees with each Director their
training and development needs. Additional induction and training is
also available to new Committee members as required. Training is also
built into the Board meetings, with relevant topics being covered as
appropriate. Following on from the induction period, the Board receives
additional training and development opportunities at regular intervals
throughout the year. These include deep dives (which concentrate
in-depth on specific topics), site visits, Board dinners and breakfast
meetings, training and information sessions, briefing materials on the
Board portal and meetings with Senior Management on key topics
affecting the Company. In addition to their duties enshrined in the
Companies Act 2006, Directors are informed of important changes
to laws and regulations affecting the Group’s businesses and their
duties as Directors. The Board is supplied with information in a timely
manner to enable it to discharge its duties. The Chairman ensures that
Non-Executive Directors are properly briefed on any issues arising at
Board meetings and that Non-Executive Directors have the ability to
communicate with the Chairman at any time.
DIRECTORS AND THEIR OTHER INTERESTS
The Board recognises that it is important for Directors to have a
diverse range of experience and the benefit that external appointments
in other companies can provide for both the individual Director and to
the Board as a whole. In light of this, Directors may be permitted to
take up external appointments and directorships in other companies
upon having requested and received prior written approval from the
Board. Under the Companies Act 2006, a Director of a company
must avoid a situation in which he or she has, or can have, a direct
or indirect interest that conflicts with, or may possibly conflict with
the interests of the Company. The Company has a formal procedure
in place to manage the disclosure, consideration and, if appropriate,
the authorisation of any such possible conflict. Each Director is aware
of the requirement to notify the Board, via the Company Secretary,
as soon as they become aware of any possible future conflict or a
material change to an existing authorisation. Upon receipt of any such
notification, the Board, in accordance with the Company’s Articles of
Association, will consider the situation before deciding whether to
approve the perceived conflict. Overall, the Board is satisfied that there
are appropriate procedures in place to deal with conflicts of interest
and that they operate effectively. None of the Non-Executive Directors
have any material business or other relationship with the Company or
its management. Sir Jim McDonald is the Principal and Vice Chancellor
of the University of Strathclyde, however, he has no direct involvement
on a day-to-day basis in relation to the Weir Advanced Research Centre
(WARC) which is operated by the Company in conjunction with the
University of Strathclyde. Nevertheless, he will offer to recuse himself
from any discussions in relation to the relationship between the
Group and the University of Strathclyde, whether in relation to WARC
or otherwise.
RE-ELECTION TO THE BOARD
In accordance with the Company’s Articles of Association and good
practice, all Directors on the Board at 31 December 2021 (with the
exception of Charles Berry), will seek re-election at the Company’s
AGM in April 2022, in compliance with the UK Corporate Governance
Code 2018. The Executive Directors have contracts of service with
one year’s notice, whilst Non-Executive Directors’ appointments can
be terminated with six-months’ notice. The letters of appointment
of the Chairman and the Non-Executive Directors are available for
inspection at the Company’s registered office and set out the required
commitment the Director must have to the Company. Further details
can also be found in the Directors’ Remuneration Report on pages
121-145. Details of the Directors’ service contracts, emoluments, the
interests of the Directors in the share capital of the Company and
options to subscribe for shares in the Company are disclosed in the
Directors’ Remuneration Report on pages 121-145.
TIME COMMITMENT
When considering new external appointments for existing Directors,
the Board takes into account a range of considerations, including
the Directors’ current commitments, the time requirement
involved, the role and responsibilities of the external position and
the potential impact on the Company. The Board also considers the
benefits that the external appointment may bring, such as greater
commercial experience, gaining expanded Board level experience
and a broader perspective from being in a new environment. If the
external appointment is considered to be beneficial to the Company’s
stakeholders by allowing the Director to gain experience and new skills
which will ultimately promote the success of the Company, it may
be approved by the Board. During 2021, the following key external
appointments were considered and approved:
• Clare Chapman was appointed as Non-Executive Director,
Remuneration Committee Chair and member of the Risk and
Nomination Committees, of M&G plc.
• Barbara Jeremiah was appointed as Non-Executive Director and
member of the Audit, Nominations and Remuneration Committees
of Senior plc.
• Venkat Venkatakrishnan was appointed as a Non-Executive Director
of Roscan Gold Corporation and as a Non-Executive Director and
member of the Audit and Management Engagement Committee of
BlackRock World Mining Trust plc.
99
The Weir Group PLC Annual Report and Financial Statements 2021Governance BOARD EFFECTIVENESS
BOARD PERFORMANCE
The review of the Board’s Performance helps the Board continuously improve its own performance and in turn the performance of
the Company. The Board is committed to performing to a high standard, and it considers that it has the right combination of skills,
experience, independence and knowledge to be effective in meeting the needs of the Group.
BOARD PERFORMANCE TENDER PROCESS
To facilitate our external Board Performance Review, the Nomination Committee undertook a tender process, as detailed below, in line
with the Corporate Governance Code and the ICSA Voluntary Good Practice Principles. The Nomination Committee recommended to
the Board the appointment of Independent Board Evaluation (IBE), for a three-year Board Performance Programme. The role of IBE
is to identify any issues that the Board should consider and the role of the Board is to take appropriate action to address any issues.
The Company does not have any other connection with IBE and does not intend to have a relationship with them for longer than six
years. IBE has reviewed the content of the Board Performance section on pages 100 and 101.
STAGE 1
• Review list of all FTSE 100 Board
Performance service providers
• Interviews held virtually with selected short
list of service providers
STAGE 2
• Proposals shared with Chairman, CEO and
• Scoring matrix populated and
Company Secretary
feedback provided from SID and
Chair of Audit Committee
STAGE 3
• Appointment by Nomination Committee and
• Appointment of service provider
Board updated
BOARD PERFORMANCE AND REVIEW PROCESS
The Board Performance Review operates on a three-year cycle and the process is detailed below.
Year 1 – 2021
Year 2 – 2022
Year 3 – 2023
• External Board Performance Review
• Internal Board Performance Review
• Internal Board Performance Review
(facilitated by IBE)
(assistance from IBE)
(assistance from IBE)
• Circulate findings and review
• Circulate findings and review
• Circulate findings and review
recommendations from previous year
recommendations from previous year
recommendations from previous year
• Board/Committee meeting
• Board/Committee meeting
• Board/Committee meeting
observation and interviews with
all Board and Group Executive
members, senior management
and advisers
• Analysis and discussion at Board
meeting with IBE present
• Individual meetings between the
Chair Designate and each Director
post evaluation
observation and interviews with
all Board members
• Analysis and discussion
at Board meeting
• Individual meetings between
the Chair and each Director
post evaluation
observations and the use of
questionnaires/interviews with
all Board members
• Analysis and discussion
at Board meeting
• Individual meetings between
the Chair and each Director
post evaluation
100
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 THE 2021 PROCESS
STAGE 1
The Performance Review of the Weir Board was conducted according to the guidance in the
UK Corporate Governance Code 2018 and was facilitated by Lisa Thomas at Independent Board
Evaluation (IBE). A comprehensive brief was given to IBE by the Chairman, in August 2021.
STAGE 2
In September and October 2021, detailed interviews were conducted with every Board member.
All participants were interviewed by Lisa Thomas according to a set agenda, tailored for the Weir Board.
In addition, the Group Executive also interviewed members of the senior management team, as well as
the Remuneration Committee advisers and external Auditors. Lisa Thomas observed the main Board and
Committee meetings in September 2021, and support materials for briefing purposes were provided by
the Company.
STAGE 3
STAGE 4
Conclusions were discussed with the Chairman and Chair-Designate and subsequently reports
were produced and discussed with the whole Board at its December meeting, with Lisa Thomas
in attendance.
Following the Board meeting, Lisa Thomas provided feedback to Committee Chairs on the
performance of each Committee and discussed the Board’s reflections on the Chairman’s role and
thoughts for the Chair-Designate directly with the Chair-Designate, in preparation for her assuming
the role in at the end of April and in her capacity of SID. Both the Chairman and Chair-Designate
received a report with feedback on individual Directors’ performance as an input to the regular annual
performance review process.
FINDINGS FROM 2021 REVIEW
Overall, Board feedback was extremely positive. Board discussions, which are open and challenging, are with sufficient grit to
avoid group think. The view is that it is a well-run Board, with experienced Non-Executive Directors and Chairman, and transparent
and experienced Executive Directors. Committee Chairs are seasoned, and steering those to play their part in support of main
Board responsibilities.
Positive characteristics are composition, the Board’s diversity of thought, and a good fit amongst colleagues, making for a positive
culture. Board members are aligned with a clear sense of purpose and values. The Board remained collegiate through Covid-19, and
has a clear sense of remit to support management to seek growth and transformation following the positioning as a mining pureplay.
The Board will continue to ensure best in class oversight of strategy, sustainability, innovation and technology. Board members are
keen to spend more time in person, and most would agree that succession and people will be a major focus of board work for 2022,
deepening the rigour of the processes, bringing the Divisions together more in person and creating opportunities for more reach
between the Board and senior management to unlock value both ways.
The feedback confirmed that the Board and its Committees operate effectively and that each Director contributes to the overall
effectiveness and success of the Group, and that good progress had been made with regard to stakeholder engagement and Board
oversight of sustainability, as highlighted in the review carried out in 2020 by The Effective Board LLP.
RECOMMENDATIONS FROM 2021 REVIEW
Following the review, the principal findings are set out below. The Board will approve an action plan during the course of 2022 and
report on progress in next year’s Annual Report and Accounts.
• Consider expanding the remit of the Nomination Committee by planning for deeper dives on talent management, diversity and
succession planning at senior management level.
• Support the Executive’s in reaching out formally and informally to Board members in person now that Covid-19 is subsiding,
to maximise full value from Board members’ expertise.
• Consider if it would be beneficial to add Governance to the remit of the Nomination Committee and consider whether a fourth Board
Committee on Sustainability & Safety could be useful in future or whether the Sustainability Excellence Committee is sufficient.
• Review the Board and Committee Agenda Planner with regard to the number of meetings annually and to allocate topics for
discussion between virtual Board and Committee meetings versus in person meetings, and the overall allocation of time to topics.
• Make more regular use of Non-Executive Director only sessions during the normal course of the year.
101
The Weir Group PLC Annual Report and Financial Statements 2021Governance ACCOUNTABILITY
THE AUDIT COMMITTEE AND AUDITORS
Details on the roles and responsibilities of the Audit Committee and its
members can be found in the Audit Committee Report on pages 110
to 120. Information on the Company’s external auditors is contained
within the Audit Committee Report.
INTERNAL CONTROL AND RISK MANAGEMENT
In accordance with the UK Corporate Governance Code 2018 and the
accompanying Guidance on Risk Management and Internal Controls,
the Group has an ongoing process for identifying, evaluating and
managing the significant risks through an internal control framework.
This process has been in place throughout 2021. More information on
how the Group seeks to manage risk can be found on pages 70-80.
The Board in seeking to achieve the Group’s business objectives,
cannot offer an absolute guarantee that the application of a risk
management process will overcome, eliminate or mitigate all
significant risks. However, by further developing and operating an
annual and ongoing risk management process to identify, report and
manage significant risks, the Board seeks to provide a reasonable
assurance against material misstatement or loss.
The Audit Committee conducted a review of the effectiveness of the
Group’s systems of internal control and risk management during 2021,
as detailed on page 112.
FUNCTIONAL AND FRONT LINE CONTROLS
This includes a wide spectrum of controls as seen in most
organisations, including, for example: standard operating procedures
and policies; a comprehensive financial planning and reporting system,
including quarterly forecasting; regular performance appraisals and
training for employees; restricted access to financial systems and
data; delegated authority matrices for review and approval of key
transactions; protective clothing and equipment to protect our people
from harm; IT and data security controls; business continuity planning;
and assessment procedures for potential new recruits.
MONITORING AND OVERSIGHT CONTROLS
There is a clearly defined organisational structure within which roles
and responsibilities are articulated. There are monitoring controls at
operating company, regional, Divisional and Group level, including
standard key performance indicators, with action plans to address
underperforming areas.
A compliance scorecard self-assessment is completed and reported
by all operating companies twice per annum. The scorecard assesses
compliance with Group policies and procedures. In 2021, the H2
assessment did not take place due to the cyber incident. Instead, the
operating companies provided attestation of key control areas.
Financial monitoring includes comparing actual results with the
forecast and prior year position on a monthly and year to date basis.
Significant variances are highlighted to Directors on a timely basis,
allowing appropriate action to be taken.
102
OUR INTERNAL CONTROL FRAMEWORK HAS FOUR
KEY LAYERS:
4
ETHICAL AND CULTURAL ENVIRONMENT
3
ASSURANCE ACTIVITIES
2
MONITORING AND OVERSIGHT CONTROLS
1
FUNCTIONAL AND FRONT LINE CONTROLS
S
K
S
R
I
ASSURANCE ACTIVITIES
We obtain a wide range of assurance to provide comfort to
management and the Board that our controls are providing adequate
protection from risk and are operating as we would expect.
As shown in the Board and Committee structure set out on page 73,
various internal and external sources of assurance report to the Board
and to management. These sources of assurance were reviewed by
the Board during the year, and principally comprise external audit,
internal audit, SHE audits and IT audits.
The various audit teams plan their activities on a risk basis, ensuring
resources are directed at the areas of greatest need. Issues and
recommendations to enhance controls are reported to management
to ensure timely action can be taken, with oversight provided from the
relevant governance committees, including the Audit Committee and
the Excellence Committees.
ETHICAL AND CULTURAL ENVIRONMENT
We are committed to doing business at all times in an ethical and
transparent manner. This is supported by the Weir values which are the
core behaviours we expect our people to live by in their working lives.
The Weir Code of Conduct also contributes to our culture, providing a
high benchmark by which we expect our business to be conducted.
Any examples of unethical behaviour are dealt with robustly
and promptly.
The Ethics section on page 80 within the Risk Review provides more
details on the Group’s activities to promote ethical behaviour.
The Group’s internal control procedures described on page 112 of the
Audit Committee Report do not cover joint venture interests.
We have Board representation on each of our joint venture companies,
where separate, albeit similar, internal control frameworks have
been adopted.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 VIABILITY STATEMENT
In accordance with provision 31 of the UK Corporate Governance Code
2018, the Directors have assessed the viability of the Group, taking
into account the Group’s current position and the potential impact of
the principal risks documented on pages 74 to 80 of the Annual Report.
demand for minerals such as copper, iron and gold driven by global
population growth, industrialisation, and electrification. This translates
into supportive commodity prices, long-term economic growth and
increasing demand for our new, more sustainable solutions technology.
ASSESSMENT PERIOD
The Directors have determined that a three-year period to
31 December 2024 is an appropriate period over which to provide its
viability statement. The Group’s key markets are by nature cyclical
and therefore, while the Group operates a five-year strategic planning
process, market cyclicality and the related lack of visibility over
commodity prices in particular indicate that a period of three years
is appropriate. We believe that this approach presents the Board and
readers of the Annual Report with a reasonable degree of confidence
over this longer-term outlook.
RISK ASSESSMENT
The Board considered the longer-term prospects of the Group as a
mining technology company and carried out a robust assessment of
the principal risks facing the Group, including those that could threaten
its business model, future performance, solvency or liquidity.
While the review has considered all the principal risks identified
by the Group, the following risks were focused on for enhanced
stress testing:
• market volatility, modelled by applying downturn scenarios and
major customer shocks;
• technology, digital transformation, competition and value chain
excellence, modelled by significant loss of market share, pricing
pressure in key markets and major site shutdown scenarios;
• value chain excellence and information security and cyber risks,
modelled by major site shutdown scenarios and significant
disruption to operations as a result of a cyber incident;
• a regulatory shock scenario in response to the ethics and
governance or safety, health and environmental risks;
• climate change, modelled by major site shutdown scenarios and
potential impact on mining revenues as a result of changes in
markets driven by climate action; and
• political and social risks, modelled by a major economic shock and
the impact of supply chain and commodity inflation.
The Group has shown resilience to the evolving impact of the
Covid-19 pandemic as shown by continuing order growth against
this challenging backdrop. However, due to the ongoing impact and
resulting uncertainty around current and any future variants the Group
has continued to identify Covid-19 as a principal risk. The financial
impact of further disruption to operations and potential site lockdowns
has been incorporated in the viability modelling. Refer to pages 74 to
80 for the Group’s principal risks, specifying those risks considered
during this review.
In response to the increasing focus on climate change, this has been
identified as a principal risk. The impact of coal and iron transition
from the Well Below 2C scenario outlined in the Task Force for
Climate-related Financial Disclosures (TCFD) (pages 62-67) has been
incorporated in the viability modelling. The model incorporates a
temporary downturn in mining revenues which is anticipated would be
offset with increased demand for other commodities critical to support
the electrification necessary to deliver the Well Below 2C scenario.
PROCESS AND KEY ASSUMPTIONS
The Strategic plan, prepared bottom-up annually and approved by
the Board, is used as the basis for the viability modelling and is
supplemented with due consideration of current trading. The key
assumptions underpinning the Strategic plan include continued strong
The output of this plan is used to perform debt and headroom profile
analysis, which includes a review of sensitivity to ‘business as usual’
risks, such as profit growth, working capital variances and return on
capital investment. The base case has been stress tested to reflect:
i. a severe but plausible downside scenario; and
ii. a highly unlikely more severe scenario.
The resulting scenarios were modelled to include a series of individual
one-off ‘shocks’ which represent the principal risks identified above,
in combination with commodity price based market downturn
scenarios. The assessment took into consideration the potential
impact on the Group’s profits and cash flows and resulting impact on
banking covenants.
The analysis indicated that the Group would be able to comply with
its current banking covenants, which are shown in note 30 within the
financial statements, and maintain sufficient liquidity headroom within
its existing lending facilities under both scenarios. The outcome of the
modelling is supported by the following factors:
• The geographic spread of the Group’s operations helps minimise
the risk of serious business interruption or catastrophic damage to
our reputation;
• While the Group remains exposed to some cyclicality from the
markets in which it operates, it continues to have a strong balance
sheet that helps support significant liquidity;
• While climate change actions may give rise to changes in certain
of the Group’s markets, our aftermarket-focused and technology
differentiated business model, together with a commodity mix
biased to commodities critical to supporting decarbonisation, gives
the Group good protection against downside risk and the ability to
benefit from opportunities in other markets;
• The Group’s ability to flex its cost base and preserve cash, as
demonstrated in 2020 with the swift actions taken in response to
Covid-19, and seen in earlier downturn years; and
• The Group’s ability to secure funding, demonstrated via the
issuance of five-year US$800m Sustainability-Linked Notes in 2021,
which provided the Group with improved levels of liquidity over an
extended maturity profile.
These factors are considered critical in protecting the Group’s viability
in the face of adverse economic conditions and/or the additional
risks highlighted.
REVIEW PROCESS
The Audit Committee, on behalf of the Board, have reviewed the
underlying processes and key assumptions underpinning the Viability
Statement. While this review does not consider all of the risks that
the Group may face, the Board consider that this stress testing
based assessment of the Group’s prospects is reasonable in the
circumstances of the inherent uncertainty involved.
CONFIRMATION OF VIABILITY
Based on this assessment, the Directors confirm that they have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period to
31 December 2024.
103
The Weir Group PLC Annual Report and Financial Statements 2021Governance NOMINATION COMMITTEE REPORT
CHARLES BERRY
Chair of
Nomination
Committee
NOMINATION COMMITTEE DURING 2021
ROLE OF THE COMMITTEE
The Nomination Committee has responsibility for considering
the size, structure and composition of the Board, for reviewing
Director and Senior Management succession plans, overseeing
the development of a diverse pipeline for succession,
retirements and appointments of Directors and for making
appropriate recommendations of candidates to the Board so
as to maintain an appropriate balance of skills, experience and
diversity on the Board. The full responsibilities of the Committee
are set out in its Terms of Reference which are available on our
website at www.global.weir/investors/corporate-governance/
board-committees/.
MEMBERS
THE BOARD CONTINUED TO
EVOLVE THROUGH 2021 AS
PLANNED AND IS COMMITTED
TO HARNESSING THE
STRENGTHS THAT FLOW FROM
ALL ASPECTS OF DIVERSITY.
CHARLES BERRY
Chair of Nomination Committee
DEAR SHAREHOLDER,
I am pleased to introduce our Nomination Committee Report for
2021, which explains the Committee’s focus and activities during the
year. The Committee focuses on succession planning and Inclusion
and Diversity to ensure that the size, composition and structure
of the Board is appropriate for the delivery of the Group’s strategy
and purpose, whilst also meeting all relevant provisions of the UK
Corporate Governance Code 2018.
This year the Nomination Committee’s activities had particular focus
on succession planning, with the search for and appointment of
Non-Executive Chair. I am pleased that an effective search process
resulted in the appointment of Barbara Jeremiah and I am delighted
that Barbara will be succeeding me. She is an excellent choice for
Chair, and personally, having served on the Hampton-Alexander
Review, it is also great to handing the baton on to the first woman to
Chair Weir in the Group’s 150-year history. We were also pleased to
welcome our two Non-Executive Directors Ben Magara and Venkat
Venkatakrishnan, who were appointed in early 2021.
Following a tender process, we appointed Independent Board
Evaluation (IBE) to carry out our external Board Effectiveness Review,
you can read more about this on pages 100 and 101.
BARBARA JEREMIAH
Chair-Designate and
Senior Independent
Director
Member since:
25 June 2019
MARY JO JACOBI
Employee Engagement
Non-Executive Director
Member since:
1 August 2017
SIR JIM MCDONALD
Non-Executive Director
Member since:
26 April 2018
Throughout 2022, the Nomination Committee will continue to focus
on talent development, succession planning together with advancing
inclusion, diversity and equality in accordance with our policies and
also the work of the Hampton-Alexander and Parker Reviews.
MAIN ACTIVITIES OF THE NOMINATION COMMITTEE
DURING 2021
• Ensured Board and Senior Management succession planning
aligned with our strategy and culture.
• Reviewed and updated Board Diversity Policy.
• Reviewed Committee Terms of Reference.
• Completed a tender process and appointed Independent
Board Evaluation (IBE) to facilitate external Board
Performance Review.
• Continued focus on Hampton-Alexander and Parker Reviews.
• Reviewed Board Committee membership and appointment
of Ben Magara as a member of the Remuneration Committee
and Venkat Venkatakrishnan and Clare Chapman as members
of the Audit Committee.
• Undertook Board skills assessment and gap analysis.
104
CHARLES BERRY
Chair of Nomination Committee
BOARD TENURE as at 31 December 2021
Director tenure
Director tenure – including previous Weir Board appointment
m
8
y
1
1
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S
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021
BOARD SKILLS AND ATTRIBUTES
The Board skills and attributes matrix, as detailed below, is reviewed by the Nomination Committee annually, taking into account the future
requirements of the Board.
Director
Independence
Engineering/
Technology/
Digital
Mining
Governance
Environment &
Sustainability
Banking
& Finance
International
Leadership
Barbara Jeremiah
Jon Stanton
John Heasley
Clare Chapman
Ebbie Haan
Mary Jo Jacobi
Ben Magara
Sir Jim McDonald
Srinivasan
Venkatakrishnan
Stephen Young
Charles Berry1
1 Charles Berry will retire after the AGM on 28 April 2022.
NOMINATION COMMITTEE MEETING ATTENDANCE
Members
Charles Berry
Mary Jo Jacobi
Barbara Jeremiah
Sir Jim McDonald
Scheduled/
Unscheduled
19 Jan
2021
29 Apr
2021
7 June
2021
N/A
23 June
2021
N/A
8 Jul
2021
N/A
22 Jul
2021
N/A
16 Aug
2021
N/A
13 Dec
2021
N/A
N/A
N/A
N/A
N/A
Total
100%
100%
100%
100%
Scheduled Unscheduled Unscheduled Unscheduled Unscheduled Unscheduled Unscheduled Scheduled
N/A These unscheduled meetings were in relation to Chair Succession. Stephen Young, Chair of Audit Committee and Clare Chapman, Chair of Remuneration Committee were also in
attendance. Charles Berry and Barbara Jeremiah, did not attend any of these meetings.
BOARD INDEPENDENCE
BOARD GENDER BALANCE
BOARD NATIONALITY
BOARD AGE
as at close of AGM 2022
as at close of AGM 2022
as at close of AGM 2022
as at close of AGM 2022
Executive
Non-Executive
2
8
Male
Female
7
3
British
Dutch
American
American/British
Zimbabwean
British/Indian
40–49
50–59
60–69
70–79
5
1
1
1
1
1
1
3
4
2
105
The Weir Group PLC Annual Report and Financial Statements 2021Governance
NOMINATION COMMITTEE REPORT
CONTINUED
APPOINTMENT OF NON-EXECUTIVE CHAIR
CHAIR SUCCESSION PROCESS
The Nomination Committee led a formal and rigorous search
process for the appointment of Chair-Designate in line with our
Board Diversity Policy. The Board engaged Russell Reynolds
Associates as external consultant to initiate the search process.
Russell Reynolds assists with the recruitment process for senior
management but does not have any other connection with the
Company. Russell Reynolds incorporated diversity from the initial
stages of the search process and as a result the ‘long lists’ and
‘short lists’ were diverse in race, gender, ethnicity, nationality,
skills and experience.
In accordance with the Corporate Governance Code 2018,
neither myself as current Chairman, nor Barbara Jeremiah
as a candidate were present or in attendance at any of the
Nomination Committee Meetings dealing with the appointment
of my successor.
The details of the selection process are noted below.
• The selection process was led by Mary Jo Jacobi, Employee
Engagement Non-Executive Director, and supported by Sir Jim
McDonald, Clare Chapman and Stephen Young.
• Stakeholder Briefing Calls were held at the start of the
selection process to allow Russell Reynolds to create a
candidate profile for discussion.
• This allowed Russell Reynolds to produce a Position
Specification that defined the key experience, skills and
personal attributes we required to fulfil the role of Chair,
which was then discussed and agreed at the Nomination
Committee meeting.
• Russell Reynolds then produced a ‘long list’ of
diverse candidates.
• During the selection process the Nomination Committee
reviewed the ‘long list’ of potential candidates and this was
duly discussed and narrowed in order to create an initial ‘short
list’ of diverse candidates.
• The Nomination Committee benchmarked the skills,
attributes and experience of the ‘short list’ of internal and
external candidates.
• Interviews were then held with the potential internal and
external candidates.
• The Nomination Committee discussed the feedback on the
candidates and a preferred candidate was identified.
• The Executive Directors and the other Non-Executive Directors
held courtesy interviews with the preferred candidate.
• The Nomination Committee unanimously agreed that Barbara
Jeremiah was the preferred candidate and recommended the
appointment to the Board for approval.
• The Board considered that Barbara’s prior period of service
at Weir as Non-Executive Director and Senior Independent
Director, her experience, skills, attributes and time commitment
made her the right candidate to fulfil the role. The Board
unanimously agreed that Barbara Jeremiah was ideally placed
to lead the Weir Group Board and was appointed Chair-
Designate and then appointment of Chair of the Board, post
Annual General Meeting on 28 April 2022.
106
BARBARA
JEREMIAH
Chair-Designate
IT IS A PRIVILEGE TO BE APPOINTED CHAIR-
DESIGNATE OF WEIR AS WE CELEBRATE
OUR 150TH ANNIVERSARY. I AM HONOURED
TO SUCCEED CHARLES WHO IN ALL
RESPECTS HAS BEEN AN EXEMPLARY
LEADER OF OUR BOARD. I LOOK FORWARD
WITH GREAT ENTHUSIASM TO CONTINUE
WORKING WITH JON STANTON, THE WEIR
TEAM AND THE BOARD TO CHART OUR PATH
FORWARD AS A GLOBAL LEADER IN MINING
TECHNOLOGY, CREATING VALUE FOR ALL OF
OUR STAKEHOLDERS.
BARBARA JEREMIAH
Chair-Designate
BOARD COMPOSITION AND SKILLS
The Nomination Committee recommends appointments to the Board
based on the existing balance of skills, knowledge and experience
on the Board, on the merits and capabilities of the candidate and
on the time they are able to devote to the role in order to promote
the success of the Company. The Committee has reviewed the
composition of the Board and Board Committees and considers that
they consist of individuals with the right balance of skills, diversity,
time commitments, experience and knowledge to provide strong
and effective leadership of the Group. During the year, the Board
consisted of up to nine Non-Executive Directors and two Executive
Directors, who together bring a diverse and complementary range of
backgrounds, personal attributes and experience.
SUCCESSION PLANNING AND TENURE
The Nomination Committee continues to give full consideration
to succession planning for the Board and Senior Management,
with a proactive approach taking into account the challenges and
opportunities facing the Company, and what skills and expertise are
required for the Board to operate effectively. The Committee annually
reviews the length of tenure of the Board and the mix of skills,
strengths and experience of the Directors.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BOARD APPOINTMENTS
The Weir Board Diversity Policy sets out the approach taken to ensure
appointments to the Board and succession planning are based on
merit. The Committee evaluates candidates against objective criteria to
assess their suitability. This includes, but is not restricted to, their skills,
education, experience, background and independence. Due regard
is given to diversity and the benefits that this brings to the Board.
The time commitment required for the role is also considered to
ensure the candidate is able to fulfil all of their obligations. The Board
acknowledges that the processes of appointment have a strong
influence on the outcomes. Any recruitment consultants used in the
appointment of Non-Executive and Executive Directors will be asked
to create a diverse talent pool of applications. No brief provided to the
consultants should restrict the parameters of their search or the list of
potential candidates they are able to produce with regards to diversity.
INCLUSION & DIVERSITY
The Committee itself is gender balanced with two female and two
male members and is committed to ensuring that at least a third
of the Board, Group Executive and their direct reports are female.
Our objective of driving the benefits of a diverse Board, Senior
Management team and wider workforce is underpinned by our Board
Diversity Policy, our Inclusion, Diversity & Equality Policy and the work
of our Inclusion and Diversity Steering Committee (see page 49).
These policies can be viewed on our website at www.global.weir/
sustainability/policies/.
The Board keeps these policies under review to ensure that they
remain an effective driver of diversity in its broadest sense, fully taking
account of gender, ethnicity, social background, skillset and breadth
of experience.
HAMPTON-ALEXANDER AND PARKER REVIEWS
The Board continued to evolve through 2021 as planned and in
line with the Hampton-Alexander and Parker Reviews. Whilst the
Hampton-Alexander Review target of 33% women members was
achieved at 31 December 2020, the addition of Ben Magara and
Venkat Venkatakrishnan on 19 January 2021 temporarily reduced
the percentage (but not number) of women. Ben and Venkat bring
extensive mining experience to Weir having both been CEOs of major
international mining companies. They are also the very first colleagues
of African and Indian heritage to join the Board. Through 2021, the
Board therefore comprised 11 members and this will reduce to 10 after
the AGM on 28 April 2022 when I retire and pass the Chair to Barbara
Jeremiah. Barbara will be the first woman to Chair the Board of The
Weir Group since its formation in 1871.
Going forward, with Barbara as Chair, the Board will continue to meet
the Hampton-Alexander recommendation that a woman holds at least
one of the roles of Chair, CEO, SID and CFO.
Board composition as assessed by the Hampton-Alexander and Parker
Reviews will then be as noted in the table below.
Further information regarding our approach, initiatives and training on
Inclusion and Diversity can be found on page 49.
The Board is committed to harnessing the strengths that flow from all
aspects of diversity and currently, with ten members and assessed
against the targets of the two external Reviews, this composition will
be broadly in line with target gender diversity, meet best practice on
roles held by women and exceed targets on ethnic diversity.
INDEPENDENCE AND RE-ELECTION OF DIRECTORS
In December 2021, the Board conducted its annual review of individual
Director conflict authorisations as recorded in the Conflicts of Interest
Register. The Conflicts of Interest Register is maintained by the
Company Secretary and sets out any actual or potential conflict of
interest situations which a Director has disclosed to the Board in
line with their statutory duties. This is in addition to consideration of
Conflicts as a standing item on every Board and Committee Agenda.
The Committee reviewed and considered the independence of each
Non-Executive Director in line with the UK Corporate Governance
Code 2018 and Guidance on Board Effectiveness. The Nomination
Committee considers that all of the Non-Executive Directors are
independent. The Committee considered and recommended an
extension to the current tenure of Sir Jim McDonald and Stephen
Young, for a further three-year period which was approved by
Shareholders at the AGM in 2021. In January 2022, the Nomination
Committee also considered and recommended the extension of
Ebbie Haan for a further three-year period, subject to approval by
Shareholders at the 2022 AGM. The Nomination Committee discussed
the annual re-election of Directors and how the Directors have
contributed to the long-term success of the Company and why each
Director should be re-elected. The skills and attributes matrix as well
as the relevant outcomes of the annual individual Director evaluations
aided the discussion.
COMMITTEE EFFECTIVENESS
The Committee’s performance was reviewed during the year as
part of the 2021 external Board Performance Review facilitated by
Independent Board Evaluation (IBE). Their report was presented to the
Board in December 2021. I am pleased to confirm it concluded that
the areas of responsibility of the Nomination Committee continued
to be performed well. You will find more information on the Board
Performance Review cycle, process and findings on pages 100 to 101.
Review
Hampton-Alexander
Board – % female
At least one of Chair/CEO/SID/CFO female
Group Executive Committee and direct reports – % female
Parker
Directors from ethnic minority background
Projected
at 28 April
2022
As at
31 December
2021
As at
31 December
2020
30%
(3 out of 10)
Yes
(Chair)
29%
(17 out of 58)
27%
(3 out of 11)
Yes
(SID)
29%
(17 out of 58)
33%
(3 out of 9)
Yes
(SID)
23%
(14 out of 62)
20%
(2 out of 10)
18%
(2 out of 11)
0%
(0 out of 11)
107
The Weir Group PLC Annual Report and Financial Statements 2021Governance NOMINATION COMMITTEE REPORT
CONTINUED
Q. HOW DOES THE ACQUISITION OF MOTION
METRICS SUPPORT WEIR’S TRANSFORMATION
INTO A PREMIUM MINING TECHNOLOGY
BUSINESS?
Globally, mining clients are increasingly focused on improving the
safety, sustainability and efficiency of their operations. This can be
fast-tracked with technology, innovation and digital transformation.
Motion Metrics is the market leading developer of innovative Artificial
Intelligence (AI) and 3D rugged Machine Vision Technology used
in mines worldwide. Its technology helps miners improve safety,
efficiency and sustainability of their operations. It also provides
information that can be used to optimise asset efficiency, supporting
better decision-making, help improve productivity while reducing
energy consumption, particularly in areas such as crushing, screening
and grinding, some of the most energy-intensive processes in mining.
These applications are therefore highly complementary to Weir’s
product portfolio that will not only accelerate the growth in the ESCO
Division, but it will also bring world-class expertise, technology, artificial
intelligence and data science, that will be applicable across the Group’s
mining value chain. This is a key milestone in our journey to becoming
a premium mining technology business.
SRINIVASAN VENKATAKRISHNAN
SHARES HIS THOUGHTS ON
JOINING THE WEIR BOARD
SRINIVASAN
VENKATAKRISHNAN
Non-Executive Director
Q.
HOW WOULD YOU SUM UP YOUR FIRST
YEAR ON THE BOARD?
Exciting, enjoyable, intellectually stimulating and delightful.
The induction process was excellent and that made the transition
easier. There was never a dull moment during the year that was
mapped with Weir’s transformation into a pure-mining play, 150th
anniversary, the unprecedented challenges posed by Covid-19,
defending the cyber incident and the acquisition of Motion Metrics –
to name a few. Given the travel restrictions caused by the pandemic,
I had to make do with virtual interactions. However, given the quality
of and familiarity gained from the interactions, when I met my Board
Colleagues in person for the first time in late October, it didn’t feel like
we were meeting for the first time. The entire Weir Family’s efforts to
make everyone feel welcome were remarkable.
Q. HOW DOES THE BOARD CONTINUE TO
MONITOR CULTURE IN LIGHT OF THE
CHALLENGES PRESENTED BY COVID-19?
Very effectively. Management has an open and transparent
engagement on this topic both within the organisation and at the
Board, and this assisted greatly. The pandemic required Weir to adapt
rapidly to a disruptive environment, remote working model, strict
Covid-19 protocols, mitigating the effects caused by the paucity of
in-person interaction and most of all the elevated needs of physical
and mental wellbeing. The Company’s leadership culture, intranet,
IT visual communication channels and interactive media platforms,
innovation and technology, were effectively harnessed to adapt
to the ‘new normal’. The Board monitored culture and wellbeing
using management feedback, detailed employee surveys resulting
in outcomes, very engaging meet the Board sessions (a mix of
both virtual, for example India during the peak of the Delta wave
and in person for example in October in UK, USA and South Africa)
and gained very useful insight and comfort from these sessions.
Notable stand-out was how the Weir family culture that has been
carefully nurtured over decades, helped ensure that Weir emerged
stronger from these headwinds.
108
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 BEN MAGARA’S
INDUCTION TO WEIR
BEN MAGARA
Non-Executive Director
Q. WHAT INSIGHTS HAVE YOU GAINED DURING
YOUR FIRST YEAR AS A NON-EXECUTIVE
DIRECTOR?
My first year has been exciting, informative, enlightening, and
welcoming. We are Weir is real at Weir and I have been impressed
with the organisation’s culture. It’s a 150-year-old company with a
great family feel while focused on delivering on its strategy. As part
of the mining industry, I have personally used many of the equipment
that Weir manufactures; from Warman pumps, to ground engaging
tools, HPGRs and more. I have been fascinated by their focus to
meet mining customer needs. I can attest that Weir has world leading
engineering technologies that enable the sustainable and efficient
supply of the natural resources essential to create a better future
for the world. I look forward to contributing my mining customer
experience to help drive Weir’s leading mining solutions offering.
Q. HOW IMPORTANT IS CLIMATE
CHANGE AND SUSTAINABILITY
IN WEIR’S FUTURE STRATEGY?
Weir has committed to bold targets like reducing its carbon
emissions in line with climate science. All these climate change
and sustainability commitments are incorporated in the Company’s
strategy. Climate change targets including emission reduction and
resource efficiencies are part of the management performance
scorecard to drive and align behaviours. I was pleased with Weir’s
commitment and leadership at the COP26 in Glasgow. It was indeed
a showcase of how important Climate Change and Sustainability
are in Weir. Integrating these topics into our future strategy is a
business imperative and we are already seeing benefits through higher
employee retention and customer partnerships.
Q.
THE BOARD HAS EVOLVED DURING 2021.
WHAT WILL BE ITS MAIN FOCUS DURING 2022?
Weir has successfully repositioned the business as a pure mining
solutions partner. This now provides a great platform to enhance our
collaboration with the mining industry in their growth and sustainability
initiatives and driving innovative solutions to their challenges in the
efficient and cleaner extraction of minerals. Employee engagement,
inclusion and diversity will remain areas of focus. Another area is
effectively integrating Motion Metrics as we enhance our offering
to the mining industry and remaining anti-fragile in the face of
global disruptions and pandemics. Weir’s rich history of Technology
and Engineering innovation remain important levers of growth.
We will continuously review how to increase and remain relevant to
our customers.
Q. HOW DOES A TAILORED BOARD INDUCTION
PROGRAMME HELP TO ENSURE THAT THE
BOARD OPERATES EFFECTIVELY?
The best part of my entry into Weir was paved by the opportunity to
engage with each of the Board members before being offered and
agreeing to join the Board. I found the conversations enlightening
and welcoming. Engaging all Board members gave each of us the
opportunity to assess our strategic fit as a Board and how effective
we would be together. A good Board induction focuses not only
on familiarising the business, the company laws, and the role of
the Board. It also includes knowing its people, its stakeholders, its
purpose, and role in society. I also enjoyed having one-on-one deep
dives with management executives. I learnt a lot about Weir and it also
gave me a strong sense of transparency across the organisation.
109
The Weir Group PLC Annual Report and Financial Statements 2021Governance AUDIT COMMITTEE REPORT
THE AUDIT COMMITTEE IS PLEASED TO
CONFIRM THAT INTERNAL CONTROLS
REMAINED EFFECTIVE DESPITE THE
CYBERSECURITY INCIDENT.
STEPHEN YOUNG
Chair of the
Audit Committee
STEPHEN YOUNG
Chair of Audit Committee
AUDIT COMMITTEE DURING 2021
MEMBERS
The Committee is comprised entirely of independent
Non-Executive Directors whose biographies are set out on
pages 86 to 88.
Clare
Chapman
Non-Executive
Director
Member since:
30 April 2021
Ebbie Haan
Non-Executive
Director
Member since:
25 June 2019
Sir
Jim McDonald
Non-Executive
Director
Srinivasan
Venkatakrishnan
Non-Executive
Director
Member since:
1 January 2015
Member since:
30 April 2021
AUDIT COMMITTEE MEETING ATTENDANCE
Members
Stephen Young
Clare Chapman1
Ebbie Haan2
Barbara Jeremiah3
Sir Jim McDonald
Srinivasan
Venkatakrishnan4
19-Jan
2021
17-Feb-
2021
22-Jul
2021
26-Oct
2021
14-Dec
2021
–
n/a
n/a
n/a
n/a
n/a
–
n/a
n/a
Total
100%
67%
80%
100%
100%
100%
Scheduled Scheduled Scheduled Scheduled Unscheduled
1 Clare Chapman joined the Committee on 30 April 2021; Clare was unable to attend in
October due to unscheduled but unavoidable business commitments.
2 Ebbie Haan was unable to attend in February due to unscheduled but unavoidable
personal circumstances.
3 Barbara Jeremiah stepped down from the Committee on 30 April 2021.
4 Srinivasan Venkatakrishnan joined the Committee on 30 April 2021.
110
MAIN ACTIVITIES DURING 2021
• Reviewed and challenged interim and annual financial reporting,
including appropriate reporting and presentation of the
disposal of the Oil & Gas Division, the financial impacts of the
cybersecurity incident and the preliminary fair value accounting
in respect of the acquisition of Motion Metrics.
• Reviewed the results of internal audits in the year and agreed
the 2022 internal audit strategy and plan; met with the Head of
Internal Audit independent of Executive management.
• Approved the PwC external audit plan; reviewed the effectiveness
of the external audit; held independent discussions with PwC’s
Group Engagement Leader, Kenneth Wilson.
• Reviewed the effectiveness of the Group’s risk management
and internal control frameworks, comprising internal audit,
compliance scorecard process, presentations to the Committee
from Divisional Finance Directors, the Group Head of Tax, Group
Treasurer and the Chief Compliance Officer.
• Reviewed the outputs of specifically scoped workstreams
implemented to provide assurance that the internal control
framework remained robust following the cyber incident.
A special Audit Committee meeting took place in December 2021
to consider the work performed to date.
• Reviewed the approach to incorporate the Task Force on Climate-
related Financial Disclosures requirements and the change in
respect of Software as a Service, following the IFRS Interpretations
Committee (IFRIC) agenda decision in relation to Configuration or
Customisation Costs in a Cloud Computing Arrangement.
• External evaluation concluded the Committee was fulfilling its
terms of reference effectively, no significant areas of concern.
• The Committee confirmed the external auditor, PwC, remains
independent and that non-audit fees are appropriately approved.
AREAS OF FOCUS 2022
• Ongoing review over cybersecurity control effectiveness.
• Assess readiness for any future implications from the
consultation on reforming UK Corporate Governance, audit and
reporting, as published by the Department for Business, Energy
and Industrial Strategy in March 2021.
• Extended review of the Group risk assurance framework.
• External review of the effectiveness of the Internal Audit function.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 INTRODUCTION
I am pleased to present our report to Shareholders for the year ended
31 December 2021 which outlines how the Committee has fulfilled
its key objective of providing effective governance over the Group’s
financial reporting during the year, and also highlights the Committee’s
key priorities for 2022.
AREAS OF FOCUS
Our key objective is achieved by focusing on, amongst other things:
• the adequacy of accounting policies and disclosures, as well as the
areas requiring significant estimates or judgements;
• the performance of both the internal audit function and the external
auditor; and
• oversight of the Group’s systems of internal control, and the
framework for identification and management of business risks and
related assurance activities.
MEMBERSHIP
The members of the Committee, other than myself, are Clare
Chapman, Ebbie Haan, Sir Jim McDonald and Srinivasan
Venkatakrishnan (Venkat), all of whom are independent Non-Executive
Directors. Clare and Venkat both joined the Committee on 30 April
2021. Barbara Jeremiah stepped down from the Committee on 30 April
2021. The Company Secretary, Graham Vanhegan, acts as Secretary to
the Committee.
Recent and relevant financial experience comes from myself, having
been Group Finance Director of Meggitt PLC before becoming CEO,
and this is further strengthened with the addition of Venkat to the
Committee. Venkat served as Chief Financial Officer of AngloGold
Ashanti Limited before becoming CEO. The remaining Committee
members have, through their other business activities, significant
experience in financial matters. They have been selected with the aim
of providing the wide range of financial and commercial expertise
necessary to fulfil our responsibilities. Summary biographies have
been presented on pages 86 to 88.
MEETINGS
We met five times during the year and have met twice since the
year end. Like many organisations, we have continued to follow
Government guidance on restricting travel and working remotely
where possible, with four of the five of our meetings having been
held virtually. Each Committee meeting normally takes place prior to
a Board meeting, during which I provide a report on our activities.
A special meeting was convened in December 2021 in order that the
Committee could be updated on the additional assurance activities that
had been implemented in response to the cybersecurity incident.
We met twice in 2021 with the external auditors without any Executive
management present. This provided us with the opportunity for any
issues of concern to be raised by, or with, the auditors. We also met
once in 2021 with the Head of Internal Audit without any Executive
management present. We meet regularly with the Divisional
Finance Directors to review, inter alia, key risks and controls in
their businesses.
We have the ability to call on Group employees to assist in our work
and to obtain any information required from Executive Directors in
order to carry out our roles and duties. We are also able to obtain
outside legal or independent professional advice if required.
The table below details the Board members and members of Senior
Management who were invited to attend meetings as appropriate
during 2021. In addition, PricewaterhouseCoopers LLP (PwC) attended
the meetings by invitation as auditors to the Group.
Committee membership in 2021
Stephen Young (Committee Chair)
Clare Chapman
Ebbie Haan
Barbara Jeremiah
Sir Jim McDonald
Srinivasan Venkatakrishnan
Other regular attendees (by invitation)
Charles Berry, Chairman
Jon Stanton, Chief Executive Officer
John Heasley, Chief Financial Officer
Kirsten McCargo, Group Financial Controller
Tayo Oyinlola, Group Head of Internal Audit
Chris Palmer, Group Head of Tax
Kenneth Wilson (PwC, Group Engagement Leader)
MAIN ACTIVITIES
Over the course of the year since the last Annual Report, our work was
focused in the following areas:
i. financial reporting;
ii. internal control and risk management, including the Group’s
response to the cybersecurity incident;
iii. internal audit; and
iv. external audit.
The following sections provide more detail on our specific items of
focus under each of these headings, explaining the work we, as a
Committee, have undertaken and the results of that work.
(i) Financial reporting
Our principal responsibility in this area is the review and challenge of
the actions and judgements of management in relation to the interim
and annual financial statements before submission to the Board,
paying particular attention to:
• critical accounting policies and practices, and any changes therein;
• decisions requiring significant judgements or estimates or where
there has been discussion with the external auditor;
• the existence of any errors, adjusted or unadjusted, resulting from
the audit;
• the clarity of the disclosures and compliance with accounting
standards and relevant financial and governance reporting
requirements, including an assessment of the adoption of the
going concern basis of accounting and a review of the process and
financial modelling underpinning the Group’s Viability Statement; and
• the processes surrounding the compilation of the Annual Report and
Financial Statements with regard to presenting a fair, balanced and
understandable assessment of the Group’s position and prospects.
We received formal reports from the Chief Financial Officer and the
external auditor, summarising the main discussion points for both the
Interim Report in our July 2021 meeting and Annual Report during our
January and February 2022 meetings.
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CONTINUED
The Committee were kept informed through the year of the
preparations towards compliance with the reporting requirements of
the Task Force on Climate-related Financial Disclosures and reviewed
the disclosures in the financial statements. We also received and
reviewed details of the impact of the IFRIC agenda decision in relation
to Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets). The Committee reviewed
the revised accounting policy in relation to Software as a Service
(SaaS) and the prior year restatement. In addition, the Committee
were updated on the work undertaken in respect of IBOR reform and
preparation for European Single Electronic Format (ESEF) reporting.
The Committee received and reviewed details of the exceptional and
other adjusting items in the year, including an exceptional gain on
sale of land in Malaysia, costs incurred in relation to the cybersecurity
incident response, acquisition and initial integration costs in respect
of Motion Metrics and the charge in relation to the Group’s legacy US
asbestos-related liabilities.
The Committee also reviewed the final accounting for the disposal
of the Oil & Gas Division, which included the sale of the Group's
49% stake in its Saudi Arabia-based joint venture, Arabian Metals,
which completed on 30 June 2021, and the recycling of cumulative
foreign exchange gains and losses from reserves. We also reviewed
the provisional fair value accounting in respect of the Motion
Metrics acquisition.
The financial reporting matters discussed in the current year and
recurring agenda items are summarised in the table on pages 116
to 120.
As reported last year, in December 2020 the Group received a letter
from the Financial Reporting Council (FRC), as part of their regular
programme of thematic reviews, highlighting their intention to
include the Group’s 2020 Annual Report in their review of IAS 37
‘Provisions, Contingent Liabilities and Contingent Assets’. The FRC’s
role in such reviews is to consider compliance with recognition,
measurement and disclosure requirements with the aim of improving
the quality of corporate reporting and identifying good practice, not
to verify the information provided. We are pleased to report that the
findings from the FRC review led to the inclusion of several extracts
from the Group’s 2020 Annual Report and Financial Statements
in their published thematic review report as examples of better
practice. We can also confirm that some improvements have been
made to existing disclosures in this report in response to minor
recommendations from the FRC.
(ii) Internal control and risk management
While overall responsibility for the Group’s risk management and
internal control frameworks rests with the Board, the Audit Committee
has a delegated responsibility to keep under review the effectiveness
of the systems supporting risk management. Further details on
accountability for Risk Management are provided in the Corporate
Governance Report on page 102.
Our work in this area was supported by reporting from the Head
of Internal Audit on the results of the programme of internal audits
completed; the overall assessment of the internal control environment,
with reference to the results of their work and the results from the
self-assessed Compliance Scorecards; and in addition, reporting, either
verbal or written, from Senior Management covering any investigations
into known or suspected fraudulent activities. We continue to note
the work undertaken for the Board on a review of the sources of
assurance which are mapped against the principal risks (see (iii)
Internal audit below). In addition, the Committee take comfort from
the audit work performed and conclusions reached by PwC over the
controls environment of the Group’s critical IT systems.
112
COMPLIANCE SCORECARD
The Compliance Scorecard is a control mechanism whereby
each operating company undertakes self-assessments, every six
months, of their compliance with Group policies and procedures,
including key internal controls across a range of categories
including finance, anti-bribery and corruption, tax, treasury,
trade and customs, HR, cybersecurity, IT and legal. As far as the
elements relating to finance are concerned, these cover (but are
not limited to) management accounts and financial reporting,
balance sheet controls, employee costs and other financial
policies. Each operating company is expected to prepare and
execute action plans to address any weaknesses identified as part
of the self-assessment process.
Operating companies are required to retain evidence of
their testing in support of their self-assessment responses.
Internal audit has responsibility for confirming the self-
assessment during planned audits. Any significant variances
are reported to local, Divisional and Group management.
Any companies reporting low levels of compliance are required to
prepare improvement plans to demonstrate how they will improve
over a reasonable period of time. The overall compliance scores
(as a percentage) are tracked over time and reported to the Audit
Committee twice a year, with the Committee paying particular
attention to the variances between self-assessed and internal
audit assessed scores as well as trends and the performance of
newly acquired companies.
As noted in this report, the Compliance Scorecard process
was not completed for the second half of 2021 (refer to the
Cybersecurity incident section for further details).
The Committee also receives regular reporting on the Group’s
Ethics and Compliance related activities from the Chief Compliance
Officer as well as the Head of Internal Audit. This includes reviewing
compliance with the Group’s Ethics Hotline programme which provides
a mechanism for employees with concerns about the conduct of
the Group or its employees to report their concerns. The Committee
ensures that appropriate arrangements are in place to receive and act
proportionately upon a complaint about malpractice. The Committee
takes a particular interest in any reports of possible improprieties in
financial reporting.
During 2021, the Committee were updated on the work performed
in the year by the Compliance team with regard to anti-bribery and
corruption risk assessments, the roll out of updated policies such
as Agents and Business Partners, Human Rights and Sanctions
Control with accompanying global training focusing on anti-bribery
and corruption, and the launch of a refreshed gifts and hospitality
approval register.
The Committee also received presentations from each Divisional
Finance Director. These presentations included a review of the
Divisional risk dashboards, significant findings from the internal audit
visits and the Compliance Scorecard process over the last 12 months,
an overview of their Divisional finance leadership teams as well as
strategic initiatives such as the transition of core accounting processes
to global shared services.
Focus is given to the strength and depth of the finance team’s
capability; the quality and efficiency of responses to findings of internal
audit visits, including whether learning has been shared more widely
across the Group to mitigate the risk of recurrence and to share
good practice; the quality of the discussion around Divisional risk
dashboards; and progress against strategic initiatives.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Finally, the Committee received presentations from the Group Head
of Tax and the Group Treasurer covering Tax and Treasury Strategy and
Risk respectively.
Cybersecurity incident
In September 2021, the Group was the target of a sophisticated
attempted ransomware attack. On detecting the threat, the Group’s
cybersecurity systems and controls responded quickly and robust
action was taken to protect the Group’s infrastructure and data.
Forensic investigation, in conjunction with cybersecurity experts,
produced no evidence that any data had been exfiltrated or encrypted.
As a result of the incident, the Group took the decision to temporarily
remove access to Windows-based PC’s and to isolate and shut down
IT systems, including the Group’s core financial reporting systems,
while the threat was assessed. In the days following the incident,
processes began to safely restore systems and bring applications
back online in a progressive manner and in order of business priority.
From a financial reporting perspective, this did lead to some temporary
disruption to regular procedures and impacted the Group’s usual
internal reporting procedures for a short period.
The Committee were updated in their scheduled October meeting
on the impact of the cybersecurity incident on the finance function.
This included a detailed review of the processes impacted and
the early mitigating actions taken to minimise impact and/or risk.
In addition, this outlined short-term re-planning of specific finance
processes to allow focus on system restorations, ensuring effective
controls and data integrity were maintained. Such early mitigating
actions included an immediate tightening of controls over the Group's
bank accounts and related banking procedures.
The incident necessitated some re-prioritisation of tasks for finance
teams globally. The decision was taken to cancel the second half 2021
Compliance Scorecard process and to introduce alternative targeted
controls assurance workstreams, focusing on providing assurance
post system restores that there were no gaps in the recording of
transactions as a result of the incident. A number of planned internal
audits were also deferred.
The Committee held an additional meeting in December to receive
an update in respect of the response to the incident. The Committee
were assured that core systems were promptly restored with no loss
of data and that there was limited manual processing.
In terms of additional assurance, the Committee were also presented
with an overview of planned inventory counts post the incident,
providing good levels of coverage in this specific risk area. We also
received a report of the findings from Internal Audit’s independent
review to confirm that the controls implemented by entities to ensure
the completeness and accuracy of data processed during the offline
period were adequate. Their review covered heightened risk areas such
as payments, inventory and revenue recognition. Tests were performed
to confirm that transactions on manual lists were transferred to the
ERP system accurately. Additionally, sample testing was performed
to confirm the existence of transactions recorded offline, and to
confirm that they were approved appropriately. Specific balance sheet
reconciliations were reviewed with no exceptions noted. Based on
their review and findings, Internal Audit were able to conclude that
there were no instances of material breakdowns in controls over the
key processes reviewed.
Further updates were provided to the Committee in January 2022.
Finally, the Committee received an update in February 2022 which
included the results from a self-certification exercise introduced in place
of the usual six-monthly Compliance Scorecard process. This involved
each company Finance Director completing a standard questionnaire
and certifying that appropriate balance sheet rigour had been restored.
The results of these specifically scoped assurance workstreams
provided the Committee with comfort that the Group’s internal control
frameworks, including IT processes and controls, remained stable
and effective. We have also taken assurance from the work of PwC in
this area.
(iii) Internal audit
The Committee has a responsibility to monitor the effectiveness
of the Group’s internal audit function. During the year, the Head of
Internal Audit provides me with copies of all internal audit reports, and
presents the results of audit visits and progress against the internal
audit plan to the Committee, with particular focus on high priority
findings and the action plans, including management responses,
to address these areas. Private discussions between myself and the
Head of Internal Audit are held during the year and at least once a year
with the full Committee.
The above activities provide broad coverage of the function and a
good sense of the control environment. This also allows us to ensure
the function is effective (which includes assessing the independence
of the function), adequately resourced and has appropriate standing
within the Company. As with last year, due to the Covid-19 pandemic,
most internal audits were performed remotely.
As referred to above, a number of planned internal audits were
deferred as a result of re-prioritising across the finance function in
response to the cybersecurity incident. The total number of completed
internal audits was 28 (2020: 26).
During 2021, Internal Audit has been strengthened further, bringing
stronger IT and digital skills to the team and helping enable greater
use of data analytics in audits. Once again, in 2021, the internal audit
team were supported by guest auditors from across the Group,
including Group Finance and Group Tax, providing subject matter
expertise for the internal audit team and development opportunities for
the guest auditors. Audit actions continue to be closed out efficiently
and effectively and improvements have been made in automation,
of both the audit and the Compliance Scorecard process. In addition,
the Committee were updated on the potential impact of the UK
Government’s white paper issued by the Department for Business,
Energy and Industrial Strategy in March 2021, with some preliminary
discussion around potential preparatory actions.
One of the main duties of the Committee is to review the Annual
Internal Audit Plan and to ensure that internal audit remains focused on
providing effective assurance. As part of the Group’s risk management
procedures, key sources of assurance are mapped against the
Group’s core processes and this is used to ensure internal audit
planning considers wider internal assurance risk indicators. The factors
considered when deciding which businesses to audit and the scope
of each audit, including consideration of the number of visits to each
operating company in the Group on a cyclical basis are, amongst
other things, the volatility of end markets, critical system or Senior
Management changes in the year, financial results, the timing of the
most recent internal audit visit, assessments from other assurance
reviews undertaken and whether the business is a recent acquisition.
In addition, the emergence of any common themes or trends in the
findings of recent internal audits or Compliance Scorecard submissions
(see previous section) is taken into consideration. Planning is further
assisted by a risk modelling tool for dynamic risk prioritisation of audits.
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CONTINUED
The resulting 2022 plan continues to focus the largest proportion
of resource on financial assurance reviews whilst incorporating
wider risk assurance coverage, both financial and non-financial,
as described below:
• reviews are undertaken to assess compliance with Weir’s Code
of Conduct procedures, including anti-bribery and corruption; this
includes areas such as policy and procedures, employee training,
relationships with agents, accounting for employee expenses and
corporate hospitality and gifts;
• the IT assurance programme which, for 2022, will focus
on areas such as crisis management, data governance and
application security;
• wider risk assurance projects such as system implementation
reviews; and
• an element of the Annual Plan is reserved for assurance coverage
of any emerging risk areas.
The Committee considered and approved the 2022 Internal Audit
Strategy and Plan including the resource model. Further progress
on automation is a significant feature of the internal audit strategy
with the 2022 plan including a continued push towards greater use
of technology through robotic process automation and potentially
process mining solutions. In addition, the plan includes assessing
the readiness for any future implications from the consultation on
reforming UK Corporate Governance, audit and reporting, as published
by the Department for Business, Energy and Industrial Strategy in
March 2021, and enhancements in Internal Audit processes to include
sustainability and other strategic areas of focus.
(iv) External audit
The Committee is responsible for recommending to the Board
the appointment, re-appointment, remuneration and removal of
the external auditor. The external auditors are PwC who were first
appointed for the financial year commencing 1 January 2016 following
a competitive tender process. The Committee has complied with
and will continue to follow the Competition and Markets Authority
guidance, ‘The Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014.’ to conduct a tender at
least every ten years.
When considering whether to recommend the re-appointment of the
external auditor, the Committee considers a range of factors, including
the effectiveness of the external audit, the period since the last audit
tender was conducted, and the ongoing independence and objectivity
of the external auditor. The next audit tender process is required to
be concluded for the year ending 31 December 2026, subject to the
ongoing satisfactory performance of PwC in the intervening period.
2021 Audit
As a result of the cybersecurity incident, PwC have included an
additional significant audit risk in relation to the completeness,
existence and accuracy of the financial statements further to the
cybersecurity incident. A Key Audit Matter is included in their Audit
Report on page 154.
In addition, a new audit risk has been added in respect of the valuation
of deferred tax assets. This is following the disposal of the Oil & Gas
Division, which resulted in significant US tax attributes being available
to the Group to offset future US taxable income of the continuing
operations, as reported last year. A Key Audit Matter is included in their
Audit Report on page 153.
On a practical level, due to the ongoing pandemic and continuing travel
restrictions, the 2021 audit work has been performed remotely, as
with last year, albeit with now well established procedures in place
for remote file reviews and component audit supervision, assisted by
the use of video calls and other technology to support certain audit
procedures normally requiring physical attendance at operating sites.
Auditor effectiveness
The effectiveness of the external audit process is highly dependent on
appropriate audit risk identification at the start of the audit cycle and
the quality of planning. PwC present their detailed audit plan to the
Committee each year identifying their assessment of the key risks,
amongst other matters.
Our assessment of the effectiveness and quality of the audit process
covers a number of other matters, including a review of the reporting
from the auditors to the Committee, a review of the latest FRC
Audit Quality Inspection report and also by seeking feedback from
management on the effectiveness of the audit process. Overall,
management were satisfied that there had been appropriate focus and
challenge on the primary areas of audit risk and assessed the quality of
the audit process to be satisfactory. In addition, it was noted that the
remote audit was effectively managed and efficient.
In addition, during 2021 the Committee were provided with a summary
of the FRC’s Audit Quality Inspection and Supervision Report.
This showed an improvement in inspection results for PwC audits
selected for review.
The Committee held two private meetings with the external auditor
in 2021. This provided additional opportunity for open dialogue and
feedback from the Committee and the auditor without Executive
management being present. Matters discussed included the auditor’s
assessment of business risks and management activity thereon,
the transparency and openness of interactions with management,
confirmation that there has been no restriction in scope placed on
them by management and how they have exercised professional
scepticism. We also meet with the Group Engagement Leader
outside the formal committee process as necessary throughout the
year. These interactions are also important in our assessment of
audit quality.
Based on the work carried out and the FRC Audit Quality Inspection
and Supervision Report, we are of the view that the quality of the audit
process is satisfactory.
114
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Independence policy and non-audit services
A formal policy exists (see www.global.weir) which provides guidelines
on any non-audit services which may be provided and ensures that
the nature of the advice to be provided cannot impair the objectivity
of the auditor’s opinion on the Group’s financial statements. The policy
makes it clear that only certain types of service are permitted to be
carried out by the auditors. All permitted non-audit services require the
approval of the Chief Financial Officer and, where the expected cost of
the service is in excess of £75,000, the approval of myself, the Audit
Committee Chair. If non-audit fees approach £0.5m during a calendar
year, the Committee will consider imposing additional restrictions on
non-audit services.
The auditor confirms their independence at least annually. As the
independence rules allow a maximum of five years as engagement
leader of the Group, as noted in last year’s report, Kenneth Wilson
replaced Lindsay Gardiner as PwC Group Engagement Leader for the
year ended 31 December 2021. This followed a selection process by
management and myself in 2020.
Fees payable to PwC in respect of audit and audit-related assurance
services for 2021 of £3.3m (2020: £3.8m) were approved by the
Committee after a review of the level and nature of work to be
performed and after being satisfied by PwC that the fees were
appropriate for the scope of the work required. The reduction in level
of fees is primarily attributable to the removal of Oil & Gas entities
from scope following the disposal of the Division.
Non-audit fee work conducted by PwC in the year of £0.2m
(2020: £0.2m) represented 7% (2020: 5%) of the audit fee. The non-
audit fees in the year are primarily due to the appointment of PwC
for assistance in the Offering Memorandum required for the five-year
US$800m Sustainability-Linked Notes and the review of the half year
results. The non-audit fees in the prior year were primarily in relation
to the appointment of PwC in the role of Reporting Accountant with
respect to the Class 1 Circular required for the sale of the Oil & Gas
Division as well as the review of the half year results. We are of the
view that the level and nature of non-audit work does not compromise
the independence of the external auditor.
Having considered the relationship with PwC, their qualifications,
expertise, resources and effectiveness, the Committee concluded that
they remained independent and effective for the purposes of the 2021
year end. As a result, the Committee recommended to the Board that
PwC should be re-appointed as auditor at the next AGM.
COMMITTEE EVALUATION
The Committee was subject to an external evaluation process during
the year as part of the overall Board Performance Review. This year
the evaluation was performed by ‘Independent Board Evaluation’,
who were appointed following a tender process undertaken by the
Nomination Committee. Details of the overall performance review can
be found on pages 100 to 101.
The evaluation concluded that the Committee was performing well and
no significant areas of concern were noted. Recommendations were
made and the Committee have agreed to give these full consideration
in 2022 and implement any agreed changes.
OUR FOCUS FOR 2021
In last year’s report we said that, in addition to our routine business,
we would focus on the following areas:
• tracking progress in cybersecurity control effectiveness;
• monitoring ongoing control effectiveness as more operating
businesses transition core accounting processes to global
shared services;
• continuing to oversee the increasing use of digital technology in the
internal audit function;
• responding to the recommendations and reporting requirements of
the Task Force on Climate-related Financial Disclosures; and
• overseeing a smooth transition to the new PwC Group
Engagement Leader.
As detailed above, primarily sections (ii) and (iii), the Committee have
received and reviewed reporting in respect of each of the focus areas
1 to 4. The Committee and Management have also helped enable
a smooth transition to the new PwC Group Engagement Leader.
With specific reference to the first focus area ‘tracking progress in
cybersecurity control effectiveness’, the Board were presented with
and approved the Group’s cybersecurity strategy in the first half of the
year. The occurrence of the cybersecurity incident in late September
necessitated the implementation of steps and controls outlined in the
approved strategy. As outlined in section (ii) above, the Committee
then focused on and reviewed the impact from a financial reporting
and controls perspective and found the internal control framework
remained robust and intact.
OUR FOCUS FOR 2022
In addition to our routine business, in 2022 our focus will be on:
• ongoing review over cybersecurity control effectiveness;
• assessing readiness for any future implications from the
consultation on reforming UK Corporate Governance, audit and
reporting, as published by the Department for Business, Energy and
Industrial Strategy in March 2021;
• extending our review of the Group risk assurance framework
including regular updates from the Group Head of Risk and
Insurance and Chief Compliance Officer; and
• external review of the effectiveness of the Internal Audit function.
STEPHEN YOUNG
Chair of Audit Committee
115
The Weir Group PLC Annual Report and Financial Statements 2021Governance Conclusion
The Committee
agrees with
the accounting
treatment and
disclosure of
these items in the
Annual Report.
AUDIT COMMITTEE REPORT
CONTINUED
CURRENT YEAR MATTERS
Area of focus
Issue
Role of the Committee
We have received detailed reporting from the Chief Financial Officer covering
the following exceptional and other adjusting items:
i.
charge/credit by Division, including the nature of the items;
ii. overview of the Motion Metrics acquisition and integration costs;
iii. explanation of the cyber incident response related costs;
iv.
details in respect of the other restructuring and rationalisation gain, which
primarily relates to a gain on sale of land in Malaysia, and also includes
some other gains as a result of the release of unutilised provisions;
explanation of the release of the unutilised provision in respect of ESCO
integration costs;
v.
vi. details of the charge in respect of the Group’s US asbestos-related
liabilities;
vii. details of discontinued operations exceptional items which was in relation
to a final adjustment to an onerous purchase contracts provision resulting
in a small credit; and
viii. disclosure of the amounts and related narrative reporting. Our work has
focused on ensuring that exceptional items met the criteria as such due
to their size, nature and/or frequency, and, other adjusting items met the
criteria being legacy items not relatable to current and ongoing trading.
We considered the treatment of the cyber incident related costs as exceptional
and confirm we are satisfied that these incremental costs meet the definition
of exceptional on account of nature, size and infrequency of events giving rise
to them.
We received detailed reporting in respect of the annual assessment of the US
asbestos-related provision, which takes into account claims experience in the
year and compares this to the financial modelling from the latest US asbestos-
related provision triennial actuarial review, conducted last year. The Committee
are satisfied that the charge in the Consolidated Income Statement and its
classification as an adjusting item is appropriate (see provisions section for
further details).
We noted the exceptional and adjusting items reflected the way in which we,
as members of the Board, reviewed the performance of the Group and were
disclosed appropriately and consistently. PwC confirmed the treatment and
related disclosures were appropriate.
Consideration was also given to the current balance sheet position of all related
provisions, including both new provisions and those remaining from previous
years, with management providing details of the remaining liabilities and
expected utilisation.
Exceptional and
adjusting items
(see notes 5
and 21 of the
Group financial
statements)
Management
exercises
judgement on
the classification
of certain items
as exceptional
or adjusting.
116
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Area of focus
Issue
Role of the Committee
Discontinued
operations
(see note 8 of the
Group financial
statements)
The Oil & Gas
Division was
classified as a
discontinued
operation and
held for sale as at
December 2020.
Final accounting
for the disposal
is reflected in
2021 following
the completion
of the sale.
Acquisition
accounting for
Motion Metrics
(see note 13
of the Group
financial
statements)
Management
exercises
judgement on the
type of intangible
assets acquired
and estimates are
made of the fair
value of all
assets and
liabilities.
In last year’s report, we noted the final gain or loss on sale, including any
adjustments for customary working capital and debt-like items and the
recycling of cumulative foreign exchange gains and losses to the Consolidated
Income Statement was expected to be reported in 2021, following completion
of the sale and associated completion accounts process.
We have received detailed reporting from the Chief Financial Officer covering
the final gain on sale calculation for the Division. This comprised:
i.
the final gain on the sale to Caterpillar Inc., which completed on
1 February 2021 and was subject to customary working capital and
debt-like adjustments;
the gain on sale of the Saudi Arabia-based joint venture, which completed
on 30 June 2021;
recycling of cumulative foreign exchange gains and losses to the
Consolidated Income Statement; and
related presentation and disclosures in the Annual Report.
iv.
We considered the accounting treatment, particularly with regard to the
recycling of cumulative foreign exchange gains and losses, and concluded
this was appropriate.
PwC confirmed the treatment and related disclosures were appropriate.
ii.
iii.
ii.
iii.
We received a summary report from management which outlined:
i.
the purchase price allocation exercise which identified and valued
separately identifiable intangible assets, primarily Motion Metrics
technology;
the assessment of other acquisition provisional fair values, with a particular
focus on provisions, which related to the adoption of vendor liabilities as
part of the transaction;
the assessment of contingent consideration as per the purchase
agreement and the rationale for the decision reached in respect of the
accounting for this in the year; and
iv.
the related disclosures in the financial statements displayed in note 13.
We reviewed the resulting provisional fair values, noting these are subject
to finalisation within 12 months of acquisition, and compared results to
recent Weir acquisitions as well as industry-wide comparisons. We considered
the treatment of contingent consideration and agreed with the decision to
record nil at the acquisition date and to re-assess this each year in light of
business performance.
We took assurance from the fact that external advisers were engaged by
the Company to assist with the purchase price allocation and we received
confirmation from PwC that management’s assumptions and calculation
methodology were appropriate.
Conclusion
The Committee
agrees with the
discontinued
operations
accounting
treatment and
the related
disclosures in the
Annual Report.
The Committee
agrees with
the acquisition
accounting
treatment and
disclosure of the
Motion Metrics
acquisition in the
Annual Report.
New accounting
standards
(see note 2 of the
Group financial
statements)
The introduction
of new accounting
standards has
required changes in
accounting policy,
treatment and
disclosures.
The Group has revised its accounting policy in relation to Software as a
Service following the IFRIC agenda decision in relation to Configuration
or Customisation Costs in a Cloud Computing Arrangement (IAS 38
Intangible Assets).
The Committee have reviewed the results of the assessment undertaken to
determine costs which are no longer eligible to be capitalised as intangible
assets. We also reviewed the revised accounting policy and resulting prior
year restatement, as required by IAS 8, which reclassified costs to operating
expenditure and reversed previously charged amortisation. The Committee
are satisfied with the restatement and the related disclosures in the
Annual Report.
PwC have reviewed the restatement and concurred with the treatment.
Other amendments to accounting standards set out in note 2 of the Group
financial statements are not considered to have a material impact on the
Consolidated Financial Statements of the Group.
The Committee is
satisfied that the
new accounting
standards have
been appropriately
reflected in the
Annual Report.
117
The Weir Group PLC Annual Report and Financial Statements 2021Governance AUDIT COMMITTEE REPORT
CONTINUED
RECURRING AGENDA ITEMS
Area of focus
Issue
Role of the Committee
Impairment
(see note 14 of
the Group financial
statements)
Management
undertakes an
annual detailed,
formal impairment
review of goodwill
and other intangible
assets, with
judgements made
on the relevant
Cash Generating
Units (CGUs)
and estimates of
available headroom
Provisions
(see note 21
of the Group
financial
statements)
Significant balance
sheet provisions
are underpinned
by management’s
key judgements on
obligating events
and timeframes
over which a
reliable estimate for
provision values can
be made.
The Group has two CGUs: Minerals and ESCO.
The goodwill and intangibles assets arising from the acquisition of Motion
Metrics have been included within the ESCO CGU from 30 November 2021.
The purchase price is considered to reflect the fair value of the assets and
therefore the addition to the ESCO CGU is considered to have neutral impact
on the impairment analysis.
The most significant estimates are in setting the assumptions underpinning the
calculation of the value in use of the CGUs. We specifically reviewed:
the achievability of the long-term business plan numbers and
i.
macroeconomic assumptions underlying the valuation process; and
long-term growth rates and discount rates used in the cash flow models for
the CGUs.
ii.
Business plans and budgets were Board-approved and underpin the cash flow
forecasts.
We noted that the results of impairment testing for both CGUs produce
significant headroom above carrying value for each and, as such, no sensitivity
analysis has been undertaken.
We have reviewed the disclosures in the financial statements and the related
narrative. We also received confirmation from PwC that they are in agreement
with management’s conclusions.
As mentioned in the ‘Exceptional and adjusting items’ section above, we
received detailed reporting in respect of the annual assessment of the US
asbestos-related provision. The Committee’s focus was centred on gaining
an understanding of:
i.
ii.
actual claims and settlement data in the year;
their relation to the assumptions that underpin the discounted cash
flow model;
iii. the period over which the liability can be reasonably estimated;
iv. the position with regard to availability of insurance cover; and
v.
the adequacy and transparency of the disclosures in note 21.
This reporting confirmed the Group’s claims experience in 2021 was greater
than that modelled. However, settlement costs related to claims were less
than that modelled. Such variations are expected to occur and the Committee
remains satisfied with the overall level of provisioning.
In addition, the reporting considered the insurance coverage and confirmed
that this is expected to be sufficient to meet settlement and associated costs
until c.2028.
The Committee considered the ongoing appropriateness of basing the
provision on ten years of projected claims (15 years for cash flows) and
concluded it continues to be appropriate due to the inherent uncertainty
resulting from the changing nature of the US litigation environment.
The review resulted in a charge to the Consolidated Income Statement of
£4.4m and a net liability on the Consolidated Balance Sheet of £16.3m.
The Committee considered the results of the review and concluded that the
closing provision and related insurance asset and charge to the Consolidated
Income Statement were appropriate.
PwC provided confirmation that management’s assumptions were reasonable.
With regard to other provisions (other than inventory – see below), we received
details of the nature of each provision and explanations of the key movements
between the opening and closing balances. The Committee are satisfied with
the accounting treatment and related disclosures in respect of other provisions
in the financial statements.
Conclusion
We are satisfied
that the impairment
analysis supports
the carrying value
of the underlying
assets in the CGUs.
We are satisfied
that the current
provisioning levels
and approach are
appropriate, as is
the recognition
of an insurance
asset in relation to
the US asbestos-
related provision.
Pensions
(see note 23 of
the Group financial
statements)
The valuation of
pension liabilities
can be materially
affected by the
assumptions
utilised by
management
on areas such
as discount and
inflation rates.
118
We received from management details of the key assumptions underpinning the
valuation, taking assurance from the fact that external advice had been taken by
the Company and that PwC had benchmarked these assumptions to their own
internal ranges and consider them appropriate.
We noted the significant reduction in pension deficit in the year, being primarily
due to changes in market conditions impacting the financial assumptions as well
as experience gains on the liabilities resulting from the Group’s latest UK Main
Scheme triennial valuation.
The Committee
was satisfied with
the assumptions
and related pension
disclosures.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Area of focus
Issue
Role of the Committee
Tax charge and
provisioning
(see notes 7
and 22 of the
Group financial
statements)
The tax position
is complex,
with a number
of international
jurisdictions
requiring
management’s
judgement with
regard to effective
tax rates, tax
compliance and tax
provisioning.
The Committee receives a detailed report from the Chief Financial Officer
every six months, which covers the following key areas:
i.
ii.
iii.
status of ongoing enquiries and tax audits with local tax authorities;
the Group’s effective tax rate for the current year; and
the level of provisioning for known and potential liabilities, including
significant movements on the prior period.
The Committee also receives an annual presentation on tax strategy and risk
from the Group Head of Tax.
In addition, the Committee takes comfort from the work done, and conclusions
reached, by PwC in this area.
As reported last year, the Committee noted the de-recognition of certain balance
sheet deferred tax assets resulting from the pending disposal of the Oil & Gas
Division, and further noted these US tax attributes would remain available to the
Group to offset future US taxable income of the continuing operations. The re-
recognition of these assets in the future would depend on the level of future US
profitability and the US tax law in force at that point in time.
The deferred tax asset (DTA) modelling undertaken in 2020 was updated in
2021 using the Group’s latest five-year strategic plan to forecast levels of
future US group taxable income over a ten-year period. This established that
an overall net DTA of $37m (£27.3m) remains supportable and appropriate,
with a consequential additional DTA derecognition of 2021 Oil & Gas attributes
totalling £3.8m.
The Group will continue to monitor the US group’s levels of taxable income
and performance against the modelling undertaken, together with the impact
of any reforms to the US tax code enacted in 2022 and beyond, in order to
evaluate the appropriate ongoing level of balance sheet DTA in future periods.
The Committee considered the accounting treatment to be appropriate and
this was confirmed by PwC.
Inventory
valuation
(see note 16
of the Group
financial
statements)
Fair,
balanced and
understandable
Management
applies estimates
on inventory
valuation and
provisioning.
Given the significant investment in inventory, and being cognisant of
the impact of commodity cycles, this remains a judgement for specific
consideration. Reporting has been received from management on the business
drivers behind movements in both gross inventory and the related slow-moving
and obsolete provision.
The Board is
required to state
that the Group’s
external reporting
is fair, balanced and
understandable.
The Committee is
requested by the
Board to provide
advice to support
the assertion.
The Committee received a report from management summarising the detailed
approach that had been taken to ensure that the Group’s external reporting
is fair, balanced and understandable. This covered, but was not limited to,
the following:
i.
involvement of a cross section of management across the organisation
during the preparation of the external reporting, including the Group
Executive, Divisional Finance Directors, Group Communications,
Sustainability, Group Finance (including Group Tax and Group Treasury) and
Company Secretariat;
input and advice from appropriate external advisers, including the
Company’s brokers and public relations agency;
use of available disclosure checklists for both Corporate Governance and
financial statement reporting, including TCFD;
regular research to identify emerging practice and guidance from relevant
regulatory bodies;
regular meetings involving the key contributors to the document,
during which specific consideration was given to the fair, balanced and
understandable assertion; and
ii.
iii.
iv.
v.
Conclusion
Based on the
work we have
undertaken, we are
satisfied that the
position presented
in these financial
statements,
including the
disclosures,
is appropriate.
Based on the
information
provided, the
Committee
concluded that
management
action had been
effective and
that the level
of provisioning
appeared
adequate.
The successful
completion of this
work has been
reported to the
Board.
vi. use of three ‘cold’ readers; two employees independent of the preparation
process (one a member of the Senior Management group) and an external,
independent proof-reader.
119
The Weir Group PLC Annual Report and Financial Statements 2021Governance Conclusion
The successful
completion of this
work has been
reported to the
Board. The Group’s
statement on going
concern is included
on page 148.
The successful
completion of this
work has been
reported to the
Board. The Group’s
Viability Statement
is reported on
page 103.
AUDIT COMMITTEE REPORT
CONTINUED
Area of focus
Issue
Role of the Committee
We fulfilled our responsibilities in this area through the review and discussion
of reporting received from management, which covered the following areas:
i.
ii.
assessment of borrowing facilities available to the Group;
review of budget and latest forecast information, including debt covenants,
and associated financial modelling;
liquidity and credit risk; and
iii.
iv. the existence of contingent liabilities.
When considering going concern, we specifically noted the proceeds received
from the sale of the Oil & Gas Division and the successful issuance of the
Group’s five-year US$800m Sustainability-Linked Notes, providing the Group
with significant levels of liquidity over an extended maturity profile.
We also considered any ongoing impact from the Covid-19 pandemic and
noted that the impact of this on the business had been relatively limited.
We also reviewed the outputs from financial modelling of future cash flows
and the reverse stress testing performed in addition to the base modelling.
This stress testing focused on the level of downside risk which would be
required for the Group to breach its current lending facilities and related
financial covenants. The review indicated that the Group continues to have
sufficient headroom on both lending facilities and related financial covenants.
The circumstances which would lead to a breach are not considered plausible.
We note the net debt to EBITDA on a lender covenant basis is 1.9 times, within
the 2.0 times target after acquisitions, which was announced last year as part
of the Group’s revised capital allocation policy. We note this is also significantly
below the lender covenant of 3.5 times.
Finally, we note the work performed by PwC in this area and their conclusion
that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
ii.
We fulfilled our responsibilities in this area through the review and discussion
of reporting received from management, which covered the following areas:
overview of the construct of the financial model and base case data
i.
underpinning the sensitivity and stress-test scenarios;
results of financial modelling which reflected the crystallisation of those
principal risks identified by the Board as having the greatest potential
impact on the Group’s viability, both individually and when taken together
in a severe but plausible stress-test scenario;
extent of mitigating actions included in the financial modelling, relative
to the population of such actions that had been identified as within the
control of management and the Board; and
iii.
vi. banking covenant calculations and assessment of facility headroom in
each of the downside and stress-test scenarios.
We noted the specific consideration of climate change related risks in the
Group’s viability modelling.
The Committee also received confirmation from PwC that they considered
management’s assessment of the Group’s longer-term viability was consistent
with the financial statements and their knowledge and understanding of
the Group.
Going Concern
The Committee’s
role, as delegated
by the Board,
is to carry out an
assessment of
the adoption of
the going concern
basis of accounting
and report to the
Board accordingly.
Viability
Statement
The Committee’s
role, as delegated
by the Board,
is to review
the underlying
processes and
key assumptions
underpinning the
Viability Statement
and report to the
Board accordingly.
120
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 DIRECTORS’ REMUNERATION REPORT
CLARE CHAPMAN
Chair of
Remuneration
Committee
WE CONTINUE TO
STRENGTHEN THE EMPHASIS
ON ESG MEASURES AS
PART OF REMUNERATION.
CLARE CHAPMAN
Chair of Remuneration Committee
REMUNERATION COMMITTEE DURING 2021
MEMBERS
The Committee is comprised entirely of independent Non-
Executive Directors whose biographies are set out on pages 86-88.
Ebbie Haan
Non-Executive Director
Member since: 25 June 2019
Mary Jo Jacobi
Employee Engagement
Non-Executive Director
Member since: 21 January 2014
Ben Magara
Non-Executive Director
Stephen Young
Non-Executive Director
Member since: 30 April 2021
Member since: 26 April 2018
REMUNERATION COMMITTEE MEETING ATTENDANCE
Members
Clare Chapman (Chair)
Ebbie Haan
Mary Jo Jacobi
Ben Magara1
Stephen Young
22-Feb-
2021
22-Jul-
2021
26-Oct-
2021
14-Dec-
2021
Total
100%
100%
100%
100%
100%
Scheduled Scheduled Scheduled Scheduled
1 With effect from 30 April 2021, Ben Magara was appointed as a member of the
Committee and Barbara Jeremiah stepped down as a member from the Committee.
DEAR SHAREHOLDER,
I am pleased to introduce our Directors’ Remuneration Report for the
year ended 31 December 2021.
During 2021, the Group continued to respond to the unique challenges
created by Covid-19, as well as the consequences of a cyber incident
that occurred in September. Across the Group, we maintained a focus
on prioritising the safety and wellbeing of our employees, whilst
responding to these challenges consistent with our purpose and
values. Our response demonstrates the strength of our culture, and
the efforts of our employees, who have worked tirelessly to serve our
customers, protect our communities and support each other, which is
something the Board remain proud of.
The Board remains committed to ensuring all of our employees are
owners in Weir and can share in the Group’s long-term success.
In 2021, we made another award of £300 of Free Shares to all newly-
eligible employees under our global share plan, Weir ShareBuilder.
We also accelerated the ShareBuilder vesting period from three
years to two years to help support a faster build-up of shareholdings
amongst our employees. To recognise the extraordinary circumstances
created by Covid-19 and many of the challenges faced by our
employees as a result, a discretionary cash payment of £100 was also
paid across the globe in March 2021 to all employees not receiving
a bonus.
I would like to take this opportunity to thank our employees for their
ongoing commitment and response in 2021 to the challenges faced.
The strong contribution delivered in 2021 showcased everything that
is great about Weir, with the organisation coming together to tackle an
unprecedented set of circumstances.
PERFORMANCE CONTEXT
Despite the ongoing challenges of Covid-19 and the complex operating
environment, this has been another year of strong execution and
significant strategic progress at Weir. We are well positioned to deliver
sustainable, profitable growth in the long term.
The Group delivered a resilient financial performance for 2021, with
revenues 2% higher than last year on a constant currency basis and
adjusted profit before tax of £249m in line with prior year. Order input
increased 22% on a constant currency basis with less Covid-19 related
mine site disruption and as customers became more confident in
the global macro backdrop and Covid-19 recovery. Adjusted operating
margin was also up year-on-year on a constant currency basis by
40bps, largely as a result of strong operational execution. Our financial
121
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
performance, despite headwinds from both the impact of the
cyber incident and the effects of ongoing Covid-19 costs, highlights
the resilience inherent in our operating model, and reaffirms the
fundamental strength of Weir. You can read more in the Financial
review on page 40.
Over the course of the year, we have continued to reposition the
Group to focus on mining technology, enabling us to take advantage
of powerful market trends and leverage our leading market positions.
The sale of the Oil & Gas Division in February 2021 was a significant
milestone in our transformation, following which we have continued to
strengthen our foundations by investing in integrating our engineering
expertise with digital technology. In November 2021, we acquired
Motion Metrics to further enhance our solutions offering through data
insights, and accelerate our journey to include data and insight as a
core offering to customers.
Reflecting on the significant opportunities to grow our business
and deliver value to all stakeholders, in March 2021 we refreshed
our medium-term performance goals aligned to our ‘We are Weir’
framework that drives strategic execution throughout the Group
across four focus pillars – People, Customers, Technology and
Performance. We have made significant progress against our ‘We are
Weir’ framework during 2021, including achieving a total incident rate
which puts us among the safest companies in our sector, enhancing
the customer experience through digitising the business, and offering
differentiated technology which allows customers to prioritise both
sustainability and efficiency. We are on track to deliver on all our
medium-term targets.
Reflecting the confidence in our strategy and the performance
achieved in 2021, the Board was pleased to announce a final dividend
of 12.3p per share, resulting in a total dividend of 23.8p for the year.
This is equal to 33% of adjusted EPS for the period, and is in line
with our capital allocation policy of returning a third of EPS through
the cycle. We believe that this policy provides us with the financial
strength necessary to be a leader in our markets while retaining
sufficient capital flexibility to invest in the exciting growth opportunities
we see ahead.
2021 OUTCOMES
The remuneration outcomes for the Executive Directors during 2021
reflects the performance of the business, tempered by the impact
on profitability arising from the cyber incident experienced in the last
quarter of 2021. The Committee also took into account the wider
stakeholder experience when determining remuneration outcomes for
the Executive Directors.
Annual bonus outcome
The annual bonus plan for the Executive Directors was reinstated for
2021. The reinstatement follows the initial suspension of the plan in
April 2020 as a prudent measure in response to the Covid-19 pandemic
and the Executive Directors’ subsequent decision to waive their 2020
bonus when the bonus plan was later reinstated for other employees
in respect of 2020.
For 2021, 70% of the bonus continued to be based on performance
against financial measures being Group PBTA and third-party working
capital, with the remaining 30% based on non-financial measures
aligned to Weir’s strategic framework. For performance delivered in
2021, the Committee has awarded a bonus of 51.7% of maximum
opportunity, being 77.5% of salary for the CEO and 64.6% of salary
for the CFO, 30% of which will be deferred into Weir shares for three
years. Full details of achievement against targets are provided on page
137. For the wider bonus-eligible workforce, the average bonus was
typically in the range of 55%-65% of maximum opportunity.
The Remuneration Committee has spent time considering the impact
of the cyber incident on the Group’s financial performance and
the subsequent impact on the bonus outcome. Following detailed
consideration, the Committee has determined not to apply any positive
discretion, on the basis that the overall outcome was considered an
appropriate reflection of performance in the year, including taking
into account the impact of the cyber incident which was reflected in
the metrics. Performance against the strategic measures was strong
across our ‘We are Weir’ framework of People, Customer, Technology
and Performance, with detailed information of achievements against
targets provided on pages 138 and 139. This includes achieving the
previously referenced total incident rate (TIR) which puts us among
the safest companies in our sector, progressing strong customer
partnerships through investment in new service centres and supply
chain solutions, and reducing our carbon footprint.
2020 restricted share award vesting in 2022 – discretionary
adjustment for 'windfall gain'
The Committee recognises that some Shareholders have concerns
around the potential for perceived ‘windfall gains’ where there is
market volatility around the time of grant of long-term share awards.
As such, the Committee included provisions in the terms of the 2020
restricted share award which allow for a discretionary downward
adjustment at the point of vesting, should the Committee determine
that a 'windfall gain' has occurred.
The Committee carefully considered this issue in advance of the
vesting of the first tranche of the 2020 restricted share award due in
April 2022. The Committee noted the fall in share price which occurred
over the period prior to grant and the impact this had on the number of
shares awarded to the Executive Directors compared to the prior year.
Recognising that the pricing of the 2020 award occurred very close
to the ‘trough’ of the market volatility induced by the pandemic, the
Committee agreed that a scale back to the number of shares would
be appropriate.
The Committee’s view was that the scale back should reflect that
some of the subsequent increase in value could be perceived to be
a so-called ‘windfall gain’, but that the increase in award value also
reflected the exceptional outperformance of Weir’s shares during 2020,
as a result of the actions taken by the management team.
This is a complex issue which requires judgement rather than a
‘formulaic answer,’ and in developing our approach the Committee
considered a range of reference points and perspectives.
First, in terms of business performance, the management team have
delivered exceptional performance since the grant of the 2020 award,
including the following:
• Highly resilient financial performance in what was an
extraordinary year. This was driven by management’s stewardship
of the business through Covid-19, and reflected in the maintenance
of operating profits and stable revenues, the strong order book
growth and the continued successful integration and delivery of
synergies from ESCO.
• The execution of the Oil & Gas disposal (at 31 December
2021, Weir’s share price had grown by c.33% since the sale was
announced). The announcement of the sale also resulted in an
immediate share price increase of over 15%, clearly reflecting the
market’s value assessment from management’s strategy and ability
to execute. The sale won ‘Sale of the year’ and ‘Deal of the year’
at the ‘Deal and Dealmakers’ Awards, recognising the challenge of
executing such a value-accreting disposal in very challenging capital
market conditions.
122
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 • The acquisition of Motion Metrics, strengthening the Group’s
leadership in making mining more sustainable and significantly
increasing the Group’s capability in critical AI technology.
• Maximising opportunities through our ‘We are Weir’ framework.
This includes our strengthened alignment with our customers’
biggest challenges and corporate transformational growth initiatives,
and the development of a compelling purpose and sustainability
strategy that has been positively received by all stakeholders.
As a further step, the Committee intends to address concerns
about potential windfall gains, if relevant, by making any adjustment
at the time of grant, in line with the latest Shareholder guidance.
This provision will be incorporated into the 2022 Directors’
Remuneration Policy and will apply to restricted share awards from
2022 onwards. We would also retain discretion to review awards at the
point of vesting, in accordance with our wider policy and principles of
best practice.
The Committee also noted a number of share price reference points
in reflecting on the extent to which value delivered since grant might
represent a ‘windfall gain’ for management:
• The initial share price recovery following grant was not
a ‘windfall’. Weir’s share price increased by over 40% in the six
months following grant, compared to 3.6% for the FTSE 100,
reflecting the actions of the management team in navigating
the pandemic, rather than Weir shares ‘riding’ an equity
market recovery.
• There was no exceptional benefit from the Covid-19 vaccine.
A number of companies received very significant share price
increases following the announcement of the Covid-19 vaccine
success in November 2020. Around a third of the FTSE 100 received
overnight share price increases of above 10%, while the increase for
Weir (4.7%) was below the average (6%), confirming no particular
‘windfall’ advantage from this market event.
• Weir significantly outperformed the equity market and the
sector over the period since grant. Weir’s share price has
increased by over 100%, compared to the FTSE 100 market increase
of less than 35%. Weir’s share price has also outperformed almost
all of its sector peers over this time, outperforming the average
increase amongst peers by 35%.
• Analysis of alternative pricing for the 2020 award.
Recognising that the 2020 grant coincided with the ‘trough’ of
the equity market, we analysed the impact a longer averaging
period around the time of grant would have had to the number
of shares awarded. If an averaging period from mid-February to
mid-May 2020 had been used instead, this would have reduced the
impact of market volatility and resulted in a c.15% reduction to the
current award.
In addition, the Committee also reflected on the broader context of
executive remuneration at Weir, including:
• The prudent approach taken in response to the Covid-19 pandemic,
including the withdrawal of base salary increases in 2020, the
Executive Directors’ waiver of any bonus in respect of 2020 (which
otherwise would have paid out at 46% of maximum), and the
reduction to the RSU awards vesting in early 2021.
• Recognition that, over the longer term, the management team have
experienced what might be called ‘windfall losses’, as a result of
historic LTIP vesting outcomes which reflected the impact of the
commodity cycle, rather than management’s performance (noting
that the average vesting outcome in the last five years of the LTIP’s
operation was below 25% of maximum, and 0% in several years).
Taking all of the above into account, as well as the feedback received
from our Shareholders in an extensive consultation, the Committee
believes that the 15% downward adjustment appropriately balances
the range of perspectives and reference points.
Restricted share awards vesting in 2022 – dividend underpin
As communicated in last year’s report, the Board took swift and
decisive actions following the outbreak of the Covid-19 pandemic,
including the withdrawal of the final dividend for 2019 and any dividend
payments in 2020. As a result, the underpin relating to the dividend for
the 2018, 2019 and 2020 restricted share awards will technically not be
met for the tranches of these awards due to vest in April 2022.
The Committee has discussed this issue ahead of the tranches vesting
in 2022 and based on:
• the Committee’s view that the breaching of the dividend was
a technical breach rather than a more substantive failure of
management or business performance;
• recognising the adjustments already made for this issue to the
number of shares which vested in April 2021; and
• the resumption of the dividend in 2021 in line with our capital
allocation policy,
the Committee is not proposing any further adjustment to the tranches
of the awards vesting in 2022.
DIRECTORS’ REMUNERATION POLICY
At our AGM in 2021, we received Shareholder approval for a rollover
of our existing Remuneration Policy, which also incorporated a number
of updates to reflect best practice and Shareholder views. At that time,
we committed to undertaking a further review of the Policy during
the remainder of 2021 in order to ensure it remains optimally aligned
with the Group’s long-term strategy as a mining technology business.
Our comprehensive review also took into account Shareholder
feedback, market practice and evolving academic thinking on potential
alternative reward structures.
The Committee concluded that our current incentive structure remains
appropriately aligned to our strategy and our objective to appropriately
reward the delivery of sustainable value over time, as reflected in our
reward principles.
Employees
as Shareholders
Reward long-term
value creation
Supporting our culture
Simplifying and
increasing effectiveness
Encouraging and enabling
substantial long-term share
ownership for all employees.
Bringing focus to sustainable
improvement in the
underlying business via our
strategic framework.
Focusing incentives on team
performance to create collective
accountability and becoming an
employer of choice by offering a
motivating and fair package.
Simple and transparent reward
linked to business success,
delivered in a way that rewards
fairly and appropriately and
enables retention.
123
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
While the Committee reaffirmed that our annual bonus and restricted
shares structure remains the right approach at Weir, we are proposing
two minor refinements to the structure as follows:
• Incorporation of a stand-alone ESG component in the annual
bonus. Whilst ESG objectives were previously captured within
the strategic scorecard element of the bonus framework, we
now propose to introduce a stand-alone ESG element in order to
more transparently illustrate our priorities and performance in this
critical area. We will retain the strategic scorecard, but simplified
to focus on core objectives outside ESG. The 2022 annual bonus
will therefore be based on: 40% PBTA, 20% cash conversion, 20%
strategic measures, 20% ESG. The ESG component will operate
under a robust architecture. The performance measures for 2022
directly align to our ‘We are Weir’ strategic framework, and the
priorities for 2022 will be based on the ESG objectives within that
framework, including safety, gender and carbon emissions targets.
Full details of the strategic measures and ESG metrics that will be
used in the 2022 bonus are set out on page 128. The underlying
performance targets will be stretching and assessed using objective,
measurable and, where possible, quantitative targets. The targets
for 2022 will be fully disclosed in next year’s report. The Committee
will consider whether prospective disclosure of ESG targets may
be possible in future years, subject to commercial sensitivities.
For example, the Committee can confirm that our total incident rate
(TIR) target for 2022 is to maintain our already sector leading 0.45
TIR and stretch target is to reduce to 0.4.
Our We are Weir purpose is “To enable the sustainable and efficient
delivery of the natural resources essential to create a better
future for the world” and puts sustainability right at the core of
our strategy.
ZERO TIR
ENABLING
NET ZERO
LEADING
eNPS SCORE
SBTi-aligned
REDUCTION
IN CO2e
BY 2030
• Restricted shares – aligning to market. As part of our review, the
Committee considered the vesting and release period for awards.
It was noted that our current approach (shares vesting in tranches
after years 3, 4 and 5, and then being released two years later after
years 5, 6 and 7) is significantly longer than what has now become
the market standard (where all shares vest at year 3 and are
released at year 5). Therefore, to ensure our restricted share awards
remain competitive against this market landscape, we are proposing
to bring the vesting and release timeline in line with the market.
Subject to Shareholder approval, the change will apply to awards
made with effect from 2022 onwards. The Committee believes that
the alignment of the vesting period to market practice, which is also
applicable to the broader Group Executive team, further cements
retention and is an important element in the future attraction of
senior talent. As set out earlier in this letter, the Committee intends
to address concerns about potential ‘windfall gains’, if relevant, by
making any adjustment at the time of grant, in line with the latest
Shareholder guidance. We will formally incorporate this provision
into the new Remuneration Policy.
We will be submitting an updated Remuneration Policy for Shareholder
approval at the 2022 AGM in order to embed the changes set out
above. The proposed Directors’ Remuneration Policy is provided in full
on pages 130-135 of this report.
In February 2020, we unveiled our first ever Sustainability Roadmap,
a significant moment in the history of the Weir Group. A key priority
for the Remuneration Committee is ensuring that our Remuneration
Policy is aligned to our sustainability focus and therefore we have
continued to strengthen the emphasis on ESG measures as part of
Executive Director remuneration over recent years, whilst balancing
the need to retain an appropriate weighting on financial outcomes.
In 2021, we introduced a new ESG underpin as part of our 2021
restricted share awards. For 2022, we are introducing a distinct ESG
element into our annual bonus framework for Executive Directors,
which will be aligned both to our new Sustainability Roadmap and
our ‘We are Weir’ Framework across People, Customer, Technology
and Performance.
124
SOLUTIONSCREATING SUSTAINABLEFOOTPRINTREDUCING OURZERO HARMCHAMPIONINGNURTURING OURUNIQUE CULTUREGovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Annual bonus – greater focus on ESG objectives
The maximum bonus opportunity will remain at 150% of salary for the
CEO and 125% of salary for the CFO, in line with the Policy. As set out
earlier in this letter, the annual bonus plan for 2022 will be based on
40% PBTA, 20% cash conversion, 20% strategic measures and 20%
ESG. 30% of any bonus earned will be deferred into shares for three
years. Further detail on the performance measures is provided on page
128 of this report.
Restricted share awards
Restricted share awards will be granted in April 2022, with no change
to the award sizes (CEO: 125% of salary; CFO: 100% of salary) or
the performance underpins from the 2021 awards. Further detail can
be found on page 129 of this report. Subject to the approval of our
proposed Remuneration Policy, 2022 awards will vest after three years
and be subject to a holding period until five years from grant.
Shareholder engagement
In developing the approach to our updated Policy and its
implementation in 2022, we consulted extensively with our major
Shareholders and investor bodies. Overall, there was a broadly
supportive response, along with valuable feedback which was relayed
to the Remuneration Committee and directly impacted the final
proposals. I would like to thank all those Shareholders who engaged
with us during this process.
The Remuneration Committee has sought to take a simple, balanced
and responsible approach to executive pay. Decisions in the year have
been made taking into account the experience of our employees,
Shareholders and any key stakeholders in the period. The Committee
appreciated the strong endorsement of last year’s Directors’
Remuneration Report and Policy and I look forward to receiving
support again at the 2022 AGM.
CLARE CHAPMAN
Chair of Remuneration Committee
2 March 2022
2022 DECISIONS
Salaries
Our typical approach on Executive Director salaries is to align
with the average increase for our wider UK workforce, in line with
Shareholder guidance. We have operated this consistently in recent
years, showing restraint on salary increases, including withdrawing
agreed salary increases in 2020 in response to the Covid-19 pandemic.
As signalled in last year’s Directors’ Remuneration Report, the
Committee undertook a more comprehensive review of salaries
in 2021, taking into account a wide range of factors, including the
growth of the business, development and execution of strategy,
and the performance of the Company and the Executive Directors.
Following this review, the Committee is proposing to reset the salaries
for the CEO and CFO to be in line with a more market competitive
level in our comparator group (FTSE 50-150).
Reflecting on best practice and the feedback we received from our
Shareholders in consultation, the Committee has determined that the
salary increases will be phased over a two-year period. In April 2022,
the Executive Directors will receive increases of around 6% as follows:
CEO £752,000 (+6% from £708,000) and CFO £462,000 (+6% from
£436,000). In 2023, the Committee expects to approve a secondary
increase in order to bring salaries to the market competitive level at
that later point. This second increase (in April 2023) may be of a broadly
similar magnitude to that in 2022, but it is yet to be confirmed and will
be subject to review at that time of prevailing market data and ongoing
sustained performance of the Executive Directors.
Whilst the Committee recognises that the salary increase is in excess
of the average increase for our wider UK workforce for 2022 of 4%
and the need to continue to show restraint and moderation on salary
progression, it is the Committee’s view that this proposal will bring,
over time, the Executive Directors’ salaries to a more reasonable
market level for a business of our size and complexity in the global
market, whilst also reflecting the performance of the business over
recent years. The Committee also recognises that the Executive
Directors have been in post for over five years and strengthening base
salary to a market competitive level further cements retention.
When considering the performance of the business which has been
delivered by the Executive Directors since their appointment, the
Committee took into account key highlights including the successful
acquisition of ESCO in 2018 and subsequent integration, the sale of
Flow Control in 2019 and Oil & Gas in 2021, strong sustained growth
through multiple cycles during their tenure, and defining our future
strategy as a premium and highly resilient mining technology business.
We can also confirm that following this salary re-set, it is the
Committee’s intention that future salary increases (post-2023) would
align with the employee average, in line with our typical approach
which we have operated consistently over many years.
Pension contributions
Under our current Directors’ Remuneration Policy, we are committed to
aligning the pension contribution for our Executive Directors with the
rate available for the wider UK workforce by the end of 2022, in line
with best practice. During the year, we undertook a comprehensive
review of the pension provision for our wider workforce, taking into
account a range of market data and guidance. Following the review,
I am pleased to say that we will be significantly enhancing the pension
provision for our UK workforce with effect from April 2022, increasing
contribution rates across the board to market competitive levels and
increasing the maximum rate available to all of the UK workforce
to 12% of salary. As a result, the existing pension provision for our
Executive Directors (12% of salary) will become aligned with the rate
available to the wider UK workforce in April 2022.
125
The Weir Group PLC Annual Report and Financial Statements 2021Governance REMUNERATION AT A GLANCE
Our objective is to appropriately reward the continuous improvement of our value-drivers and the delivery of sustainable value over time as
reflected by our reward principles:
EMPLOYEES AS
SHAREHOLDERS
REWARD LONG-TERM
VALUE CREATION
SUPPORTING OUR
CULTURE
SIMPLIFYING
AND INCREASING
EFFECTIVENESS
DIRECTORS’ REMUNERATION POLICY
The key components of our remuneration framework are fixed pay, annual bonus and restricted share awards as set out in the
Remuneration Policy on pages 130-135.
FIXED PAY
Consists of salary,
pension and benefits
ANNUAL BONUS
Includes a core financial component
and an element based on the delivery
of key objectives aligned to the
strategic framework
Maximum: 150% (CEO) and 125% (CFO)
of salary
30% deferred into shares for three years
RESTRICTED SHARE AWARDS
Encourages substantial long-term share
ownership and increases emphasis on
the creation of long-term value for end
market customers and Shareholders
Award size: 125% (CEO) and 100% (CFO)
of salary
Shares vest three years from
grant and are released at year 5.
Vesting subject to underpin
FURTHER UPDATE OF THE DIRECTORS’ REMUNERATION POLICY – MINOR REFINEMENTS:
At the 2021 AGM, we received Shareholder approval for a rollover of our existing Remuneration Policy, which also incorporated a number of
updates to reflect best practice and Shareholder views. At that time, we also committed to undertaking a further review of the Policy during
the remainder of 2021 in order to ensure it remains optimally aligned with the Group’s long-term strategy. Following comprehensive review,
we concluded that our current incentive structure remains appropriately aligned to strategy and therefore no major changes are required.
We are, however, proposing two minor refinements to the structure, as previously set out on page 124, as follows:
Incorporation of a stand-alone ESG component in the annual bonus
To further strengthen the alignment between remuneration and strategy we are introducing a stand-alone ESG component into annual
bonus in order to more transparently illustrate our priorities and performance in this critical area.
2021 bonus framework
50% PBTA
20% Working Capital
30% Strategic Measures (including ESG)
2022 bonus framework
40% PBTA
20% Cash Conversion
20% Strategic Measures
20% ESG Measures
Alignment of restricted shares vesting period to general market practice
Our current approach of restricted shares vesting in tranches after years 3, 4 and 5, and then being released two years later after years 5, 6,
and 7 is significantly more onerous than what has become the market standard, where awards vest at year 3 and are released at year 5.
We are therefore amending the vesting and release timeline to align with market (which also aligns with Shareholder guidance, including the
UK Corporate Governance Code 2018). The change would apply with effect from the 2022 awards and would not impact awards made prior
to 2022.
Vesting Period Change – current structure
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Amended structure applicable to awards from 2022 onwards
Year 1 Year 2 Year 3 Year 4 Year 5
2 years holding period
100% of award vests
2 years holding period
2 years holding period
2 years holding period
50% of award vests
25% of award vests
25% of award vests
126
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021
ANNUAL BONUS OUTCOME FOR THE YEAR ENDED 31 DECEMBER 2021
Further details, including information on the performance assessment of the strategic measures are set out on pages 137-139.
2021 Annual Bonus Outcome
Entry
(20% payable)
Target
Maximum
(100%
payable)
FY21
Outcome
Payout % of
maximum for
each measure
Weighted
payout %
£232.0m
£281.9m
£331.8m
£271.9m
52.0%
26.0%
PBTA (50% weighting)
(defined as profit before tax and adjusting items from continuing operations)
£528.8m
£491.9m
£455.0m
£563.8m
0%
0%
Third-party working capital (20% weighting)
Strategic measures (30% weighting)
6%
18%
30%
25.7%
85.6%
25.7%
Total
Jon Stanton actual
John Heasley actual
51.7%
£548,967
£281,720
DISCRETIONARY REDUCTION TO 2020
RESTRICTED SHARE AWARD VESTING
IN 2022 FOR ‘WINDFALL GAIN’
The Remuneration Committee has carefully
considered this issue and has decided to apply a
discretionary downward adjustment of 15% to the
number of shares which vest from the first tranche
of the 2020 award in April 2022. In doing so, the
Committee recognises that some Shareholders have
concerns around the potential for perceived ‘windfall
gains’ where there is market volatility around the time
of grant of long-term share awards. At the same time,
the Committee also reflected on a number of broader
reference points in relation to the performance of the
Executive Directors and the business since the award
in 2020 and as set out in detail on pages 122-123,
concluding that whilst there cannot be a formulaic
answer, on balance a 15% reduction is appropriate.
Remuneration Committee consideration points
The 2020 restricted share award occurred close to trough of
market resulting in a perceived ‘windfall gain’.
The resilient financial performance of the business and management’s
strong stewardship through Covid-19 and the cyber incident.
The execution of the Oil & Gas Division sale and the immediate
15% share price increase as a result.
A share price increase of over 100% since the 2020 award, compared to the
FTSE 100 market increase of less than 35%, outperforming the market
and almost all sector peers in this time.
The prudent measures already taken, including the withdrawal of salary increases
for the Executive Directors in 2020 and the Executive Directors’ waiver of any bonus
in respect of 2020 (which otherwise would have paid out at 46% of maximum).
Downward discretion applied to 2020
restricted share award vesting in April 2022
following consideration of above
15%
2021 CEO SINGLE TOTAL FIGURE OF REMUNERATION
£796,461
£796,461
£100,441
£100,441
Total £896,902
Total £896,902
2020
2020
2021
2021
£0m
£0m
Fixed pay
Fixed pay
£0.5m
£0.5m
Annual bonus
Annual bonus
Restricted shares
Restricted shares
£814,240
£814,240
£548,967
£548,967
£404,357
£404,357
Total £1,767,564
Total £1,767,564
£1.0m
£1.0m
£1.5m
£1.5m
£2.0m
£2.0m
Notes
The Executive Directors waived their 2020 annual bonus.
In 2020, the restricted shares value was solely comprised of the first 25% of the 2018 award vesting. The 2021 restricted shares value comprises the second 25% of the 2018 award vesting
and the first 25% of the 2019 award vesting.
EXECUTIVE DIRECTORS’ SHAREHOLDING
EXECUTIVE DIRECTORS’ SHAREHOLDING
CEO
CEO
CFO
CFO
Shareholding requirement
Shareholding requirement
244,243 shares
244,243 shares
120,486 shares
120,486 shares
Shareholding requirement
Shareholding requirement
0%
0%
100%
100%
200%
200%
300%
300%
400%
400%
500%
500%
600%
600%
700%
700%
127
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION IN 2022
IMPLEMENTATION OF REMUNERATION POLICY IN 2022
The table below summarises the key components of our remuneration framework and indicates how we intend to operate the policy in 2022.
Operation
2022 implementation
Fixed
Salary
Pension
Benefits
Variable
Fixed remuneration which
reflects role, skills, and
responsibilities.
• CEO – £752,000
• CFO – £462,000
The 6% increases are above the increase of 4% for the wider UK workforce as part of a two-
year phased approach to align with FTSE 50-150 market competitive levels.
Executive Directors receive
pension contributions of 12%
per annum.
No change for 2022, but with a broader investment made in pension provision for the wider
UK workforce from April 2022, which includes a new availability of the 12% contribution rate
for all UK employees, the Executive Directors’ pension contributions will become aligned
with the rate available to the wider UK workforce in April 2022.
Car allowance, healthcare and
life assurance.
No change.
Annual bonus Maximum opportunity:
CEO 150% of base salary
CFO 125% of base salary
30% deferred into shares for
three years. Annual bonus
awards will also be subject to
malus and clawback provisions.
No change to maximum opportunities. New standalone ESG measure introduced, with
measures and weightings for 2022 as follows:
• 40% PBTA (defined as profit before tax and adjusting items from continuing operations)
• 20% Cash conversion (defined as free operating cash flow as a percentage of adjusted
operating profit)
• 20% Strategic measures
• 20% ESG measures
Note
We are retaining a cash based measure for 20% of the annual bonus opportunity, replacing third-party working capital with
cash conversion as the metric from 2022. Strong operating cash conversion ensures a focus on working capital efficiency and
optimal levels of capital expenditure to ultimately allow free cash generation to invest in growth opportunities and meet our
commitment to return 33% of net adjusted earnings by way of dividend and a full investment grade credit rating.
Given their overall commercial sensitivity, underlying targets across the financial and non-
financial measures will be disclosed in next year’s report. Set out below are details of the
target priorities for 2022 for both the strategic measures and the ESG measures. These are
aligned to our 'We are Weir' framework of People, Customer, Technology and Performance.
PEOPLE
Strategic measures:
• Retain our talent.
• Build our digital capability.
• Maintain top quartile
engagement score.
CUSTOMER
ESG measures:
• Improve our safety Total Incident Rate
(TIR).
• Improve our gender diversity.
Strategic measures:
• Execute our top 3 strategic growth
ESG measures:
• Develop our scope 4 value proposition.
initiatives in each Division.
• Establish new strategic alliances that
enhance our customer value proposition
significantly.
TECHNOLOGY
Strategic measures:
• Commercialise our top 3 horizon
1 innovations in each Division.
• Progress our priority acceleration R&D
ESG measures:
• Build pipeline and commercialise material
sustainability focused technologies/
solution (# new projects.
projects.
• Digitise our current business model.
• Create and deploy Future Back Strategy.
PERFORMANCE
Strategic measures:
• Improve our Lean scores.
• Grow % of Group revenue covered by
Global Business Services Finance shared
services.
ESG measures:
• Reduce scope 1&2 CO2e emissions vs
2019 base.
• Evaluate Science Based Targets initiative
(SBTi) scope 3 target.
128
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 Restricted
share awards
Operation
2022 implementation
Maximum award size:
CEO 125% of base salary
CFO 100% of base salary
Awards subject to a vesting
and subsequent holding
period. Vesting subject to the
underpin. Prior to vesting, if
any of the thresholds have not
been met, it would trigger the
Committee to consider whether
a discretionary adjustment was
required.
Restricted share awards will
also be subject to malus and
clawback provisions.
For restricted share awards
from 2022 onwards, the
Remuneration Committee has
the ability to make adjustment
at the time of grant to address,
if relevant, concerns about
windfall gains and taking into
account latest Shareholder
guidance. The Committee
also retains discretion to
review awards at the point of
vesting, in accordance with our
wider policy and principle of
best practice.
No change to award size.
Vesting schedule changed for new awards from 2022 onwards:
Previously vesting was in years 3, 4 and 5 with a subsequent two-year holding period
on each vest so shares fully released between years 5 and 7.
To bring into line with market practice, from 2022, vesting is in full after year 3 with
a subsequent two-year holding period so shares fully released after year 5.
No change to the underpin:
Balance sheet health
Breaching covenants
• No breach of debt covenant or re-negotiation of covenant terms outside of a normal
refinancing cycle
Investor returns
Return on Capital Employed (ROCE)
• Maintain average ROCE over the vesting period above the average Weighted Average Cost
of Capital for that period
Environmental, social and governance (ESG)
Sustainability Roadmap progress
• Awarded a B listing or better by CDP1 through the vesting period in recognition of climate
change contribution
Corporate governance
Major governance failure
• No material failure in governance or an illegal act resulting in significant reputational
damage and/or material financial loss to the Group
Note
1 CDP are one of the world’s leading climate change research groups https://www.cdp.net. CDP’s annual environmental
disclosure and scoring process is respected as the gold standard of corporate environmental transparency. It ranks
companies on a scale of A to D- based on the comprehensiveness of disclosure, awareness and management of
environmental risks and demonstration of best practices associated with environmental leadership, such as setting
ambitious and meaningful targets. Weir’s score in 2020 and 2021 has been A- recognising the sustained progress made
in this area. The underpin for the 2022 award will be set such that if Weir’s score falls below a threshold of B for any year
during the vesting period, this would trigger the Committee to consider an adjustment to vesting. The CDP methodology
requires continuous improvement even to maintain a level of scoring and therefore the Committee believes this is an
appropriate level at which to set the threshold for the underpin.
Other
Shareholding
guidelines
No change.
• CEO – 400% of base salary
• CFO – 300% of base salary
In addition, shareholding
requirements will continue
post-employment for a period of
two years.
Fees reflect responsibilities and
time commitments for the role.
Chair and
Non-Executive
Director (NED)
fees
Chair and NED fees will increase by 4% in line with the wider UK employee average,
effective 1 April 2022.
• Chair’s fee – £337,000
• NED base fee – £67,400
• Chair of Committee fee – £17,600
• Senior Independent Director fee – £14,100
• Employee Engagement Director fee – £17,600
129
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION POLICY
REMUNERATION POLICY
The policy will be put to Shareholders for approval at the AGM to be held on 28 April 2022. Subject to approval, the policy is intended to apply for
three years from that date.
In developing the proposed policy, input was received from the Chairman and management while ensuring that conflicts of interest were suitably
mitigated. Input was also provided by the Committee’s appointed independent advisers throughout the process.
There are two minor refinements between the proposed and the current policy approved in 2021 being: (i) the introduction of a specific ESG
measure into the annual bonus; and (ii) the alignment of the vesting period on the restricted shares to market practice. We are also introducing
a provision to address concerns about potential ‘windfall gains’, if relevant, by making any adjustment to restricted share awards at the time
of grant.
POLICY TABLE
BASE SALARY
Purpose
To provide a salary which takes into account an individual’s role, skills and
responsibilities and enables the Group to attract and retain talented leaders.
Operation
Reviewed annually, with increases normally taking effect from 1 April. Salaries are
set by reference to market practice for similar roles in companies of similar size and
complexity. The Committee also takes into account personal performance, the wider
employee context, and economic and labour market conditions.
Maximum value
While there is no stipulated maximum salary
increase, increases will not normally be greater
than the average salary increase for UK employees
(or the relevant jurisdiction if an Executive Director
is based outside the UK).
Different increases may be awarded at the
Committee’s discretion in instances such as where:
• there has been a significant increase in the size,
complexity or value of the Group;
• there has been a change in role or responsibility;
• the individual is relatively new in the role and the
salary level has been set to reflect this; and
• the individual is positioned below relevant
market levels.
PENSION
Purpose
To encourage long-term saving and planning for retirement.
Operation
A contribution into the Company’s defined contribution pension plan or an equivalent
cash allowance, or any other arrangement the Committee considers has the same
economic benefit.
Maximum value
12% of base salary per annum in line with the
maximum contribution rate available to the wider
UK workforce from April 2022.
BENEFITS
Purpose
To provide cost-effective benefits valued by individuals.
Operation
Benefits include, but are not limited to, healthcare, car allowance, liability insurance
and death in service insurance.
Other benefits may be provided from time to time if considered reasonable and
appropriate, such as relocation benefits or long-term disability insurance.
Maximum value
• Car allowance – no greater than £20,000
per annum
• Life assurance – 5 x base salary
The cost of providing insurance and healthcare
benefits varies according to premium rates, so
there is no formal maximum monetary value.
130
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 ANNUAL BONUS
Purpose
To incentivise the delivery of our strategic plan and to reward the achievement of
stretching performance on an annual basis.
To focus incentives on team performance to create collective accountability.
Operation
Measures, targets and weightings are reviewed and determined annually at the start
of each financial year to ensure they are appropriate and support the Company’s
strategy. 30% of any bonus will be deferred into an award of Weir Group shares
which will normally be released after three years.
Malus and clawback provisions may be applied in the event of a material
misstatement in the financial statements of the Group or a subsidiary/Division,
the discovery that information used to determine an award was materially incorrect,
mistaken or misrepresented, gross misconduct (leading to termination for cause),
a material corporate failure in any Group company or a relevant business unit,
or reputational damage causing significant damage to the Company and clearly
attributable to the individual.
SHARE REWARD PLAN (SRP)
Purpose
To encourage and enable substantial long-term share ownership.
To reward the delivery of sustainable value over time.
Operation
The Committee may grant awards under the SRP on an annual basis.
Awards will vest at the end of a three-year period, subject to continued employment
and assessment of the underpin.
Following vesting, an additional two-year holding period will also apply, such that
vested shares are released five years from grant.
Awards will normally be in the form of conditional share awards, but may be awarded
in other forms if appropriate (e.g. as nil cost options).
Malus and clawback (applicable for three years from vesting) provisions may be
applied in the event of:
• a discovery of a material misstatement in the audited consolidated accounts of the
Group or audited accounts of any Group company;
• action or conduct which can be considered as gross misconduct;
• events or behaviour which have a significant detrimental impact on the reputation
of any Group company, and which can be attributed to the individual award holder;
• the information used to determine the number of shares over which an award is
granted, or vests is found to be materially incorrect, mistaken or misrepresented to
the advantage of the award holder; and
• a material corporate failure in any Group company or a relevant business unit.
Maximum value
• CEO 150% of base salary
• CFO 125% of base salary
Performance assessment
Annual bonuses will be subject to such targets as
the Committee considers appropriate each year.
Financial measures will normally be used to
calculate at least 50% of the bonus, with the
remainder being based on strategic, ESG and/or
personal objectives.
The performance targets for financial measures
are set in the context of the internal budget
taking into account other relevant factors such as
external forecasts.
All financial measures are calibrated with payment
on a straight-line basis between threshold (up to
20% of maximum bonus payable), stretch, and any
points in between.
Payment of any non-financial measures component
will be subject to a discretionary underpin
(including individual performance).
In exceptional circumstances the Committee has
discretion to alter the measures and/or targets
during the performance period if it believes the
original measures and/or targets are no longer
appropriate.
The Committee has discretion in exceptional
circumstances to amend the payout level if it
believes this will better reflect the Company’s
underlying performance.
Maximum value
The Committee will determine the grant level each
year. The maximum value of award which may be
granted in respect of a financial year is:
• CEO 125% of base salary
• CFO 100% of base salary
The Committee has the ability to adjust award
levels at the time of grant to address, if relevant,
concerns about the potential for perceived
‘windfall gains’.
Performance assessment
No performance measures are associated with the
awards.
The underpin will consist of a ‘basket’ of pre-
determined key metrics which will best reflect
overall business health over the vesting period. For
each metric, a clearly defined and, where relevant,
quantifiable ‘threshold’ will be set at the time of
grant. Thresholds will be disclosed on a prospective
basis.
Prior to vesting, if any of the thresholds have
not been met, it would trigger the Committee
to consider whether a discretionary downward
adjustment was required.
In addition, the Committee will also have general
discretion to reduce vesting levels if it believes this
will better reflect the underlying performance of
the Company over the period.
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CONTINUED
SHAREHOLDING REQUIREMENTS
Purpose
To ensure Executive Directors build and hold a significant shareholding long term.
To align Executive Directors’ interests with Shareholders.
Operation
Executive Directors are required to build up a shareholding in the Company over a five-
year period.
All beneficially owned shares, deferred shares and unvested restricted share awards
count towards an individual’s shareholding (on a net of tax basis where relevant).
Until the shareholding requirement is met an Executive Director must retain 50% of net
restricted share awards, performance share awards, and deferred bonus award shares.
Shareholding requirements continue post-employment:
• The requirement will fall to half the normal level on leaving.
• The requirement would then taper down to zero after two years.
ALL EMPLOYEE SHARE PLANS
Purpose
To enable long-term share ownership for all employees, and to increase alignment
with Shareholders.
To provide one common benefit to all employees.
Operation
Executive Directors may be entitled to participate in all-employee share plans on the
same basis as all other employees.
CHAIRMAN AND NON-EXECUTIVE DIRECTORS’ FEES
Purpose
To attract and retain experienced and skilled Non-Executive Directors and to reflect
the responsibilities and time commitment involved.
Fees are reviewed by reference to companies of similar size and complexity,
economic and labour market conditions.
Additional fees may be made available to Non-Executive Directors where appropriate
to reflect any additional time commitment or duties.
The Company may reimburse Non-Executive Directors for any business-related costs
(such as travel and accommodation costs incurred in connection with their duties) and
any associated tax on these costs.
Shareholding guidelines
• CEO 400% of base salary
• CFO 300% of base salary
Maximum Value
The maximum value will be in line with the
maximum value for all other employees.
Maximum value
Fees as prescribed in the Articles of Association.
Planned increases in fees will take into account
general increases across the Group, along with
market practice.
CHOICE OF PERFORMANCE MEASURES AND TARGETS
The performance measures selected for the annual bonus awards and the performance underpins selected for the restricted share awards are
set on an annual basis by the Committee, to ensure that they remain appropriate to reflect the priorities for the Company in the year ahead.
The annual bonus plan measures are chosen to align to our reward principles and the delivery of our strategy. The restricted shares performance
underpins are chosen to align with our key underlying drivers of value. The targets for the performance measures are set taking into account
a number of factors, including the Company’s annual operating plan, strategic priorities, the economic environment and market conditions
and expectations.
DIVIDENDS
Executive Directors are entitled to receive the value of dividends payable on any deferred bonus awards under the annual bonus or awards under
the SRP up to the point of vesting. This value may be calculated assuming that the dividends were notionally reinvested in the Company’s shares.
COMMON AWARD TERMS
Awards granted under the share plans may be adjusted in the event of any variation of the Company’s share capital or any demerger, special
dividend or other event that may affect the current or future value of the awards.
LEGACY ARRANGEMENTS
The Committee reserves the right to make any remuneration payments and/or payments for loss of office, this includes exercising any discretions
available to it in connection with such payments (notwithstanding that they are not in line with this policy) where the terms of payment:
• came into effect before this policy was approved and implemented (including where such payments are in line with a previously approved
policy); and
• were agreed at a time when the individual was not a Director of the Company and, in the opinion of the Committee, the payment is not in
consideration for the individual becoming a Director.
This includes the vesting of any awards granted under the SRP.
132
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 RECRUITMENT POLICY
The Committee’s approach when considering the overall remuneration arrangements in the recruitment of an Executive Director is to take
account of all relevant factors such as the individual’s remuneration package in their prior role and the market positioning of the package against
the local market. We will not pay more than necessary to facilitate the recruitment.
Component
Remuneration
Buy-out Awards
Other
Internal promotion to
Executive Director
Policy and operation
The salary level, benefits, pension, annual bonus and annual SRP participation will be in line with the policy
table, including the maxima shown.
The Committee will consider whether any buy-out awards are reasonably necessary to facilitate the recruitment
of an Executive Director, and if there are any other compensation arrangements that would be forfeited on
leaving the previous employer.
The Committee will seek to structure any buy-out award taking into account relevant factors including any
performance conditions, the form in which it is to be paid and the timeframe of the award.
Buy-out awards will generally be made on a like-for-like basis and will be no more generous in quantum than
the awards being forfeited.
The Committee may agree to meet certain mobility or relocation costs, including but not limited to,
temporary living and transportation expenses. The Committee may also agree to meet the costs of
relevant professional fees.
Reasonable expenses and associated tax incurred as part of their recruitment will be reimbursed to the
Executive Director.
The Committee will honour existing remuneration arrangements made prior to and not in contemplation of
promotion. The arrangements will continue to pay out in accordance with the respective rules and guidelines.
SERVICE CONTRACTS AND POLICY ON PAYMENT OF LOSS OF OFFICE
It is the Committee’s policy that there should be no element of reward for failure. The Committee’s approach when considering payments in the
event of termination is to take account of the individual circumstances including the reason for termination, contractual obligations of both parties
as well as incentive plan and pension scheme rules.
If an Executive Director’s service contract is terminated other than in accordance with its terms, the Committee will give full consideration to the
obligation and ability of the individual to mitigate any loss they may suffer as a result of the termination of their contract.
Service contracts and letters of appointment are available for inspection at the Company’s registered office.
Provision
Unexpired term
Change of control
Notice period
Contractual payments
Annual bonus and deferred
bonus awards
Policy
The unexpired term of Executive Directors’ contracts is 12 months.
Executive Directors have rolling contracts.
No provisions in service contracts relate to a change of control.
Refer to the relevant sections below for annual bonus and share plans provisions.
Current Executive Directors have 12 months’ notice by either the Company or the individual. This would be the
normal policy for new appointments.
Termination with contractual notice or termination by way of payment in lieu of notice (PILON) at the Company’s
discretion.
Neither notice nor PILON will be given in the event of gross misconduct.
The calculation of PILON will be at 1.2 x gross salary to reflect the value of salary and contractual benefits.
PILON will be made where circumstances dictate that Executive Directors’ services are not required for their full
notice period. Contracts also allow for phased payments on termination which provides for mitigation, including
remuneration from alternative employment.
The Committee may authorise:
• payments for statutory entitlements in the event of termination;
• reasonable settlement of potential legal claims; and
• payment of reasonable reimbursement of professional fees in connection with such agreements.
At the discretion of the Committee, where an individual leaves as a Good Leaver (as defined below), a pro-rated
payment (payable in such proportions of cash and shares as the Committee may determine) may be earned if
employment ceases during the year. Any payment will be subject to the assessment of bonus targets.
Dismissal for gross misconduct – all entitlements will be forfeited, including any unvested deferred bonus awards.
All other departure events – existing rights are normally retained in respect of any deferred bonus awards. Vesting
will take place at the normal vesting date unless the Committee determines otherwise.
Malus and clawback provisions will continue to apply.
Change in control – any bonus will normally be determined by the Committee up to the expected date of change
in control taking into account both performance and the period of the financial year which has elapsed. Deferred
bonus awards will vest on change in control.
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CONTINUED
Provision
Outstanding share plan
awards
All employee share plans
Relocation
Chairman and
Non-Executive Directors
Policy
The treatment of awards will be governed by the rules of the relevant plan.
Where an individual leaves as a Good Leaver (which includes for reasons of death, retirement, ill-health, injury or
disability, redundancy, the sale of employing company or business, or other circumstances that the Committee
determines) unvested awards will normally continue and vest on the normal vesting date, taking into account
the assessment of any applicable underpins and pro-rated to reflect the proportion of the vesting period which
has elapsed.
The Committee may exercise its discretion to apply a different pro-rata methodology or to dis-apply time pro-
rating completely.
Awards subject to a holding period will continue to be subject to that holding period as if employment had not
ceased, except in the case of death, or in such other circumstances as the Committee may determine, when the
holding period will end at that time.
The rules provide flexibility that in the case of the participant’s death (or such other exceptional circumstances as
the Committee considers appropriate), awards will vest (and awards in the holding period will be released) at the
time of death/leaving.
If an individual leaves for any reason other than as a Good Leaver, any unvested awards will lapse on termination.
Awards will remain subject to the operation of malus and clawback provisions.
Change in control – the extent to which unvested awards vest will be determined by the Committee, taking into
account the performance conditions and/or underpins as applicable and the proportion of the vesting period that
has elapsed. Alternatively, awards may be exchanged for new equivalent awards in the acquiring company. The
holding period applicable to any awards will end at the time of change in control.
The rules of any all-employee share plans will apply in the event of termination of employment or change
in control.
The Committee may determine that share plan awards or deferred bonus awards should vest early if an Executive
Director is relocated to a country where they would suffer a tax or regulatory disadvantage by holding the award.
Non-Executive Directors have letters of appointment. The letters do not contain any contractual entitlement to
a termination payment and the Non-Executive Directors can be removed in accordance with the Company’s
Articles of Association.
Notice periods are six months from the Company and no notice from the individual.
There are no change in control provisions in the letters of appointment.
SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT
The following table sets out the dates of each of the Executive Directors’ service agreements, the dates of the Non-Executive Directors’ letters of
appointment and the date on which the Non-Executive is subject to election or re-election. Directors are required to retire at each Annual General
Meeting and seek re-election by Shareholders.
Executive Director
Jon Stanton
John Heasley
Non-Executive Director
Charles Berry1
Clare Chapman
Engelbert Haan
Barbara Jeremiah2
Mary Jo Jacobi
Ben Magara
Sir Jim McDonald
Srinivasan Venkatakrishnan
Stephen Young
Contract commencement date
28 July 2016
3 October 2016
Unexpired term (months)
12
12
Date of appointment
1 January 2014
1 August 2017
18 February 2019
1 August 2017
1 January 2014
19 January 2021
1 January 2015
19 January 2021
1 January 2018
Date when next subject to election/re-election
n/a
28 April 2022
28 April 2022
28 April 2022
28 April 2022
28 April 2022
28 April 2022
28 April 2022
28 April 2022
1 Charles Berry will retire as Chairman following the AGM on 28 April 2022.
2 Barbara Jeremiah is Chair-Designate and to be appointed Chair following the AGM on 28 April 2022.
CONSIDERATION OF CONDITIONS ELSEWHERE IN THE GROUP
The reward principles set out at the beginning of the Directors’ Remuneration Report reflect the reward principles that apply to all employees
across the Group. Although these principles apply across the Group, given the size of the Group and the geographical spread of its operations,
the way in which the principles are implemented in practice varies. For example, annual bonus deferral applies at the more senior levels within
the Group and participation in restricted share awards is typically limited to senior management and executives. All employees are eligible to
participate in our global all employee share plan, Weir ShareBuilder, and we offer competitive and fair rates of pay across the organisation.
134
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 CONSIDERATION OF EMPLOYEE ENGAGEMENT
Meaningful engagement with customers and employees plays a crucial role in both innovation and the continuous improvement of the
Weir business.
The Board recognises the importance of culture and effective employee relations to the creation of good work and good workplaces. The role of
the Board therefore is to ensure that mechanisms are in place, and monitored, for effective employee engagement and that there is governance
of the process for management standards and training to continue to assure ourselves of the leadership skills required to do engagement well.
Given the multi-national nature of our business, the management team also recognise that their approaches to insight-gathering and dialogue
need to reflect country practices so that engagement can be led well locally and be mindful of circumstances and culture.
As a Board, we recognise the importance of a Group-wide framework for employee dialogue which is why our continued focus is to ensure
that we broaden our Group-wide practices for gathering workforce views and engaging in meaningful dialogue and for measuring and further
strengthening employee engagement. Monitoring of progress will take place at the Board in the form of an annual employee insights report.
We have in place a variety of employee voice channels, such as our global employee engagement survey and our ‘Meet the Board’ sessions,
which provide employees with an opportunity to provide feedback on any topics that interest or concern them. Although we have not specifically
engaged with employees on executive remuneration, any remuneration concerns from our ‘Meet the Board’ sessions would be flagged to the
Remuneration Committee for separate consideration. The Committee intends to strengthen direct engagement with employees on executive
remuneration going forward.
CONSIDERATION OF SHAREHOLDER ENGAGEMENT
Shareholders and their representative bodies play a very active role in the continued development of our Remuneration Policy. We have
undertaken significant engagement with Shareholders in relation to the minor amendments proposed to the Remuneration Policy in 2022 and
also in relation to the implementation of Policy in 2022.
The Committee remains committed to ongoing dialogue and will seek input from Shareholders when considering any further changes.
PAY AT WEIR
APPLICATION OF REMUNERATION POLICY
JON STANTON
JOHN HEASLEY
Fixed
100%
£869,400
Mid Point
35%
£869,400
Maximum
30%
£869,400
Maximum1 +
26%
£869,400
27%
£676,800
38%
£940,000
38%
£1,128,000
33%
£1,128,000
32%
£940,000
41%
£1,410,000
Fixed
100%
£536,519
Mid Point
40%
£536,519
Maximum
34%
£536,519
Maximum1 +
30%
£536,519
26%
£346,500
34%
£462,000
37%
£577,500
32%
£577,500
29%
£462,000
38%
£693,000
1 Maximum + 50% share price increase.
1 Maximum + 50% share price increase.
Fixed pay
Annual bonus
SRP
Fixed pay
Annual bonus
SRP
NOTES TO APPLICATION OF REMUNERATION POLICY CHARTS
The above chart illustrates the potential total remuneration for the Executive Directors in respect of the application of our Remuneration Policy.
Element of package
Fixed Pay
Annual Bonus
SRP
Assumptions used
Base salary: effective 1 April 2022
Benefits: benefits as disclosed in single total figure of remuneration for 2021
Pension: 12% cash allowance, which is also the maximum rate available to the wider UK workforce from April 2022
Minimum: no bonus is earned
Mid-point: 60% of maximum is earned (being the mid-point under the annual bonus between the threshold pay-out
of 20% and maximum pay-out)
Maximum: 100% of maximum is earned
Minimum: no vesting
Mid-point: 100% vesting
Maximum: 100% vesting
Maximum +50%: As above for maximum performance but includes share price appreciation in respect of the SRP
of 50%
135
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
COMPLYING WITH UK CORPORATE GOVERNANCE CODE 2018
The following table summarises how the Remuneration Policy fulfils the factors set out in provision 40 of the 2018 UK Corporate Governance
Code 2018.
CLARITY
Remuneration arrangements
should be transparent and promote
effective engagement with
Shareholders and the workforce.
The Committee is committed to providing open and transparent
disclosures to Shareholders and the workforce with regards to
executive remuneration arrangements.
The 2021 Directors’ Remuneration Report sets out the remuneration
arrangements for the Executive Directors in a clear and transparent way.
There is also an AGM where Shareholders can ask any questions on
the remuneration arrangements.
SIMPLICITY
Remuneration structures should
avoid complexity and their
rationale and operation should be
easy to understand.
Our remuneration arrangements for Executive Directors, as well
as those throughout the organisation, are simple in nature and
understood by all participants.
The structure for Executive Directors consists of fixed pay (salary,
benefits, pension), annual bonus scheme and a restricted share plan.
RISK
Remuneration arrangements
should ensure reputational
and other risks from excessive
rewards, and behavioural risks that
can arise from target-based plans,
are identified and mitigated.
The Committee considers that the structure of incentive arrangements
does not encourage inappropriate risk-taking.
Under the annual bonus, discretion may be applied where formulaic
outcomes are not considered reflective of underlying Company
performance. There are robust underpins in place for restricted
share awards.
Malus and clawback provisions also apply to variable incentives.
PREDICTABILITY
The range of possible values of
rewards to individual Directors
and any other limits or discretions
should be identified and explained
at the time of approving the policy.
The annual bonus scheme is the only scheme currently in operation
for Executive Directors where there is variability in payouts depending
on the performance of the Company. The restricted share awards
are subject to share price movements and therefore aligned with the
Shareholder experience.
The potential value and composition of the Executive Directors’
remuneration packages at below threshold, mid-point, maximum
and maximum including a 50% share price increase scenarios are
provided in the Directors’ Remuneration Policy.
PROPORTIONALITY
The link between individual
awards, the delivery of strategy
and the long-term performance
of the Company should be clear.
Outcomes should not reward
poor performance.
Payments from annual bonus require robust performance
against challenging conditions. Performance conditions have
been designed to link with Group strategy and consist of
financial and non-financial metrics.
The Committee has discretion to override formulaic outturns to ensure
that they are appropriate and reflective of overall performance.
ALIGNMENT
TO CULTURE
Incentive schemes should
drive behaviours consistent
with Company purpose, values
and strategy.
This year we granted Free Shares under Weir ShareBuilder to all
employees newly attaining 12 months’ service by the 2021 award date.
ShareBuilder is our global all employee share plan, and is part of our
ambition of making all Weir colleagues Shareholders.
The variable incentive schemes, performance measures and
underpins are designed to be consistent with the Company’s purpose,
values and strategy.
136
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 ANNUAL REPORT ON REMUNERATION
This section sets out how the Remuneration Policy was applied for the year ending 31 December 2021.
SINGLE TOTAL FIGURE OF REMUNERATION FOR EXECUTIVE DIRECTORS (AUDITED)
Jon Stanton
John Heasley
Base Salary
Pension
Benefits
Total Fixed Pay
Annual Bonus
Restricted Shares
Total Variable Pay
Total Pay
2021 (£)
702,750
84,330
27,160
814,240
548,967
404,357
953,324
1,767,564
2020 (£)
687,000
82,440
27,021
796,461
–
100,441
100,441
896,902
2021 (£)
432,750
51,930
19,079
503,759
281,720
199,148
480,868
984,627
2020 (£)
423,000
50,760
19,331
493,091
–
49,447
49,447
542,538
NOTES TO THE TOTAL FIGURE OF REMUNERATION FOR THE EXECUTIVE DIRECTORS (AUDITED)
Base salary – corresponds to the amount received during the year ended 31 December 2021.
Pension – corresponds to the cash allowance provided to the Executive Directors during the year ended 31 December 2021. This equates to 12% of salary.
Benefits – corresponds to the value of benefits in respect of the year ended 31 December 2021, as set out in the table below.
Annual bonus – the Executive Directors waived their bonus for 2020, which otherwise would have delivered an outcome of 45.7% of maximum opportunity.
Restricted shares – the 2020 value is solely comprised of the first 25% of the 2018 award vesting at a share price of £9.73. The 2021 value comprises the second 25% of the 2018 award vesting
at a share price of £19.41 and the first 25% of the 2019 award vesting at a share price of £18.59. The 2021 value incorporates the discretionary downward adjustment to the 2018 and 2019
awards vesting in April 2021 to recognise the technical breach of the dividend underpin, as disclosed in the 2020 Directors’ Remuneration Report. Of the 2021 restricted share award value,
£1,152 for Jon Stanton and £575 for John Heasley reflects the share price appreciation in the period since award. There was no discretion exercised in respect of the award as a result of the share
price appreciation.
Benefits
Car allowance
Group healthcare
Life assurance
Total
Jon Stanton
2021 (£)
17,000
1,547
8,613
27,160
John Heasley
2021 (£)
13,970
1,547
3,562
19,079
2021 ANNUAL BONUS (AUDITED)
The Remuneration Committee has spent time considering the impact of the cybersecurity incident on the Group’s financial performance and
the subsequent impact on the bonus outcome. Following detailed consideration, the Committee has determined not to apply any discretion, on
the basis that the overall outcome was considered an appropriate reflection of performance in the year, including taking into account the impact
of the cyber incident which was reflected in the metrics. The following table details the performance achieved against the stretching targets set
at the beginning of the year. As a result, a bonus of 51.7% of maximum was payable to the Executive Directors. Jon Stanton’s bonus award is
77.5% of salary as at 31 December 2021 and John Heasley’s bonus award is 64.6% of salary as at 31 December 2021. 30% of the bonus for
the Executive Directors is deferred into shares, vesting after three years in accordance with the provisions set out in our Remuneration Policy on
page 131.
Payout as % of maximum
PBTA1
Third-party working capital
Strategic measures
Total bonus
Weighting
50%
20%
30%
100%
Entry
20%
£232.0m
£528.8m
Mid-point
60%
£281.9m
£491.9m
Maximum
100%
£331.8m
£455.0m
Achievement
Payout % of
maximum for
each measure
Payout (%)
£271.9m
£563.8m
25.7%
52.0%
0%
85.6%
26.0%
0%
25.7%
51.7%
Note
1 PBTA is defined as profit before tax and adjusting items from continuing operations. The performance targets and achievements are calculated using the September 2020 closing
exchange rates.
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The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
STRATEGIC MEASURES (AUDITED)
The strategic measures were introduced in 2018 to better align with our reward principles and delivery of our strategy. The strategic measures are
aligned to the strategic framework (People, Customers, Technology and Performance). The following provides a detailed view of results in 2021:
PEOPLE
Improve safety and employee engagement
Priority for 2021
High standards of
leadership driving
a best-in-class
behavioural safety
culture.
Target
• Maintain Total Incident Rate (TIR) at 0.5.
• Develop and launch advanced Safety, Health and
Result
• TIR of 0.45.
• Advanced SHE training designed – launch
Score out
of 7.5%
6.0%
Environment (SHE) training.
• New ISO45001 accreditation achieved at 12 sites.
Improve organisational
effectiveness.
• Business unit capability plans delivered.
• Deliver Discovery phase 2 on budget.
• Create and implement Digital Learning campaign.
deferred to 2022. Alternate non-mandatory
SHE training completed and Group wellbeing
initiatives launched company wide.
• 21 sites ISO45001 accredited.
• Executed programmes to delivery key
organisational capabilities.
• Discovery phase 2 delivered on time and
budget; went live on 30 August 2021.
• Digital bootcamps and online learning
rolled out.
Continue and extend
the Weir culture and
develop the voice of
the employee.
• Global affinity groups launched.
• Improve the % of females in senior job bands
• Launched global affinity groups.
• Increased women in senior management
by 4%.
bands by 4%.
• Improve overall mean employee engagement score.
• Improved mean employee engagement
score to outperform top quartile
manufacturing benchmark.
CUSTOMER
Outgrow our markets through the cycle
Priority for 2021
Enhance global
capabilities and
customer intimacy.
Target
• Establish four new service centres, one co-
located between Minerals and ESCO.
• Secure $12m from dealer sales that have been
Result
• Five service centres established and two
centres co-located between Minerals
and ESCO.
Score out
of 7.5%
7.5%
transitioned to direct sales.
• $14m direct sales secured.
Increase customer
focused partnerships
and collaboration.
Respond to Voice of
Customer (VoC).
• Implement five new service agreements.
• RoW infrastructure sales of $13.5m.
• Implemented 31 new service agreements.
• RoW infrastructure sales of $16.4m.
• Deliver 10% improvement in customer
• 20% improvement in customer satisfaction
satisfaction (Net Promoter Score – NPS).
(NPS).
• Define and implement custom supply chains with
• Two custom supply chains implemented.
two key customers.
138
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 TECHNOLOGY
Increase investment in research and development as a proportion of revenues and grow sustainable solutions
Priority for 2021
Progress
commercialisation of
Weir Digital offering.
Target
• Deploy Emergent Technology Assessment tool
to maximise the impact of technology scouting
and R&D activities and minimise the risk of
technology disruption over the medium term.
• All new HPGR, crushers, GEHO and large MC
pumps Tier 1 Synertrex enabled.
• Deliver additional ToolTek sales (two units) and
successful implementation support.
Result
• Initial technology assessment developed
and deployed in line with revised roll out
plan following the cyber incident.
• Agreed Tier 1 Synertrex enabled.
• One additional ToolTek unit delivered.
Score out
of 7.5%
6.7%
Innovate products
and solutions
that address our
customers’ biggest
challenges.
• Develop automated products-in-use benefit
• Initial assessments of product use-
evaluation process and revenue from sustainable
products/solutions tracking.
• Build sustainable innovation hopper by initiating at
least four new water saving or energy projects.
phase emissions and embodied carbon
completed. Revenue tracked for FTSE
Green Revenues benchmark.
• Four new water and energy savings
• 150 Nemisys® upgrades/conversions.
projects in progress.
Protect and
extend our core
through materials,
manufacturing
and process
advancement.
• Develop and deploy Design for Additive
Manufacturing with Metals (DfAM) training to
40 Design Engineers to increase our additive
manufacturing capability.
• Complete final version of MC3 450 size
and launch.
• Initiate two field trials for next generation
products with collected machine data.
• 215 Nemisys® upgrades/conversions.
• Training developed, but actively deferred
to 2022 for some employees due to
cyber incident.
• Successful MC3 450 prototype trials.
• One field trial signed and two verbal
agreements in place.
PERFORMANCE
Increase our operating margins by 150bps by 2023 and cut CO2e by 30% by 2024
Priority for 2021
Improve operational
performance.
Target
• Increase OTD by 3% overall.
• 5% reduction in Newton cost per ton.
• Complete IS&T transformation programme in line
with business case.
Result
• OTD regression of 8%.
• 5% increase in Newton cost per ton due to
Score out
of 7.5%
5.5%
high inflation in raw material costs.
• Programme reprioritised and accelerated to
address cyber priorities.
Realise benefits of
Group portfolio.
• Define Group operating model post sale of Oil &
Gas Division and have a developed strategy and
implementation plan.
• Strategy and implementation plan
developed to deliver a constant currency
operating margin of 17% by year-end FY23.
• Successful execution of Oil & Gas post-closing
• Successfully completed the sale of Oil &
activities to optimise value preservation.
• ESCO to achieve $10m revenue synergies
with Minerals.
Gas Division.
• Realised ESCO acquisition revenue
synergies aligned with business plan.
Deliver against
Reducing
our Footprint
sustainability priority.
• Reduce Minerals and ESCO combined scope 1&2
carbon footprint by 5% vs 2019 benchmark.
• Complete benchtop scope 3 study to identify
biggest contributors to our total CO2 footprint and
launch workstreams to address top two findings.
• 14.7% absolute and 15.4% intensity CO2e
reductions (per £m revenue in constant
currency vs 2019).
• Scope 3 study completed. Workstreams
launched to address the largest scope 3
emissions sources and a deep-dive
assessment of product CO2 footprints.
Total Achievement
25.7% out
of 30%
139
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
SCHEME INTERESTS AWARDED DURING 2021 (AUDITED)
The following table sets out awards granted to the Executive Directors in the year ending 31 December 2021.
Share award
Restricted Share (Conditional)1
Jon Stanton
John Heasley Restricted Share (Conditional)1
Award basis
125% salary
100% salary
Grant date
8 Apr 2021
8 Apr 2021
Face value of award
at maximum vesting2
£885,000
£436,000
No. of shares granted
48,422
23,855
Notes
1 There are no performance periods associated with the restricted share awards. Vesting of the restricted share awards will be phased over a five-year period: 50% after three years, and 25%
after each of years 4 and 5 following grant. An additional two-year holding period will also apply to each of the tranches vesting such that 50% of vested shares from an award are released five
years from grant, 25% are released after six years and the final 25% is released after seven years.
2 The face value of the restricted share award is based on the average of the closing price for the three days prior to the date of grant, being £18.2767.
Vesting of the 2021 restricted share award is subject to continued employment and assessment of the underpin. Prior to vesting, if any of the
thresholds set out below have not been met, it would trigger the Committee to consider whether a discretionary adjustment was required.
Balance sheet health
Breaching covenants
No breach of debt covenant or renegotiation of covenant terms outside a normal refinancing cycle.
Investor returns
Return on Capital Employed (ROCE)
Maintain average ROCE over the vesting period above the average Weighted Average Cost of Capital for that period.
Environmental, social
and governance (ESG)
Sustainability Roadmap progress
Awarded a B listing or better by CDP through the vesting period in recognition of climate change contribution.
Corporate
governance
Major governance failure
No material failure in governance or an illegal act resulting in significant reputational damage and/or material financial
loss to the Group.
SINGLE TOTAL FIGURE OF REMUNERATION FOR CHAIRMAN AND NON-EXECUTIVE DIRECTORS (AUDITED)
Senior Independent
Director/Employee
Engagement Non-Executive
Director/Committee Chair
Fee (£)
2021
2020
16,775
16,400
16,775
13,500
16,400
13,200
Basic Fee (£)
Taxable Benefits4 (£)
Total Fees (£)
Charles Berry1
Clare Chapman
Engelbert Haan
Mary Jo Jacobi
Barbara Jeremiah
Ben Magara2
Sir Jim McDonald
Srinivasan Venkatakrishnan3
Stephen Young
2021
321,750
64,325
64,325
64,325
64,325
61,261
64,325
61,261
64,325
2020
262,500
62,900
62,900
62,900
62,900
62,900
2021
549
84
2020
802
821
324
690
2021
322,299
81,100
64,325
81,100
77,909
61,261
64,325
61,261
81,100
2020
262,500
80,102
63,721
79,624
76,790
62,900
81,163
62,900
16,775
16,400
1,863
Notes
1 Charles Berry waived his fees for two months in 2020 and requested the fees instead be donated on a charitable basis to the Solidarity Fund in South Africa and the Prince and Princess of
Wales Hospice in the UK.
2 Ben Magara was appointed to the Board on 19 January 2021.
3 Srinivasan Venkatakrishnan was appointed to the Board on 19 January 2021.
4 Taxable benefits includes travel and accommodation to attend Board meetings.
No payments were made to past Directors.
140
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)
Shares owned
outright1
Scheme Interests
As at 31 December 2021
Conditional
without
performance
conditions Vested in 20212
26,432
13,121
–
–
–
–
–
211,461
104,157
–
–
–
–
–
Current
shareholding
(% of salary)3
326%
265%
–
–
–
–
–
Current
shareholding
including
scheme
interests
without
performance
conditions
(% of salary)4
590%
473%
–
–
–
–
–
Shareholding
requirement
(% of salary)
400%
300%
–
–
–
–
–
–
–
–
–
–
–
–
With
performance
conditions
–
–
–
–
–
–
–
–
–
–
–
134,812
67,626
2,145
456
1,000
5,000
3,250
–
500
500
5,883
Jon Stanton
John Heasley
Charles Berry
Clare Chapman
Engelbert Haan
Mary Jo Jacobi5
Barbara Jeremiah
Ben Magara
Sir Jim McDonald
Srinivasan Venkatakrishnan
Stephen Young
Notes
1 Shares owned outright includes the net-of-tax shares which vested in 2021.
2 Vested in 2021 reflects the gross shares vesting in 2021.
3 Current shareholding percentage is calculated using the share price of £17.11 as at 31 December 2021.
4 The values of scheme interests are on an estimated net-of-tax basis.
5 Mary Jo Jacobi’s interest in 5,000 shares shown above is through her holding of 10,000 American Depository Receipts (ADRs). One ADR being equivalent to 0.5 ordinary shares.
There have been no changes in the interests of each Director between 31 December 2021 and the date of this Report.
EXTERNAL APPOINTMENTS
During the year Jon Stanton was a Non-Executive Director of Imperial Brands PLC. He received £112,125 in fees. John Heasley was a Non-
Executive Director of Royal Scottish National Orchestra Society Limited. He received no fees.
CEO PAY RATIO
The table below shows our CEO pay ratio at 25th, median and 75th percentile of our UK employees as at 31 December 2021. The ratios for
2021, 2020 and 2019 have been determined using Option A of the regulations given Option A is the most robust approach and preferred by
Shareholders. In 2018, the ratios were calculated based on the single total figure of remuneration for Jon Stanton and the total pay for the
employees based on our gender pay gap data under Option B of the regulations. The increase in the pay ratio from 2020 to 2021 is primarily
due to i) the payment of an annual bonus for 2021 to the CEO following the 2020 annual bonus being waived by the CEO and ii) the year-on-year
build-up of vests from the new restricted share awards introduced from 2018 onwards. We are satisfied that the median pay ratio is consistent
with the pay, reward and progression policies for our UK employees.
Financial year
2021
2020
2019
2018
Total pay
Base Salary
Calculation Method
Option A
Option A
Option A
Option B
Jon Stanton
£1,767,564
£702,750
25th percentile pay ratio
53:1
27:1
56:1
75:1
Median pay ratio
42:1
22:1
44:1
66:1
25th percentile
£33,250
£21,910
Median
£42,070
£34,920
75th percentile pay ratio
30:1
17:1
34:1
53:1
75th percentile
£58,069
£52,788
Notes
Total pay for the percentile employees includes the following pay elements: base salary, holiday pay, annual leave adjustment, shift premium and allowance, sick pay, overtime pay, first aid
allowance, living allowances, employer pension contribution and the provision of private medical and life assurance.
No annual bonus or long-term incentive/restricted share award was payable to the employees at the percentiles. We have uprated pay for part-time employees and new joiners accordingly to
calculate full-time equivalent total pay.
We offer competitive and fair rates of pay across the organisation, and employees are eligible to participate in our global all employee share plan, Weir ShareBuilder.
141
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
GENDER PAY
For 2021, our mean gender pay gap has stayed broadly flat when compared to 2020, moving from 1% to -3%. Similarly, our median gender pay
gap moved marginally from -15% to -14%. Whilst our outcomes show we are generally well positioned on gender pay, we recognise that this is
largely due to the high number of males who are working in lower paid production and field roles. We have continued to take action to appoint
more senior females since the 5 April 2021 gender pay gap snapshot date and therefore increase the number of females in management and
leadership roles. The gender bonus gap for 2021 has moved significantly in favour of females due to the payment of a £100 discretionary award
to all employees in March 2021 and the first vesting of our 2019 ShareBuilder award in May 2020. Whilst these were both gender agnostic
payments, given the mainly male profile of our UK workforce it significantly impacts both the mean and median bonus for males. A copy of the
full Gender Pay report can be found on our website www.genderpay.weir
THE REQUIREMENTS AND OUR OUTCOMES
The UK Government’s Gender Pay Gap Regulation requires legal entities with 250 or more employees to publish details of their gender pay and
bonus gap. In Weir, there is one employing entity required to publish this data, but we have taken the opportunity to publish the consolidated data
for our UK employees as this is more representative of our UK organisation.
GENDER PAY AND EQUAL PAY
The gender pay gap is different from equal pay, which relates to men and women being paid the same for similar roles or work of equal value.
Our pay policies are designed to ensure equal pay for equal jobs and we have processes in place to ensure pay levels are reviewed consistently.
MEAN AND MEDIAN PAY AND BONUS GAP
Gender pay gap
Gender bonus gap
PROPORTION OF MALES AND FEMALES RECEIVING A BONUS
Male
Female
PROPORTION OF MALES AND FEMALES IN EACH PAY QUARTILE BAND
Upper
Upper middle
Lower middle
Lower
Mean
-3%
-106%
Male
71%
77%
83%
80%
Median
-14%
-940%
96%
92%
Female
29%
23%
17%
20%
HISTORICAL TSR PERFORMANCE
The graph below shows Weir’s TSR performance against the performance of the FTSE 350 over the 10-year period to 31 December 2021.
The FTSE 350 was chosen because it is a broad equity index of which Weir is a constituent.
250
200
150
100
50
0
142
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
The Weir Group
FTSE 350
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 CHANGE IN CHIEF EXECUTIVE’S REMUNERATION OVER TEN YEARS
The table below shows the total remuneration over the period 1 January 2012 to 31 December 2021, as well as outcomes under the annual
bonus and long-term incentive plans.
Single total figure £000
Jon Stanton
Keith Cochrane
Annual bonus
(% of maximum)
Jon Stanton
Keith Cochrane
Long-term incentive
(% of maximum)4
Jon Stanton
Keith Cochrane
2012
–
3,363
2012
–
54%
2012
–
100%
2013
–
1,787
2013
–
10%
2013
–
43%
2014
–
1,456
2014
–
61%
2014
–
0%
2015
–
1,065
2016
2811
1,0122
2015
–
20%
2015
–
0%
2016
38%
40%
2016
0%
0%
2017
1,441
–
2017
70%
–
2017
0%
–
2018
2,400
–
2018
62%
–
2018
75%
–
2019
1,434
–
2019
38%
–
2019
45%
–
2020
897
–
2020
0%3
–
2020
–
–
2021
1,768
–
2021
52%
–
2021
–
–
Notes
1 Relates to the period Jon Stanton was CEO from 1 October 2016.
2 Relates to the period Keith Cochrane was on the Board to 30 September 2016.
3 The formulaic annual bonus outcome for 2020 was 46%, however, this was waived by the Executive Directors.
4 The final award under the long-term incentive plan was made in 2017 and which vested at 45% of maximum in 2019 as shown above. From 2018, restricted shares were awarded to the CEO
which have no performance conditions and the value of which at vest are included in the single total figure table in the relevant year.
PERCENTAGE CHANGE IN REMUNERATION OF BOARD DIRECTORS AND WIDER EMPLOYEE POPULATION
The table below shows the percentage change in elements of remuneration for the Board Directors relative to the previous year.
The employee population comprises those employed by The Weir Group PLC.
All Weir Group PLC Employees
Jon Stanton (CEO)
John Heasley (CFO)
Charles Berry1
Clare Chapman
Ebbie Haan
Mary Jo Jacobi
Barbara Jeremiah
Ben Magara2
Sir Jim McDonald
Srinivasan Venkatakrishnan3
Stephen Young
Salary/Fees
Taxable Benefits4
Bonus4
2021
0.2%
2.3%
2.3%
22.6%
2.3%
2.3%
2.3%
2.3%
–
2.3%
–
2.3%
2020
(3.3%)
0.7%
0.7%
(16.1%)
0.7%
15.6%
0.7%
21.8%
–
0.7%
–
0.7%
2021
26.6%
0.5%
(1.3%)
n/a
(100.0%)
(100.0%)
(100.0%)
(87.8%)
–
0.0%
–
(100.0%)
2020
(36.6%)
28.3%
7.2%
(100.0%)
n/a
n/a
(92.4%)
n/a
–
n/a
–
n/a
2021
73.6%
n/a
n/a
–
–
–
–
–
–
–
–
–
2020
(65.4%)
(100.0%)
(100.0%)
–
–
–
–
–
–
–
–
–
Notes
1 Charles Berry waived his fees for two months in 2020 and requested the fees instead be donated on a charitable basis to the Solidarity Fund in South Africa and the Prince and Princess of
Wales Hospice in the UK.
2 Ben Magara was appointed to the Board on 19 January 2021.
3 Srinivasan Venkatakrishnan was appointed to the Board on 19 January 2021.
4 The n/a values shown reflect that a % change cannot be calculated given the nil value in the previous year. The Single Total Figure of Remuneration for Executive Directors on page 137 and the
Single Total Figure of Remuneration for Chairman and Non-Executive Directors on page 140 provide further detail.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the change in total staff pay for continuing operations between 2021 and 2020, and dividends paid out in respect of 2021
and 2020.
Financial year
Overall spend on pay for employees
Profit distributed by way of dividend
2021
£m
509.7
29.8
2020
£m
489.1
–
Percentage
Change
4.2%
n/a
Details of the overall spend on pay for employees can be found in note 4 to the Group financial statements on page 181. Details of the dividends
declared and paid are contained in note 10 to the Group financial statements on page 188.
143
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REMUNERATION REPORT
CONTINUED
THE REMUNERATION COMMITTEE
The Remuneration Committee in 2021
There were four Committee meetings during 2021 and all Committee members attended the meetings they were eligible to attend.
Role
Chair and members
Internal attendees
Name
Clare Chapman
Ebbie Haan
Mary Jo Jacobi
Barbara Jeremiah1
Ben Magara2
Stephen Young
Charles Berry
Jon Stanton
Rosemary McGinness
Craig Gibson
Graham Vanhegan
Title
Independent Non-Executive Directors
Chairman
Chief Executive Officer
Chief People Officer
Group Head of Reward
Chief Legal Officer and Company Secretary and Secretary to
the Committee
Committee’s external adviser
Deloitte LLP
Adviser to Committee
Notes
1 Until 30 April 2021.
2 From 30 April 2021.
Internal advisers provided important information to the Committee and attended meetings. None of the individuals were involved in any decisions
relating to their own remuneration.
Deloitte LLP was appointed by the Committee in 2016 following a competitive tender process, and provided services to the Committee for the
year ended 31 December 2021. Fees paid to Deloitte LLP for work that materially assisted the Committee were £214,250, charged on a time
and material basis. Deloitte LLP also provided other services to the Weir Group in the year, principally tax advisory and compliance services.
Deloitte is a signatory to the Remuneration Consultants’ Group Voluntary Code of Conduct and the Committee is satisfied that Deloitte’s advice
was objective and independent.
MAIN ACTIVITIES
Over the course of the year since the last Annual Report, the Committee’s work has been focused on:
• Continued response to Covid-19 situation, including the reinstatement of bonus for 2021 and the vesting of restricted shares in 2022 taking
into account Shareholder concerns on 'windfall gains' from the 2020 award.
• External benchmarking of Executive Director remuneration incorporating base salary, annual bonus and long-term incentive – both quantum
and structures.
• Alignment of Executive Director pension with the wider UK workforce and the broader investment in employee pension provision as a result.
• Wider global workforce activity including the commencement of a global benefits programme of work, retirement provision benchmarking
across various of our geographies, global gender and equal pay analysis.
• 2021 annual bonus outcomes.
• 2022 salary review for Executive Directors and Group Executives.
• 2022 Chair’s fees.
• Group Executive shareholdings.
• Remuneration Policy implementation in 2022 and proposed minor refinements to Remuneration Policy from 2022 – and associated
consultation with Shareholders.
COMMITTEE’S PERFORMANCE
The Committee’s Terms of Reference are reviewed on an annual basis and were last updated in January 2022. A copy can be found on our
website www.corporategovernance.weir.
The Committee was evaluated as part of the 2021 Board Effectiveness Review, and it was concluded that the Committee was fulfilling its terms
of reference effectively.
144
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 SHAREHOLDING VOTING
The table below sets out the voting by Shareholders on the resolution to approve the Directors’ Remuneration Report at the AGM held in April 2021.
Remuneration Report
For
204,051,550
(97.01%)
Against
6,299,796
(2.99%)
Total Votes Cast
210,351,346
(81.03%)
Withheld
13,715
The table below sets out the voting by Shareholders on the resolution to approve the current Directors’ Remuneration Policy at the AGM held in
April 2021.
Remuneration Policy
For
202,157,431
(96.11%)
Against
8,185,797
(3.89%)
Total Votes Cast
210,343,228
(81.02%)
Withheld
21,833
ANNUAL GENERAL MEETING
This report and our proposed renewal of the existing Remuneration Policy will be submitted to Shareholders for approval at the Annual General
Meeting to be held on 28 April 2022.
CLARE CHAPMAN
Chair of Remuneration Committee
2 March 2022
145
The Weir Group PLC Annual Report and Financial Statements 2021Governance DIRECTORS’ REPORT
The Directors present their report for the year ending
31 December 2021.
2022 ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 28 April 2022 at 2.30 pm.
The Directors’ Report includes the Corporate Governance Report from
pages 81 to 149, together with the sections of the Annual Report
incorporated by reference.
The Company has chosen to disclose the following information in the
Strategic Report on pages 2 to 80:
• Particulars of any important events, if any, affecting the Company
which have occurred since the end of the financial year.
• An indication of likely future developments in the business of
the Company.
• An indication of the activities of the Company in the field of research
and development.
• Details of employee policy and involvement (page 26).
• Information on greenhouse gas emissions (pages 60-61).
• Principal risks and uncertainties (pages 74 to 80).
• In compliance with their duties under s.172 of the Companies
Act 2006, the Directors have described how they have worked
to foster the Company’s business relationships with suppliers,
customers and others, and the effect of that on principal decisions
taken, in the Strategic Report (pages 2 to 80) and in the Corporate
Governance Report (pages 81-149). The Board decisions table
on pages 94-95 demonstrates the key decisions made by the
Board, the stakeholders affected and the strategic factors taken
into consideration.
The Strategic Report and the Directors’ Report constitute the
management report as required under the Disclosure and Transparency
Rule 4.1.5R.
Information to be disclosed under the Listing Rule 9.8.4 is set out in
the table below.
Subject matter
Waiver of emoluments
(LR 9.8.4(5))
Waiver of future emoluments
(LR 9.8.4(6))
Waiver of dividends
(LR 9.8.4(12))
Page reference
140
137
147
Paragraphs (1), (2), (4), (7), (8), (9), (10), (11), (13) and (14) of Listing Rule 9.8.4 are not applicable.
Details of Directors’ beneficial and non-beneficial interests in the
shares of the Company are shown on page 141 of the Directors’
Remuneration Report. There have been no changes in the interests of
each Director between 31 December 2021 and the date of this Report.
This Annual Report has been prepared for, and only for, the members
of the Company, as a body, and no other persons. The Company, its
Directors, employees, agents and advisers, do not accept or assume
responsibility to any other person to whom this document is shown or
into whose hands it may come, and any such responsibility or liability
is expressly disclaimed. This Annual Report may contain statements
which are not based on current or historical fact and/or which are
forward-looking in nature. Please refer to the cautionary statement on
page 253.
COMPANY NUMBER
The Weir Group PLC is registered in Scotland under company
number SC002934.
146
The Notice of Meeting, along with an explanation of the proposed
resolutions, are set out in a separate document which accompanies
this Annual Report and can be downloaded from the Company’s
website. The Company conducts the vote at the AGM by poll and the
result of the votes, including proxies, is published on the Company’s
website after the meeting.
DIVIDEND
The Directors have recommended a final dividend of 12.30p per share
for the period ended 31 December 2021. Payment of this dividend is
subject to shareholder approval at the 2022 AGM.
SUBSTANTIAL SHAREHOLDERS
As at 31 December 2021 and up to the date of this Report, the
following information has been received, in accordance with DTR 5,
from holders of notifiable interests in the Company’s issued share
capital. The information provided below was correct at the date of
notification; however, the date of receipt may not have been within
the current financial year. It should be noted that these holdings are
likely to have changed since the Company was notified. However,
notification of any change is not required until the next notifiable
threshold is crossed:
Shareholder
BlackRock, Inc.
Sprucegrove Investment Management Ltd 12,898,529
Black Creek Investment Management Inc. 10,542,710
Number of
voting rights
Number of
voting rights
%
Below 5% Below 5%
4.97%
4.06%
Between 31 December 2021 and 1 March 2022, the Company was notified of the following
changes to the table above.
TR-1 received from Massachusetts Financial Services Company on 12 January 2022.
Number of voting rights 13,229,067. Percentage of voting rights 5.09%.
EMPLOYMENT POLICY AND INVOLVEMENT
The average number of employees in the Group during the year is
given in note 4 to the Group financial statements on page 181.
Group companies operate within a framework of HR policies, practices
and regulations appropriate to their market sector and country of
operation. Policies and procedures for recruitment, training and career
development promote equality of opportunity regardless of gender,
sexual orientation, age, marital status, disability, race, religion or
other beliefs and ethnic or national origin. At Weir, we strive to build
an inclusive culture in which all employees have the opportunity to
succeed and to be able to do the best work of their lives. The Group
remains committed to the fair treatment of people with disabilities
regarding recruitment, training, promotion and career development.
Meaningful dialogue with our employees is actively encouraged.
Further details are included on page 26. As at 31 December 2021,
there were 11,428 people employed by the Group of whom 1,907
were female, 9,514 were male and seven did not disclose their
gender. As at 31 December 2021, there were 11 Directors of The
Weir Group PLC Board, eight of whom were male and three were
female. Excluding the Executive Directors, there were 39 males and
16 females in our senior management team, which includes statutory
Directors of corporate entities,
FINANCIAL INSTRUMENTS
The information required in respect of financial instruments as required
by Schedule 7 of The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 is given in note 29 to the
Group financial statements on pages 216-222.
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 SHARE CAPITAL AND RIGHTS ATTACHING TO THE
COMPANY’S SHARES
Details of the issued share capital of the Company, which comprises a
single class of ordinary shares of 12.5p each are set out in note 24 to
the Group financial statements on page 210. The rights attaching to the
shares are set out in the Company’s Articles of Association. There are
no special control rights in relation to the Company’s shares and the
Company is not aware of any agreements between Shareholders
that may result in restrictions on the transfer of securities and/or
voting rights.
During the period, no ordinary shares were issued.
The Group has a nominee arrangement with Computershare Investor
Services PLC (the ‘Computershare Nominee’) and employee benefit
trusts with Estera Trust (Jersey) Limited (the ‘Estera EBT’) and
Computershare Trustees (Jersey) Limited (the ‘Computershare EBT’).
During the period, the Estera EBT purchased 28 shares in the
market at an aggregate value of £546.09 and had 6 shares returned
by Computershare Nominee relating to a duplicate vesting under
the All-Employee Share Ownership Plan (the ‘ShareBuilder plan’).
The Computershare EBT purchased 846,336 shares in the market
at an aggregate value of £15,091,978.09 on behalf of the Company
for satisfaction of any future vesting of the awards granted under
the Share Reward Plan, the ShareBuilder plan and the ESCO Stock
Incentive Plan (the ‘ESCO’ plan). The Computershare EBT had 1,578
shares returned from Computershare Nominee relating to incorrect
vestings from the ShareBuilder plan.
During the period, the SRP vested and the trustees of the Estera EBT
transferred 16,022 ordinary shares to employees to satisfy the SRP
awards. The Computershare EBT transferred 783,833 ordinary shares
to employees to satisfy the SRP awards and transferred 5,049 shares
to Computershare Nominee to be held on behalf of participants and
subject to the rules of the SRP Deferred Bonus Plan.
During the period, the ESCO plan vested and the trustees of the
Computershare EBT transferred 35,984 ordinary shares to employees
to satisfy the ESCO awards.
During the period, the ShareBuilder plan vested and the trustees of the
Computershare EBT transferred 85,398 ordinary shares to employees
to satisfy the ShareBuilder plan awards.
Both the Estera EBT and Computershare Nominee agreed to waive
any right to all dividend payments on shares held by them with
the exception of shares held in respect of awards which have a
dividend entitlement.
Details of the shares held by the Computershare Nominee, the
Computershare EBT and the Estera EBT are set out in note 24 to the
Group financial statements on page 210.
The 694,230 shares held in the Computershare Nominee are the
shares in respect of which dividends have not been waived. 110,648
shares held in the Computershare Nominee are subject to post
vesting restrictions.
The Estera EBT held none of the issued share capital of the Company
as at 31 December 2021.
The Computershare EBT held, through nominee account
Computershare Nominees (Channel Islands) Limited, 0.11% of the
issued share capital of the Company as at 31 December 2021. This is
held in trust on behalf of the Company for satisfaction of any future
vesting of the awards granted under, the SRP, and ShareBuilder Plans.
The Computershare Nominee held 0.27% of the issued share capital
of the Company as at 31 December 2021. The shares are held on
behalf of employees and former employees of the Group.
The voting rights in relation to these shares are exercised by the
trustees. The Estera EBT may vote or abstain from voting with the
shares or accept or reject any offer relating to shares, in any way they
see fit, without incurring any liability and without being required to give
reasons for their decision.
REPURCHASE OF SHARES
At the 2021 Annual General Meeting, Shareholders renewed the
Company’s authority to make market purchases of up to 25.9m
ordinary shares (representing approximately 10% of the issued
share capital excluding treasury shares). No shares were purchased
under this authority during the year ended 31 December 2021. 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 at the same level.
VOTING RIGHTS
The Company’s Articles of Association provide that on a show of hands
at a general meeting of the Company, every holder of ordinary shares
present in person and by proxy 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 AGM specifies deadlines for exercising voting rights
and appointing a proxy or proxies to vote in relation to resolutions
to be passed at the AGM. The Company conducts the vote at the
AGM by poll and the result of the poll will be released to the London
Stock Exchange and posted on the Company’s website as soon as
practicable after the meeting.
The Articles of Association may only be amended by a special
resolution passed at a general meeting of Shareholders.
TRANSFER OF SHARES
There are no restrictions on the transfer of ordinary shares in the
Company, other than as contained in the Articles of Association:
• The Directors may refuse to register any transfer of any certificated
share which is not fully paid up, provided that this power will not be
exercised so as to disturb the market in the Company’s shares.
• The Directors may also refuse to register the transfer of a
certificated share unless it is delivered to the Registrar’s office, or
such other place as the Directors have specified, accompanied by a
certificate for the shares to be transferred and such other evidence
as the Directors 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, in relation to the transfer
of shares.
APPOINTMENT AND REPLACEMENT OF DIRECTORS
The provisions about the appointment and re-election of Directors of
the Company are contained in the Articles of Association.
POWERS OF DIRECTORS
The business of the Company is managed by the Directors who may
exercise all the powers of the Company, subject to the provisions of
the Company’s Articles of Association, any special resolution of the
Company and any relevant legislation.
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CONTINUED
DIRECTORS’ 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 2006 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’ and Officers’ liability insurance.
PENSION SCHEME INDEMNITIES
The Group operates a closed defined benefit pension scheme in
the UK which provides retirement and death benefits for employees
and former employees of the Group: The Weir Group Pension and
Retirement Savings Scheme. The corporate trustee of the pension
scheme is The Weir Group Pension Trust Limited, a subsidiary of The
Weir Group PLC. Qualifying pension scheme indemnity provisions, as
defined in section 235 of the Companies Act 2006, were in force for
the financial year ended 31 December 2021 and remain in force for
the benefit of each of the Directors of The Weir Group Pension Trust
Limited. These indemnity provisions cover, to the extent permitted by
law, certain losses or liabilities incurred as a Director or officer of the
corporate trustees of the pension schemes.
CHANGE OF CONTROL – SIGNIFICANT AGREEMENTS
The following significant agreements contain provisions entitling the
counterparties to require prior approval, exercise termination, alteration
or similar rights in the event of a change of control of the Company.
The Group has in place a US$950m multi-currency revolving credit
facility (the ‘Facility’) with a syndicate of 12 banks due to mature in
June 2023. Under the terms of this Facility, if there is a change of
control of the Company, the Company has 30 days from the date of
the change of control to agree terms for continuing the Facility.
If at the end of the 30 days no agreement is reached between
the Company and the banks, then any lender may request, by not
less than 30 days’ notice to the Company, that its commitment be
cancelled and all outstanding amounts be repaid to that lender at the
expiry of such notice period.
The Company has in issue fixed-rate private placement notes with
a range of maturities: US$590m at an interest rate of 4.27% due on
16 February 2022 and US$200m at an interest rate of 4.34% due on
16 February 2023. Under the terms of the applicable note purchase
agreements, if there is a change of control of the Company, the notes
must be offered for prepayment by the Company within seven days of
the change of control.
The Company also has issued $800m Sustainable Linked Bond Notes.
If a Change of Control Repurchase Event occurs, the Company will be
required to make an offer to each Holder of the Notes to repurchase
all or any part of the Notes of such Holders at a repurchase price in
cash equal to 101% of the aggregate principal amount of the Notes
repurchased, plus any accrued and unpaid interest on the Notes
repurchased to, but not including, the date of repurchase. A Change
of Control Repurchase Event means the occurrence of both a Change
of Control and a Rating Event.
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.
148
CONFIRMATIONS
So far as each of the Directors is aware, there is no relevant audit
information (as defined by section 418 of the Companies Act 2006)
of which the Company’s auditors are unaware.
Each of the Directors has taken all of the steps that he or she ought
to have taken as a Director to make themselves aware of any relevant
audit information and to establish that the Company’s auditors are
aware of that information.
GOING CONCERN
These financial statements have been prepared on the going
concern basis.
As discussed in the Chief Executive Officer’s review the Group has
seen strong economic recovery in its mining end markets during 2021.
This coupled with the range of prudent cost management and cash
preservation actions taken, predominantly in 2020, in order to protect
the business has resulted in the impact of Covid-19 being relatively
limited for the Group.
In spite of an increasingly challenging global logistical and inflationary
backdrop our mining businesses have continued to be highly resilient
and profitable during 2021, while the sale of our Oil & Gas business on
1 February 2021 for an enterprise value of US$405m further reduced
our net debt. In May 2021, the Group also completed the issue of
five-year US$800m Sustainability-Linked Notes securing increased
levels of liquidity and extended maturity, while effectively replacing
the Group’s private placement debt which is due for settlement
in February 2022 and February 2023 as discussed in the Financial
review. These refinancing actions plus the reduction in net debt
in the period, resulted in the Group having £1.2bn of immediately
available committed facilities and cash balances at 31 December 2021,
reducing to c.£800m following the maturity of US$590m of US Private
placement debt in February 2022.
Given current levels of macroeconomic uncertainty stemming from
Covid-19, inflation, the global supply chain crisis and geopolitical risks,
the Group performed financial modelling of future cash flows, which
cover a period of 12 months from the approval of the 2021 Annual
Report. The financial modelling included reverse stress testing which
focused on the level of downside risk which would be required for
the Group to breach its current lending facilities (note 19) and related
financial covenants (note 30). The review indicated that the Group
continues to have sufficient headroom on both lending facilities and
related financial covenants. The circumstances which would lead
to a breach are not considered plausible.
The Directors, having considered all available relevant information,
have a reasonable expectation that the Group has adequate resources
to continue to operate as a going concern.
The Directors’ Report has been approved by the Board of Directors in
accordance with the Companies Act 2006.
On behalf of the Board of Directors
GRAHAM VANHEGAN
Chief Legal Officer and Company Secretary
2 March 2022
GovernanceThe Weir Group PLC Annual Report and Financial Statements 2021 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have prepared
the Group financial statements in accordance with UK-adopted
international accounting standards and the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’, and
applicable law).
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or
loss of the Group for that period. In preparing the financial statements,
the Directors are required to:
• Select suitable accounting policies and then apply
them consistently;
• State whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS 101
have been followed for the Company financial statements,
subject to any material departures disclosed and explained in the
financial statements;
• Make judgements and estimates that are reasonable and prudent;
• Prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to
ensure that the financial statements comply with the Companies
Act 2006.
Each of the Directors, as at the date of this report, confirms to the best
of their knowledge that:
• the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities, financial position
and profit of the Group;
• The Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising
FRS 101, give a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
• The Strategic Report and the Directors’ Report include a fair review
of the development and performance of the business and the
position of the Group and Company, together with a description of
the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ Report
is approved:
• So far as the Director is aware, there is no relevant audit information
of which the Group’s and Company’s auditors are unaware; and
• They have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and Company’s
auditors are aware of that information.
On behalf of the Board of Directors
JON STANTON
Chief Executive Officer
2 March 2022
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
JOHN HEASLEY
Chief Financial Officer
2 March 2022
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for Shareholders to assess the
Group’s performance, business model and strategy.
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The Weir Group PLC Annual Report and Financial Statements 2021Governance INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF THE WEIR GROUP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
In our opinion:
• The Weir Group PLC’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of
the state of the Group’s and of the Company’s affairs as at 31 December 2021 and of the Group’s profit and the Group’s cash flows for the year
then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements 2021 (the “Annual Report”), which
comprise: the Consolidated and Company Balance Sheets as at 31 December 2021; the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Cash Flow Statement, and the Consolidated and Company Statements of Changes in
Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 4 of Notes to the Group Financial Statements, we have provided no non-audit services to the Company or its
controlled undertakings in the period under audit.
OUR AUDIT APPROACH
Context
The Group is organised into two continuing Divisions: Minerals and ESCO. On 1 February 2021, the Group completed its disposal of the majority
of the Oil & Gas Division, and the disposal of the Group’s shareholding in the remaining joint venture in the Oil & Gas Division was completed
on 30 June 2021. Having previously announced the sale in the prior year, the Oil & Gas Division has been treated as a discontinued operation in
both the current and prior year. Each continuing division conducts its business in a number of locations around the world. Many of the business
locations (or components) are of a similar size, so we scoped our audit to ensure we had appropriate coverage of the Group. We included
components which accounted for the largest share of the Group’s results or where we considered there to be areas of significant risk.
Overview
Audit scope
• We conducted audit work on eleven components in nine countries. We conducted full scope audits on seven of these components, specified
scope on three components and specified procedures on the remaining one component.
• The eleven components where we performed audit work accounted for 69% of total Group revenue and 53% of adjusted profit before tax
from continuing operations.
Key audit matters
• Valuation of pension liabilities (Group and Company)
• Valuation of pension assets (Group and Company)
• Accounting for asbestos-related claims (Group)
• Valuation of deferred tax assets in the US (Group)
• Completeness, existence and accuracy of financial information following the cyber incident (Group and Company)
• Valuation of goodwill and intangible assets following the acquisition of Motion Metrics (Group)
Materiality
• Overall Group materiality: £12,445,000 (2020: £11,550,000) based on 5% of profit before tax and adjusting items from continuing operations.
• Overall Company materiality: £11,325,000 (2020: £10,500,000) based on 1% of net assets capped at 91% of Group materiality.
• Performance materiality: £9,333,750 (2020: £8,662,500) (Group) and £8,494,000 (2020: £7,875,000) (Company).
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Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Valuation of pension assets, valuation of deferred tax assets in the US, the completeness, existence and accuracy of financial information
following the cyber incident and the valuation of goodwill and intangible assets following the acquisition of Motion Metrics are new key audit
matters this year. Accounting for the disposal of the Oil & Gas Division including the tax impact, accounting for exceptional items and implications
of COVID-19, which were key audit matters last year, are no longer included because they are either no longer applicable or are not significant
audit risks. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Valuation of pension liabilities (Group and Company)
The Group operates a number of defined benefit pension plans, giving
rise to a defined benefit obligation of £1,017.3m as at 31 December
2021 (2020: £1,132.1m). In respect of the Company, there is a liability
of £830.2m (2020: £927.1m).
These balances are significant in the context of the overall Balance
Sheet of the Group and of the Company. The valuation of pension
liabilities requires judgement and technical expertise in choosing
appropriate assumptions such as discount rate, inflation and mortality.
Management engaged external actuarial experts to assist them in
selecting appropriate assumptions and to calculate the liabilities.
Inappropriate selection of assumptions or methodologies for
calculating the pension liabilities could result in a material difference
in the value of the liabilities. The use of a regulated and qualified third
party mitigates the risk to a degree, however it remains a judgemental
area with significant values involved.
We reviewed the independent actuary’s report on the assumptions
and methodology used to calculate the pension liabilities and
compliance of management’s approach with the relevant accounting
standard IAS 19 ‘Employee Benefits’ (Revised). We used our actuarial
experts to assess whether the assumptions used in calculating the
pension liabilities are reasonable by:
• assessing whether mortality assumptions are appropriate in
line with the demographics of each significant plan and, where
applicable, with UK industry benchmarks;
• verifying that the methodology of the discount and inflation rate
assumptions is in line with the accounting framework and the
position of the assumptions are within our acceptable ranges;
• performing independent testing of the roll-forward approach to
calculate the liabilities for the significant plans and compared against
management’s actuary’s results.
Based on our procedures, we concluded management’s key
assumptions individually and collectively were acceptable.
We assessed the related disclosures included in the Group and
Company financial statements and consider them to be appropriate
and in compliance with IAS 19 ‘Employee Benefits’ (Revised).
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OF THE WEIR GROUP PLC
CONTINUED
Key audit matter
How our audit addressed the key audit matter
Valuation of pension assets (Group and Company)
For the pooled investment vehicles (‘PIVs’) we:
The Group operates a number of defined benefit pension plans,
giving rise to pension assets of £960.6m as at 31 December 2021
(2020: £971.3m). In respect of the Company, pension assets are
£816.8m) (2020: £831.3m).
The significant risk relates to the complex pooled investment vehicles
and insured assets. The scheme holds investments in pooled funds
which have complex underlying investments or do not have a quoted
price. These funds are more complex in nature, comprising a mixture
of assets including private equity and derivatives. There is deemed to
be a high level of estimation uncertainty and complexity in valuing the
underlying funds given the lack of observable inputs in respect of a
number of the assets.
The UK Main scheme has insured assets of £293.2m (2020: £330.4m).
The values of these assets are set with reference to the actuarial
assumptions used to set the defined benefit obligation. Therefore, in
line with the calculation of the liabilities, these annuities are complex
and have a high degree of estimation uncertainty.
• obtained independent third party confirmations from the
Investment Managers;
• understood the PIV’s strategy and nature of the
underlying investments;
• assessed the basis and frequency of pricing; and
• assessed whether there are any restrictions on the purchase or sale
of either the underlying assets or units held by an investor which
would impact the fair value of the investment.
For the complex PIVs we performed the following, where applicable:
• requested and reviewed details of transactions close to the year
end to compare against the year end valuation;
• reviewed the controls report of the entity responsible for pricing
the investment;
• obtained and read the most recent audited financial statements of
the PIV;
• compared valuations in the audited financial statements to the
Investment Manager’s unaudited confirmations at the same date;
• for PIVs that did not have a valuation at the Balance Sheet date
understood how any capital changes (i.e. purchases, sales,
subscriptions or redemptions) in the period between the date of the
valuation (as per the confirmation) and the entity’s balance sheet
date have been accounted for; and
• evaluated the evidence obtained.
For the insured assets, we engaged our internal actuarial experts to
review the valuation of the buy-in annuity policies at 31 December
2021. Based on our procedures, we concluded that the valuation of the
assets are appropriate.
We assessed the related disclosures included in the Group and
Company financial statements and consider them to be appropriate
and in compliance with IAS 19 ‘Employee Benefits’ (Revised).
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Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Key audit matter
How our audit addressed the key audit matter
Accounting for asbestos-related claims (Group)
Total asbestos related provisions as at 31 December 2021 amounted
to £61.6m (2020: £67.7m). This consists of a provision of £58.5m
(2020: £64.5m) for the Group’s liabilities arising from asbestos-related
damages claims in the US and £3.1m in the UK (2020: £3.2m).
The valuation of the liability involves significant estimation. In arriving
at the estimate of the liability, management is required to make
assumptions which include the number and value of claims and
the time period over which the liability can be reliably measured.
As a result there is a high degree of uncertainty in this estimate
and management uses an independent actuary to assist with
this assessment.
The Group has insurance cover in place to partially offset the US
provision of £42.2m (2020: £52.4m) which is recognised within
other receivables. After deduction of the insurance asset there is
a net provision for the estimated uninsured US liability of £16.3m
(2020: £12.1m).
Valuation of deferred tax assets in the US (Group)
The disposal of the Oil & Gas Division has resulted in significant
deferred tax assets arising in the United States due to trading year
losses and the impact of steps taken to prepare for the disposal.
At 31 December 2021, this resulted in the partial recognition of
£27.3m (2020: £27.8m) of deferred tax assets to the extent they are
supported by management’s forecast of US taxable profits.
Since there is partial recognition of deferred tax assets, the valuation
uses estimates of future profits in the US operations.
We performed procedures on both the UK and US asbestos liabilities.
The US provision is the more significant and has a greater level of
estimation uncertainty.
Management obtains a triennial actuarial estimate of the US asbestos
liability from an independent expert and the most recent assessment
was performed by external actuarial consultants in 2020. We involved
our PwC actuarial experts to assess the 2020 valuation and the
reasonableness of the methodology used by the independent expert.
We evaluated management’s underlying assumptions used in its
calculation which included testing of:
• the mathematical accuracy of the underlying calculations in
management’s model;
• the input data to management’s model, such as the average cost
per claim and the number of settled claims to source data, which
we verified directly with the Group’s external lawyers and to the
independent actuarial assessment; and
• the reasonableness of forecast number and value of claims to be
settled to the actuarial assessment for the period of provision.
We evaluated the appropriateness of management’s assessment of
the timescale over which a liability can be reliably measured, which
remains at ten years. We also examined the insurance cover held by
the Group and recalculated the expected date of insurance exhaustion
to be in line with that disclosed by management. In addition, we
validated that the insurance cover remains active and currently
continues to settle claims as expected.
We tested the reasonableness of the provision made for the
estimated uninsured liability.
Finally, we tested the disclosures in the financial statements
and checked for compliance with IAS 37 ‘Provisions, Contingent
Liabilities and Contingent Assets’ and IAS 1 ‘Presentation of Financial
Statements’ and considered them to be appropriate.
We audited management’s forecasts which support the continued
recognition of a portion of the Group’s US deferred tax assets to
confirm the quantum of deferred tax derecognised is appropriate by:
• verifying the inputs in management’s US taxable income forecasts
are derived from the Group’s five year strategic plan with forecasts
for a further five years and appropriate risk weightings applied;
• assessing the assumptions made by management in determining
the amount of deferred tax which can be supported; and
• performing sensitivity analysis on the assumptions used by
management to confirm the amount of deferred tax remaining
on the balance sheet was within our calculated range of
possible outcomes.
In addition, we assessed the adequacy and appropriateness of the
disclosures for compliance with IAS 12 ‘Income Taxes’.
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OF THE WEIR GROUP PLC
CONTINUED
Key audit matter
How our audit addressed the key audit matter
Completeness, existence and accuracy of financial information
following the cyber incident (Group and Company)
Our Digital Audit team assessed the cyber security response of the
Group by:
On 24 September 2021, the Group experienced an attempted cyber
security attack. The Group took the decision to temporarily remove
access to Windows-based PCs and to isolate and shut down IT
systems, including the Group’s core financial reporting systems, while
the threat was assessed. Following a forensic investigation, access to
those systems was restored in an orderly manner.
• reviewing third party specialist reports to independently verify
our understanding of the incident and the impact on key
business systems;
• assessing the supporting evidence to confirm that no confidential or
sensitive data was lost or amended through the incident;
• considering the integrity checks performed by IT in restoring
We introduced a new significant audit risk over the completeness,
existence and accuracy of financial information in light of this
cyber incident.
key systems;
• reviewing evidence of correspondence with regulators to address
the risk of any future investigation, litigation or fines; and
• assessing management’s remediation plan to reduce the likelihood
of similar incidents reoccurring.
Furthermore, our component audit teams performed substantive
testing over the completeness, existence and accuracy of financial
information both during the short period of system outage and during
the period where user access was sufficiently restored to operate
processes and controls in the normal manner.
We did not identify any significant accounting issues as a
consequence of the cyber incident.
Acquisition of Motion Metrics (Group)
In performing our audit of the acquisition, we have:
On 30 November 2021, the Group completed the acquisition of
Motion Metrics for a consideration of £67.9m and have identified net
assets with a provisional fair value of £15.8m. Goodwill of £52.1m has
been recognised within the ESCO cash generating unit.
• verified the consideration paid and payable under the terms of the
transaction to the Share Purchase Agreement;
• assessed the appropriateness of the fair value of the contingent
consideration at the acquisition date;
• engaged valuation experts to assess the methodology and key
assumptions applied by management to identify and value the
intangible assets acquired;
• assessed underlying forecasts supporting the valuation of intangible
assets; and
• verified the recognition and measurement of provisions recognised
at the acquisition date.
Finally, we reviewed the disclosures for compliance with IFRS 3
‘Business Combinations’.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a
whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which
they operate.
The Group is organised into two continuing operating Divisions: Minerals and ESCO. On 1 February 2021, the Group completed its disposal of
the majority of the Oil & Gas Division, and the disposal of the Group’s shareholding in the remaining joint venture in the Division was completed
on 30 June 2021. Having previously announced the sale in the prior year, the Oil & Gas Division has been treated as a discontinued operation in
both the current and prior year. Each division conducts its business in a number of locations around the world. Many of the business locations (or
components) are of similar size, so we scoped our audit to ensure we had appropriate coverage of the Group’s continuing operations, covering
both divisions. We included components which accounted for the largest share of the Group’s results or where we considered there to be areas
of significant risk.
The Group’s components vary significantly in size and we identified seven components that, in our view, required an audit of their complete
financial information due to their relative size or risk characteristics. Of these full scope component audits, two were based in the UK and were
performed by members of the Group engagement team. These covered central functions and Head Office managed balances including treasury,
uncertain tax provisions, post-retirement benefits, goodwill and intangibles.
The remaining five full scope component audits were performed by other PwC network firms. Other PwC network firms also performed specific
scope audits over a further three components which covered all line items on the income statement and specified line items on the balance
sheet. A specified procedures audit was performed on the remaining one component.
154
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The scope of work at each component was determined by its contribution to the Group’s overall financial performance or balance sheet and its
risk profile. Where component audits were performed by teams from other PwC network firms, members of the Group engagement team were
involved in their work throughout the audit. We maintained regular communication and conducted formal interim and year end video calls with all
full and specific scope component teams. The discussions during the audit also included divisional management. Due to COVID-19 restrictions,
the audits of all components were performed remotely.
Of the eleven components in scope, we deemed four to be financially significant to the Group. The UK and global travel restrictions resulted in all
aspects of oversight of the component audits by the Group engagement team occurring remotely in 2021.
Our component and Group audits also had consideration of the impact of climate change. This involved:
• making enquiries with local and Group management and the Group Sustainability team to obtain their risk assessment and understand the
governance processes in place to address climate risk impacts. We also reviewed relevant board papers related to climate change;
• review of the Group’s CDP submission made during 2021 and obtained an understanding of the carbon reduction commitments made by the
Group and the impact of these on the financial statements;
• consideration of the impact on financial statement line items and compared this to management’s assessment of the impact of climate risk on
the financial statements, including the potential impact on the underlying assumptions and estimates as outlined in the basis of preparation in
note 1 of the Notes to the Group Financial Statements; and
• assessment of the consistency of the information in the front half of the Annual Report regarding Task Force on Climate-Related Financial
Disclosures (‘TCFD’) and the financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark
applied
Group financial statements
£12,445,000 (2020: £11,550,000).
5% of profit before tax and adjusting items from
continuing operations.
It is clear from the Annual Report that this profit
measure is used by shareholders in evaluating the
underlying business performance. We applied a
lower materiality to the audit of exceptional items
and intangibles amortisation.
Company financial statements
£11,325,000 (2020: £10,500,000).
1% of net assets capped at 91% of Group materiality.
The nature of the Company’s activities supports a net asset
basis for the calculation of materiality.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of
materiality allocated across components was between £400,000 and £11,325,000. Certain components were audited to a local statutory audit
materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and
extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% (2020: 75%) of overall materiality, amounting to £9,333,750 (2020: £8,662,500) for the Group financial statements and
£8,494,000 (2020: £7,875,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £620,000 (Group audit)
(2020: £600,000) and £566,000 (Company audit) (2020: £600,000) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
• review and evaluation of management’s cash flow forecasts and the process by which they were determined and approved, agreeing the
forecasts with the latest Board approved budgets and confirming the mathematical accuracy of underlying calculations;
• assessment of management’s forecast assumptions for base case and severe but plausible downside scenarios on the Group’s ability to
continue as a going concern; and
• consideration of the Group’s liquidity and availability of financing to support the going concern basis of accounting.
155
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF THE WEIR GROUP PLC
CONTINUED
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s
ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an
audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report
for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable
legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to
add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why the
period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its
liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
156
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only
consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the Group and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s compliance with the
Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related
to the wide variety of jurisdictions in which the Group operates, and we considered the extent to which non-compliance might have a material
effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such
as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase
revenue or profit. The Group engagement team shared this risk assessment with the component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit procedures performed by the Group engagement team and/or component
auditors included:
• discussions with management, internal audit and Group General Counsel, including consideration of known or suspected instances of non-
compliance with laws and regulations and fraud or matters reported on the Group’s Ethics Hotline;
• evaluation of management’s controls designed to prevent and detect irregularities;
• review of Board Minutes;
• challenging assumptions and judgements made by management in its significant accounting estimates, in particular in relation to the
classification of costs as exceptional; and
• identifying and testing journal entries, in particular any journal entries posted by Senior Management or unexpected users, postings to
exceptional items, unusual account combinations and round sum accruals or provisions.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
157
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF THE WEIR GROUP PLC
CONTINUED
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent
in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not
visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit Committee, we were appointed by the members on 28 April 2016 to audit the financial statements
for the year ended 31 December 2016 and subsequent financial periods. The period of total uninterrupted engagement is 6 years, covering the
years ended 31 December 2016 to 31 December 2021.
OTHER MATTER
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will
form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance
with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report
will be prepared using the single electronic format specified in the ESEF RTS.
KENNETH WILSON (SENIOR STATUTORY AUDITOR)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Glasgow
2 March 2022
158
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
Continuing operations
Revenue
Continuing operations
Operating profit before share of
results of joint ventures
Share of results of joint ventures
Operating profit
Finance costs
Finance income
Profit before tax from continuing
operations
Tax (expense) credit
Profit for the year from continuing
operations
(Loss) profit for the year from
discontinued operations
Profit (loss) for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Earnings (loss) per share
Basic – total operations
Basic – continuing operations
Diluted – total operations
Diluted – continuing operations
Year ended 31 December 2021
Restated (note 2)
Year ended 31 December 2020
Adjusted
results
£m
Adjusting
items (note 5)
£m
Statutory
results
£m
Adjusted
results
£m
Adjusting
items (note 5)
£m
Statutory
results
£m
Notes
3
1,933.6
–
1,933.6
1,964.7
–
1,964.7
15
6
6
7
8
9
294.5
1.7
296.2
(52.7)
5.6
249.1
(63.8)
(39.6)
–
(39.6)
–
–
(39.6)
9.4
254.9
1.7
256.6
(52.7)
5.6
209.5
(54.4)
297.0
1.6
298.6
(53.8)
3.8
248.6
(60.8)
185.3
(30.2)
155.1
187.8
106.1
75.9
75.9
–
75.9
(2.2)
183.1
182.6
0.5
183.1
71.3p
70.8p
103.9
259.0
258.5
0.5
259.0
99.7p
59.6p
99.0p
59.2p
(26.6)
161.2
161.0
0.2
161.2
72.3p
71.7p
(70.6)
–
(70.6)
–
–
(70.6)
16.3
(54.3)
(261.4)
(315.7)
(315.7)
–
(315.7)
226.4
1.6
228.0
(53.8)
3.8
178.0
(44.5)
133.5
(288.0)
(154.5)
(154.7)
0.2
(154.5)
(59.6p)
51.4p
(59.6p)
50.9p
159
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Profit (loss) for the year
Other comprehensive income (expense)
Losses taken to equity on cash flow hedges
Exchange losses on translation of foreign operations
Reclassification of foreign currency translation reserve on discontinued operations
Exchange (losses) gains on net investment hedges
Reclassification adjustments on cash flow hedges
Tax relating to other comprehensive expense to be reclassified in subsequent periods
Items that are or may be reclassified to profit or loss in subsequent periods
Other comprehensive income (expense) not to be reclassified to profit or loss in subsequent periods:
Remeasurements on defined benefit plans
Remeasurements on other benefit plans
Tax relating to other comprehensive (income) expense not to be reclassified in subsequent periods
Items that will not be reclassified to profit or loss in subsequent periods
Net other comprehensive expense
Year ended
31 December
2021
£m
259.0
Restated (note 2)
Year ended
31 December
2020
£m
(154.5)
Notes
8
7
23
7
(0.2)
(29.9)
(103.4)
(18.2)
0.1
–
(151.6)
96.3
–
(21.1)
75.2
(76.4)
(1.1)
(34.2)
–
6.5
1.9
0.1
(26.8)
(34.5)
0.2
6.5
(27.8)
(54.6)
Total net comprehensive income (expense) for the year
182.6
(209.1)
Attributable to:
Equity holders of the Company
Non-controlling interests
Total net comprehensive income (expense) for the year attributable to equity holders of the Company
Continuing operations
Discontinued operations
8
182.5
0.1
182.6
183.3
(0.8)
182.5
(210.3)
1.2
(209.1)
74.3
(284.6)
(210.3)
160
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2021
ASSETS
Non-current assets
Property, plant & equipment
Intangible assets
Investments in joint ventures
Deferred tax assets
Other receivables
Derivative financial instruments
Total non-current assets
Current assets
Inventories
Trade & other receivables
Derivative financial instruments
Income tax receivable
Cash & short-term deposits
Assets held for sale
Total current assets
Total assets
LIABILITIES
Current liabilities
Interest-bearing loans & borrowings
Trade & other payables
Derivative financial instruments
Income tax payable
Provisions
Liabilities held for sale
Total current liabilities
Non-current liabilities
Interest-bearing loans & borrowings
Other payables
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
Merger reserve
Treasury shares
Capital redemption reserve
Foreign currency translation reserve
Hedge accounting reserve
Retained earnings
Shareholders' equity
Non-controlling interests
TOTAL EQUITY
31 December
2021
£m
Restated (note 2)
31 December
2020
£m
Notes
11
12
15
22
17
29
16
17
29
18
19
20
29
21
19
20
29
21
22
23
24
415.3
1,308.3
12.3
57.0
76.5
–
1,869.4
517.1
505.7
7.1
32.0
564.4
–
1,626.3
3,495.7
523.9
490.6
3.8
7.6
36.5
–
1,062.4
812.3
–
0.1
69.0
40.7
56.7
978.8
2,041.2
1,454.5
32.5
582.3
332.6
(5.3)
0.5
(206.5)
1.5
705.9
1,443.5
11.0
1,454.5
449.5
1,249.4
15.0
54.9
84.6
0.1
1,853.5
443.6
420.2
16.0
29.6
351.7
427.6
1,688.7
3,542.2
26.5
413.9
18.9
12.3
29.2
143.3
644.1
1,332.6
0.3
–
76.1
21.4
160.8
1,591.2
2,235.3
1,306.9
32.5
582.3
332.6
(6.8)
0.5
(55.4)
1.6
408.3
1,295.6
11.3
1,306.9
The financial statements were approved by the Board of Directors and authorised for issue on 2 March 2022. The financial statements also
comprise the notes on pages 165 to 224.
JON STANTON
Director
JOHN HEASLEY
Director
161
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
Total operations
Cash flows from operating activities
Cash generated from operations
Additional pension contributions paid
Exceptional and other adjusting cash items
Exceptional cash items – acquired vendor liabilities
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisitions of subsidiaries, net of cash acquired
Investment in joint ventures
Purchases of property, plant & equipment
Purchases of intangible assets
Exceptional item – proceeds from sale of property
Other proceeds from sale of property, plant & equipment and intangible assets
Disposals of discontinued operations, net of cash disposed and disposal costs
Disposals of joint ventures
Interest received
Dividends received from joint ventures
Net cash generated from (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Lease payments
Proceeds from settlement of derivative financial instruments
Interest paid
Net proceeds from changes in non-controlling interests
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Purchase of shares for employee share plans
Net cash used in financing activities
Net increase in cash & cash equivalents
Cash & cash equivalents at the beginning of the year
Foreign currency translation differences
Cash & cash equivalents at the end of the year
The cash flows from discontinued operations included above are disclosed separately in note 8.
Year ended
31 December
2021
£m
Restated (note 2)
Year ended
31 December
2020
£m
Notes
25
266.0
(7.8)
(8.6)
(11.1)
(82.4)
156.1
(67.9)
–
(44.4)
(8.4)
15.8
14.3
258.5
24.0
2.6
0.7
195.2
794.1
(903.4)
(27.8)
10.6
(45.6)
–
(29.8)
(0.4)
(15.0)
(217.3)
134.0
374.1
(8.1)
500.0
365.0
(11.3)
(24.1)
–
(63.4)
266.2
–
0.1
(59.9)
(11.8)
–
4.3
(6.8)
–
2.2
8.3
(63.6)
1,467.2
(1,455.8)
(43.4)
5.1
(52.7)
5.1
–
–
(10.9)
(85.4)
117.2
272.1
(15.2)
374.1
25
25
25
15
10
18
162
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
At 31 December 2019
Restatement
(see note 2)
Restated at
31 December 2019
(Loss) profit for the year
(restated note 2)
Losses taken to equity
on cash flow hedges
Exchange (losses) gains
on translation of foreign
operations
Exchange gains on net
investment hedges
Reclassification
adjustments on cash
flow hedges
Remeasurements on
defined benefit plans
Remeasurements on
other benefit plans
Tax relating to other
comprehensive
(expense) income
Total net comprehensive
(expense) income for
the year
Cost of share-based
payments inclusive
of tax credit
Purchase of shares for
employee share plans
Notional proceeds
of increase in non-
controlling interests
Proceeds of increase in
non-controlling interests
Proceeds from decrease
in non-controlling interests
Exercise of share-
based payments
At 31 December 2020
At 31 December 2020 as
originally presented
Share
capital
£m
32.5
Share
premium
£m
582.3
Merger
reserve
£m
332.6
Treasury
shares
£m
(0.5)
Capital
redemption
reserve
£m
0.5
Foreign
currency
translation
reserve
£m
(26.7)
Hedge
accounting
reserve
£m
0.7
Retained
earnings
£m
590.6
Attributable
to equity
holders
of the
Company
£m
1,512.0
Non-
controlling
Total
interests
equity
£m
£m
1.4 1,513.4
–
–
–
–
–
–
–
(5.7)
(5.7)
–
(5.7)
32.5
582.3
332.6
(0.5)
0.5
(26.7)
0.7
584.9
1,506.3
1.4
1,507.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(10.9)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(35.2)
6.5
–
–
–
–
–
(154.7)
(154.7)
0.2
(154.5)
(1.1)
–
(1.1)
(35.2)
1.0
(34.2)
(1.1)
–
–
1.9
–
–
–
–
–
–
6.5
1.9
(34.5)
(34.5)
0.2
0.2
0.1
6.5
6.6
–
–
–
–
–
6.5
1.9
(34.5)
0.2
6.6
(28.7)
0.9
(182.5)
(210.3)
1.2
(209.1)
–
–
–
–
–
–
–
–
–
–
10.5
10.5
–
–
–
–
(10.9)
–
–
–
–
–
3.6
5.4
10.5
(10.9)
3.6
5.4
(0.3)
(0.3)
–
32.5
–
582.3
–
332.6
4.6
(6.8)
32.5
582.3
332.6
(6.8)
–
0.5
0.5
–
(55.4)
–
1.6
(4.6)
408.3
–
1,295.6
–
–
11.3 1,306.9
(55.4)
1.6
419.1
1,306.4
11.3
1,317.7
163
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share
capital
£m
–
Share
premium
£m
–
Merger
reserve
£m
–
Treasury
shares
£m
–
Capital
redemption
reserve
£m
–
Foreign
currency
translation
reserve
£m
–
Hedge
accounting
reserve
£m
–
Retained
earnings
£m
(10.8)
Attributable
to equity
holders
of the
Company
£m
(10.8)
Non-
controlling
interests
£m
–
Total
equity
£m
(10.8)
32.5
–
582.3
–
332.6
–
(6.8)
–
0.5
–
(55.4)
–
1.6
–
408.3
258.5
1,295.6
258.5
11.3 1,306.9
259.0
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
32.5
–
582.3
–
332.6
–
–
–
–
–
–
–
–
–
–
(15.0)
–
16.5
(5.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.2)
(29.5)
(103.4)
(18.2)
–
–
–
–
–
–
0.1
–
–
(0.2)
–
(0.2)
(29.5)
(0.4)
(29.9)
(103.4)
(18.2)
0.1
96.3
96.3
(21.1)
(21.1)
–
–
–
–
–
(103.4)
(18.2)
0.1
96.3
(21.1)
(151.1)
(0.1)
333.7
182.5
0.1
182.6
–
–
–
–
–
–
–
–
10.2
(29.8)
–
–
10.2
(29.8)
(15.0)
–
–
–
10.2
(29.8)
(15.0)
–
(0.4)
(0.4)
–
0.5
–
(206.5)
–
1.5
(16.5)
705.9
–
1,443.5
–
–
11.0 1,454.5
CONTINUED
Restatement (note 2)
Restated at 31 December
2020
Profit for the year
Losses taken to equity
on cash flow hedges
Exchange losses on
translation of foreign
operations
Reclassification of
exchange gains on
discontinued operations
Exchange losses on net
investment hedges
Reclassification
adjustments on cash
flow hedges
Remeasurements on
defined benefit plans
Tax relating to other
comprehensive income
Total net comprehensive
(expense) income
for the year
Cost of share-based
payments inclusive
of tax charge
Dividends
Purchase of shares for
employee share plans
Dividends to non-
controlling interests
Exercise of share-
based payments
At 31 December 2021
164
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 NOTES TO THE GROUP FINANCIAL STATEMENTS
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE
The Consolidated Financial Statements of The Weir Group PLC (the ‘Company’) and its subsidiaries (together, the ‘Group’) for the year ended
31 December 2021 (‘2021’) were approved and authorised for issue in accordance with a resolution of the Directors on 2 March 2022.
The comparative information is presented for the year ended 31 December 2020 (‘2020’).
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International
Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. The Weir Group PLC transitioned to
UK-adopted International Accounting Standards in its Consolidated Financial Statements on 1 January 2021. This change constitutes a change in
accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change
in framework. The Consolidated Financial Statements of The Weir Group PLC have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006 as applicable to those companies reporting under those standards.
The Weir Group PLC is a public limited company, limited by shares, incorporated in Scotland, United Kingdom and is listed on the London Stock
Exchange. The principal activities of the Group are described in note 3.
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements are presented in Sterling. All values are rounded to the nearest 0.1 million pounds (£m) except where
otherwise indicated.
The financial statements are also prepared on a historic cost basis except where measured at fair value as outlined in the accounting policies.
Going concern
The Directors have a reasonable expectation that the Group has adequate resources to continue to operate for a period of at least 12 months
from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis of preparing the financial
statements. In forming this view the Directors have reviewed the Group’s budgets and sensitivity analysis as discussed further in the Directors’
Report on pages 146 to 148.
Climate change
As well as considering the impact of climate change across our business model, the Directors have considered the impact on the financial
statements in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. There has not been a material
impact on the financial reporting judgements and estimates arising from our considerations, consistent with our assessment that climate change
is not expected to have a detrimental impact on the viability of the Group in the medium-term. Specifically we note the following:
• the impact of climate change has been included in the modelling to assess the viability and going concern status of the Group, both in terms
of the preparation of our strategic planning, which underpins our viability statement modelling and the modelling, of our severe but plausible
downside scenarios;
• our assessment of the carrying value of goodwill and intangible assets included consideration of scenario analysis of potential climate change
on our end markets and this did not introduce a set of circumstances which were considered could reasonably lead to an impairment;
• the impact on the carrying value and useful lives of tangible assets has been considered and while we continue to invest in projects to reduce
our carbon impact there is not considered to be a material impact on our existing asset base;
• in May 2021, the Group successfully completed the issuance of five-year US$800m Sustainability-Linked Notes. The cost of meeting our linked
targets in 2024 has been considered within the above modelling and the impact is not material; and
• further detail on our science based targets and performance against them is included in the Emissions Strategy.
New accounting standards, amendments and interpretations
The accounting policies which follow are consistent with those of the previous period with the exception of the following standards, amendments
and interpretations which are effective for the year ended 31 December 2021:
i) Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16;
The Group has applied the practical expedient to changes to interest rates resulting from IBOR reform. In all circumstances the replacement of
IBOR with an economically equivalent rate has resulted in a change in the effective interest rate for the liability affected. These changes have
had no impact on the Consolidated Income Statement for the period.
ii) IFRS 16 Covid-19 Related Rent Concessions Amendment; and
On 31 March 2021 the IASB published a further amendment to the May 2020 practical expedient for lessees. The expedient provided lessees
with relief from assessing whether a rent concession in relation to Covid-19 is a lease modification. The 2020 amendment stated that any
reduction in lease payments affected only payments due on or before 30 June 2021. The March 2021 amendment extends the scope of the
exemption to 30 June 2022. The Group has previously applied this exemption in 2020 and the effect in both 2020 and 2021 is not material.
iii) IFRIC – Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets).
The Group has revised its accounting policy in relation to Software as a Service (SaaS) and related configuration and customisation costs in
response to the IFRIC configuration or customisation costs in a cloud computing arrangement (April 2021) agenda decision which clarified the
interpretation of the current accounting standard. SaaS arrangements provide the Group access to software via payment of a subscription.
165
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
2. ACCOUNTING POLICIES continued
Under the new guidance these contracts are service contracts and the expense is recognised in the Consolidated Income Statement when the
service is received. The costs related to implementing the software are split into those which configure the software and those which generate
a separate asset controlled by the Group. The configuration costs are expensed to the Consolidated Income Statement when the service is
received. Any expenditure resulting in a separate intangible asset is capitalised in accordance with the current Group policy as stated below.
The Group's previous accounting policy has been to capitalise SaaS arrangements and related customisation and configuration costs as intangible
assets. In response to this agenda decision the Group has completed a review of the costs which are no longer eligible to be capitalised as
intangible assets and this has resulted in a reclassification to operating expenditure and the reversal of previously accumulated amortisation.
This policy has been applied retrospectively in accordance with IAS 8 resulting in a restatement of prior year financial statements, with further
details provided below.
The following new accounting standards and interpretations have been published but are not mandatory for 31 December 2021:
i) Narrow scope amendments to IFRS 3, IAS 16, IAS 37 and annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16;
ii) Amendments to IAS 1, Presentation of financial statement’s on classification of liabilities;
iii) Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8;
iv) Amendments to IAS 12 – deferred tax related to assets and liabilities arising from a single transaction; and
v) IFRS 17 Insurance contracts
These amendments have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the
current or future reporting periods or on foreseeable future transactions.
Prior year restatement
All primary statements and (loss) earnings per share have been restated to retrospectively apply the voluntary change in accounting policy for
Software as a Service as discussed above. The directly impacted financial statement line items in the Consolidated Balance Sheet, Consolidated
Income Statement and Consolidated Cash Flow Statement are shown below. The Consolidated Balance Sheet as at 31 December 2019 has also
been restated for Software as a Service but is not presented below on the grounds of materiality, the impact being reflected in the Consolidated
Statement of Changes in Equity.
Restated Consolidated Balance Sheet (extract)
at 31 December 2020
Non-current assets
Intangible assets
Current assets
Income tax receivable
Current liabilities
Income tax payable
CAPITAL & RESERVES
31 December 2019
31 December 2020
Retained earnings
As previously
reported
£m
SaaS
adjustment
£m
Restated
31 December
2020
£m
1,262.7
(13.3)
1,249.4
29.4
14.6
1,513.4
1,317.7
419.1
0.2
(2.3)
(5.7)
(10.8)
(10.8)
29.6
12.3
1,507.7
1,306.9
408.3
Restated Consolidated Income Statement (extract)
for the year ended 31 December 2020
Adjusted
results: as
previously
reported
£m
SaaS
adjustment
£m
Adjusted
results:
restated
£m
Statutory
results: as
previously
reported
£m
SaaS
adjustment
£m
Statutory
results:
restated
£m
Operating profit before share of results of
joint ventures
Operating profit
Profit before tax from continuing operations
Tax expense
Profit for the year from continuing operations
Profit (loss) for the year
303.8
305.4
255.4
(62.1)
193.3
166.7
(6.8)
(6.8)
(6.8)
1.3
(5.5)
(5.5)
297.0
298.6
248.6
(60.8)
187.8
161.2
232.7
234.3
184.3
(45.7)
138.6
(149.4)
(6.3)
(6.3)
(6.3)
1.2
(5.1)
(5.1)
226.4
228.0
178.0
(44.5)
133.5
(154.5)
As disclosed in note 5 certain amortisation costs are included within adjusting items. £0.5m in relation to amortisation of SaaS was included in
adjusting items in 2020 and has subsequently been reversed as shown in the table above.
166
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Restated Consolidated Cash Flow Statement (extract)
for the year ended 31 December 2020
Cash flows from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash flows from investing activities
Purchases of intangible assets
Net cash (used in) generated from investing activities
Basic earnings (loss) per share:
Total operations1
Continuing operations2
Continuing operations before adjusting items2
Diluted earnings (loss) per share:
Total operations1
Continuing operations2
Continuing operations before adjusting items2
As previously
reported
£m
SaaS
adjustment
£m
Restated
31 December
2020
£m
372.2
273.4
(19.0)
(70.8)
(7.2)
(7.2)
7.2
7.2
365.0
266.2
(11.8)
(63.6)
As previously
reported
2020
pence
Restated
2020
pence
(57.6)
53.3
74.4
(57.6)
52.9
73.8
(59.6)
51.4
72.3
(59.6)
50.9
71.7
1 Adjusted for a profit of £0.2m in respect of non-controlling interests for total operations.
2 Adjusted for a profit of £0.2m in respect of non-controlling interests for continuing operations.
Basis of consolidation
The Consolidated Financial Statements include the results, cash flows and assets and liabilities of The Weir Group PLC and its subsidiaries, and
the Group’s share of results of its joint ventures. For consolidation purposes, subsidiaries and joint ventures prepare financial information 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 achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
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.
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented
within equity in the Consolidated Balance Sheet, separately from the Company Shareholders’ equity.
A full list of the Company’s related undertakings can be found on pages 241 to 247.
Adjusting items
In order to provide the users of the Consolidated Financial Statements with a more relevant presentation of the Group’s performance, statutory
results for each year has been analysed between:
i) adjusted results; and
ii) the effect of adjusting items.
The principal adjusting items are summarised below. These specific items are presented on the face of the Consolidated Income Statement,
along with the related adjusting item's taxation, to provide greater clarity and a better understanding of the impact of these items on the Group’s
financial performance. In doing so, it also facilitates greater comparison of the Group’s underlying results with prior years and assessment of
trends in financial performance. This split is consistent with how underlying business performance is measured internally.
i) Intangibles amortisation
Intangibles amortisation is expensed in line with the other intangible assets policy, with separate disclosure provided to allow visibility of the
impact of both:
a) intangible assets recognised via acquisition, which primarily relate to items which would not normally be capitalised unless identified as part
of an acquisition opening balance sheet. The ongoing costs associated with these assets are expensed; and
b) ongoing multi-year investment activities, which currently include our IT transformation strategy and digitisation strategy.
During the year, amortisation of £5.3m (restated 2020: £4.6m) is included within adjusted operating profit in relation to assets, which are no
longer part of ongoing multi-year investment activities.
167
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
2. ACCOUNTING POLICIES continued
ii) Exceptional items
Exceptional items are items of income and expense which, because of the nature, size and/or infrequency of the events giving rise to them, merit
separate presentation. Exceptional items may include, but are not restricted to: profits or losses arising on disposal or closure of businesses; the
cost of significant business restructuring; significant impairments of intangible or tangible assets; adjustments to the fair value of acquisition-
related items such as contingent consideration and inventory; acquisitions and other items deemed exceptional due to their significance, size
or nature.
iii) Other adjusting items
Other adjusting items are those which do not relate to the Group’s current ongoing trading and, due to their nature, are treated as adjusting
items. For example these may include, but are not restricted to, movements in the provision for asbestos-related claims or the associated
insurance assets, which relate to the Flow Control Division that was sold in 2019 but the provision remains with the Group and is in run-off,
or past service costs related to pension liabilities.
Further analysis of the items included in the column ‘Adjusting items’ in the Consolidated Income Statement is provided in notes 4, 5 and 12
to the financial statements.
Use of estimates and judgements
The Group’s significant accounting policies are set out below. The preparation of the Consolidated Financial Statements, in conformity with IFRS,
requires management to make judgements that affect the application of accounting policies and estimates that impact the reported amounts of
assets, liabilities, income and expense.
Management bases these judgements on a combination of past experience, professional expert advice and other evidence that is relevant to
each individual circumstance. Actual results may differ from these judgements and the resulting estimates which are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised.
Areas requiring significant judgement in the current year and on a recurring basis are presented to the Audit Committee, as summarised on
page 110.
The areas where management considers critical judgements and estimates to be required, which are areas more likely to be materially adjusted
due to inherent uncertainty regarding estimates and assumptions, are those in respect of the following:
i) Retirement benefits (estimate)
The assumptions underlying the valuation of retirement benefit assets and liabilities include discount rates, inflation rates and mortality
assumptions which are based on actuarial advice. Changes in these assumptions could have a material impact on the measurement of the
Group’s retirement benefit obligations. Sensitivities to changes in key assumptions are provided in note 23.
ii) Provisions (judgement/estimate)
Management judgement is used to determine when a provision is recognised, taking into account the commercial drivers which gave rise to it,
the Group’s previous experience of similar obligations and the progress of any associated legal proceedings. The calculation of provisions typically
involves management estimates of associated cash flows and discount rates. The key provision which currently requires a greater degree of
management judgement and estimate is the US asbestos provision and associated insurance asset, details of which are included in note 21.
iii) Taxation (estimate)
The level of current and deferred tax recognised in the financial statements is dependent on subjective judgements as to the interpretation of
complex international tax regulations and, in some cases, the outcome of decisions by tax authorities in various jurisdictions around the world,
together with the ability of the Group to utilise tax attributes within the time limits imposed by the relevant tax legislation. The value of the
recognised US Deferred Tax Asset in relation to US tax attributes is based on expected future US taxable profits with reference to the Group's
five-year strategic plan. The application of this model may result in future changes to the deferred tax asset recognised.
The Group faces a variety of tax risks which result from operating in a complex global environment, including the ongoing reform of both
international and domestic tax rules in some of the Group’s larger markets and the challenge to fulfil ongoing tax compliance filing and transfer
pricing obligations given the scale and diversity of the Group’s global operations.
The Group makes provision for open tax issues where it is probable that an exposure will arise including, in a number of jurisdictions, ongoing tax
audits and uncertain tax positions including transfer pricing which are by nature complex and can take a number of years to resolve. In all cases,
provisions are based on management’s interpretation of tax law in each country, as supported where appropriate by discussion and analysis
undertaken by the Group’s external advisers, and reflect the single best estimate of the likely outcome or the expected value for each liability.
Provisions for uncertain tax positions are included in current tax liabilities and total £7.0m at 31 December 2021.
The Group believes it has made adequate provision for such matters although it is possible that amounts ultimately paid will be different from the
amounts provided, but not materially within the next 12 months.
Detailed tax disclosures are provided in notes 7 and 22.
168
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 iv) Acquisition accounting (estimate and judgement)
On the acquisition of a business, management assesses: (i) the Purchase Price Allocation (PPA) in order to attribute fair values to separately
identifiable intangible assets providing they meet the recognition criteria and (ii) the fair values of other assets and liabilities.
The fair values of these intangible assets are dependent on estimates of attributable future revenues, margins and cash flows, as well as
appropriate discount rates. In addition, the allocation of useful lives to acquired intangible assets requires the application of judgement based
on available information and management expectations at the time of recognition. The valuation of other tangible assets and liabilities involves
aligning accounting policies with those of the Group, reflecting appropriate external market valuations for property, plant & equipment, assessing
recoverability of receivables and inventory, and exposures to unrecorded liabilities. In deriving appropriate fair values the process will inevitably
involve the use of estimates. The disclosure in relation to business combinations is provided in note 13.
Discontinued operations
In compliance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, when it is known that a component of the Group will
be held for sale or disposed of the results are disclosed within one line in the Consolidated Income Statement, with the comparative periods
also restated. In the Consolidated Balance Sheet, the assets and liabilities of the component, in the current period only, are reported as current
assets/liabilities held for sale.
As a discontinued operation, the component is measured at the lower of its carrying amount and fair value less costs to sell. At the time
of disposal the foreign currency translation reserve will be recycled to the Consolidated Income Statement and included in the gain or loss
on disposal.
Business combinations
The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control
of a subsidiary is the sum of the fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes
the fair value of any asset or liability arising from a contingent consideration arrangement. Any goodwill arising from the business combination is
accounted for in line with the goodwill policy below.
Acquisition costs are expensed as incurred.
Assets acquired and liabilities assumed are generally measured at their acquisition date fair values as discussed in critical judgements
and estimates.
Joint ventures
The Group has a long-term contractual arrangement with another party which represents a joint venture. The Group’s interests in the results and
assets and liabilities of its joint venture are accounted for using the equity method.
This investment is carried in the Consolidated Balance Sheet at cost plus post-acquisition changes in the Group’s share of net assets less any
impairment in value. The Consolidated Income Statement reflects the share of results of operations of the investment 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 Consolidated Statement of Comprehensive Income.
Any goodwill arising on the acquisition of a joint venture, representing the excess of the cost of the investment over the Group’s share of the net
fair value of the joint venture’s identifiable assets, liabilities and contingent liabilities, is included in the carrying amount of the joint venture and is
not amortised. To the extent that the net fair value of the joint venture’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’s profit or loss in the year in which the investment
is acquired.
Foreign currency translation
The financial statements for each of the Group’s subsidiaries and joint ventures 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 Consolidated 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
recognised in other comprehensive income 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 year 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 and in other
comprehensive income.
In the event that a foreign operation is sold, the gain or loss on disposal recognised in the Consolidated Income Statement is determined after
taking into account the cumulative currency translation differences that are attributable to the operation. As permitted by IFRS 1, 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 that date.
In the Consolidated Cash Flow Statement, the cash flows of foreign operations are translated into Sterling at the average exchange rate for
the year.
169
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
2. ACCOUNTING POLICIES continued
Revenue recognition
Revenue is the consideration the Group expects to receive from customers in exchange for goods and services. Revenue is recognised in the
Consolidated Income Statement when control of goods and services is transferred to the customer. Transfer of control is deemed to be over time
where the following criteria are met:
• the customer concurrently receives and consumes the benefits from the Group’s performance;
• the Group’s performance creates or enhances a customer controlled asset; or
• the Group’s performance does not create an asset with an alternative use and the Group has a right to payment for performance completed
to-date.
Where the above criteria are not met then revenue is recognised at a point in time when control is transferred to the customer.
Revenue is shown net of sales taxes, discounts and after eliminating sales within the Group. No revenue is recognised where recovery
of the consideration is not probable or there are significant uncertainties regarding associated costs, or the possible return of goods.
Variable consideration is recognised only if it is highly probable that there will not be a significant revenue reversal. The consideration is an
estimation based on the terms of the contract and other available information. Liquidated damages can result in variable consideration and will
only be recognised as a deduction from revenue where there is a history of recurring liquidated damages, for example, for the same customer or
product line with the value of the reduction being the most likely amount from a range of possible outcomes. The adjustment to revenue will be
monitored throughout the contract and adjusted as liquidated damages become more or less likely. Volume discounts are deducted from revenue
based on the most reliable estimates of volumes to be purchased.
The timing of payment from customers is generally aligned to revenue recognition, subject to agreed payment terms usually in line with industry
standards. Certain contracts may include milestone payments which do not necessarily align to revenue recognition: a contract asset is recorded
where revenue is recognised in advance of customer invoicing and where cash is received in advance of revenue recognition, a contract liability
is recognised.
i) Sale of goods
This policy is applicable to the sale of both original equipment and spare parts whether sold individually, in bulk or as part of a cross-selling
marketing strategy. Contracts for the provision of both original equipment and spare parts, and where required services, are combined if one or
more of the following is met:
• The contract achieves a single commercial objective and is negotiated as a package.
• The price or performance of one contract influences the amount of consideration to be paid in the other contract.
• The goods or services in the separate contracts represent a single performance obligation.
Each cross-selling contract is reviewed to identify the performance obligations in relation to original equipment and spare parts with them only
being combined if they are not capable of being distinct and are not distinct in the context of the contract.
Revenue from the sale of goods is recognised in line with incoterms which in the majority of transactions is at the point of despatch. This reflects
when the customer obtains control of the product and can determine its future use and location. For larger orders where multiple units are
delivered in instalments as part of one performance obligation, revenue will be recognised over time in line with delivery. These items are a series
of distinct goods which have the same pattern of transfer of control being the fulfilment of the incoterm, provided the customer has control of
the goods as they are delivered.
Where the sale of product requires customer inspection, this is deemed to be part of the main performance obligation so revenue is not
recognised until the inspection has been completed and approved by the customer. In instances where commissioning is provided, the transfer
of control for the sale of goods is at the point of despatch where commissioning is a separate performance obligation or once commissioning
is complete where combined in the sale of goods performance obligation. A separate performance obligation for commissioning is identified
where a customer could obtain the same service from a third-party supplier with revenue in respect of commissioning being recognised once the
commissioning is complete.
ii) Provision of services
The revenue recognition of provision of services is dependent on the nature of the contracts. Shorter-term contracts tend to be for ‘one-
off’ service provision which means the customer only consumes the benefit from the Group’s performance when the work is complete.
Revenue is therefore recognised at a point in time for such contracts. For other contracts, revenue from the rendering of services is generally
recognised over time where the customer concurrently receives and consumes a benefit from the Group’s performance over the period of
the contract duration. Revenue from services is recognised in proportion to the stage of completion of the performance obligations at the
balance sheet date. The stage of completion is assessed by reference to the transfer of control over time, which usually corresponds to the
contractual agreement with each separate customer and the costs incurred on the contract to date in comparison with the total forecast costs
of the contract.
iii) Construction contracts
Revenue for construction contracts is recognised over time as the contracts usually contain discrete elements separately transferring control
to customers over the life of the contract and the Group’s performance does not create an asset with an alternative use.
170
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 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. Both these methods
are faithful depictions of the transfer of control given the Group has a right to payment for performance completed to date. The basis used is
dependent upon the nature of the underlying contract. For instances where the work is subject to formal customer acceptance procedures,
revenue will only be recognised once the customer review has been completed and approved by the customer as this is the point both parties
are in agreement that control has been transferred in line with contract terms. Losses on contracts are recognised in the year when such losses
become probable.
Property, plant & equipment
Property, plant & equipment comprises owned assets and right-of-use assets that do not meet the definition of investment property.
i) Owned assets
Owned property, plant & 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 & equipment is provided on a straight-line basis so as to
charge the cost less residual value, to the Consolidated Income Statement over the expected useful life of the asset concerned, and is in the
following ranges:
Freehold buildings, long leasehold land & buildings 10 – 40 years
Plant & equipment
3 – 20 years
ii) Right-of-use assets and lease liabilities
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the Group assesses whether it has both the right to obtain substantially all of the economic
benefits from use of the identified asset and the right to direct the use of the identified asset throughout the period of use.
The Group recognises a lease liability and right-of-use asset at the lease commencement date. The lease liability is initially measured as the
present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or
where the interest rate implicit in the lease cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate. The Group’s incremental borrowing rate is calculated by taking the government borrowing rate
in any given currency and adding the estimated Group credit spreads for a variety of tenors. An interpolation is performed annually to obtain one
rate for each of the major lease currencies based on the weighted average life of the lease book.
Lease payments consist of the following components:
• fixed payments, including in-substance fixed payments, less any lease incentives receivable;
• variable lease payments that depend on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option (if the lessee is reasonably certain to exercise that option); and
• payments of penalties for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease).
The right-of-use asset is measured as equal to the lease liability and adjusted for:
• lease payments made to the lessor at or before the commencement date;
• lease incentives received;
• initial direct costs associated with the lease; and
• an initial estimate of restoration costs.
The right-of-use asset is depreciated using the straight-line method over the lease term. In addition, the right-of-use asset is periodically reduced
by any impairment losses.
The Group has adopted the exemption available for short-term leases, with payments being recognised on a straight-line basis over the lease
term. Short-term leases are defined as leases with a lease term of 12 months or less.
The Group has adopted the exemption available for low value assets, with payments being recognised on a straight-line basis over the lease
term. Leases relating to laptops, desktop computers, mobile phones, photocopiers, printers and other office equipment, where the asset value
is less than £3,500 or the local currency equivalent have been treated as ‘low value’. Where the lease contract meets both ‘short-term’ and ‘low
value’ exemptions, the annual cost of the lease is reported within expenses relating to short-term leases.
For each lease, the lease term has been calculated as the non-cancellable period of the lease contract, except where the Group is reasonably
certain that it will exercise contractual extension options. In assessing whether a lessee is reasonably certain to exercise an option to extend a
lease, or not to exercise an option to terminate a lease, the Group shall consider all relevant facts and circumstances that create an economic
incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease. In certain circumstances
the Group will refer to the five-year strategic plan period as an appropriate period to consider whether the ‘reasonably certain’ criteria are met.
171
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
2. ACCOUNTING POLICIES continued
Goodwill
Goodwill arises on the acquisition of businesses 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. Acquisition costs are recognised
in the Consolidated Income Statement in the year in which they are incurred. Goodwill in respect of an acquired business is recognised as an
intangible asset. Goodwill is carried at cost less any recognised impairment losses and is tested at least annually or where there are indicators
of impairment.
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.
An assessment of probable contingent consideration is recognised at the date of acquisition or disposal. For acquisitions, subsequent changes to
the fair value of the contingent consideration are adjusted against the cost of acquisition where they qualify as measurement period adjustments.
The measurement period is the period from the date of acquisition to the date that the Group obtains complete information about facts and
circumstances that existed as of the acquisition date, and is subject to a maximum of one year. If the change does not qualify as a measurement
period adjustment, it is reflected in the Consolidated Income Statement as an adjusting item. For disposals, any subsequent change in contingent
consideration is adjusted against the disposal proceeds and the gain or loss on disposal.
Other intangible assets
Intangible assets acquired separately are measured at cost on initial recognition. 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 Consolidated 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.
Brand names
Brands are recognised as a result of a business combination. The brand is recognised if it is separable from the remaining business and is
expected to generate future economic benefits. Internally generated brands are not capitalised in accordance with IAS 38 ‘Intangible Assets’.
Brands are fair valued at acquisition and subsequently measured at cost less any accumulated impairment. All subsequent expenditure is
expensed to the Consolidated Income Statement as incurred.
Due to the long-term nature of the brands the Group has assessed that they have indefinite useful lives, with the exception of Motion Metrics
which is amortised over 15 years. An annual impairment exercise is completed for brands with an indefinite useful life, to confirm that the value
in use, based on discounted cash flows, exceeds the carrying value.
Customer and distributor relationships
Customer and distributor relationships are recognised as part of a business combination if they are separable from the acquired business or arise
from contractual or legal rights. They represent the relationships that the acquiree has built up over a significant period of time and will provide
repeat custom to the business which will generate future economic benefit.
The assets are initially recorded at fair value at acquisition and subsequently recognised at cost less accumulated amortisation and impairment.
All subsequent expenditure is charged to the Consolidated Income Statement as incurred. Amortisation is charged to the Consolidated Income
Statement over the useful life of the asset. The useful life can vary depending on the circumstances of each acquisition. The useful lives range
from 5 to 30 years.
If there are any indicators of impairment an assessment of the value in use of the relationships is completed. If the carrying value exceeds the
value in use the variance is accounted for as an impairment to the asset with a corresponding charge to the Consolidated Income Statement.
Software
Software assets can be purchased, acquired or internally generated. Software that is not an integral part of related hardware is recognised as an
intangible asset.
Software is recognised at cost less accumulated amortisation. Amortisation is spread over the estimated useful life of the software which can
range from 4 to 8 years.
Software as a Service (SaaS) arrangements provide the Group with the right to access cloud based software applications over a contractual
period. The software remains the intellectual property of the developer and as a result the Group does not recognise an intangible asset in
relation to subscription fees and costs incurred to customise or configure the software. The related costs are recognised in the Consolidated
Income Statement when the service is received.
Costs incurred to enhance or develop an existing intangible asset or develop new software code which meet the definition and recognition
criteria of an intangible asset are capitalised as intangible software assets. Amortisation is recognised over the expected useful life of
the software.
172
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Trademarks and intellectual property
Trademarks and intellectual property are legally protected rights which are expected to generate future revenues. On acquisition they are
measured at fair value based on discounted expected cash flows. Assets are subsequently held at cost less accumulated amortisation
and impairment.
The assets are amortised based on the period in which the legal protection is in place or the asset is expected to generate revenues.
The amortisation period for the currently capitalised trademarks ranges from 6 to 15 years.
Other
Other intangible assets are stated at cost less accumulated amortisation and any recognised impairment losses. The expected useful life of other
intangible assets is up to six years.
Research & development costs
All research expenditure is charged to the Consolidated Income Statement in the year in which it is incurred.
Development expenditure is charged to the Consolidated Income Statement in the year in which it is incurred unless it relates to the
development of a new product or technology and meets the following requirements:
• 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, and has sufficient resources, to complete the development and to use or sell the asset.
Any such capitalised development expenditure is amortised on a straight-line basis so it is charged to the Consolidated Income Statement over
the expected life of the resulting product or technology.
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 and intangible assets with an indefinite life 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 Consolidated 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.
Financial assets & liabilities
The Group’s principal financial assets and liabilities, other than derivatives, comprise bank overdrafts, short-term borrowings, loans and fixed-rate
notes, commercial paper, cash and short-term deposits. The Group also has other financial assets and liabilities such as trade receivables, trade
payables and leases which arise directly from its operations.
A financial asset 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. Under IFRS 9 ‘Financial Instruments’ where
the modification is not substantial, any difference in the modified cash flows is recognised in profit or loss.
Reimbursement asset
The Group has several insurance policies in place with regards to legal claims in relation to alleged asbestos exposure as discussed in note 21.
In accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ a reimbursement asset is only recognised when it is
virtually certain that the asset will be received and there is a corresponding liability recognised. The value recognised is the lower of the
amount confirmed by the insurer under the policy and the provision for the related liability. If the asset is probable the asset is not recognised
but disclosed.
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The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
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2. ACCOUNTING POLICIES continued
Trade receivables
Trade receivables, which are generally of a short-term nature, are recognised at original invoice amount where the consideration is unconditional.
If they contain significant financing components, trade receivables are instead recognised at fair value. The Group holds trade receivables to
collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details of
the Group’s impairment policies and the calculation of the loss allowance are provided in note 17 and the policy in respect of invoice discounting
is included in note 29.
Cash & cash equivalents
Cash & cash equivalents comprise cash in hand, deposits available on demand and other short-term highly liquid investments with a maturity
on acquisition of three months or less and 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.
Trade payables
Trade payables are recognised and carried at original invoice amount. The Group’s supply chain financing programme policy and assessment for
the period is provided in note 20.
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. Borrowings are classified as current liabilities unless the Group has an unconditional right to settle the liability at least
12 months after the balance sheet date.
Provisions, contingent liabilities & contingent assets
A provision is recognised in the Consolidated 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.
A contingent liability is disclosed if there is a possible obligation as a result of a past event that might, but will probably not, require an outflow of
economic benefits; or there is a present obligation as a result of a past event that probably requires an outflow of economic benefits, but where
the obligation cannot be measured reliably.
A contingent asset is disclosed if an inflow of economic benefits is probable arising from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Derivative financial instruments & hedge accounting
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 also uses foreign currency borrowings as a hedge of its exposure to foreign exchange risk on its
investments in foreign subsidiaries. Additionally, the Group periodically uses interest rate swaps to manage its exposure to interest rate risk.
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 as the present value of the estimated future cash flows based on spot and forward foreign
exchange rates and counterparty and the Group’s own credit risk. The fair value of interest rate swaps and cross-currency swaps is calculated as
the present value of the estimated future cash flows based on interest rate curves, spot foreign exchange rates and counterparty and own credit
risk. Changes in their fair values are recognised in the Consolidated Income Statement, except where hedge accounting is used, provided the
conditions specified by IFRS 9 are met. Hedge accounting is applied in respect of hedge relationships where it is both permissible under IFRS 9
and practical to do so. When hedge accounting is used, the relevant hedging relationships are classified as fair value hedges, cash flow hedges or
net investment hedges, as appropriate.
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 Consolidated 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 or net investment hedge, to the extent that the hedge is effective, changes in the fair
value of the hedging instrument will be recognised directly in other comprehensive income. For the cash flow hedge, when the hedged asset
or liability is recognised in the financial statements, the accumulated gains and losses recognised in other comprehensive income 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. For net investment hedges, gains and losses on hedging instruments designated as hedges of the net investments in foreign operations
are recognised in other comprehensive income to the extent that the hedging relationship is effective. Gains and losses accumulated in the
foreign currency translation reserve are recycled to the income statement when the foreign operation is disposed of.
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 through other comprehensive income 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 that was
reported in equity is immediately reclassified to the income statement in the period.
174
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Derivatives embedded in non-derivative host contracts, which are not already measured at fair value through profit or loss, 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 Consolidated Income Statement.
Where items are recognised in the Consolidated Income Statement, these are presented within operating profit or finance costs dependent on
their nature.
Share-based payments
Equity settled share-based incentives are provided to employees under the Group’s Share Reward Plan (SRP), formerly the Long Term Incentive
Plan (LTIP), the Weir ShareBuilder Plan (WSBP) and as a consequence of occasional one-off conditional awards made to employees.
The fair value of SRP awards and one-off conditional awards 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 or performance conditions, where applicable. The conditions of the SRP for the Executive
Directors which took effect in 2018 are summarised in the Directors’ Remuneration Policy, which can be found on the Company’s website at
www.corporategovernance.weir. The conditions of the SRP for senior management are summarised in note 27.
The fair value of WSBP awards at grant date is calculated as the share price at the date of the grant less an adjustment for loss of reinvestment
return on the dividend equivalent. There are no performance conditions attached to these awards but participants who leave the Company
prior to vesting lose their right to the awards. The terms of the share awards granted under the WSBP are set out on the plan’s website at
www.sharebuilder.weir.
Treasury shares
The Weir Group PLC shares held by the Company, or those held in Trust, 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 retained earnings. No gain or loss is recognised in total comprehensive income on the
purchase, sale, issue or cancellation of equity shares.
Post-employment benefits
Post-employment benefits comprise pension benefits provided to certain current and former employees in the UK, US and Canada and post-
retirement healthcare benefits provided to certain employees in the US.
For defined benefit pension and post-retirement healthcare plans, the annual service cost is calculated using the projected unit credit method and
is recognised over the future service lives of participating employees, in accordance with the advice of qualified actuaries. Current service cost
and administration expenses are recognised in operating costs and net interest on the net pension liability is recognised in finance costs.
The finance cost recognised in the Consolidated Income Statement in the year reflects the net interest on the net pension liability.
This represents the change in the net pension liability resulting from the passage of time, and is determined by applying the discount rate to the
opening net liability, taking into account employer contributions paid into the plan, and hence reducing the net liability, during the year.
Past service costs resulting from enhanced benefits are recognised immediately in the Consolidated Income Statement. Actuarial gains and
losses, which represent differences between interest on the plan assets, experience on the benefit obligation and the effect of changes in
actuarial assumptions, are recognised in full in other comprehensive income in the year in which they occur.
The defined benefit liability or asset recognised in the Consolidated Balance Sheet comprises the net total for each plan of the present value
of the benefit obligation, using a discount rate based on yields at the balance sheet date on appropriate high-quality corporate bonds that have
maturity dates approximating the terms of the Group’s obligations and are denominated in the currency in which the benefits are expected to be
paid minus the fair value of the plan assets, if any, at the balance sheet date. The balance sheet asset recognised is limited to the present value of
economic benefits which the Group expects to recover by way of refunds or a reduction in future contributions. In order to calculate the present
value of economic benefits, consideration is also given to any minimum funding requirements.
For defined contribution plans, the cost represents the Group’s contributions to the plans and these are charged to the Consolidated Income
Statement in the year in which they fall due, along with any associated administration costs.
Taxation
Current tax is the amount of tax payable or recoverable in respect of the taxable profit or loss for the year.
Deferred tax liabilities represent tax payable in future years in respect of taxable temporary differences. Deferred tax assets represent tax
recoverable in future years 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 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.
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:
i) 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;
ii) deferred tax is provided on temporary differences arising on investments in subsidiaries and joint ventures, 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; and
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The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
2. ACCOUNTING POLICIES continued
iii) 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.
Current and deferred tax is recognised in the Consolidated Income Statement except if it relates to an item recognised directly in equity, in which
case it is recognised directly in equity.
The Group also recognises provisions in the Consolidated Balance Sheet for uncertain tax as disclosed above in critical accounting estimates.
Alternative performance measures
The Consolidated Financial Statements of The Weir Group PLC have been prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as applicable to those companies reporting under those standards.
In measuring our performance, the financial measures that we use include those which have been derived from our reported results in
order to eliminate factors which we believe distort period-on-period comparisons. These are considered alternative performance measures.
This information, along with comparable GAAP measurements, is useful to investors in providing a basis for measuring our operational
performance. Our management uses these financial measures, along with the most directly comparable GAAP financial measures, in evaluating
our performance and value creation. Alternative performance measures should not be considered in isolation from, or as a substitute for, financial
information in compliance with GAAP. Alternative performance measures as reported by the Group may not be comparable with similarly titled
amounts reported by other companies.
Below we set out our definitions of alternative performance measures and provide reconciliations to relevant GAAP measures.
Adjusted results and adjusting items
The Consolidated Income Statement presents Statutory results, which are provided on a GAAP basis, and Adjusted results (non-GAAP), which
are management’s primary area of focus when reviewing the performance of the business. Adjusting items represent the difference between
Statutory results and Adjusted results and are defined within the accounting policies section above. The accounting policy for Adjusting items
should be read in conjunction with this note. Details of each adjusting item are provided in note 5. We consider this presentation to be helpful
as it allows greater comparability of the underlying performance of the business from year to year.
Operating cash flow (cash generated from operations)
Operating cash flow excludes additional pension contributions, exceptional and other adjusting cash items and income tax paid. This reflects our
view of the underlying cash generation of the business. A reconciliation to the GAAP measure ‘Net cash generated from operating activities’ is
provided in the Consolidated Cash Flow Statement.
Free operating cash and free cash flow
Free operating cash flow is defined as operating cash flow (cash generated from operations), adjusted for net capital expenditure, lease
payments, dividends received from joint ventures and purchase of shares for employee share plans. Free cash flow (FCF) is defined as free
operating cash flow further adjusted for net interest, income taxes, settlement of derivative financial instruments, pension contributions and non-
controlling interest dividends. FCF reflects an additional way of viewing our available funds that we believe is useful to investors as it represents
cash flows that could be used for repayment of debt, dividends, exceptional and other adjusting items, or to fund our strategic initiatives,
including acquisitions, if any.
The reconciliation of operating cash flows (cash generated from operations) to free operating cash flow and subsequently FCF is as follows.
Operating cash flow (cash generated from operations)
Net capital expenditure from purchase & disposal of property, plant & equipment and intangibles
Lease payments
Dividends received from joint ventures
Purchase of shares for employee share plans
Free operating cash flow
Net interest paid
Income tax paid
Settlement of derivative financial instruments
Additional pension contributions paid
Non-controlling interest dividends
Free cash flow
176
2021
£m
266.0
(38.5)
(27.8)
0.7
(15.0)
185.4
(43.0)
(82.4)
10.6
(7.8)
(0.4)
62.4
Restated
(note 2)
2020
£m
365.0
(67.4)
(43.4)
8.3
(10.9)
251.6
(50.5)
(63.4)
5.1
(11.3)
–
131.5
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Free operating cash conversion
Free operating cash conversion is a new non-GAAP key performance measure used by management, which is defined as free operating cash
flow divided by adjusted operating profit on a total Group basis.
Continuing operations
Discontinued operations
Adjusted operating profit – Total Group
Free operating cash flow
Free operating cash conversion %
Working capital as a percentage of sales
2021
£m
296.2
(0.3)
295.9
185.4
63%
Restated
(note 2)
2020
£m
298.6
(20.6)
278.0
251.6
91%
Working capital includes inventories, trade & other receivables, trade & other payables and derivative financial instruments as included in the
Consolidated Balance Sheet, adjusted to exclude insurance contract assets totalling £82.2m included in note 17 and £10.9m of interest accruals
included in note 20. This working capital measure reflects the figure used by management to monitor the performance of the business and is
divided by revenue, as included in the Consolidated Income Statement, to arrive at working capital as a percentage of sales.
EBITDA
EBITDA is operating profit from continuing operations, before exceptional items, other adjusting items, intangibles amortisation, and excluding
depreciation of owned assets and right-of-use assets. EBITDA is used in conjunction with other GAAP and non-GAAP financial measures to
assess our operating performance. A reconciliation of EBITDA to the closest equivalent GAAP measure, operating profit, is provided.
Continuing operations
Operating profit
Adjusted for:
Exceptional and other adjusting items (note 5)
Adjusting amortisation (note 5)
Adjusted operating profit
Non-adjusting amortisation (note 4)
Adjusted Earnings before interest, tax and amortisation (EBITA)
Depreciation of owned property, plant & equipment (note 11)
Depreciation of right-of-use property, plant & equipment (note 11)
Adjusted Earnings before interest, tax, depreciation and amortisation (EBITDA)
Net debt
2021
£m
256.6
4.7
34.9
296.2
5.3
301.5
43.0
27.6
372.1
Restated
(note 2)
2020
£m
228.0
31.8
38.8
298.6
4.6
303.2
43.2
29.0
375.4
Net debt is a common measure used by management and investors when monitoring the capital management of the Group and is the basis
for covenant reporting as included in note 30. A reconciliation of net debt to cash & short-term deposits, interest-bearing loans & borrowings is
provided in note 25.
3. SEGMENT INFORMATION
Continuing operations includes two operating Divisions: Minerals and ESCO. These two Divisions are organised and managed separately based
on the key markets served and each is treated as an operating segment and a reportable segment under IFRS 8. The operating and reportable
segments were determined based on the reports reviewed by the Chief Executive Officer which are used to make operational decisions.
The Minerals segment is the global leader in the provision of slurry handling equipment and associated aftermarket support for abrasive high-
wear applications used in the mining and oil sands markets. The ESCO segment is the world’s leading provider of ground engaging tools for large
mining machines. Following its acquisition on 30 November 2021, Motion Metrics, a mining technology business which is the market leading
developer of innovative Artificial Intelligence (AI) and 3D rugged Machine Vision Technology used in mines worldwide, is included within the
ESCO segment.
On 5 October 2020, the Group announced an agreement had been entered into to sell the Oil & Gas Division and, in line with IFRS 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’, the Group classified the Division as a discontinued operation as disclosed in note 8. The sale
of the Division completed during 2021.
177
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
3. SEGMENT INFORMATION continued
The Chief Executive Officer assesses the performance of the operating segments based on operating profit from continuing operations before
exceptional and other adjusting items (including impairments) (‘segment result’). Finance income and expenditure and associated interest-bearing
liabilities and financing derivative financial instruments are not allocated to segments as all treasury activity is managed centrally by the Group
Treasury function. The amounts provided to the Chief Executive Officer with respect to assets and liabilities are measured in a manner consistent
with that of the financial statements. The assets are allocated based on the operations of the segment and the physical location of the asset.
The liabilities are allocated based on the operations of the segment.
Transfer prices between business segments are set on an arm’s length basis, in a manner similar to transactions with third parties.
The segment information for the reportable segments for 2021 and 2020 is disclosed below. Information for Oil & Gas is included in note 8.
Revenue
Sales to external customers
Inter-segment sales
Segment revenue
Eliminations
Minerals
ESCO
Total continuing
operations
Restated
(note 2)
2020
£m
2021
£m
1,422.1
–
1,422.1
1,469.2
0.1
1,469.3
Restated
(note 2)
2020
£m
495.5
0.9
496.4
2021
£m
511.5
2.1
513.6
Restated
(note 2)
2020
£m
1,964.7
1.0
1,965.7
(1.0)
1,964.7
2021
£m
1,933.6
2.1
1,935.7
(2.1)
1,933.6
Sales to external customers – 2020 at 2021 average exchange rates
Sales to external customers
1,422.1
1,433.2
511.5
462.3
1,933.6
1,895.5
Segment result
Segment result before share of results of joint ventures
Share of results of joint ventures
Segment result
Unallocated expenses
Adjusted operating profit
Adjusting items
Net finance costs
Profit before tax from continuing operations
Segment result – 2020 at 2021 average exchange rates
Segment result before share of results of joint ventures
Share of results of joint ventures
Segment result
Unallocated expenses
Adjusted operating profit
251.0
–
251.0
259.9
–
259.9
81.6
1.7
83.3
79.5
1.6
81.1
251.0
–
251.0
250.4
–
250.4
81.6
1.7
83.3
73.6
1.5
75.1
332.6
1.7
334.3
(38.1)
296.2
(39.6)
(47.1)
209.5
332.6
1.7
334.3
(38.1)
296.2
339.4
1.6
341.0
(42.4)
298.6
(70.6)
(50.0)
178.0
324.0
1.5
325.5
(42.2)
283.3
Revenues from any single external customer do not exceed 10% of Group revenue.
178
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Assets & liabilities
Intangible assets
Property, plant & equipment
Working capital assets
Investments in joint ventures
Segment assets held for sale
Segment assets
Unallocated assets
Total assets
Working capital liabilities
Segment liabilities held for sale
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information – total Group
Segment additions to non-current assets
Unallocated additions to non-current assets
Total additions to non-current assets
Other segment information – total Group
Segment depreciation & amortisation
Segment impairment of property,
plant & equipment
Segment impairment of intangible assets
Unallocated depreciation & amortisation
Total depreciation, amortisation & impairment
Minerals
ESCO
Discontinued operations
Total Group
Restated
(note 2)
2020
£m
2021
£m
Restated
(note 2)
2020
£m
575.0
311.7
678.7
1,565.4
–
–
1,565.4
2021
£m
563.8
280.1
773.2
1,617.1
–
–
1,617.1
2021
£m
741.7
123.7
239.0
1,104.4
12.3
–
1,116.7
663.8
124.0
191.0
978.8
15.0
–
993.8
406.9
–
406.9
365.2
–
365.2
119.4
–
119.4
83.4
–
83.4
2020
£m
–
–
–
–
–
427.6
427.6
–
143.3
143.3
–
–
–
–
–
–
–
–
–
–
60.2
70.7
16.8
22.1
0.4
6.6
Restated
(note 2)
2020
£m
1,238.8
435.7
869.7
2,544.2
15.0
427.6
2,986.8
555.4
3,542.2
448.6
143.3
591.9
1,643.4
2,235.3
2021
£m
1,305.5
403.8
1,012.2
2,721.5
12.3
–
2,733.8
761.9
3,495.7
526.3
–
526.3
1,514.9
2,041.2
77.4
0.2
77.6
99.4
–
99.4
66.4
65.8
34.8
37.1
(1.4)
0.1
(0.4)
–
–
–
–
–
–
–
–
31.6
101.2
134.5
(1.4)
176.1
(1.4)
0.1
9.6
109.5
(1.8)
176.1
12.7
321.5
The asset and liability balances include right-of-use assets and lease liabilities. Refer to note 11 for depreciation on right-of-use assets.
Unallocated assets are continuing operations and primarily comprise cash and short-term deposits, asbestos-related insurance asset, Trust
Owned Life Insurance policy investments, derivative financial instruments, income tax receivable, deferred tax assets and elimination of
intercompany as well as those assets which are used for general head office purposes. Unallocated liabilities are continuing operations and
primarily comprise interest-bearing loans & borrowings and related interest accruals, derivative financial instruments, income tax payable,
provisions, deferred tax liabilities, elimination of intercompany and retirement benefit deficits as well as liabilities relating to general head office
activities. Segment additions to non-current assets include right-of-use assets.
179
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
3. SEGMENT INFORMATION continued
Geographical information
Geographical information in respect of revenue and non-current assets for 2021 and 2020 is disclosed below. Revenues are allocated based on
the location to which the product is shipped. Assets are allocated based on the location of the assets and operations. Non-current assets consist
of property, plant & equipment, intangible assets and investments in joint ventures.
Year ended 31 December 2021
Revenue from continuing operations
Sales to external customers
Non-current assets
Year ended 31 December 2020
Revenue from continuing operations
Sales to external customers
Non-current assets (restated note 2)
UK
£m
US
£m
Canada
£m
Asia
Pacific
£m
Australia
£m
South
America
£m
Middle
East &
Africa
£m
Europe &
FSU
£m
Total
£m
23.8
314.1
315.9
699.7
266.0
158.5
237.9
150.0
304.0
201.5
387.5
71.1
224.1
86.9
174.4
54.1
1,933.6
1,735.9
UK
£m
US
£m
Canada
£m
Asia
Pacific
£m
Australia
£m
South
America
£m
Middle
East &
Africa
£m
Europe &
FSU
£m
Total
£m
15.8
332.5
296.0
747.7
274.6
61.8
227.3
138.8
348.0
210.1
415.6
82.6
218.0
98.1
169.4
42.3
1,964.7
1,713.9
The following disclosures are given in relation to continuing operations.
An analysis of the Group’s revenue is as follows:
Original equipment
Aftermarket parts
Sales of goods
Provision of services – Aftermarket
Construction contracts – Original equipment
Revenue
Timing of revenue recognition
At a point in time
Over time
Segment revenue
Eliminations
Minerals
2021
£m
1,290.6
131.5
1,422.1
2020
£m
1,382.1
87.2
1,469.3
ESCO
2021
£m
508.3
5.3
513.6
2020
£m
490.1
6.3
496.4
4. REVENUES & EXPENSES
The following disclosures are given in relation to continuing operations.
2021
£m
386.9
1,366.6
1,753.5
121.0
59.1
1,933.6
2020
£m
444.3
1,358.1
1,802.4
116.0
46.3
1,964.7
Total continuing operations
2021
£m
2020
£m
1,798.9
136.8
1,935.7
(2.1)
1,933.6
1,872.2
93.5
1,965.7
(1.0)
1,964.7
Year ended 31 December 2021
Restated (note 2)
Year ended 31 December 2020
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
1,933.6
(1,237.2)
696.4
14.6
(218.9)
(197.6)
1.7
296.2
–
(4.4)
(4.4)
4.8
–
(40.0)
–
(39.6)
1,933.6
(1,241.6)
692.0
19.4
(218.9)
(237.6)
1.7
256.6
1,964.7
(1,263.6)
701.1
7.5
(203.5)
(208.1)
1.6
298.6
–
(8.2)
(8.2)
–
(5.8)
(56.6)
–
(70.6)
1,964.7
(1,271.8)
692.9
7.5
(209.3)
(264.7)
1.6
228.0
A reconciliation of revenue to operating profit
is as follows:
Revenue
Cost of sales
Gross profit
Other operating income
Selling & distribution costs
Administrative expenses
Share of results of joint ventures
Operating profit
180
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Operating profit from continuing operations is stated
after charging:
Cost of inventories recognised as an expense
Depreciation of property, plant & equipment (note 11)
Lease expenses (note 11)
Amortisation of intangible assets (note 12)
Exceptional and other adjusting items (note 5)
Net foreign exchange losses
Net impairment charge of trade receivables (note 17)
Year ended 31 December 2021
Restated (note 2)
Year ended 31 December 2020
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
1,237.2
70.6
8.6
5.3
–
4.8
1.4
–
–
–
34.9
4.7
–
–
1,237.2
70.6
8.6
40.2
4.7
4.8
1.4
1,263.6
72.2
9.1
4.6
–
14.4
10.5
–
–
–
38.8
31.8
–
–
1,263.6
72.2
9.1
43.4
31.8
14.4
10.5
Depreciation of property, plant & equipment (note 11) for discontinued operations was £nil (2020: £22.5m) and amortisation of intangible assets
(note 12) was £nil (2020: £9.1m).
Research & development costs
Research & development costs for continuing operations amount to £32.6m (2020 restated: £26.1m) of which £30.6m (2020: £24.8m) was
charged directly to cost of sales in the income statement and £2.0m (2020 restated: £1.3m) was capitalised (note 12). Research & development
costs for discontinued operations amounted to £0.5m (2020: £5.9m) of which £0.5m (2020: £5.9m) was charged to cost of sales in the
income statement.
Employee benefits expense
Wages & salaries
Social security costs
Other pension costs
Defined benefit plans
Defined contribution plans
Share-based payments – equity settled transactions (note 27)
Details of Directors’ remuneration is disclosed in note 28.
The average monthly number of people employed by the Company and its subsidiaries is as follows:
Minerals
ESCO
Group companies
2021
£m
437.5
38.2
0.4
22.7
10.9
509.7
2021
Number
8,301
2,117
445
10,863
2020
£m
420.5
36.6
0.4
22.3
9.3
489.1
2020
Number
8,455
2,228
447
11,130
The following disclosures are given in relation to total operations.
At 31 December 2021, the number of people employed by the Group and including those under temporary contracts was 11,994 (2020: 13,070).
Auditors' remuneration
The total fees payable by the Group to our auditors for work performed in respect of the audit and other services
provided to the Company and its subsidiary companies during the year are disclosed below
Fees payable to the Company’s auditors for the audit of the Company and Consolidated Financial Statements
Fees payable to the Company’s auditors for other services
The audit of the Company’s subsidiaries
Audit-related assurance services
Other non-audit services
2021
£m
2020
£m
1.8
1.4
0.1
0.2
2.4
1.3
0.1
0.2
181
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
5. ADJUSTING ITEMS
Recognised in arriving at operating profit from continuing operations
Intangibles amortisation (note 4)
Exceptional items
Motion Metrics acquisition and integration related costs
Cybersecurity incident response
Other restructuring and rationalisation activities
ESCO acquisition and integration related costs
Covid-19 restructuring and other costs
Black Economic Empowerment transaction
Other adjusting items
Asbestos-related provision
Pension equalisation
Total adjusting items
Recognised in arriving at operating profit from discontinued operations
Intangibles amortisation (note 4)
Exceptional items
Impairment – Fair value adjustment
Onerous purchase contracts
Disposal related costs
Covid-19 restructuring and other costs
Other restructuring and rationalisation activities
Total adjusting items (note 8)
Continuing operations
Intangibles amortisation
Restated
(note 2)
2020
£m
2021
£m
(34.9)
(38.8)
(2.8)
(4.7)
6.3
0.9
–
–
(0.3)
(4.4)
–
(4.4)
(39.6)
–
–
0.9
–
–
–
0.9
0.9
–
–
(2.0)
(3.3)
(9.7)
(4.4)
(19.4)
(11.8)
(0.6)
(12.4)
(70.6)
(9.1)
(209.2)
(3.8)
(11.4)
(0.7)
(0.2)
(225.3)
(234.4)
Intangibles amortisation of £34.9m relates to acquisition related assets and ongoing multi-year investment activities as outlined in the accounting
policy in note 2.
Exceptional items
Exceptional items in the year include £2.8m of acquisition and integration related costs associated with the Motion Metrics acquisition, which
completed on 30 November 2021 (note 13). The majority of these costs relate to adviser fees, due diligence and initial integration. This has
resulted in a £0.9m exceptional cash flow in the year. We anticipate further integration costs of approximately £3.0m in 2022.
The Group incurred £4.7m of costs in the final quarter of 2021 as a direct result of the cybersecurity incident in September. These costs primarily
related to specialist advisory fees incurred centrally to investigate and respond to the incident, incremental hardware costs expensed to facilitate
business continuity during the period of recovery plus an impairment charge of £0.1m on existing hardware. This has resulted in a £2.2m
exceptional cash outflow in the year with £2.4m expected to be settled in the first half of 2022.
An exceptional credit for other restructuring and rationalisation activities in the year is primarily the result of a land sale in Sendayan, Malaysia.
The land sold was part of our restructuring decision to exit Minerals Malaysia foundry operations in 2018. The land was sold in August 2021
for proceeds of £16.6m, with a book value of £11.0m, resulting in a net gain of £4.8m after deducting legal and tax fees of £0.8m. Overall this
transaction resulted in an exceptional cash inflow of £15.8m in the year. The remaining credit of £1.5m relates to the partial reversal of
restructuring and rationalisation charges recognised in North America and China in prior years.
An accrual of £0.9m has been released in relation to ESCO integration costs which were initially expensed in 2019.
In the prior year, restructuring and rationalisation activities primarily represented actions to further right-size certain central functions as a result of
the continued deep downturn in oil and gas markets. Other exceptional items related to costs of £3.3m associated with the integration of ESCO,
the Black Economic Empowerment transaction for ownership in Weir Minerals South Africa (Pty) Ltd with Medu Capital (Pty) Ltd of £4.4m and
specific one-off and/or short-term costs as a direct result of the Covid-19 pandemic of £9.7m of which £8.9m was severance.
182
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Other adjusting items
A charge of £4.4m (2020: £11.8m) has been recorded in respect of movements in the US asbestos-related liability and associated insurance
provision, plus settlements for post-1981 US asbestos-related claims which relate to legacy Group products. Further details of this are included
in note 21.
In the prior year, a charge of £0.6m was recognised in respect to pension equalisation costs.
Discontinued operations
Intangibles amortisation
In line with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, no amortisation has been recognised in the period.
Exceptional items
In the current year a final adjustment has been made to an onerous purchase contracts provision resulting in a credit of £0.9m (2020:
charge £3.8m).
Prior year exceptional items included an adjustment of £209.2m to the carrying value of the Oil & Gas Division to reflect the fair value less costs
to sell off the Division. This reflected the estimated proceeds from the disposal. The fair value adjustment included £49.5m of intangible assets,
£126.6m of goodwill and £33.1m of inventory. Disposal costs of £11.4m were incurred primarily relating to advisory and consultancy fees.
Other exceptional items related to Covid-19 costs within the Oil & Gas Division of £0.7m and restructuring and rationalisation costs of £0.2m.
The restructuring and rationalisation costs related to severance costs of £3.0m which were offset by credit balances of: £1.1m gain on sale of
a property written off as an exceptional in 2019, £1.0m credit for the final adjustments in relation to the liquidation of the EPIX joint venture and
£0.7m of prior year unutilised provisions.
6. FINANCE (COSTS) INCOME
The following disclosures are given in relation to continuing operations.
Finance costs
Interest payable on financial liabilities
Interest and finance charges payable on lease liabilities
Change in fair value of forward points in cross-currency swaps and forward contracts
Finance charges related to committed loan facilities
Finance charges related to discounting of trade receivables
Other finance costs – retirement benefits
Finance income
Interest receivable on financial assets
2021
£m
(37.2)
(4.3)
(0.5)
(8.0)
(0.1)
(2.6)
(52.7)
2021
£m
5.6
2020
£m
(38.6)
(4.0)
(3.1)
(4.5)
(0.3)
(3.3)
(53.8)
2020
£m
3.8
183
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
7. TAX EXPENSE
Income tax (expense) credit from total operations
Consolidated Income Statement
Current income tax
UK corporation tax
Adjustments in respect of previous years
UK corporation tax
Foreign tax
Adjustments in respect 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
Adjustments in respect of previous years
Total deferred tax1
Total income tax expense in the Consolidated Income Statement
Total income tax expense is attributable to:
Profit from continuing operations
Profit (loss) from discontinued operations
1
Includes £3.4m of deferred tax credit relating to foreign tax (2020: £8.2m charge).
The total income tax expense is disclosed in the Consolidated Income Statement, and note 8, as follows.
Tax (expense) credit – adjusted continuing operations
adjusted discontinued operations (note 8)
exceptional and other adjusting items
adjusting intangibles amortisation and impairment
Total income tax (expense) in the Consolidated Income Statement
2021
£m
(1.4)
(4.1)
(5.5)
(64.5)
(0.5)
(70.5)
14.4
(6.4)
1.1
0.9
10.0
(60.5)
(54.4)
(6.1)
(60.5)
2021
£m
(63.8)
(1.7)
(2.9)
7.9
(60.5)
Current tax for 2021 has been reduced by £0.1m (2020: £0.3m) 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 22.
Tax relating to items charged or credited to equity from continuing operations
Consolidated Statement of Comprehensive Income
Deferred tax – origination & reversal of temporary differences
Deferred tax – effect of change in tax rates
Tax (charge) credit on actuarial gains/losses on retirement benefits
Tax credit on hedge losses
Tax (charge) credit in the Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Deferred tax on share-based payments
Tax (charge) credit in the Consolidated Statement of Changes in Equity
184
2021
£m
(19.1)
(2.0)
(21.1)
–
(21.1)
(0.7)
(0.7)
Restated
(note 2)
2020
£m
1.7
(7.7)
(6.0)
(73.9)
5.5
(74.4)
35.1
(36.9)
(1.3)
3.0
0.1
(74.5)
(44.5)
(30.0)
(74.5)
Restated
(note 2)
2020
£m
(60.8)
(3.0)
(21.3)
10.6
(74.5)
2020
£m
6.5
–
6.5
0.1
6.6
1.2
1.2
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021
Reconciliation of the total tax charge from total operations
The tax charge (2020: charge) in the Consolidated Income Statement for the year is lower (2020: higher) than the weighted average of standard
rates of corporation tax across the Group of 24.7% (2020 restated: 0.5%). The differences are reconciled below.
Profit before tax from continuing operations
Profit (loss) before tax from discontinued operations
Profit (loss) before tax
At the weighted average of standard rates of corporation tax across the Group of 24.7% (2020: 0.5%)
Adjustments in respect of previous years – current tax
– deferred tax
Joint ventures
Unrecognised deferred tax assets
Overseas tax on unremitted earnings
Permanent differences
Tax effect of funding overseas operations
Effect of changes in tax rates
Exceptional and other adjusting items ineligible for tax
At effective tax rate of 18.93% (2020: -93.01%)
2021
£m
209.5
110.0
319.5
78.9
4.6
(0.9)
(0.6)
6.4
3.8
(12.5)
–
(1.1)
(18.1)
60.5
Restated
(note 2)
2020
£m
178.0
(258.0)
(80.0)
(0.4)
2.2
(3.0)
(1.3)
1.6
3.3
2.3
(6.3)
0.9
75.2
74.5
Exceptional and other adjusting items ineligible for tax includes the impact of profits and losses arising on the disposal of the Oil & Gas entities
where these gains and losses are exempt from tax.
Unrecognised deferred tax assets increased from an addition of £1.6m in 2020 to an addition of £6.4m in 2021. This reflects the further
derecognition of £3.8m of deferred tax assets arising in the US on disposal of the US Oil & Gas operations, together with £2.6m of losses arising
in continuing operations entities including China and Turkey where deferred tax asset recognition is not appropriate.
The tax effect of funding overseas operations reduced from a credit of £6.3m in 2020 to £nil in 2021, reflecting the unwind of the Group’s US
financing arrangement in November 2020.
The Group’s provision for overseas tax on unremitted earnings increased from an addition of £3.3m in 2020 to an addition of £3.8m in 2021.
This is due to an increase in 2021 of the provision in respect of unremitted earnings in Chile and Peru.
Permanent differences decreased from an addition of £2.3m in 2020 to a reduction of £12.5m in 2021. This reflects the non-recurrence of £8.0m
of 2020 permanent differences related to discontinued operations, together with the 2022 impact of the Group’s R&D credits of £1.8m and
movement in the Group’s provisions for uncertain tax positions of £10.0m, following the expiration of tax statute of limitation in the various
jurisdictions together with the conclusion of open tax audits in South Africa.
8. DISCONTINUED OPERATIONS
On 5 October 2020, the Group announced it had entered into an agreement to sell the Oil & Gas Division and, in line with IFRS 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’, the Group classified the Division as held for sale and its results have since been reported in
discontinued operations. Following the initial announcement of the sale, the Group’s joint venture partner, Saudi Arabia-based, Arabian Metals
Company (AMCO) exercised its pre-emption right to purchase Weir’s 49% stake in AMCO for an enterprise value of US$30.0m. The Oil & Gas
Division provided pressure pumping and pressure control equipment and aftermarket support across the oilfield equipment and services value
chain, primarily to customers in North America.
The Group completed the disposal of the Oil & Gas Division (excluding AMCO) on 1 February 2021 to Caterpillar Inc. (CAT) for an enterprise value
of US$375.0m and a net consideration of £275.3m after certain customary working capital and debt-like adjustments. Following finalisation of
working capital and tax provision adjustments, the Group received a further £7.5m to reflect a final consideration of £282.8m with adjustments
made to net assets sold in relation to tax as part of the agreed completion accounts process. There remains minor offsetting balances relating to
potential tax liabilities and tariff rebates which are not reflected below as at present the amounts relating to these items are not yet finalised and
the timing of settlement is currently unknown. These are not expected to have a significant impact on the results disclosed below.
The sale of AMCO to Olayan Financing Company (Olayan), our joint venture partner, completed on 30 June 2021. A consideration of
US$37.8m (£27.4m) was received compared to the original fair market value of US$30.0m agreed with CAT. The agreement with CAT in respect
of the joint venture sale was that any proceeds received from Olayan above the fair market value would be split 90:10 in favour of CAT, subject
to certain capital gains tax and dividend retentions. This resulted in a payment to CAT of US$4.7m (£3.4m) in July 2021 and a payment of capital
gains tax to the Saudi authorities of US$6.3m (£4.6m) in August 2021.
185
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
8. DISCONTINUED OPERATIONS continued
Financial information relating to discontinued operations is set out in the table below.
Financial performance and cash flow information for discontinued operations
Revenue
Operating (loss) profit before share of results of joint ventures
Share of results of joint ventures
Operating (loss) profit
Finance costs
Finance income
(Loss) profit before tax from discontinued operations
Tax expense
(Loss) profit after tax from discontinued operations
Gain on sale of Oil & Gas Division (see below)
Gain on sale of joint venture (see below)
(Loss) profit for the period from discontinued operations
Reclassification of foreign currency translation reserve
Other comprehensive (expense) income from discontinued
operations
Total net comprehensive expense from discontinued
operations
Year ended 31 December 2021
Year ended 31 December 2020
Adjusted
results
£m
25.1
(1.9)
1.6
(0.3)
(0.2)
–
(0.5)
(1.7)
(2.2)
–
–
(2.2)
Adjusting
items
(note 5)
£m
–
0.9
–
0.9
–
–
0.9
–
0.9
99.2
6.0
106.1
Statutory
results
£m
25.1
(1.0)
1.6
0.6
(0.2)
–
0.4
(1.7)
(1.3)
99.2
6.0
103.9
(103.4)
(1.3)
(0.8)
Adjusted
results
£m
314.3
(24.5)
3.9
(20.6)
(3.3)
0.3
(23.6)
(3.0)
(26.6)
–
–
(26.6)
Adjusting
items
(note 5)
£m
–
(234.4)
–
(234.4)
–
–
(234.4)
(27.0)
(261.4)
–
–
(261.4)
Statutory
results
£m
314.3
(258.9)
3.9
(255.0)
(3.3)
0.3
(258.0)
(30.0)
(288.0)
–
–
(288.0)
–
3.4
(284.6)
The reconciliation from revenue to operating profit includes cost of sales of £21.8m (2020: £272.6m), other operating income of £0.3m
(2020: £3.3m), selling & distribution costs of £1.4m (2020: £18.1m), administrative expenses of £4.1m (2020: £51.4m) and share of results of joint
venture of £1.6m (2020: £3.9m).
The gain on sale is largely attributable to the recycling of cumulative foreign exchange gains and losses from the foreign currency translation
reserve to the income statement which is recognised only at the time of sale. For the Oil & Gas Division, excluding AMCO, the cumulative net
foreign exchange gains on retranslation of foreign operations recycled was £244.3m offset by the cumulative net foreign exchange losses on
net investment hedges of £143.4m. In June 2021, £2.5m of cumulative net foreign exchange gains on retranslation of foreign operations was
recycled in respect of the AMCO disposal.
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net (decrease) increase in cash & cash equivalents from discontinued operations
Details of the sale of Oil & Gas Division (excluding AMCO)
Year ended
31 December 2021
£m
(16.3)
(0.2)
(1.1)
(17.6)
Year ended
31 December 2020
£m
20.3
3.8
(18.5)
5.6
Year ended
31 December 2021
£m
Consideration received
Cash received – initial settlement
Cash received – completion accounts settlement
Total disposal consideration
Carrying amount of net assets sold
Costs of disposal
Gain on sale of Oil & Gas Division before reclassification of foreign currency translation reserve and tax
Reclassification of foreign currency translation reserve
Gain on sale of Oil & Gas Division before tax
Tax credit on disposal
Gain on sale of Oil & Gas Division after tax
275.3
7.5
282.8
(282.9)
(1.8)
(1.9)
100.9
99.0
0.2
99.2
186
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The carrying amount of assets and liabilities as at the date of sale were as follows.
Property, plant & equipment
Intangible assets
Investment in joint ventures
Inventories
Trade & other receivables
Cash & short-term deposits
Trade & other payables
Leases
Provisions
Net assets
Details of the sale of AMCO joint venture
Consideration received
Cash received
Consideration adjustment – paid to CAT
Total disposal consideration
Carrying amount of investment held
Costs of disposal1
Gain on sale of joint venture before reclassification of foreign currency translation reserve and tax
Reclassification of foreign currency translation reserve
Gain on sale of joint venture before tax
Tax charge on disposal
Gain on sale of joint venture after tax
1 Costs of disposal related to an unutilised prior year provision for costs to sell.
Earnings (loss) per share
Earnings (loss) per share from discontinued operations were as follows.
Basic
Diluted
Period ended
1 February 2021
£m
117.3
82.0
3.1
107.6
78.9
16.1
(48.8)
(65.2)
(8.1)
282.9
Year ended
31 December 2021
£m
27.4
(3.4)
24.0
(16.1)
0.2
8.1
2.5
10.6
(4.6)
6.0
2021
pence
40.1
39.8
2020
pence
(110.9)
(110.9)
The earnings (loss) per share figures were derived by dividing the net profit (loss) attributable to equity holders of the Company from discontinued
operations by the weighted average number of ordinary shares, for both basic and diluted amounts, shown in note 9.
9. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share amounts are calculated by dividing net profit (loss) for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing the
net profit (loss) attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year,
adjusted for the effect of dilutive share awards.
The following reflects the earnings used in the calculation of earnings (loss) per share.
Profit (loss) attributable to equity holders of the Company
Total operations1 (£m)
Continuing operations2 (£m)
Continuing operations before adjusting items2 (£m)
1 Adjusted for a profit of £0.5m (2020: profit of £0.2m) in respect of non-controlling interests for total operations.
2 Adjusted for a profit of £0.5m (2020: profit of £0.2m) in respect of non-controlling interests for continuing operations.
2021
258.5
154.6
184.8
Restated
(note 2)
2020
(154.7)
133.3
187.6
187
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
9. EARNINGS (LOSS) PER SHARE continued
The following reflects the shares numbers used in the calculation of earnings (loss) per share, and the difference between the weighted average
share capital for the purposes of the basic and the diluted earnings (loss) per share calculations.
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution: employee share awards
Adjusted weighted average number of ordinary shares for diluted earnings per share
2021
Shares
million
259.3
1.7
261.0
2020
Shares
million
259.5
2.2
261.7
The profit (loss) attributable to equity holders of the Company used in the calculation of both basic and diluted earnings (loss) per share from
continuing operations before adjusting items is calculated as follows.
Net profit attributable to equity holders from continuing operations2
Adjusting items net of tax
Net profit attributable to equity holders from continuing operations before adjusting items
Basic earnings (loss) per share:
Total operations1
Continuing operations2
Continuing operations before adjusting items2
Diluted earnings (loss) per share:
Total operations1
Continuing operations2
Continuing operations before adjusting items2
2021
£m
154.6
30.2
184.8
2021
pence
99.7
59.6
71.3
99.0
59.2
70.8
Restated
(note 2)
2020
£m
133.3
54.3
187.6
Restated
(note 2)
2020
pence
(59.6)
51.4
72.3
(59.6)
50.9
71.7
1 Adjusted for a profit of £0.5m (2020: profit of £0.2m) in respect of non-controlling interests for total operations.
2 Adjusted for a profit of £0.5m (2020: profit of £0.2m) in respect of non-controlling interests for continuing operations.
There have been 6,258 share awards (2020: 350,896) exercised between the reporting date and the date of signing of these financial statements.
These were settled out of existing shares held in trust.
Earnings (loss) per share from discontinued operations is disclosed in note 8.
10. DIVIDENDS PAID & PROPOSED
Declared & paid during the year
Equity dividends on ordinary shares
Final dividend for 2020: 0.00p (2019: 0.00p)
Interim dividend for 2021: 11.50p (2020: 0.00p)
Proposed for approval by Shareholders at the Annual General Meeting
Final dividend for 2021: 12.30p (2020: 0.00p)
2021
£m
–
29.8
29.8
31.9
2020
£m
–
–
–
–
The current year dividend is in line with the capital allocation policy announced in our 2020 Annual Report and Financial Statements, under which
the Group intends to distribute 33% of net adjusted earnings by way of dividend. As a result dividend cover in 2021 is 3.0 times. In response to
the Covid-19 pandemic, the Board did not propose an interim or final dividend for 2020.
The proposed dividend is based on the number of shares in issue, excluding treasury shares held, at the date that 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 this Annual Report and Financial Statements and the record date for the final dividend.
188
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 11. PROPERTY, PLANT & EQUIPMENT
Property, plant & equipment comprises owned and right-of-use assets that do not meet the definition of investment property.
Owned land
& buildings
£m
Owned
plant &
equipment
£m
Total
owned
property,
plant &
equipment
£m
Right-of-
use land &
buildings
£m
Right-of-
use plant &
equipment
£m
Total
right-of-use
property,
plant &
equipment
£m
Total
property,
plant &
equipment
£m
Cost
At 31 December 2019
Additions
Disposals
Reclassifications to intangible assets (note 12)
Reclassifications to inventory
Reclassifications
Reassessments and modifications
Transferred to assets held for sale (note 8)
Exchange adjustment
At 31 December 2020
Additions
Acquisitions
Disposals
Reclassifications to intangible assets (note 12)
Reclassifications to inventory
Reclassifications
Reassessments and modifications
Inflation adjustment
Exchange adjustment
At 31 December 2021
Accumulated depreciation & impairment
At 31 December 2019
Depreciation charge for the year1
Impairment during the year
Disposals
Reclassifications to intangible assets (note 12)
Reclassifications
Reassessments and modifications
Transferred to assets held for sale (note 8)
Exchange adjustment
At 31 December 2020
Depreciation charge for the year
Impairment during the year
Disposals
Reclassifications
Reassessments and modifications
Inflation adjustment
Exchange adjustment
At 31 December 2021
Net book value at 31 December 2019
Net book value at 31 December 2020
Net book value at 31 December 2021
182.1
7.3
(1.8)
–
–
2.4
–
(32.4)
(3.8)
153.8
4.0
0.2
(23.8)
–
–
4.2
–
–
(4.4)
134.0
52.2
5.8
0.1
(1.3)
–
(0.2)
–
(15.6)
(1.0)
40.0
4.6
–
(6.0)
–
–
–
(1.8)
36.8
129.9
113.8
97.2
660.6
54.1
(44.1)
(2.2)
0.3
(2.4)
–
(166.8)
(9.7)
489.8
44.3
0.4
(15.7)
(0.5)
(0.2)
(4.2)
–
0.3
(19.5)
494.7
397.0
47.0
(1.9)
(40.9)
(0.6)
0.2
–
(133.9)
(5.9)
261.0
38.4
0.2
(12.2)
–
–
0.2
(13.2)
274.4
263.6
228.8
220.3
842.7
61.4
(45.9)
(2.2)
0.3
–
–
(199.2)
(13.5)
643.6
48.3
0.6
(39.5)
(0.5)
(0.2)
–
–
0.3
(23.9)
628.7
449.2
52.8
(1.8)
(42.2)
(0.6)
–
–
(149.5)
(6.9)
301.0
43.0
0.2
(18.2)
–
–
0.2
(15.0)
311.2
393.5
342.6
317.5
181.7
19.8
(3.3)
–
–
(0.1)
10.6
(78.9)
(1.6)
128.2
12.4
0.2
(6.2)
–
–
(0.2)
3.3
–
(2.4)
135.3
31.7
32.6
–
(3.3)
–
–
(2.4)
(21.2)
(1.2)
36.2
20.0
(1.6)
(2.8)
0.1
0.8
–
(0.8)
51.9
150.0
92.0
83.4
39.6
7.8
(3.5)
–
–
0.1
(2.5)
(12.5)
(0.8)
28.2
8.9
–
(4.8)
–
–
0.2
(2.9)
–
(0.6)
29.0
11.9
9.3
–
(3.5)
–
–
(1.4)
(2.6)
(0.4)
13.3
7.6
–
(4.6)
(0.1)
(0.8)
–
(0.8)
14.6
27.7
14.9
14.4
221.3
27.6
(6.8)
–
–
–
8.1
(91.4)
(2.4)
156.4
21.3
0.2
(11.0)
–
–
–
0.4
–
(3.0)
164.3
43.6
41.9
–
(6.8)
–
–
(3.8)
(23.8)
(1.6)
49.5
27.6
(1.6)
(7.4)
–
–
–
(1.6)
66.5
177.7
106.9
97.8
1,064.0
89.0
(52.7)
(2.2)
0.3
–
8.1
(290.6)
(15.9)
800.0
69.6
0.8
(50.5)
(0.5)
(0.2)
–
0.4
0.3
(26.9)
793.0
492.8
94.7
(1.8)
(49.0)
(0.6)
–
(3.8)
(173.3)
(8.5)
350.5
70.6
(1.4)
(25.6)
–
–
0.2
(16.6)
377.7
571.2
449.5
415.3
1
Includes depreciation on owned assets in relation to discontinued operations of £nil (2020: £9.6m) and depreciation on right-of-use assets in relation to discontinued operations of £nil
(2020: £12.9m).
189
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
11. PROPERTY, PLANT & EQUIPMENT continued
Owned property, plant & equipment
The carrying amount of assets under construction included in plant & equipment for continuing operations is £31.8m (2020: £52.4m).
Discontinued operations include assets under construction in plant & equipment of £nil (2020: £1.7m).
In 2021, the impairment recorded was £0.2m (2020: reversal of £1.8m) and related wholly to computer hardware equipment within the Minerals
Division which was written-off as a result of the cyber incident.
In 2021, the inflation adjustment recorded was to increase cost by £0.3m (2020: £nil) and increase accumulated depreciation by £0.2m
(2020: £nil). The inflation adjustments in 2021 related wholly to owned property, plant & equipment assets located in Argentina, within the
Minerals Division. Inflation adjustments are recorded in accordance with IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
Right-of-use assets
The Group leases many assets including buildings, vehicles, forklifts, photocopiers and printers, machinery and IT equipment. Building lease
terms are negotiated on an individual basis and contain a wide range of terms from 1-25 years. The average lease term is approximately five
years. Plant & equipment lease terms range from 1-16 years, with an average lease term of approximately four years. The current and non-current
lease liabilities are disclosed in notes 19 and 29 respectively. The maturity analysis of contractual undiscounted cash flows is included in note 29.
The following table shows the breakdown of the lease expense between amounts charged to operating profit and amounts charged to finance
costs in the year for continuing operations.
In 2021, the impairment recorded was a reversal of £1.6m (2020: £nil) and related solely to a property which was previously held, but idle, and
impaired. In the year the property ceased to be a right-of-use asset of the Group and the impairment was reversed on the disposal of the asset.
Depreciation of right-of-use assets
Expenses relating to short-term leases
Expenses relating to leases of low value assets, excluding short-term leases of low value
Income from sub-leasing right-of-use assets
Expenses relating to variable lease payments not included in the measurement of lease liabilities
Charge to operating profit
Finance cost – interest expense related to lease liabilities
Charge to profit before tax from continuing operations
2021
£m
(27.6)
(7.1)
(1.8)
0.8
(0.5)
(36.2)
(4.3)
(40.5)
2020
£m
(29.0)
(7.7)
(1.5)
0.5
(0.4)
(38.1)
(4.0)
(42.1)
The total cash outflow in the year for continuing operations, which includes right-of-use cash flows and associated finance costs as well as cash
flows for the above expenses, is £40.7m (2020: £41.6m). Future cash outflows from leases not yet commenced to which the Group is committed
total £8.6m (2020: £12.8m).
190
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 12. INTANGIBLE ASSETS
Cost
At 31 December 2019
Prior period restatement (note 2)
Restated at 1 January 2020
Additions (restated)
Disposals
Reclassifications from property,
plant & equipment (note 11)
Reclassifications
Transferred to assets held for sale (note 8)
Exchange adjustment
Restated at 31 December 2020
Additions
Acquisitions
Disposals
Reclassifications from property,
plant & equipment (note 11)
Reclassifications
Exchange adjustment
At 31 December 2021
Accumulated amortisation & impairment
At 31 December 2019
Prior period restatement (note 2)
Restated at 1 January 2020
Amortisation charge for the year (restated)1
Impairment during the year
Disposals
Reclassifications from property,
plant & equipment (note 11)
Reclassifications
Transferred to assets held for sale (note 8)
Exchange adjustment
Restated at 31 December 2020
Amortisation charge for the year1
Impairment during the year
Disposals
Reclassifications
Exchange adjustment
At 31 December 2021
Restated net book value at 31 December 2019
Restated net book value at 31 December 2020
Net book value at 31 December 2021
Goodwill
£m
1,556.9
–
1,556.9
–
–
–
–
(777.9)
(30.9)
748.1
–
52.1
–
–
–
0.6
800.8
681.0
–
681.0
–
126.6
–
–
–
(777.9)
(26.4)
3.3
–
–
–
–
(0.1)
3.2
875.9
744.8
797.6
1
Includes amortisation in relation to discontinued operations of £nil (2020: £9.1m).
Brand
names
£m
Customer &
distributor
relationships
£m
Purchased
software
£m
Intellectual
property &
trademarks
£m
Development
costs
£m
Other
£m
Total
£m
352.2
–
352.2
–
–
–
–
(88.9)
(9.7)
253.6
–
3.3
–
–
–
2.0
258.9
50.5
–
50.5
–
14.2
–
–
–
(63.2)
(1.5)
–
–
–
–
–
–
–
301.7
253.6
258.9
703.6
–
703.6
–
(1.9)
–
–
(502.7)
(19.0)
180.0
–
–
–
–
–
1.5
181.5
497.9
–
497.9
18.8
28.1
(1.9)
–
–
(451.9)
(14.6)
76.4
7.0
–
–
–
0.6
84.0
205.7
103.6
97.5
94.3
(7.5)
86.8
9.1
(4.6)
1.8
(0.4)
(8.3)
0.9
85.3
6.0
0.1
(1.8)
0.5
2.4
(3.3)
89.2
43.4
(0.5)
42.9
9.0
–
(4.2)
0.3
(0.1)
(7.3)
0.1
40.7
9.5
0.1
(1.7)
1.3
(1.6)
48.3
43.9
44.6
40.9
130.9
–
130.9
–
(6.1)
–
–
(32.7)
(1.6)
90.5
–
34.0
–
–
–
(1.0)
123.5
66.6
–
66.6
12.4
6.2
(6.1)
0.3
–
(30.2)
(1.0)
48.2
9.7
–
–
–
0.2
58.1
64.3
42.3
65.4
51.3
–
51.3
1.3
(5.7)
–
1.4
(0.1)
0.4
48.6
2.0
–
–
–
(2.2)
(0.7)
47.7
27.8
–
27.8
9.0
–
(5.8)
–
–
–
0.1
31.1
8.1
–
–
(1.3)
(0.2)
37.7
23.5
17.5
10.0
–
80.9 2,970.1
(7.5)
80.9 2,962.6
10.4
(20.8)
–
(2.5)
2.2
0.4
(1.0)
–
(8.6) (1,419.2)
(1.9)
(61.8)
67.3 1,473.4
8.0
89.5
(1.8)
–
–
–
–
(0.2)
1.3
0.5
–
0.4
68.4 1,570.0
29.9
–
1,397.1
(0.5)
29.9 1,396.6
52.5
176.1
(20.5)
3.3
1.0
(2.5)
–
0.1
(6.7)
(0.8)
24.3
5.9
–
–
–
0.2
30.4
0.6
–
(1,337.2)
(44.1)
224.0
40.2
0.1
(1.7)
–
(0.9)
261.7
51.0 1,566.0
43.0 1,249.4
38.0 1,308.3
191
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
12. INTANGIBLE ASSETS continued
Intangible assets have been restated, to retrospectively apply the voluntary change in accounting policy for Software as a Service.
This restatement has impacted intangible assets as at 31 December 2019 and as at 31 December 2020. The restatement and its impact on the
Consolidated Financial Statements has been outlined in note 2.
In 2021, the impairment recorded was £0.1m (2020: £176.1m). In the prior year, the impairment charge of £176.1m related wholly to
discontinued operations.
In 2021, total acquisitions recorded were £89.5m (2020: £nil), including goodwill £52.1m, brand names £3.3m, purchased software £0.1m,
and intellectual property and trademarks £34.0m. The intangible assets arose on the acquisition of Motion Metrics on 30 November 2021.
The acquisition of Motion Metrics has been outlined in note 13.
The carrying amount of assets under construction included in intangible assets for continuing operations is £3.7m (2020: £9.6m).
Discontinued operations include assets under construction in intangible assets of £nil (2020: £0.3m).
Brand names, with the exception of the Motion Metrics® brand name, have been assigned an indefinite useful life and as such are not amortised,
but are tested annually for impairment. The Motion Metrics® brand name has an expected useful life of 15 years and is being amortised over
this period.
The carrying value of brand names with an indefinite life is tested annually for impairment (note 14). The carrying value at the year end of brand
names with an indefinite life was £255.9m (2020: £253.6m).
The brand name value includes the brands of ESCO™, Linatex® and Warman® all of which are considered to be leaders in their respective
markets. The allocation of significant brand names is as follows.
ESCO
Warman
Linatex
SPM
Trio
Other1
SPM included in assets held for sale
Other brands included in assets held for sale
Brand names
2021
£m
126.3
61.3
42.1
–
17.6
11.6
258.9
–
–
258.9
2020
£m
124.9
60.8
41.8
18.0
17.4
16.4
279.3
(18.0)
(7.7)
253.6
1
Included within ‘Other’ is the Motion Metrics® brand name, which has a carrying value of £3.0m at 31 December 2021 (2020: £nil), and is being amortised over an expected remaining useful life
of 15 years.
The allocation of customer and distributor relationships, and the amortisation period of these assets is as follows.
Remaining
amortisation period
Customer and distributor
relationships
ESCO
SPM
Novatech
Trio
Other
2021
Years
24-27
n/a
n/a
3
Up to 9
2020
Years
25-28
n/a
n/a
4
Up to 10
SPM and Novatech customer and distributor relationships included in assets
held for sale
n/a
n/a
2021
£m
89.4
–
–
3.0
5.1
97.5
–
97.5
2020
£m
92.3
35.5
15.3
3.9
7.4
154.4
(50.8)
103.6
192
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 13. BUSINESS COMBINATIONS
The Group completed the acquisition of 100% of the voting rights of Motion Metrics on 30 November 2021 for an enterprise value of CAD$150m
(£88m), which represents initial equity value consideration of £68m paid in cash and adoption of £20m of vendor liabilities primarily relating to tax,
settlement of an employee growth participation plan and disposal costs.
Motion Metrics is a leading Canada-based global mining technology business and is the market leading developer of innovative Artificial
Intelligence (AI) and 3D rugged Machine Vision Technology used in mines worldwide. Its technology helps miners increase safety, efficiency
and sustainability of their operations. As part of the agreement, Motion Metrics’ Vancouver headquarters will become Weir’s global centre for
excellence in AI and Machine Vision Technology.
Motion Metrics applications are highly complementary to Weir’s product portfolio. It will join the ESCO Division and reporting segment reflecting
the early adoption of its technology in ground engaging tools (G.E.T.) where ESCO is an established global leader. Motion Metrics AI and Machine
Vision capabilities are expected to be leveraged across the whole mining value chain served by the Weir Group.
The provisional fair values, which are subject to finalisation within 12 months of acquisition, are disclosed in the table below. There are certain
intangible assets included in the £52.1m of goodwill recognised that cannot be individually separated and reliably measured due to their nature.
These items include the future growth of the business, synergies and an assembled workforce.
Motion Metrics provisional fair values
Property, plant & equipment – owned assets
Property, plant & equipment – right-of-use assets
Intangible assets
Brand names
Intellectual property & trademarks
Purchased software
Inventories
Trade & other receivables
Income tax receivable
Interest-bearing loans & borrowings
Trade & other payables
Income tax payable
Provisions
Deferred tax liabilities
Provisional fair value of net assets
Goodwill arising on acquisition
Total consideration
Cash consideration
Contingent consideration
Total consideration
The total net cash outflow on current year acquisitions was as follows:
cash paid
cash & cash equivalents acquired
Total cash outflow (note 25)
2021
£m
0.6
0.2
3.3
34.0
0.1
2.2
2.3
0.7
(0.2)
(1.6)
(0.5)
(20.0)
(5.3)
15.8
52.1
67.9
67.9
–
67.9
(67.9)
–
(67.9)
The gross amount and fair value of Motion Metrics trade receivables amounts to £2.3m. It is expected that virtually all the contractual amounts
will be collected.
Motion Metrics contributed £0.6m to revenue and an operating loss of £0.3m (before adjusting items) in the period from acquisition to
31 December 2021. If the acquisition had occurred at the start of 2021, the revenue and statutory profit for the year from acquired operations
would not have had a material impact on the results disclosed in the Consolidated Income Statement and therefore are not separately disclosed.
Group exceptional acquisition and integration costs totalled £2.8m in the year (note 5).
Contingent consideration
As part of the purchase agreement a maximum of an additional CAD$100m is payable by the Group contingent on Motion Metrics exceeding
specific revenue and EBITDA targets over the next three years. Any balance which becomes payable would be split, with 80% reflecting further
consideration and 20% for a new employee bonus plan. The entry point for any contingent payment would require significant growth both in
terms of revenue and EBITDA margin by 2024. While the Group expects Motion Metrics to grow as it leverages the benefits of being partnered
with ESCO, and the opportunities within Minerals, the entry targets are considered challenging. At present the probability of Motion Metrics
exceeding these targets in order to trigger a contingent payment is considered uncertain, in part due to the relative infancy of the business. As a
result no contingent consideration has been recorded at the acquisition date. This will be reassessed in future periods as the business develops.
193
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
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 cash generating
units (CGUs) that are expected to benefit from the business combination. The Group tests goodwill and intangible assets (brand names) with
indefinite lives annually for impairment, or more frequently if there are indications that these might be impaired.
The carrying amounts of goodwill and intangible assets with indefinite lives have been allocated as per the table below.
Minerals
ESCO
Continuing operations
Discontinued operations
Description of CGUs
Goodwill
2021
£m
363.8
433.8
797.6
–
Intangibles
2021
£m
129.6
126.3
255.9
–
Goodwill
2020
£m
365.7
379.1
744.8
–
Intangibles
2020
£m
128.7
124.9
253.6
25.7
A description of each of the CGUs is provided below along with a summary of the key drivers of revenue growth and operating profit margin.
Minerals
Minerals includes the Weir Warman, Weir Linatex and Weir Trio brands. Weir Minerals companies supply pumps and associated equipment and
services to all global mining markets. The key drivers for revenues are: (i) levels of mining capital expenditure which drives demand for original
equipment; and (ii) levels of actual mining activity which drives demand for spare parts and service. Independent forecasts of mining capital
expenditure and activity have been used to derive revenue growth assumptions. These independent forecasts were prepared during the final
quarter of 2021.
ESCO
ESCO includes the ESCO and Bucyrus Blades brands. This CGU is a supplier of ground engaging tools (G.E.T.) and associated equipment and
services to the mining and infrastructure industries. The key drivers for revenues are: (i) levels of mining and infrastructure capital expenditure
which drives demand for original equipment; and (ii) levels of actual mining and infrastructure activity which drives demand for spare parts and
service. Independent forecasts of expenditure in these sectors have been used to derive revenue growth assumptions. These independent
forecasts were prepared during the final quarter of 2021.
The goodwill and intangibles assets arising from the acquisition of Motion Metrics have been included within the ESCO CGU from 30 November
2021. At 31 December 2021, the purchase price is considered to reflect the fair value of the assets and therefore the addition to the ESCO CGU
is considered to have neutral impact on the impairment analysis.
Discontinued operations
Discontinued operations incorporate the former Oil & Gas North America and Oil & Gas International CGUs. The Oil & Gas Division was disposed
to Caterpillar Inc. on 1 February 2021, with Weir’s stake in Saudi Arabia-based Arabian Metals Company (AMCO) being sold to our joint venture
partner Olayan Financing Company, on 30 June 2021.
Impairment testing assumptions
Impairment testing requires an estimate of the value in use of the CGUs to which the goodwill and intangible assets are allocated. To estimate
the value in use, the Group estimates the expected future cash flows from the CGU and discounts them to their present value at a determined
discount rate, which is appropriate for the geographic location of the CGU. Forecasting expected cash flows and selecting an appropriate
discount rate inherently requires estimation. The forecasts reflect latest strategic plans, for each of the CGUs, covering a period of five years and
incorporate initial plans for achieving the Group’s long-term sustainability goals, which are described more fully in the Strategic Report.
The Directors have considered a range of scenarios, including those consistent with meeting the Paris goals of limiting the global temperature
increase to well below 2°C, which the Directors consider to be a reasonably possible outcome. In these scenarios, assumptions have been
made over the price and production volumes of certain commodities, that are key to end customers, with several of these commodities being
vital globally in achieving the Paris goals. Under the scenarios considered by the Directors there are no indicators of impairment in relation to
either CGU.
194
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The basis of the impairment tests for the two continuing CGUs, including key assumptions, are set out in the table below.
Basis of
valuation
CGU
Minerals Value in use
Period of
forecast
5 years
Discount
rate1
10.8% (2020: 10.9%)
Real
growth2
2.4% (2020: 2.1%)
ESCO
Value in use
5 years
10.6% (2020: 9.5%)
2.3% (2020: 1.8%)
Key
assumptions3
Revenue growth, Adjusted
operating profit margins
Revenue growth, Adjusted
operating profit margins
Source
External forecast
Historic experience
External forecast
Historic experience
1 Discount rate
The pre-tax nominal weighted average cost of capital (WACC) is the basis for the discount rate, with adjustments made, as appropriate, for geographic risk. The WACC is the weighted average
of the pre-tax cost of debt financing and the pre-tax cost of equity finance. The discount rate has remained broadly the same for Minerals, and increased in ESCO, due to changes in country mix
with mining asset betas remaining stable.
2 Real growth
For the two CGUs the real growth beyond the five-year forecast period has been updated to reflect external International Monetary Fund (IMF) growth rates for the countries in which the
CGU operates. These reflect the global nature of these businesses, the long-term growth prospects in their end markets and the fact that they sell a significant proportion of their products to
emerging markets which also have strong long-term growth prospects.
3 Adjusted operating profit margins
Adjusted operating profit margins have been forecast based on historic levels taking cognisance of the likely impact of changing economic environments and competitive landscapes on volumes
and revenues, and the impact of associated management actions.
Impairment testing and sensitivity analysis
Forecasts for the Minerals and ESCO CGUs show significant headroom above carrying value. No sensitivity analysis has been presented for
these CGUs as there is no reasonable possible change in key assumptions that would cause the carrying values to exceed recoverable amounts.
The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the CGU, and that the
discount rate used is appropriate given the risks associated with the specific cash flows.
15. INVESTMENTS IN JOINT VENTURES
At the year end, the Group held an investment in one joint venture, ESCO Elecmetal Fundición Limitada.
At 31 December 2019
Disposals
Transfer to assets held for sale
Share of results
– continuing operations
– discontinued operations
Share of dividends – continuing operations
– discontinued operations
Exchange adjustment
At 31 December 2020
Share of results
Share of dividends
Exchange adjustment
At 31 December 2021
£m
36.6
(0.1)
(17.9)
1.6
3.9
(2.1)
(6.2)
(0.8)
15.0
1.7
(2.0)
(2.4)
12.3
Wesco LLC and Weir Arabian Metals Company were transferred to assets held for sale in the prior year and subsequently disposed on 1 February
2021 and 30 June 2021 respectively. EPIX Power Systems LLC was dissolved in November 2020, resulting in a loss of £0.1m.
195
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
15. INVESTMENTS IN JOINT VENTURES continued
The Group’s share of the remaining joint venture balance sheet is detailed below.
Share of joint venture’s balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
The Group’s share of the revenue and profit of its remaining joint venture are included below.
Share of joint venture’s revenue & profits
Revenue
Cost of sales
Administrative expenses
Income tax expense
Interest
Profit after tax
The Group’s investment in the joint venture is included in the list on pages 241 to 247.
16. INVENTORIES
Raw materials
Work in progress
Finished goods
2021
£m
7.7
12.5
(2.6)
(5.3)
12.3
2021
£m
12.3
(10.4)
0.1
(0.2)
(0.1)
1.7
2021
£m
33.5
39.1
444.5
517.1
2020
£m
7.5
14.3
(5.3)
(1.5)
15.0
2020
£m
13.5
(11.2)
(0.2)
(0.5)
–
1.6
2020
£m
27.0
33.9
382.7
443.6
In 2021, the cost of inventories recognised as an expense within cost of sales for continuing operations amounted to £1,237.2m (2020: continuing
operations £1,263.6m). In 2021, the write-down of inventories to net realisable value for continuing operations amounted to £7.9m (2020:
continuing operations £12.2m), and the reversal of previous write-downs amounted to £6.4m (2020: continuing operations £7.6m).
17. TRADE & OTHER RECEIVABLES
Other receivables presented as non-current on the face of the Consolidated Balance Sheet of £76.5m (2020: £84.6m) are primarily in respect
of insurance contracts, including Trust Owned Life Insurance policy investments of £40.2m (2020: £38.8m) which provide a form of security for
certain unfunded employee benefit plans operated by ESCO, and insurance contracts relating to asbestos-related claims in the USA of £35.3m
(2020: £45.2m). Further detail on these claims is presented in note 21.
Current trade & other receivables are analysed in the following table.
Trade receivables
Loss allowance
Other debtors
Sales tax receivable
Prepayments
Contract assets
2021
£m
397.8
(17.4)
380.4
30.7
22.0
45.5
27.1
505.7
2020
£m
338.7
(18.8)
319.9
21.7
19.3
24.8
34.5
420.2
The average credit period on sales of goods is 72 days (2020: 59 days) on a continuing basis. Other debtors includes £1.3m (2020: £0.2m)
in respect of amounts due from joint ventures, and £6.9m (2020: £7.2m) in respect of insurance contracts relating to asbestos-related claims
(note 21).
196
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Impairment of trade & other receivables
The Group has two types of financial assets that are subject to IFRS 9’s expected credit loss model:
i) trade receivables for sales of products and services; and
ii) contract assets relating to construction contracts.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all
trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based
on shared credit risk characteristics.
The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the
same types of contracts. Due to the way in which these contracts are managed, expected credit loss is included within the loss allowance
for trade receivables.
Due to the diverse end markets and customer geographies within the Group, the methodology applied to arrive at the expected loss rate is
dictated by local circumstances. For short-term trade receivables, historical loss rates might be an appropriate basis for the estimate of expected
future losses. These are then adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. As such, one methodology applied is the use of a provision matrix, where different loss rates are applied
depending on the number of days that a trade receivable is past due. Alternatively the expected credit loss is calculated on an individual customer
basis based on historical loss data for that customer, their receivables ageing, and any other knowledge of the customer’s current and forecast
financial position.
Trade receivables and contract assets are written-off when there is no reasonable expectation of recovery.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit (note 4).
Subsequent recoveries of amounts previously written-off are credited against the same line item.
The gross carrying amount of trade receivables, for which the loss allowance is measured at an amount equal to the lifetime expected credit
losses under the simplified method, is analysed below.
Analysis of gross carrying amount of trade receivables by days past due
Not past due
Up to 3 months past due
Between 3 & 6 months past due
More than 6 months past due
Reconciliation of opening to closing loss allowance for trade receivables
Balance at the beginning of the year
Impairment losses recognised on receivables
Arising on acquisition
Amounts written-off as uncollectable
Amounts recovered during the year
Impairment losses reversed
Transferred to assets held for sale
Exchange adjustment
Balance at the end of the year
The Group has recognised the following assets in relation to contracts with customers.
Construction contract assets
Accrued income
Total contract assets
2021
£m
280.4
78.0
10.0
29.4
397.8
2021
£m
(18.8)
(4.1)
(0.1)
1.9
0.5
2.7
–
0.5
(17.4)
2021
£m
7.2
19.9
27.1
2020
£m
258.5
40.2
8.6
31.4
338.7
2020
£m
(14.4)
(11.8)
–
2.0
0.9
1.3
2.9
0.3
(18.8)
2020
£m
15.1
19.4
34.5
The decrease in construction contract assets relates to the mix of contracts, with a number of contracts having been completed during the year
and new contracts recognised.
197
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
18. CASH & SHORT-TERM DEPOSITS
Cash at bank & in hand
Short-term deposits
For the purposes of the Consolidated Cash Flow Statement, cash & cash equivalents comprise the following:
Cash & short-term deposits
Bank overdrafts & short-term borrowings (note 19)
Cash & short-term deposits held for sale
2021
£m
340.5
223.9
564.4
564.4
(64.4)
–
500.0
2020
£m
287.4
64.3
351.7
351.7
(0.6)
23.0
374.1
Cash at bank & 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 earns interest at the respective short-term
deposit rates.
The Group operates a notional cash pooling arrangement in which individual balances are not offset for reporting purposes. Cash & short-term
deposits at 31 December 2021 includes £60.5m (2020: £0.4m) that is part of this arrangement and both cash and interest-bearing loans &
borrowings are grossed up by this amount.
19. INTEREST-BEARING LOANS & BORROWINGS
Current
Bank overdrafts
Fixed-rate notes
Lease liabilities
Non-current
Bank loans1
Fixed-rate notes
Lease liabilities
2021
£m
64.4
435.9
23.6
523.9
(3.0)
734.2
81.1
812.3
2020
£m
0.6
–
25.9
26.5
667.7
578.4
86.5
1,332.6
1 Balance relates to unamortised issue costs.
The Group operates a notional cash pooling arrangement in which individual balances are not offset for reporting purposes. Cash & short-term
deposits at 31 December 2021 includes £60.5m (2020: £0.4m) that is part of this arrangement and both cash and interest-bearing loans &
borrowings are grossed up by this amount.
Bank loans
Revolving credit facility
United States Dollar variable rate loans
Sterling variable rate loans
Other
Sterling variable rate term loan
Non-current bank loans
Maturity
Interest basis
2023
2023
US$ LIBOR
£ LIBOR
2022
£ LIBOR
Weighted average interest rate
2021
%
1.75
1.75
–
2020
%
1.90
1.78
2.02
2021
£m
–
(3.0)
–
(3.0)
2020
£m
153.9
314.9
198.9
667.7
198
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The weighted average interest rates include an applicable margin over and above the interest basis.
Fixed-rate notes
Private placement
United States Dollar fixed-rate notes
United States Dollar fixed-rate notes
Other
United States Dollar Sustainability-Linked notes
Maturity
Interest basis
2022
2023
2026
FIXED
FIXED
FIXED
Less: current instalments due on fixed-rate
notes
United States Dollar fixed-rate notes
Non-current fixed-rate notes
2022
FIXED
Fixed interest rate
2021
%
4.27
4.34
2.20
2020
%
4.27
4.34
–
2021
£m
435.9
147.7
586.5
1,170.1
(435.9)
734.2
2020
£m
432.2
146.2
–
578.4
–
578.4
The disclosures above represent the interest profile and currency profile of financial liabilities before the impact of derivative financial instruments.
In June 2020, the Group completed the refinancing of its US$950m Revolving Credit Facility (RCF) which was due to expire in September 2021.
This was replaced with a US$950m RCF with a syndicate of 12 global banks and will mature in June 2023 with the option to extend for up to a
further two years. In 2020, the Group also replaced its £300m term loan facility which was previously maturing in December 2020, with a £200m
facility due to mature in March 2022, which was subsequently settled in 2021. The RCF includes a link to the Group’s sustainability goals and the
covenant terms remained unchanged.
In May 2021, the Group completed the issue of five-year US$800m Sustainability-Linked Notes due to mature in May 2026 which includes a
target to reduce scope 1&2 CO2 emissions by 30% by December 2024, consistent with the Group's medium-term KPIs announced in the 2020
Annual Report. The Notes will initially bear interest at a rate of 2.20% per annum to be paid semi-annually in May and November. The interest
on the Notes will be linked to achievement of Weir’s 2024 Sustainability Performance Target (SPT). The interest rate applicable to the Notes will
increase by 0.25% to 2.45% per annum from and including the last interest payment date preceding 31 December 2024 if the Group does not
attain its SPT. As a result of the additional funding, the Group took the decision to settle its £200m term loan facility, which was due to mature in
March 2022, with a charge to the Consolidated Income Statement of the remaining unamortised costs of £0.8m.
At 31 December 2021, £nil (2020: £468.8m) was drawn under the US$950m multi-currency revolving credit facility which is disclosed net of
unamortised issue costs of £3.0m (2020: £5.1m).
At 31 December 2021, £nil (2020: £198.9m) was drawn under the matured £200m term loan facility which is disclosed net of unamortised issue
costs of £nil (2020: £1.1m).
At 31 December 2021, a total of £583.6m (2020: £578.4m) was outstanding under private placement which is disclosed net of unamortised issue
costs of £0.1m (2020: £0.3m).
At 31 December 2021, a total of £586.5m (2020: £nil) was outstanding under Sustainability-Linked Notes which is disclosed net of unamortised
issue costs of £4.5m (2020: £nil).
199
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
20. TRADE & OTHER PAYABLES
Current
Trade payables
Other creditors
Other taxes & social security costs
Accruals
Contract liabilities
Non-current
Other payables
2021
£m
243.1
8.7
12.5
158.3
68.0
490.6
–
–
2020
£m
210.7
9.6
13.7
140.0
39.9
413.9
0.3
0.3
Trade payables includes balances due to suppliers that have signed up to a supply chain financing programme, under which all invoices are settled
via a partner bank. This allows the suppliers to elect on an invoice-by-invoice basis to receive a discounted early payment from the partner bank
rather than being paid in line with the agreed payment terms. The value of the liability payable by the Group remains unchanged. The aggregate
limit of facilities available at 31 December 2021 for continuing operations was £110.4m (2020: continuing operations £71.2m) and may be
voluntarily cancelled under bilateral terms of 30 days’ notice. At 31 December 2021, suppliers chose to utilise supply chain financing facilities of
£33.4m on a continuing operations basis (2020: continuing operations £32.8m or total Group £40.7m).
The Group assesses the arrangement against indicators to assess if debts which vendors have sold to the partner bank under the supplier
financing scheme continue to meet the definition of trade payables or should be classified as borrowings. At 31 December 2021 and
31 December 2020, the payables met the criteria of trade payables and the arrangement had no impact on the results or the financial position
of the Group.
The Group has recognised the following liabilities in relation to contracts with customers.
Construction contract liabilities
Deferred income
Total contract liabilities
2021
£m
4.9
63.1
68.0
2020
£m
2.0
37.9
39.9
The increase in construction contract liabilities in the year primarily relates to projects previously included within deferred income now recognised
as construction contract liabilities once revenue begins to be recognised. The increase in deferred income in the year largely relates to advances
received in relation to a large contract to supply dewatering pumps in Australia.
Revenue recognised in relation to contract liabilities
The following table shows the revenue recognised in the current reporting period related to carried forward contract liabilities.
Revenue recognised that was included in the contract liability balance at the beginning of the year
2021
£m
29.5
2020
£m
43.7
Transaction price allocated to unsatisfied performance obligations
The transaction price allocated to performance obligations unsatisfied at the year end is £67.5m (2020: continuing operations £55.6m). This relates
only to performance obligations from contracts with a duration of over a year as permitted by the practical expedient in paragraph 121 of IFRS 15.
The following table shows when revenue is expected to be recognised for unsatisfied performance obligations from contracts with a duration
of over one year.
Less than 1 year
After 1 year but not more than 5 years
After 5 years
Total value of performance obligations unsatisfied from contracts with a duration over 1 year
2021
£m
30.9
24.9
11.7
67.5
2020
£m
48.5
7.1
–
55.6
200
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 21. PROVISIONS
At 31 December 2020
Additions
Acquisitions
Utilised
Unutilised
Exchange adjustment
At 31 December 2021
Current 2021
Non-current 2021
At 31 December 2021
Current 2020
Non-current 2020
At 31 December 2020
Warranties
& contract
claims
£m
6.5
8.2
–
(3.8)
(1.3)
(0.2)
9.4
9.2
0.2
9.4
6.1
0.4
6.5
Asbestos-
related
£m
67.7
1.4
–
(8.0)
–
0.5
61.6
7.6
54.0
61.6
7.7
60.0
67.7
Employee-
related
£m
12.5
12.4
–
(11.3)
(0.4)
(0.8)
12.4
Exceptional
items
£m
8.5
7.7
20.0
(23.4)
(1.2)
(0.5)
11.1
6.9
5.5
12.4
6.8
5.7
12.5
10.8
0.3
11.1
7.7
0.8
8.5
Other
£m
10.1
3.3
–
(1.9)
(0.6)
0.1
11.0
2.0
9.0
11.0
0.9
9.2
10.1
Total
£m
105.3
33.0
20.0
(48.4)
(3.5)
(0.9)
105.5
36.5
69.0
105.5
29.2
76.1
105.3
The impact of discounting is not material for any category of provision.
Warranties & contract claims
Provision has been made in respect of actual warranty 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. At 31 December 2021, the warranties portion
of the provision totalled £7.2m (2020: £5.7m) for continuing operations. The majority of these costs relate to claims which fall due within one
year of the balance sheet date and it is expected that all costs related to such claims will have been incurred within five years of the balance
sheet date.
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 exceed the economic benefits expected to be received from the contracts and before
allowing for future expected aftermarket revenue streams. Provision is made immediately when it becomes apparent that expected costs will
exceed the expected benefits of the contract. At 31 December 2021, the contract claims element, which includes onerous provision, was £2.2m
(2020: £0.8m), all of which is expected to be incurred within one year of the balance sheet date.
Asbestos-related claims
US asbestos-related provision – pre-1981 date of first exposure
US asbestos-related provision – post-1981 date of first exposure
US asbestos-related provision – total
UK asbestos-related provision
Total asbestos-related provision
US asbestos-related provision
2021
£m
55.5
3.0
58.5
3.1
61.6
2020
£m
61.4
3.1
64.5
3.2
67.7
Certain of the Group’s US-based subsidiaries are co-defendants in lawsuits pending in the US in which plaintiffs are claiming damages arising
from alleged exposure to products previously manufactured which contained asbestos. The dates of alleged exposure currently range from the
1950s to the 1980s.
The Group has historically held comprehensive insurance cover for cases of this nature and continues to do so for claims with a date of first
exposure (dofe) pre-1981. The expiration of one of the Group’s insurance policies in 2019 resulted in no further insurance cover for claims with a
post-1981 dofe. All claims are directly administered by National Coordinating Counsel on behalf of the Group’s insurers who also meet associated
defence costs. The insurers, their legal advisers and in-house counsel agree and execute the defence strategy between them.
A summary of the Group’s US asbestos-related claim activity is shown in the table below.
Number of open claims
Opening
New
Dismissed
Settled
Closing
2021
Number
1,586
656
(315)
(162)
1,765
2020
Number
1,551
528
(309)
(184)
1,586
201
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
21. PROVISIONS continued
A review of both the Group’s expected liability for US asbestos-related diseases and the adequacy of the Group’s insurance policies to meet
future settlement and defence costs was completed in conjunction with external advisers in 2020 as part of our planned triennial actuarial
update. This review was based on an industry standard epidemiological decay model, and Weir’s claims settlement history. The 2020 review
reflected higher levels of claims, particularly relating to the 1970s and 1980s, and a longer dofe period, but lower settlement values than the
previous review conducted in 2017. The actuarial model incorporates claims, with a dofe pre- and post-1981, primarily relating to lung cancer and
mesothelioma and includes estimates relating to:
• the number of future claims received;
• settlement rates by disease type;
• mean settlement values by disease type;
• ratio of defence costs to indemnity value; and
• the profile of associated cash flows through to 2049.
The actuarial model in 2020 provided a range of potential liability based on levels of probability from 10% to 90%, which, on an undiscounted
basis, equates to £53m-£133m. The mean actuarial estimate of £91m represents the expected undiscounted value over the range of reasonably
possible outcomes. The provision in the financial statements is based on the mean actuarial estimate which is then adjusted each year to reflect
expected settlements in the model, discounting and restricting our estimate to ten years of future claims.
Period of future claims provided
Discount rate
2021
10 years
2.6%
2020
10 years
2.1%
The period over which the provision can be reliably estimated is judged to be ten years due to the inherent uncertainty resulting from the changing
nature of the US litigation environment detailed below, and cognisant of the broad range of probability levels included within the actuarial model.
While claims may extend past ten years and may result in a further outflow of economic benefits, the Directors do not believe any obligation which
may arise beyond ten years can be reliably measured at this time. The effect of extending the claims period by a further ten years is included in the
sensitivities below. The discount rate is set based on the yield available at the balance sheet date denominated in the same currency, and with a term
broadly consistent to that of the liabilities being provided for, with sensitivities to the discount rate also included below.
In 2020, confirmation was also received from external advisers of the insurance asset available and the estimated defence costs which would be
met by the insurer. An update to the insurance asset is obtained annually and based on the profile of the claims in the actuarial model, external
advisers expect the insurance cover and associated limits currently in place to be sufficient to meet the settlement and associated costs until
c.2028. Therefore, no cash flows to or from the Group, related to claims with an exposure date pre-1981, are expected until that time. Claims with
an exposure date post-1981 are estimated to incur cash outflows of less than £0.4m per annum and are not insured currently or in the future.
The table below represents the Directors’ best estimate of the future liability and corresponding insurance asset.
US asbestos-related provision
Gross provision
Effect of discounting
Discounted US asbestos-related provision
Insurance asset
Net US asbestos-related liability
The net provision and insurance asset are presented in the financial statements as follows.
Provisions – current
Provisions – non-current
Trade & other receivables
Non-current other receivables
2021
£m
67.4
(8.9)
58.5
42.2
16.3
2021
£m
7.1
51.4
6.9
35.3
2020
£m
72.7
(8.2)
64.5
52.4
12.1
2020
£m
7.2
57.3
7.2
45.2
There remains inherent uncertainty associated with estimating future costs in respect of asbestos-related diseases. Actuarial estimates of future
indemnity and defence costs associated with asbestos-related diseases are subject to significantly greater uncertainty than actuarial estimates
for other types of exposures. This uncertainty results from factors that are unique to the asbestos claims litigation and settlement process
including but not limited to:
i)
the possibility of future state or federal legislation applying to claims for asbestos-related diseases;
ii)
the ability of the plaintiff’s bar to develop and sustain new legal theory and/or develop new populations of claimants;
iii) changes in focus of the plaintiff’s bar;
iv) changes in the Group’s defence strategy; and
v) changes in the financial condition of other co-defendants in suits naming the Group and affiliated businesses.
202
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 As a result, there can be no guarantee that the assumptions used to estimate the provision will result in an accurate prediction of the actual costs
that may be incurred.
In 2021, the number of claims received has exceeded those included in the actuarial model, while settlement costs related to claims received,
predominantly in prior years, are below those provided. These variations are to be expected from period to period. Sensitivity analysis reflecting
reasonably probable scenarios has been conducted. The results of this analysis are shown below.
Estimated impact on the discounted US asbestos-related provision of
Increasing the number of projected future settled claims by 10%
Increasing the estimated settlement value by 10%
Increasing the basis of provision by ten years
Decreasing the discount rate by 50bps
2021
£m
5.5
5.5
5.2
1.6
Application of these sensitivities, on an individual basis, would not lead to a material change in the provision.
The Group’s US subsidiaries have been effective in managing the asbestos litigation, in part, because the Group has access to historical project
documents and other business records going back more than 50 years, allowing it to defend itself by determining if legacy products were present
at the location of the alleged asbestos exposure and, if so, the timing and extent of their presence. In addition, the Group has consistently and
vigorously defended claims that are without merit.
UK asbestos-related provision
In the UK, there are outstanding asbestos-related claims which are not the subject of insurance cover. The extent of the UK asbestos exposure
involves a series of legacy employer’s liability claims which all relate to former UK operations and employment periods in the 1950s to 1970s.
In 1989, the Group’s employer’s liability insurer (Chester Street Employers Association Ltd) was placed into run-off which effectively generated
an uninsured liability exposure for all future long-tail disease claims with an exposure period pre-dating 1 January 1972. All claims with a disease
exposure post 1 January 1972 are fully compensated via the Government-established Financial Services Compensation Scheme. Any settlement
to a former employee whose service period straddles 1972 is calculated on a pro rata basis. The Group provides for these claims based on
management’s best estimate of the likely costs given past experience of the volume and cost of similar claims brought against the Group.
The UK provision was reviewed and adjusted accordingly for claims experience in the year, resulting in a provision of £3.1m (2020: £3.2m).
Employee-related
Employee-related provisions arise from legal obligations in a number of territories in which the Group operates, the majority of which relate to
compensation associated with periods of service. A large proportion of the provision is for long service leave. The outflow is generally dependent
upon the timing of employees’ period of leave with the calculation of the majority of the provision being based on criteria determined by the
various jurisdictions.
Exceptional items
The exceptional items provision relates to exceptional charges included within note 5 where the cost is based on a reliable estimate of
the obligation.
The opening balance of £8.5m included £6.6m which related to severance costs in Minerals and disposal costs related to Oil & Gas.
The remaining £1.9m related to onerous contract provisions in Minerals.
Additions in the year total £7.7m, including cybersecurity costs of £4.7m and acquisition and integration costs in relation to Motion Metrics of
£2.8m. The acquisition related balance of £20.0m reflects vendor liabilities for Motion Metrics primarily relating to tax, settlement of an employee
growth participation plan and disposal costs of which £11.1m was cash settled in the year.
The closing balance of £11.1m includes £8.9m for opening balance sheet liabilities in Motion Metrics (£8.8m restructuring taxes and £0.1m
acquisition costs) which will be cash settled in 2022, cybersecurity costs of £0.4m and final Oil & Gas disposal costs of £0.4m. The remaining
balance of £1.4m relates to prior year balances in Minerals for severance costs and onerous contract provisions.
Other
Other provisions include environmental obligations, penalties, duties due, legal claims and other exposures across the Group. These balances
typically include estimates based on multiple sources of information and reports from third-party advisers. The timing of outflows is difficult
to predict as many of these will ultimately rely on legal resolutions and the expected conclusion is based on information currently available.
Where certain outcomes are unknown, a range of possible scenarios is calculated, with the most likely being reflected in the provision.
203
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
22. DEFERRED TAX
Deferred income tax assets
Post-employment benefits
Decelerated depreciation for tax purposes
Intangible assets
Untaxed reserves
Offset against liabilities
Deferred income tax assets
Deferred income tax assets attributable to:
Continuing operations
Discontinued operations
Deferred income tax liabilities
Accelerated depreciation for tax purposes
Overseas tax on unremitted earnings
Intangible assets
Other temporary differences
Offset against assets
Deferred income tax liabilities
Deferred income tax liabilities attributable to:
Continuing operations
Discontinued operations
Net deferred income tax asset
2021
£m
13.4
7.4
–
182.0
(145.8)
57.0
57.0
–
57.0
(23.8)
(7.3)
(116.1)
(39.3)
145.8
(40.7)
(40.7)
–
(40.7)
16.3
The movement in deferred income tax assets and liabilities during the year was as follows.
At 31 December 2019
(Charged) credited to the Consolidated Income
Statement (note 7)
Credited to equity (note 7)
Exchange adjustment
At 31 December 2020
Credited (charged) to the Consolidated Income
Statement (note 7)
(Charged) to equity (note 7)
Acquisition of business
Disposal of business
Exchange adjustment
At 31 December 2021
Post-
employment
benefits
£m
28.1
Accelerated
depreciation for
tax purposes
£m
(10.0)
Overseas tax
on unremitted
earnings
£m
(9.0)
Intangible
assets
£m
(130.1)
Untaxed
reserves, tax
losses & other
temporary
differences
£m
153.2
(0.9)
6.5
(0.2)
33.5
0.9
(21.1)
–
–
0.1
13.4
(4.8)
–
1.1
(13.7)
(0.9)
–
–
(1.7)
(0.1)
(16.4)
(0.4)
–
–
(9.4)
1.5
–
–
–
0.6
(7.3)
(6.2)
–
3.5
(132.8)
22.6
–
(5.3)
–
(0.6)
(116.1)
12.2
1.3
(3.4)
163.3
(14.1)
(0.7)
–
(5.3)
(0.5)
142.7
2020
£m
33.5
7.3
0.1
163.6
(142.1)
62.4
54.9
7.5
62.4
(21.0)
(9.4)
(132.9)
(0.3)
142.1
(21.5)
(21.4)
(0.1)
(21.5)
40.9
Total
£m
32.2
(0.1)
7.8
1.0
40.9
10.0
(21.8)
(5.3)
(7.0)
(0.5)
16.3
Untaxed reserves primarily relate to temporarily disallowed inventory/receivable provisions and accruals/provisions for liabilities where the
tax allowance is deferred until the cash expense occurs. Included in this balance is a deferred tax asset in relation to tax losses of £56.6m
(2020: £54.7m). This includes £46.3m (2020: £44.5m) relating to US Federal and State tax losses and £7.9m (2020: £5.6m) relating to UK
tax losses.
Deferred tax assets of £54.0m (2020: £59.9m) have been recognised in respect of entities which have suffered a loss in either the current or
preceding period. Deferred tax assets have been recognised in these territories on the basis of forecast future profitability. Of the recognised
deferred tax assets, £23.7m (2020: £8.6m) of US foreign tax credits have a 10 year time expiry with the earliest expiration date being 2026,
£4.5m (2020: £4.2m) of US research and development tax credits have a 20 year time expiry with the earliest expiration date being 2028, and
£5.4m (2020: £3.8m) of US State attributes have a 20 year time expiry.
204
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Deferred tax asset balances for unused tax losses of £73.5m (2020: £69.7m) have not been recognised on the grounds that there is insufficient
evidence that these assets will be recoverable.
This includes £50.0m (2020: £46.6m) of US deferred tax assets not recognised, but retained by the continuing US group, in connection with the
disposal of the US entities within the Oil & Gas Division. US deferred tax asset recognition was determined by the application of a model which
estimates the future forecast levels of US taxable income with reference to the Group’s five-year strategic plan. The ongoing application of this
model may result in future changes to the amount of US deferred tax assets that remain unrecognised.
Deferred tax asset balances for capital losses amounting to £7.8m (2020: £6.3m) have not been recognised but would be available in the event of
future taxable capital gains being incurred by the Group.
Unrecognised assets will be recovered when future tax charges are sufficient to absorb these tax benefits.
The net deferred tax asset due after more than one year is £16.3m (2020: £40.9m).
Temporary differences associated with Group investments
A deferred tax liability of £7.3m (2020: £9.4m) has been recognised in respect of taxes on the unremitted earnings of the South American and
Canadian subsidiaries. As at 31 December 2021, 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 £2,331.9m (2020: £2,355.1m).
There are no income tax consequences attaching to the payment of dividends by the Company to its Shareholders.
UK corporation tax rate changes
Finance Bill 2016 enacted provisions to reduce the main rate of UK corporation tax to 17% from 1 April 2020. The Budget on 11 March 2020
announced that the standard rate of corporation tax would remain at 19% from 1 April 2020 and furthermore, an increase in the UK rate from
19% to 25% from April 2023 was substantively enacted as part of Finance Bill 2021 (on 25 May 2021). As a result, at 31 December 2021,
deferred tax balances have been calculated at 19% or 25% depending upon when the balance is expected to unwind.
23. PENSIONS & OTHER POST-EMPLOYMENT BENEFIT PLANS
The Group operates various defined benefit pension plans in the UK and North America. All defined benefit plans are closed to new members.
The most significant defined benefit plan is the Main funded UK plan.
UK plans
At the balance sheet date, the Group has a funded defined benefit plan (the Main Plan) and an unfunded retirement benefit plan for retired
Executive Directors. The Group also operates a defined contribution plan, the contributions to which are in addition to those set out below, and
are charged directly to the Consolidated Income Statement. The liabilities of the Group’s former Executive Plan, which was previously accounted
for on the balance sheet, were transferred in full to an insurer in 2020. The Executive Plan’s assets, primarily insurance policies, and liabilities
were removed from the Group’s balance sheet as at 31 December 2020.
For the defined benefit plans, benefits are related to service and final salary. The Main Plan closed to future accrual of benefits effective from
30 June 2015.
The weighted average duration of the expected benefit payments from the Main Plan is around 16 years.
The current funding target for the UK plans is to maintain assets equal to the value of the accrued benefits. The Main Plan holds two insurance
policies which match the liabilities in respect of a significant proportion of deferred and retired pensioners.
The regulatory framework in the UK requires the pension scheme Trustees and Group to agree upon the assumptions underlying the funding
target, and then to agree upon the necessary contributions required to recover any deficit at the valuation date. There is a risk to the Group that
adverse experience against these assumptions could lead to a requirement for the Group to make considerable contributions to recover any
deficit. This risk is significantly reduced through the insurance policies held.
North American plans
The Group also sponsors funded defined benefit pension plans in the US and Canada and certain unfunded arrangements (including post-
employment healthcare benefits for senior employees) in the US.
Following the acquisition of ESCO in 2018, these plans combined make up 18% of the Group’s pension and other post-employment benefit plan
commitments and 15% of the Group’s total associated assets.
The weighted average duration of these plans is around 11 years.
205
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
23. PENSIONS & OTHER POST-EMPLOYMENT BENEFIT PLANS continued
The defined benefit plans in the UK and North America expose the Group to a number of risks.
i) Uncertainty in benefit payments
The value of the Group’s liabilities for the defined benefit plans will ultimately depend on the amount of benefits paid out. This in turn will
depend on the level of inflation (for those benefits that are subject to some form of inflation protection) and how long individuals live. This risk
is significantly reduced through the insurance policies held in the UK.
ii) Volatility in asset values
The Group is exposed to future movements in the values of assets held in the funded defined benefit plans to meet future uninsured
benefit payments.
iii) Uncertainty in cash funding
Movements in the values of the obligations or assets may result in the Group being required to provide higher levels of cash funding, although
changes in the level of cash required can often be spread over a number of years. This risk is significantly reduced through the insurance
policies held. In addition, the Group is also exposed to adverse changes in pension regulation.
iv) Exchange rate movements
Movements in exchange rates will affect the value in GBP of the assets and obligations of the Group’s North American defined benefit plans.
Assumptions
The significant actuarial assumptions used for accounting purposes reflect prevailing market conditions in the UK and North America and are
as follows.
Significant actuarial assumptions:
Discount rate (% pa)
Retail Prices Inflation (RPI) assumption (% pa)
Post-retirement mortality (life expectancies in years):
Current pensioners at 65 – male
Current pensioners at 65 – female
Future pensioners at 65 – male
Future pensioners at 65 – female
Other related actuarial assumptions:
Rate of increases for pensions in payment (% pa)
Pre 6 April 2006 service
Post 5 April 2006 service
Consumer Prices Inflation (CPI) assumption (% pa)
Rate of increase in healthcare costs
UK pensions
North American pensions &
post-retirement healthcare
2021
2020
2021
2020
1.9
3.4
21.6
23.4
22.9
24.9
3.2
2.1
2.6
n/a
1.4
3.0
21.3
23.2
22.6
24.8
2.9
2.1
2.1
n/a
2.6
n/a
20.5
22.5
22.0
23.9
n/a
n/a
n/a
1
2.1
n/a
20.4
22.3
21.9
23.7
n/a
n/a
n/a
2
1 Between 5.0% and 7.4% per annum decreasing to 4.5% per annum and remaining static at that level from 2031 onwards.
2 Between 5.5% and 7.2% per annum decreasing to 4.5% per annum and remaining static at that level from 2031 onwards.
The assumptions used to determine end-of-year benefit obligations are also used to calculate the following year’s cost. For North America,
weighted average assumptions are shown above where applicable.
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 a member retiring in 2042 (in 20 years’
time). No specific allowance has been made in the mortality assumptions for the potential impact of Covid-19.
206
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The assets and liabilities of the plans are as follows.
Plan assets at fair value
Equities (quoted)
Diversified Growth Funds (c. 40% quoted)
Corporate bonds (quoted)
Government bonds (quoted)
Insurance policies (unquoted)
Property
Private debt (unquoted)
Multi Asset Credit Funds (quoted)
Cash (quoted)
Fair value of plan assets
Present value of funded obligations
Net funded obligations
Present value of unfunded obligations
Net liability
Plans in deficit
UK pensions
North American pensions &
post-retirement healthcare
2021
£m
207.7
70.1
44.4
106.8
293.2
–
44.5
39.7
10.4
816.8
(828.9)
(12.1)
(1.3)
(13.4)
(13.4)
2020
£m
211.2
65.1
45.1
102.6
330.4
–
26.3
39.3
11.3
831.3
(925.7)
(94.4)
(1.4)
(95.8)
(95.8)
2021
£m
46.0
2.6
52.1
36.4
–
5.5
–
–
1.2
143.8
(156.5)
(12.7)
(30.6)
(43.3)
(43.3)
2020
£m
48.4
3.1
47.1
36.2
–
4.9
–
–
0.3
140.0
(169.7)
(29.7)
(35.3)
(65.0)
(65.0)
Total
2021
£m
253.7
72.7
96.5
143.2
293.2
5.5
44.5
39.7
11.6
960.6
(985.4)
(24.8)
(31.9)
(56.7)
(56.7)
2020
£m
259.6
68.2
92.2
138.8
330.4
4.9
26.3
39.3
11.6
971.3
(1,095.4)
(124.1)
(36.7)
(160.8)
(160.8)
Of the Government bonds held at 31 December 2021, 41% are fixed interest bonds. The pension plans have not directly invested in any of the
Group’s own financial instruments, or in properties or other assets used by the Group.
In the UK, where the majority of the Group’s pension assets are held, the investment strategy is to hold equities and other return-seeking assets,
such as diversified growth funds and a mixture of bonds, to meet the assessed value of the benefits promised for the non-insured deferred
pensioners. For the remaining deferred pensioners and the bulk of pensioners currently receiving their benefits, the liabilities are backed by
insurance policies and suitable bonds.
The ESCO unfunded arrangements are backed by a grantor trust which contains Trust Owned Life Insurance (TOLI) policy investments.
These investments do not match the obligations of the corresponding employee benefit plans, they are not used in practice to pay the benefits
as they fall due and they are available to the Group’s creditors in the event of insolvency. This means the grantor trust does not qualify as a ‘plan
asset’ for the purposes of IAS 19 and is instead treated as a separate Group asset outside of this note. The value of these assets was estimated
at £40.2m as at 31 December 2021.
The change in net liabilities recognised in the Consolidated Balance Sheet is comprised as follows.
Opening net liabilities
Expense charged to the income statement
Amount recognised in the Consolidated
Statement of Comprehensive Income
Employer contributions
Exchange adjustment
Closing net liabilities
UK pension
North American pensions &
post-retirement healthcare
2021
£m
(95.8)
(1.4)
79.5
4.3
–
(13.4)
2020
£m
(69.3)
(2.0)
(30.1)
5.6
–
(95.8)
2021
£m
(65.0)
(2.7)
16.8
7.8
(0.2)
(43.3)
2020
£m
(69.4)
(3.4)
(4.4)
10.4
1.8
(65.0)
Total
2021
£m
(160.8)
(4.1)
96.3
12.1
(0.2)
(56.7)
2020
£m
(138.7)
(5.4)
(34.5)
16.0
1.8
(160.8)
207
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
23. PENSIONS & OTHER POST-EMPLOYMENT BENEFIT PLANS continued
The amounts recognised for the Group in the Consolidated Income Statement and in the Consolidated Statement of Comprehensive Income for
the year are analysed as follows.
Recognised in the Consolidated Income
Statement
Current service cost
Past service cost
Administrative expenses
Included in operating profit
Interest on net pension liability
Total expense charged to the Consolidated
Income Statement
Recognised in the Consolidated Statement
of Comprehensive Income
Actual return on plan assets
Less: interest on plan assets
Other actuarial gains (losses) due to:
Changes in financial assumptions
Changes in demographic assumptions
Experience on benefit obligations
Actuarial gains (losses) recognised in the
Consolidated Statement of Comprehensive
Income
UK pension
2021
£m
–
–
(0.1)
(0.1)
(1.3)
(1.4)
14.7
(11.5)
3.2
43.7
(5.0)
37.6
2020
£m
–
(0.6)
–
(0.6)
(1.4)
(2.0)
96.2
(16.8)
79.4
(106.6)
(2.9)
–
North American pensions &
post-retirement healthcare
2021
£m
(0.4)
–
(1.0)
(1.4)
(1.3)
(2.7)
7.3
(3.0)
4.3
10.1
(0.5)
2.9
2020
£m
(0.4)
–
(1.1)
(1.5)
(1.9)
(3.4)
20.3
(3.9)
16.4
(20.8)
1.3
(1.3)
Total
2021
£m
(0.4)
–
(1.1)
(1.5)
(2.6)
(4.1)
22.0
(14.5)
7.5
53.8
(5.5)
40.5
2020
£m
(0.4)
(0.6)
(1.1)
(2.1)
(3.3)
(5.4)
116.5
(20.7)
95.8
(127.4)
(1.6)
(1.3)
79.5
(30.1)
16.8
(4.4)
96.3
(34.5)
Current service cost, past service cost, curtailment/settlement gains and administration expenses are recognised in operating costs and interest
on net pension liability is recognised in other finance costs.
The Group’s largest North American plan is the US ESCO Corporation pension plan. The Group’s current funding policy for this plan is to pay
the minimum required contributions under US regulation. However, in the event the plan’s funding level is projected to fall below particular
thresholds, the Group will consider funding more than the minimum required contribution.
Pension contributions are determined with the advice of independent qualified actuaries on the basis of regular valuations using the projected
unit method. The Group made special contributions of £7.8m in 2021 (2020: £11.3m) in addition to the Group’s regular contributions.
In 2015, the Group entered into a pension funding partnership structure under which it has contributed interests in a Scottish Limited Partnership
(SLP) for the Main Plan.
The Main Plan’s interests in the SLP reduce the deficit on a funding basis, although the agreement will not affect the position directly on an IAS
19 accounting basis as the investments held do not qualify as assets for IAS 19 purposes. As a partner in the SLP, the Main Plan is entitled to
receive a share of the profits of the SLP once a year for 15 years, subject to conditions being met. The profits to be shared with the Plan will be
reflected in the Group’s financial statements as a pension contribution.
The latest actuarial funding valuation of the Main Plan as at 31 December 2020 is due to be finalised in 2022. Under the proposed recovery plan,
the Group has agreed to contribute £6.2m in each year from 2021 to 2029 inclusive. These contributions are primarily funded by the income
payments from the SLP described above. The contributions are subject to an annual review mechanism, and will temporarily cease if the Main
Plan’s funding level on a funding basis exceeds 105%.
The Trustees of the UK Executive Plan, which was previously consolidated within the Group’s accounting figures, entered into a full buy-in
transaction with Scottish Widows in 2017. A final balancing premium was paid during 2020, and the responsibility of this Plan is now with the
insurer. The Executive Plan was therefore removed from the Group’s balance sheet as at 31 December 2020, with £47.1m of liabilities and plan
assets being removed as disclosed below.
The Group has taken legal advice regarding its UK arrangements to confirm the accounting treatment under IFRIC 14 with regard to recognition
of a surplus and also recognition of a minimum funding requirement. This confirmed that there is no requirement to adjust the balance sheet and
that recognition of a current surplus is appropriate on the basis that the Group has an unconditional right to a refund of a current (or projected
future) surplus at some point in the future. For the same reason, there is no requirement for the Group to adjust the balance sheet to recognise
the future agreed deficit recovery contributions. Having considered the position, taking account of the legal input received and noting that the
Trustees of the UK arrangements do not have discretionary powers to unilaterally wind up the schemes without cause, the Directors of the Group
have concluded that the Group has an unconditional right to a refund of any surplus.
Based on the proposed funding valuations, the total Group contributions for 2022 (including those expected from the SLP in the UK) are expected
to be £14.7m.
208
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Changes in the present value of the defined benefit obligations are analysed as follows.
Opening defined benefit obligations
Current service cost
Past service cost
Interest on benefit obligations
Benefits paid
Actuarial gains (losses) due to:
Changes in financial assumptions
Changes in demographic assumptions
Experience on benefit obligations
Liabilities removed due to curtailments/
settlements
Exchange rate adjustment
Closing defined benefit obligations
UK pensions
North American pensions &
post-retirement benefits
Total
2021
£m
(927.1)
–
–
(12.8)
33.4
43.7
(5.0)
37.6
–
–
(830.2)
2020
£m
(883.7)
–
(0.6)
(18.2)
37.8
(106.6)
(2.9)
–
47.1
–
(927.1)
2021
£m
(205.0)
(0.4)
–
(4.3)
11.9
10.1
(0.5)
2.9
–
(1.8)
(187.1)
2020
£m
(196.8)
(0.4)
–
(5.8)
13.1
(20.8)
1.3
(1.3)
–
5.7
(205.0)
2021
£m
(1,132.1)
(0.4)
–
(17.1)
45.3
53.8
(5.5)
40.5
–
(1.8)
(1,017.3)
Changes in the fair value of plan assets are analysed as follows.
Opening plan assets
Interest on plan assets
Employer contributions
Administrative expenses
Benefits paid
Actual return on plan assets less interest
on plan assets
Assets distributed on settlements
Exchange rate adjustment
Closing plan assets
Sensitivity analysis
UK pensions
North American pensions &
post-retirement benefits
Total
2021
£m
831.3
11.5
4.3
(0.1)
(33.4)
3.2
–
–
816.8
2020
£m
814.4
16.8
5.6
–
(37.8)
79.4
(47.1)
–
831.3
2021
£m
140.0
3.0
7.8
(1.0)
(11.9)
4.3
–
1.6
143.8
2020
£m
127.4
3.9
10.4
(1.1)
(13.1)
16.4
–
(3.9)
140.0
2021
£m
971.3
14.5
12.1
(1.1)
(45.3)
7.5
–
1.6
960.6
2020
£m
(1,080.5)
(0.4)
(0.6)
(24.0)
50.9
(127.4)
(1.6)
(1.3)
47.1
5.7
(1,132.1)
2020
£m
941.8
20.7
16.0
(1.1)
(50.9)
95.8
(47.1)
(3.9)
971.3
Changes in key assumptions can have a significant effect on the reported retirement benefit obligation and the Consolidated Income Statement
expense for 2022. The effects of changes in those assumptions on the reported retirement benefit obligation are set out in the table below.
Discount rate
Effect on defined benefit obligation of a 1.0% change
Effect on net liability of a 1.0% change
RPI inflation (and associated assumptions)
Effect on defined benefit obligation of a 1.0% change
Effect on net liability of a 1.0% change
Life expectancy
Effect on defined benefit obligation of a 1 year change
Effect on net liability of a 1 year change
Increase
Decrease
Increase
Decrease
2021
£m
139.3
112.8
(93.7)
(69.6)
(44.7)
(27.5)
2021
£m
(165.4)
(136.0)
84.6
62.1
44.7
27.5
2020
£m
165.3
132.5
(103.9)
(75.5)
(39.1)
(24.3)
2020
£m
(198.7)
(161.9)
94.0
67.6
39.1
24.3
The impact on the net liability is significantly reduced as a result of the insurance policies held. In the absence of such policies, the impact on the
net liability would be much closer to the significantly higher impact on the defined benefit obligation shown in the table.
These sensitivities have been calculated to show the movement in the defined benefit obligation and net liability in isolation and assume no
other changes in market conditions at the accounting date. In practice, for example, a change in discount rate is unlikely to occur without any
movement in the value of the invested (non-insurance policy) assets held by the plans.
209
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
24. SHARE CAPITAL & RESERVES
Issued & fully paid share capital
At the beginning of the year
At the end of the year
Treasury shares
At the beginning of the year
Purchase of shares in respect of equity settled share-based payments
Utilised during the year in respect of equity settled share-based payments
At the end of the year
2021
Number
million
259.6
259.6
0.4
0.8
(0.9)
0.3
2020
Number
million
259.6
259.6
–
1.0
(0.6)
0.4
The Company has one class of ordinary share with a par value of 12.5p which carries no rights to fixed income.
As at 31 December 2021, Computershare Investor Services PLC held the following shares, which are subject to restriction, on behalf
of individuals:
• 0 shares (2020: 24,478) for the ESCO restricted awards made under the ESCO 2010 stock incentive plan.
• 36,347 shares (2020: 97,765) for performance shares that have vested under the LTIP. These shares have a market value of £0.6m.
• 36,127 shares (2020: 8,093) for restricted shares that have vested under the Share Reward Plan. These shares have a market value of £0.6m.
• 38,174 shares (2020: 58,816) for bonus shares awarded under the Share Reward Plan. These shares have a market value of £0.7m.
As at 31 December 2021, 0 shares (2020: 15,988) were unallocated and held by the Estera Trust (Jersey) Limited.
As at 31 December 2021, 289,600 shares (2020: 351,950) were unallocated and held by the Computershare Trustees (Jersey) Limited with
a market value of £5.0m.
Reserves
The period movements on the below reserves are summarised in the Consolidated Statement of Changes in Equity.
Merger reserve
The merger reserve relates to the issue of new equity as part of the consideration paid for an acquisition. Shares issued directly to ESCO
Shareholders on 12 July 2018, as part of the total acquisition consideration, qualified for merger relief under Section 612 of the Companies
Act 2006 and resulted in an increase to the reserve of £323.2m. The remaining reserve balance of £9.4m relates to shares issued in part
consideration for the acquisition of Delta Industrial Valves Inc. during 2015.
Capital redemption reserve
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 and the Group’s hedge of its net investment in foreign operations. In 2021, £103.4m gain relating to Oil & Gas entities was recycled to
the Consolidated Income Statement on disposal.
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.
Net gains (losses) transferred from equity during the year are included in the following line items in the Consolidated Income Statement and
Consolidated Balance Sheet.
2021
£m
(0.1)
–
(0.1)
2020
£m
(0.1)
(1.8)
(1.9)
Revenue
Finance costs
210
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 25. ADDITIONAL CASH FLOW INFORMATION
Total operations
Net cash generated from operations
Operating profit – continuing operations
Operating profit (loss) – discontinued operations
Operating profit (loss) – total operations
Exceptional and other adjusting items
Amortisation of intangible assets
Share of results of joint ventures
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Impairment of property, plant & equipment
Grants received
Gains on disposal of property, plant & equipment
Funding of pension & post-retirement costs
Employee share schemes
Transactional foreign exchange
Increase (decrease) in provisions
Cash generated from operations before working capital cash flows
(Increase) decrease in inventories
(Increase) decrease in trade & other receivables & construction contracts
Increase (decrease) in trade & other payables & construction contracts
Cash generated from operations before exceptional cash items
Additional pension contributions paid
Exceptional and other adjusting cash items
Exceptional cash items – acquired vendor liabilities
Income tax paid
Net cash generated from operating activities
Cash flows from discontinued operations included above are disclosed separately in note 8.
Exceptional and other adjusting items are detailed in note 5.
The following tables summarise the cash flows arising on acquisitions (note 13) and disposals (note 8).
Acquisitions of subsidiaries
Acquisition of subsidiaries – cash paid
Acquisition of subsidiaries – current period acquisitions
Total cash outflow relating to acquisitions
Net cash inflow (outflow) arising on disposals
Consideration received net of costs paid & cash disposed of – Oil & Gas Division (excluding AMCO)
Consideration received net of costs paid & cash disposed of – AMCO Joint Venture
Prior period disposals – settlement of final costs and final completion adjustment
Total cash inflow (outflow) relating to disposals
Net debt comprises the following
Cash & short-term deposits (note 18)
Current interest-bearing loans & borrowings (note 19)
Non-current interest-bearing loans & borrowings (note 19)
Assets and liabilities held for sale
Notes
Restated (note 2)
2020
£m
2021
£m
5
12
8, 15
11
11
11
27
23
256.6
0.6
257.2
3.8
40.2
(3.3)
43.0
27.6
–
(0.3)
(4.3)
(2.7)
10.9
4.8
3.9
380.8
(84.9)
(61.7)
31.8
266.0
(7.8)
(8.6)
(11.1)
(82.4)
156.1
2021
£m
67.9
67.9
67.9
258.5
24.0
–
282.5
2021
£m
564.4
(523.9)
(812.3)
–
(771.8)
228.0
(255.0)
(27.0)
257.1
52.5
(5.5)
52.8
41.9
0.2
(0.4)
(0.3)
(2.6)
9.3
14.5
(7.6)
384.9
44.2
130.0
(194.1)
365.0
(11.3)
(24.1)
–
(63.4)
266.2
2020
£m
–
–
–
(2.1)
–
(4.7)
(6.8)
2020
£m
351.7
(26.5)
(1,332.6)
(44.0)
(1,051.4)
211
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
25. ADDITIONAL CASH FLOW INFORMATION continued
Reconciliation of financing cash flows to movement in net debt
Opening
balance at
31 December
2020
£m
374.1
Cash
movements
£m
150.1
Additions/
acquisitions
£m
–
Disposals
£m
(16.1)
Non-cash
movements
£m
–
FX
£m
(8.1)
Closing
balance at
31 December
2021
£m
500.0
Transferred
to assets/
liabilities held
for sale
£m
–
Total
continuing
operations
£m
500.0
Cash & cash equivalents
Third-party loans
Leases
Unamortised issue costs
Amounts included in
gross debt
Amounts included in
net debt
(1,252.6)
(179.4)
6.5
104.4
27.8
5.1
(0.2)
(20.6)
–
–
65.2
–
(26.3)
2.1
–
–
0.2
(4.0)
(1,174.7)
(104.7)
7.6
(1,425.5)
137.3
(20.8)
65.2
(24.2)
(3.8)
(1,271.8)
(1,051.4)
287.4
(20.8)
49.1
(32.3)
(3.8)
(771.8)
Financing derivatives
(2.5)
(10.6)
–
–
–
14.5
1.4
Total financing liabilities1
(1,428.0)
126.7
(20.8)
65.2
(24.2)
10.7
(1,270.4)
1 Total financing liabilities comprise gross debt plus other liabilities relating to financing activities.
–
–
–
–
–
–
–
(1,174.7)
(104.7)
7.6
(1,271.8)
(771.8)
1.4
(1,270.4)
Opening
balance at
31 December
2019
£m
272.1
Cash
movements
£m
117.2
Additions
£m
–
Disposals
£m
–
FX
£m
(15.2)
Non-cash
movements
£m
–
Closing
balance at
31 December
2020
£m
374.1
Transferred
to assets/
liabilities held
for sale
£m
23.0
Total
continuing
operations
£m
351.1
–
–
–
–
–
–
–
11.1
1.2
–
12.3
–
0.6
(2.2)
(1,252.6)
(179.4)
6.5
–
(67.0)
–
(1,252.6)
(112.4)
6.5
(1.6)
(1,425.5)
(67.0)
(1,358.5)
(2.9)
(1.6)
(1,051.4)
(44.0)
(1,007.4)
–
6.4
(2.5)
–
(2.5)
12.3
4.8
(1,428.0)
(67.0)
(1,361.0)
Cash & cash equivalents
Third-party loans
Leases
Unamortised issue costs
Amounts included in
gross debt
Amounts included in
net debt
(1,244.5)
(185.0)
0.9
(19.2)
43.4
7.8
–
(39.6)
–
(1,428.6)
32.0
(39.6)
(1,156.5)
149.2
(39.6)
Financing derivatives
(3.8)
(5.1)
–
Total financing liabilities1
(1,432.4)
26.9
(39.6)
1 Total financing liabilities comprise gross debt plus other liabilities relating to financing activities.
212
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 26. COMMITMENTS & LEGAL CLAIMS
Capital commitments
Outstanding capital commitments contracted but not provided for – property, plant & equipment
Outstanding capital commitments contracted but not provided for – intangible assets
2021
£m
8.7
–
2020
£m
7.5
0.3
The Group’s share of the capital commitments of its joint ventures for continuing operations amounted to £nil (2020: £0.7m).
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. Provisions have been made where the Directors have assessed that a cash outflow is probable. All other claims are believed to be
remote or are not yet ripe.
27. EQUITY SETTLED SHARE-BASED PAYMENTS
Employee share plans
The Group’s 2018 Share Reward Plan (SRP) allows for Restricted shares and Bonus shares to be awarded to employees under the Plan. The SRP
replaced the Long Term Incentive Plan 2014 (LTIP) under which the types of awards which were granted included: Performance shares, Restricted
shares and Bonus shares. Details of the SRP for Executive Directors are outlined in the Remuneration Report on pages 121 to 145. The vesting
period varies for senior management with awards vesting in three tranches on a pro rata basis. The first tranche vests in April 2022, the second
in April 2023 and the final in April 2024. The underpin and two year holding period attached to the Executive Directors SRP are not applicable to
senior management.
As part of the ESCO acquisition, certain Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs) issued by ESCO pre-acquisition were
rolled into Weir Group share awards. The pre-acquisition cost of these awards totalled £1.4m and was recorded in reserves, with a corresponding
increase in goodwill. These awards were treated in line with other restricted awards noted above. The final tranche of these awards vested
during 2021.
In 2019, the Weir Group All-Employee Share Ownership Plan (Weir ShareBuilder) launched. Awards granted under ShareBuilder are free shares
given to all employees who meet the eligibility criteria. Awards granted in 2019 vested in two tranches. One third of the shares awarded vested
on 9 May 2020 and the remaining shares vested on 9 May 2021. Dividend equivalents will be added in the form of shares at each vesting date.
Awards granted in 2020 vest in one tranche on the second anniversary of the grant date.
One-off conditional share awards are also occasionally granted to employees. These transactions fall under the scope of IFRS 2 and are treated in
line with awards issued under the Group’s SRP in the year or LTIP in prior years.
The following tables illustrate the number and weighted average share prices (WASP) of shares awarded.
Performance shares
Outstanding at the beginning of the year
Vested during the period
Forfeited during the year
Outstanding at the end of the year
Restricted shares
Outstanding at the beginning of the year
Awarded during the year
Vested during the year
Forfeited during the year
Outstanding at the end of the year
2021
Number
million
–
–
–
–
2021
Number
million
1.9
0.5
(0.8)
(0.1)
1.5
2021
WASP
–
–
–
–
2021
WASP
£11.74
£18.28
£13.01
£12.23
£13.14
2020
Number
million
0.4
(0.2)
(0.2)
–
2020
Number
million
1.1
1.4
(0.4)
(0.2)
1.9
2020
WASP
£17.46
£18.58
£16.75
–
2020
WASP
£17.91
£8.69
£18.54
£12.91
£11.74
213
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
27. EQUITY SETTLED SHARE-BASED PAYMENTS continued
Weir ShareBuilder Plan (WSBP)
Outstanding at the beginning of the year
Awarded during the year
Vested during the year
Forfeited during the year
Outstanding at the end of the year
2021
Number
million
0.3
–
(0.1)
–
0.2
2021
WASP
£16.47
–
£16.32
–
£16.57
2020
Number
million
0.2
0.2
–
(0.1)
0.3
2020
WASP
£16.32
£16.57
–
£16.32
£16.47
In respect of awards issued in the year and revised estimates of previously issued awards, an amount of £10.9m has been charged (2020: £9.3m)
to the Consolidated Income Statement in respect of the number of awards which are expected to be made at the end of the vesting period.
The remaining contractual lives of the outstanding LTIP, SRP, Weir ShareBuilder and one-off conditional share awards at the end of the period are
as follows.
Year of award
2018
2019
2020
2021
2021
Number
million
0.1
0.2
0.9
0.5
2021
Remaining
contractual life1
2 months
7 months
15 months
16 months
2020
Number
million
0.2
0.4
1.6
–
2020
Remaining
contractual life1
11 months
10 months
16 months
–
1 Remaining contractual life reflects an average across awards with 1-5 year vesting periods.
The fair value at date of grant of the conditional awards under the SRP has been independently estimated based on the type of award:
i) Restricted shares and Weir ShareBuilder
The grant date fair value of these awards is calculated as the share price at the date of grant less an adjustment for loss of reinvestment return on
the dividend equivalent. There are no performance conditions attached to these awards.
The fair value of Weir ShareBuilder awards at grant date and occasional one-off conditional awards at grant date is also estimated on this basis.
ii) Performance shares
Performance shares were last granted in 2017. No further performance shares have been granted.
Bonus shares
Under the Group’s annual bonus plan, Executive Directors and members of the Group Executive defer 30% of any bonus received into an award
of Weir Group shares which will normally be released after three years. These awards are entitled to accrue the value of the dividends payable on
any deferred bonus awards during the three year holding period.
The SRP bonus shares are administered by Computershare Trust Company, N.A., CPU Share Plans Pty Ltd and Computershare Investor Services
PLC. The shares are acquired on market at the grant date and are held in Computershare Trust Company, N.A., CPU Share Plans Pty Ltd and
Computershare Investor Services PLC until such time as they are vested. Forfeited shares are reallocated in subsequent grants. Under the terms
of the Trust Deed, Weir Group is required to provide the necessary funding for the acquisition of the shares at the time of the grant.
The number of shares to be granted is determined based on the applicable annual bonus divided by the price at which the Company’s shares are
traded at the date of the grant. In 2021, 5,049 shares were awarded (2020: 25,464).
The fair value of the rights at grant date was estimated by taking the market price of the Company’s shares on that date.
214
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 28. RELATED PARTY DISCLOSURE
The following table provides the total amount of significant transactions which have been entered into by the Group with related parties for the
relevant financial year and outstanding balances at the year end.
Related party
Joint ventures
Group pension plans
Sales to related
parties – goods
£m
0.7
5.9
–
–
Sales to related
parties –
services
£m
0.1
0.1
–
–
Purchases from
related parties –
goods
£m
16.7
19.3
–
–
Purchases from
related parties –
services
£m
–
0.3
–
–
Amounts owed
to related
parties
£m
–
–
5.9
5.9
Amounts owed
by related
parties
£m
1.3
0.2
–
–
2021
2020
2021
2020
Contributions to the Group pension plans are disclosed in note 23.
Terms & conditions of transactions with related parties
Sales to and from related parties are made at normal market prices. Outstanding balances at the period end are unsecured and settlement occurs
in cash. There have been no guarantees provided or received for any related party balances. For 2021, the Group has not raised any provision for
doubtful debts relating to amounts owed by related parties (2020: £nil) as the payment history has been excellent. 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 benefits1
Share-based payments
Post-employment benefits
1
Included in short-term employee benefits for 2020 is £1.2m related to specific retention and incentive awards.
Emoluments paid to the Directors of The Weir Group PLC
Remuneration
Gains made on the exercise of Long Term Incentive Plan awards
2021
£m
5.9
1.3
0.3
7.5
2021
£m
3.0
0.6
3.6
2020
£m
6.6
0.7
0.3
7.6
2020
£m
2.1
0.1
2.2
Key management comprises the Board and the Group Executive. Further details of the Directors’ remuneration are disclosed in the Directors’
Remuneration Report on pages 121 to 145.
215
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
29. FINANCIAL INSTRUMENTS
A. Derivative financial instruments
The Group enters into derivative financial instruments in the normal course of business in order to hedge its exposure to foreign exchange risk.
Derivatives are only used for economic hedging purposes and no speculative positions are taken. Derivatives are recognised as held for trading
and at fair value through profit and loss unless they are designated in IFRS 9 compliant hedge relationships.
The table below summarises the types of derivative financial instrument included within each balance sheet category.
Included in non-current assets
Other forward foreign currency contracts
Included in current assets
Forward foreign currency contracts designated as cash flow hedges
Forward foreign currency contracts designated as net investment 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
Other forward foreign currency contracts
Net derivative financial assets (liabilities) – continuing operations
Net derivative financial liabilities held for sale
Net derivative financial assets (liabilities) – total Group
B. Financial assets and liabilities
2021
£m
–
–
–
–
7.1
7.1
(0.4)
–
–
(3.4)
(3.8)
(0.1)
(0.1)
3.2
–
3.2
2020
£m
0.1
0.1
0.2
4.3
11.5
16.0
–
(0.1)
(0.9)
(17.9)
(18.9)
–
–
(2.8)
(0.1)
(2.9)
Financial assets and liabilities (with the exception of derivative financial instruments) are initially recognised at fair value net of transaction costs.
Subsequently they are recognised at either fair value or amortised cost. Derivative financial instruments are initially recognised at fair value and
subsequently remeasured at fair value.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
During the years ended 31 December 2021 and 31 December 2020, there were no transfers between level 1 and level 2 fair value
measurements and no transfers into or out of level 3 fair value measurements.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet where the Group currently has a legal right to offset
the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
As at 31 December 2021, cash & short-term deposits of £564.4m (2020: £351.7m) and current interest-bearing loans & borrowings of £523.9m
(2020: £26.5m) were presented after elimination of debit and credit balances within individual pools of £0.2m (2020: £0.3m).
The Group operates a notional cash pooling arrangement in which individual balances are not offset for reporting purposes. Cash & short-term
deposits at 31 December 2021 includes £60.5m (2020: £0.4m) that is part of this arrangement and both cash and interest-bearing loans &
borrowings are grossed up by this amount.
The Group has also entered into arrangements that do not meet the criteria for offsetting but still allow for the related amounts to be offset in
specific circumstances. As at 31 December 2021, the Group had derivative financial instruments of £2.6m (2020: £1.9m) which were subject to
master netting arrangements but not offset.
216
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Carrying amounts and fair values
The table below shows the carrying amounts and fair values of the Group’s financial instruments that are reported in the financial statements.
Carrying
amount
2021
£m
Fair value
2021
£m
Fair value measurement using
Level 1
Quoted prices
in active
markets
£m
Level 2
Significant
observable
inputs
£m
Level 3
Significant
unobservable
inputs
£m
Financial assets – total Group
Derivative financial instruments recognised at fair value
through profit or loss
Trade & other receivables excluding statutory assets,
prepayments & construction contract assets
Cash & short-term deposits
Financial liabilities – total Group
Derivative financial instruments recognised at fair value
through profit or loss
Derivative financial instruments in designated hedge
accounting relationships
Amortised cost
Fixed-rate borrowings
Floating-rate borrowings
Leases
Bank overdrafts & short-term borrowings
Trade & other payables excluding statutory liabilities
& contract liabilities
Financial assets – total Group
Derivative financial instruments recognised at fair value
through profit or loss
Derivative financial instruments in designated hedge
accounting relationships
Trade & other receivables excluding statutory assets,
prepayments & construction contract assets
Cash & short-term deposits
Financial assets held for sale
Financial liabilities – total Group
Derivative financial instruments recognised at fair value
through profit or loss
Derivative financial instruments in designated hedge
accounting relationships
Amortised cost
Fixed-rate borrowings
Floating-rate borrowings
Leases
Bank overdrafts & short-term borrowings
Trade & other payables excluding statutory liabilities
& contract liabilities
Financial liabilities held for sale
Fair value measurement using
Level 1
Quoted prices
in active
markets
£m
Level 2
Significant
observable
inputs
£m
Level 3
Significant
unobservable
inputs
£m
Fair value
2020
£m
7.1
7.1
507.5
564.4
1,079.0
3.5
0.4
1,170.1
(3.0)
104.7
64.4
410.1
1,750.2
Carrying
amount
2020
£m
11.6
4.5
445.6
351.7
81.4
894.8
17.9
1.0
578.4
667.7
112.4
0.6
507.5
564.4
1,079.0
3.5
0.4
1,211.1
(3.0)
104.7
64.4
410.1
1,791.2
11.6
4.5
445.6
351.7
81.4
894.8
17.9
1.0
620.2
667.7
112.4
0.6
360.6
117.3
1,855.9
360.6
117.3
1,897.7
–
–
–
–
–
–
–
–
–
–
7.1
507.5
564.4
3.5
0.4
1,211.1
(3.0)
104.7
64.4
410.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.6
4.5
445.6
351.7
81.4
17.9
1.0
620.2
667.7
112.4
0.6
360.6
117.3
–
–
–
–
–
–
–
–
–
–
–
–
–
The fair value of cash & short-term deposits, trade & other receivables and trade & other payables approximates their carrying amount due to the
short-term maturities of these instruments. As such disclosure of the fair value hierarchy for these items is not required.
217
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
29. FINANCIAL INSTRUMENTS continued
C. Hedging activities
The Group designates certain derivative financial instruments in either cash flow hedging or net investment hedging relationships in accordance
with IFRS 9.
Hedge relationship
Hedged risk
Hedging instruments
Cash Flow Hedge
Cash flow hedge of highly probable forecast foreign
currency purchases and sales
Transactional foreign exchange risk
Forward foreign currency contracts
Net Investment Hedge
Net investment hedge of foreign operations
Translational foreign exchange risk
Foreign currency debt
Cross-currency swaps
Forward foreign currency contracts
For each type of derivative financial instrument, the net carrying amount and maturity date ranges for continuing operations are set out in the
table below.
Year ended 31 December 2021
Forward foreign currency contracts designated as cash flow hedges
Other forward foreign currency contracts at fair value through profit or loss
Year ended 31 December 2020
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 at fair value through profit or loss
Net carrying
amount
£m Maturity dates
(0.4)
2022
3.6
2022 to 2023
3.2
Net carrying
amount
£m Maturity dates
2021
0.2
2021
4.2
(0.9)
2021
(6.3) 2021 to 2023
(2.8)
218
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 For each type of derivative financial instrument, the amounts recognised for the year in profit or loss and equity are set out in the table below.
In the financial statements these amounts are offset by the retranslation of foreign currency denominated receivables and payables, the impact
of which is also set out in the table below.
Year ended 31 December 2021
Instruments measured at fair value through profit or loss (FVTPL)
Designated in hedge accounting relationships
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
Not designated in hedge accounting relationships
Other forward foreign currency contracts at FVTPL
Total gains/(losses) on instruments measured at FVTPL
Year ended 31 December 2020
Instruments measured at FVTPL
Designated in hedge accounting relationships
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
Not designated in hedge accounting relationships
Other forward foreign currency contracts at FVTPL
Total gains/(losses) on instruments measured at FVTPL
Hedge ineffectiveness
Amounts recognised in
profit or loss
Amounts recognised in equity
Other gains
(losses) in
operating profit
£m
Total amounts
recognised in
profit or loss
£m
Hedge
accounting
reserve
£m
Foreign currency
translation
reserve
£m
0.1
–
–
(4.2)
(4.1)
0.1
–
–
(4.2)
(4.1)
(0.2)
–
–
–
(0.2)
–
4.1
3.2
–
7.3
Amounts recognised in
profit or loss
Amounts recognised in equity
Other gains
(losses) in
operating profit
£m
Total amounts
recognised in
profit or loss
£m
Hedge
accounting
reserve
£m
Foreign currency
translation
reserve
£m
1.9
–
–
(8.6)
(6.7)
1.9
–
–
(8.6)
(6.7)
(1.1)
–
–
–
(1.1)
–
3.6
(6.1)
–
(2.5)
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency revenue and cost of sales, the Group enters into hedge relationships where the critical terms of the hedging
instrument match exactly with the terms of the hedged item. The Group therefore performs a qualitative assessment of effectiveness. If changes
in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging
instrument, the Group uses the hypothetical derivative method to determine whether an economic relationship remains, and so assess
effectiveness. As all critical terms matched during the year, the economic relationships were 100% effective.
Ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the
credit risk of the Group or the derivative counterparty.
During the year, the Group held fixed-for-fixed cross-currency swaps which matured in October 2021 and were designated as hedging
instruments in net investment hedges of the net assets of foreign operations. The swaps had similar critical terms as the hedged items, as
the coupon and principal settlements exchange currencies matching both denomination and amounts of the hedged net assets, for amounts
denominated in the presentation currency of the Group. The Group utilises borrowings which are measured at amortised cost and denominated
in the currency of the hedged net assets, as hedging instruments in net investment hedges. The Group does not hedge 100% of its net assets of
foreign operations, therefore the hedged item is identified as a proportion of the net assets of the foreign operations up to the notional amount of
the swaps and principal amount of the borrowings. As all critical terms matched during the year, the economic relationships were 100% effective.
Hedge ineffectiveness for the cross-currency interest rate swaps was assessed using the same principles as for hedges of foreign currency
revenue and cost of sales. It may occur due to the credit value/debit value adjustment on the cross-currency interest rate swaps which is not
matched by the net assets retranslation.
There was no ineffectiveness during 2021 or 2020 in relation to the cross-currency interest rate swaps or foreign exchange forwards.
219
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
29. FINANCIAL INSTRUMENTS continued
Effects of hedge accounting on financial position and performance
The effects of the foreign currency related hedging instruments on the Group’s financial position and performance are as follows:
Cash flow hedging: foreign currency forwards
Carrying amount (£m)
Assets
Liabilities
Notional amounts (m)
USD
Average exchange rates
USD:AUD
Maturity dates
Hedge ratios1
Change in fair value of outstanding hedging instruments since 1 January (£m)
Change in value of hedged item used to determine hedge effectiveness (£m)
1 The foreign currency forwards are denominated in the same currency as the highly probable future transactions, therefore the hedge ratio is 1:1.
Net investment hedging: foreign currency forwards, cross currency swaps and borrowings
Carrying amount (£m)
Assets – derivatives
Liabilities – derivatives
Liabilities – borrowings
Notional amounts (m)
USD
ZAR
AUD
Average exchange rates
GBP:USD
GBP:ZAR
GBP:AUD
Maturity dates
Hedge ratios1
Change in fair value of outstanding hedging instruments since 1 January (£m)
Change in value of hedged item used to determine hedge effectiveness (£m)
2021
(0.4)
–
(0.4)
12.3
1.31
02/2022 –
09/2022
1:1
(0.2)
0.2
2021
(1,051.2)
–
–
(1,051.2)
1,422.8
–
–
1.35
–
–
02/2022 –
05/2026
1:1
(18.2)
18.2
2020
0.2
0.2
–
4.4
1.37
03/2021 –
05/2021
1:1
(1.1)
1.1
2020
(345.3)
4.3
(1.0)
(348.6)
655.6
345.0
158.7
1.32
20.23
1.79
01/2021 –
02/2022
1:1
6.5
(6.5)
1 The derivatives and borrowings are denominated in the same currency as the highly probable future transactions, therefore the hedge ratio is 1:1.
D. Financial risk management
Financial risk management of the Group is carried out by Group Treasury in conjunction with individual subsidiaries. The principal financial risks to
which the Group is exposed are market risk, liquidity risk and credit risk.
Market risk
The Group is exposed to foreign exchange risk and interest rate risk in the ordinary course of business.
i) Foreign exchange risk
The Group is exposed to both transactional and translational foreign exchange risk. Transactional risk arises when subsidiaries enter into
transactions denominated in currencies other than their functional currency for operational or financing purposes or when the Group’s Treasury
function enters into transactions for financing or risk management purposes. Translational risk arises on the translation of overseas earnings
and investments into Sterling for consolidated reporting purposes. Foreign currency transactional and translational risk could result in volatility in
reported consolidated earnings and net assets.
In respect of transactional foreign currency risk, the Group maintains a policy that all operating units eliminate exposures on committed foreign
currency transactions, usually by entering into forward foreign currency contracts through the Group’s Treasury function. Certain operating units
apply cash flow hedge accounting in accordance with IFRS 9. The Group does not engage in any speculative foreign exchange transactions.
220
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The Group has material foreign investments in the US, Australia, Canada, Europe, South America and South Africa. In respect of translational risk,
the Group has historically had a policy of partially hedging its net investment exposure to US Dollar (US$), Australian Dollar (AUD), Euro (EUR) and
South African Rand (ZAR) denominated subsidiaries. During the year, the Group simplified its legal entity structure to remove the requirement to
risk manage net investment exposure to Australia Dollar (AUD) and South African Rand (ZAR). The Group’s exposure to US Dollar (US$) remains
partially hedged. This is achieved through designating an element of US$ denominated borrowings and forward currency contracts as net
investment hedges against the Group’s investments. The Group does not hedge the translational exposure arising from profit and loss items.
Sensitivity to foreign exchange rates
The Group considers the most significant transactional foreign exchange risk relates to the Canadian Dollar, US Dollar, Chinese Yuan and South
African Rand. The following table shows the impact of movements in derivative valuation as a result of a weakening of these currencies.
In the Consolidated Income Statement, these amounts are partially offset by the retranslation of foreign currency denominated receivables
and payables.
Transactional foreign exchange
2021
Canadian Dollar
US Dollar
Chinese Yuan
South African Rand
2020
Australian Dollar
Canadian Dollar
Euro
US Dollar
Increase in
currency rate
Effect on profit
gain (loss)
£m
Effect on equity
gain (loss)
£m
+25%
+25%
+25%
+25%
+25%
+25%
+25%
+25%
(26.1)
14.7
(6.1)
5.2
(2.9)
(32.3)
(1.5)
7.5
–
210.2
–
–
17.9
–
3.8
96.0
The Group is also exposed to translational foreign exchange risk as a result of its global operations and therefore the earnings of the Group will
fluctuate due to changes in foreign exchange rates in relation to Sterling. The Group’s operating profit before adjusting items from continuing
operations was denominated in the following currencies.
US Dollar
Australian Dollar
Canadian Dollar
Chilean Peso
Euro
South African Rand
Brazilian Real
Chinese Yuan
Indian Rupee
Russian Rouble
UK Sterling
Other
Adjusted operating profit
ii) Interest rate risk
Restated (note 2)
2020
£m
161.5
20.3
52.8
42.3
40.4
3.2
6.3
7.5
7.3
4.8
(55.4)
7.6
298.6
2021
£m
131.1
51.2
44.8
40.3
27.4
9.1
6.7
6.0
4.5
–
(27.4)
2.5
296.2
The Group is exposed to interest rate risk on its outstanding borrowings. Changes in interest rates will affect future interest cash flows on
floating-rate debt and the fair value of fixed-rate borrowings.
The earnings of the Group are sensitive to changes in interest rates in respect of floating-rate borrowings. As at 31 December 2021, 0%
(2020: 54%) of the Group’s borrowings were at floating interest rates. There is no significant risk from Interest Rate Benchmark Reform.
Economically equivalent rates are in use where relevant. The interest rate profile of the Group’s interest-bearing borrowings was as follows.
US Dollar
UK Sterling
Floating-rate
£m
–
–
2021
Fixed-rate
£m
(1,174.7)
–
Total
£m
(1,174.7)
–
Floating-rate
£m
(153.9)
(520.0)
2020
Fixed-rate
£m
(578.7)
–
Total
£m
(732.6)
(520.0)
221
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
29. FINANCIAL INSTRUMENTS continued
Sensitivity to interest rates
Based on borrowings at 31 December 2021, a 1% increase in interest rates would have a £nil (2020: £6.7m) impact on the profit before tax and
amortisation of the Group. This assumes that the change in interest rates is effective from the beginning of the period and that all other variables
are constant throughout the period.
Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial liabilities as they fall due.
Liquidity risk is managed by monitoring forecast and actual cash flows and ensuring that sufficient committed facilities are in place to meet
possible downside scenarios. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of fixed-
rate loan notes, bank loans, commercial paper and bank overdrafts. Further details of the Group’s borrowing facilities are disclosed in note 19.
The tables below show only the financial liabilities of the Total Group by maturity. The amounts disclosed in the table are undiscounted cash flows
and may therefore not agree to the amounts disclosed in the Consolidated Balance Sheet.
The Group manages its liquidity to ensure that it always has sufficient funding to grow the business and is able to meet its obligations as they fall due.
Year ended 31 December 2021
Total Group
Forward foreign currency contracts – net outflow
Cash flows relating to derivative financial liabilities
Trade & other payables excluding statutory liabilities
& deferred income
Leases
Bank overdrafts & short-term borrowings
Fixed-rate notes
Cash flows relating to non-derivative financial liabilities
Year ended 31 December 2020
Total Group
Forward foreign currency contracts – net outflow
Cash flows relating to derivative financial liabilities
Trade & other payables excluding statutory liabilities
& deferred income
Leases
Bank overdrafts & short-term borrowings
Bank loans
Fixed-rate notes
Cash flows relating to non-derivative financial liabilities
Credit risk
Less than 1 year
£m
(3.9)
(3.9)
1 to 2 years
£m
0.1
0.1
2 to 5 years
£m
–
–
(415.0)
(28.4)
(64.4)
(464.6)
(972.4)
(976.3)
–
(24.8)
–
(164.0)
(188.8)
(188.7)
–
(44.2)
–
(623.6)
(667.8)
(667.8)
Less than 1 year
£m
(1.4)
(1.4)
1 to 2 years
£m
0.4
0.4
2 to 5 years
£m
0.1
0.1
(409.6)
(29.5)
(0.6)
(12.8)
(24.8)
(477.3)
(478.7)
(0.3)
(23.5)
–
(208.6)
(447.8)
(680.2)
(679.8)
–
(41.4)
–
(478.2)
(149.7)
(669.3)
(669.2)
More than
5 years
£m
–
–
–
(28.9)
–
–
(28.9)
(28.9)
More than
5 years
£m
–
–
–
(30.5)
–
–
–
(30.5)
(30.5)
Total
£m
(3.8)
(3.8)
(415.0)
(126.3)
(64.4)
(1,252.2)
(1,857.9)
(1,861.7)
Total
£m
(0.9)
(0.9)
(409.9)
(124.9)
(0.6)
(699.6)
(622.3)
(1,857.3)
(1,858.2)
The Group is exposed to credit risk to the extent of non-payment by either its customers or the counterparties to its derivative financial instruments.
The Group’s credit risk is primarily attributable to its trade receivables with risk spread over a large number of countries and customers, with
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. In addition, applicable credit worthiness checks are undertaken with external credit rating agencies before entering
into contracts with customers and credit limits are set as appropriate and enforced. As shown in note 17, the trade receivables presented in the
balance sheet are net of the expected credit loss allowance. Refer to those notes for detail of the loss allowance calculation.
In certain circumstances, operating entities are permitted to make use of invoice discounting facilities, including customer supply chain financing
arrangements, to reduce counterparty credit risk. The arrangements are assessed to ensure the entity has transferred substantially all the risks
and rewards of ownership of the receivables, allowing the derecognition of the receivables in their entirety. The cash when received is recognised
as a working capital movement and presented in cash generated from operations. The total amount of receivable invoices discounted at the year
end and therefore derecognised was £18.5m (2020: £6.5m) and this is reflected in the working capital cash flows section of note 25. The fees
incurred as part of the invoice discounting programme are as shown in note 6.
The Group’s exposure to the credit risk of financial instruments is limited by the adherence to counterparty credit limits, and by only trading
with counterparties that have an investment grade credit rating or better at contract inception, based upon ratings provided by the major credit
rating agencies. Exposures to those counterparties are regularly reviewed and, when the market view of a counterparty’s credit quality changes,
adjusted as considered appropriate.
The maximum exposure to credit risk is equal to the carrying value of the financial assets of the Group.
222
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 30. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains robust capital ratios in order to support its business and
maximise Shareholder value.
The Group manages its capital structure and makes adjustments 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’s banking
arrangements include bi-annual financial covenants based on adjusted net debt to EBITDA (not greater than 3.5) and adjusted interest cover (not
less than 3.5). The Group has complied with these covenants throughout the reporting period and monitors capital using the following indicators.
Net debt to EBITDA cover – covenant basis
Net debt to EBITDA comprises net debt divided by operating profits from total operations before exceptional and other adjusting items,
intangibles amortisation, depreciation and excluding the impact of IFRS 16 ‘Leases’.
For the purposes of the covenants required by the Group’s lenders, the net debt is to be converted at the exchange rate used in the preparation
of the Group’s Consolidated Income Statement and Consolidated Cash Flow Statement, i.e. average rate. In addition, results of businesses
acquired in the financial year have to be included as if the acquisitions occurred at the start of the financial year, while the results of businesses
disposed of in the year are to be excluded. During the year, the Group acquired Motion Metrics and the impact is reflected below. Given the
disposal of the Oil & Gas Division completed during the year, its results are excluded.
The Group considers that the ratio of covenant basis net debt to EBITDA is the key metric from a capital management perspective. As announced
in the 2020 Annual Report, following the announcement of the Oil & Gas disposal, the Group will seek to maintain the ratio between 0.5 to 1.5
times, with up to 2.0 times for acquisitions.
Net debt at average exchange rates (£m)
Adjusted EBITDA from continued operations (note 2) (£m)
Adjusted EBITDA from discontinued operations (£m)
Adjustment for IFRS 16 (£m)
Adjustment for Motion Metrics acquisition (£m)
Adjusted EBITDA – covenant basis (£m)
Net debt to adjusted EBITDA cover (ratio)
Interest cover – covenant basis
Restated (note 2)
2020
913.1
375.4
1.8
(50.4)
–
326.8
2.8
2021
646.4
372.1
–
(31.3)
(3.2)
337.6
1.9
Interest cover comprises adjusted operating profit from total operations divided by adjusted net finance costs (excluding other finance costs) and
excluding the impact of IFRS 16 ‘Leases’.
Adjusted EBITA from continuing operations (note 2) (£m)
Adjusted EBITA from discontinued operations (£m)
Adjustment to exclude the impact of IFRS 16 (£m)
Adjustment for Motion Metrics acquisition (£m)
Operating profit – covenant basis (£m)
Adjusted net finance costs (excluding other finance costs) - covenant basis (£m)
Interest cover (ratio) – covenant basis
Gearing ratio
Restated (note 2)
2020
303.2
(20.6)
(8.5)
–
274.1
42.4
6.5
2021
301.5
–
(3.7)
(3.0)
294.8
40.2
7.3
Gearing comprises net debt divided by total equity. Net debt comprises cash & short-term deposits and interest-bearing loans & borrowings
(note 25).
Net debt (£m)
Total equity (£m)
Gearing ratio (%)
2021
771.8
1,454.5
53.1
Restated (note 2)
2020
1,051.4
1,306.9
80.4
223
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE GROUP FINANCIAL STATEMENTS
CONTINUED
31. EXCHANGE RATES
The principal exchange rates applied in the preparation of these financial statements were as follows.
Average rate (per £)
US Dollar
Australian Dollar
Euro
Canadian Dollar
Chilean Peso
South African Rand
Brazilian Real
Russian Rouble
Chinese Yuan
Indian Rupee
Closing rate (per £)
US Dollar
Australian Dollar
Euro
Canadian Dollar
Chilean Peso
South African Rand
Brazilian Real
Russian Rouble
Chinese Yuan
Indian Rupee
2021
1.38
1.83
1.16
1.73
1,043.54
20.34
7.42
101.45
8.88
101.70
2021
1.35
1.86
1.19
1.71
1,153.18
21.57
7.54
101.62
8.60
100.66
2020
1.28
1.86
1.13
1.72
1,015.14
21.06
6.61
92.76
8.86
95.12
2020
1.37
1.77
1.12
1.74
970.26
20.04
7.10
101.33
8.92
99.76
32. EVENTS AFTER THE BALANCE SHEET DATE
Following the Russian invasion of Ukraine on 24 February 2022, there exists uncertainty about the Group’s ability to recover assets in Russia
and Ukraine, and to continue to trade with customers in those countries. Net assets across the two countries are c.2% of the total Group and
revenues and operating profits are less than 5% of the total Group. Given the small scale of these operations relative to the overall Group we do
not consider this event to have any bearing on the Group’s ability to continue as a going concern or the Group’s longer-term viability.
224
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 COMPANY BALANCE SHEET
AT 31 DECEMBER 2021
ASSETS
Non-current assets
Intangible assets
Property, plant & equipment
Investments in subsidiaries & loans
Deferred tax assets
Trade & other receivables
Derivative financial instruments
Total non-current assets
Current assets
Trade & other receivables
Derivative financial instruments
Cash & short-term deposits
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade & other payables
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Interest-bearing loans & borrowings
Derivative financial instruments
Retirement benefit plan deficits
Total non-current liabilities
Total liabilities
NET ASSETS
CAPITAL & RESERVES
Share capital
Share premium
Merger reserve
Treasury shares
Capital redemption reserve
Special reserve
Retained earnings
TOTAL EQUITY
31 December
2021
£m
Restated (note 1)
31 December
2020
£m
Notes
3
4
5
6
7
9
7
9
10
9
12
11
9
8
13
13
13
13
13
0.4
10.7
3,848.5
14.1
34.4
0.2
3,908.3
101.3
11.1
192.4
304.8
4,213.1
1,486.7
9.6
0.6
1,496.9
1,309.8
0.2
13.4
1,323.4
2,820.3
1,392.8
32.5
582.3
332.6
(5.3)
0.5
1.8
448.4
1,392.8
0.5
11.4
3,890.6
26.5
37.0
0.1
3,966.1
96.0
22.9
39.6
158.5
4,124.6
1,238.7
27.4
4.2
1,270.3
1,365.1
0.1
95.8
1,461.0
2,731.3
1,393.3
32.5
582.3
332.6
(6.8)
0.5
1.8
450.4
1,393.3
In accordance with the concession granted under section 408 of the Companies Act 2006, the Income Statement and Statement of
Comprehensive Income of the Company have not been separately presented in these financial statements. The loss of the company was £28.2m
(2020: restated profit of £163.6m).
The financial statements on pages 225 to 240 were approved by the Board of Directors on 2 March 2022.
JON STANTON
Director
JOHN HEASLEY
Director
225
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share
capital
£m
32.5
–
–
–
–
Share
premium
£m
582.3
–
–
–
–
Treasury
shares
£m
(0.5)
–
–
–
–
Capital
redemption
reserve
£m
0.5
–
–
–
–
Special
reserve
£m
1.8
–
–
–
–
Retained
earnings
£m
305.3
163.6
(30.1)
5.7
139.2
Merger
reserve
£m
332.6
–
–
–
–
–
–
–
332.6
332.6
–
332.6
–
–
–
–
–
–
–
582.3
582.3
–
582.3
–
–
–
–
–
(10.9)
4.6
(6.8)
(6.8)
–
(6.8)
–
–
–
–
–
–
–
–
–
–
–
582.3
–
–
–
–
332.6
–
–
(15.0)
16.5
(5.3)
–
–
–
32.5
32.5
–
32.5
–
–
–
–
–
–
–
–
–
32.5
Total
equity
£m
1,254.5
163.6
(30.1)
5.7
139.2
10.5
(10.9)
–
1,393.3
1,394.4
(1.1)
1,393.3
(28.2)
79.5
(0.1)
(17.1)
10.5
–
(4.6)
450.4
451.5
(1.1)
450.4
(28.2)
79.5
(0.1)
(17.1)
34.1
34.1
10.2
(29.8)
–
(16.5)
448.4
10.2
(29.8)
(15.0)
–
1,392.8
–
–
–
0.5
0.5
–
0.5
–
–
–
–
–
–
–
–
–
0.5
–
–
–
1.8
1.8
–
1.8
–
–
–
–
–
–
–
–
–
1.8
At 31 December 2019
Restated profit for the year
Remeasurements on defined benefit plans
Tax relating to other comprehensive expense
Total net comprehensive income for the year
Cost of share-based payments inclusive
of tax credit
Purchase of shares for employee share plans
Exercise of share-based payments
At 31 December 2020
At 31 December 2020 as originally presented
Restatement (note 1)
Restated at 31 December 2020
Loss for the year
Remeasurements on defined benefit plans
Other movements
Tax relating to other comprehensive expense
Total net comprehensive income for
the year
Cost of share-based payments inclusive
of tax charge
Dividends (note 2)
Purchase of shares for employee share plans
Exercise of share-based payments
At 31 December 2021
226
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Authorisation of financial statements and statement of compliance
The company financial statements of The Weir Group PLC (the ‘Company’) for the year ended 31 December 2021 (‘2021’) were approved and
authorised for issue in accordance with a resolution of the Directors on 2 March 2022. The comparative information is presented for the year
ended 31 December 2020 (‘2020’).
The Weir Group PLC is a public limited company limited by shares and incorporated in Scotland, United Kingdom and is listed on the London
Stock Exchange.
The company financial statements of The Weir Group PLC have been prepared on a going concern basis under the historic cost convention and
in accordance with FRS 101 and applied in accordance with the provisions of the Companies Act 2006. The following disclosure exemptions from
the requirements of IFRS have been consistently applied in the preparation of these financial statements, in accordance with FRS 101:
i)
ii)
Disclosures required by paragraphs 45(b) and 46-52 of IFRS 2 ‘Share-based payment’ can be found in note 27 to the Group
financial statements;
IFRS 7 ‘Financial Instruments: Disclosures’ exemption has been taken as a result of the disclosures in note 29 to the Group
financial statements;
iii)
IAS 7 ‘Statement of cash flows’;
iv)
Disclosure of key management compensation as required by paragraph 17 of IAS 24 ‘Related party disclosures’;
v)
vi)
Disclosure of related party transactions with wholly owned subsidiaries as required by IAS 24 ‘Related party disclosures’;
Paragraph 38 of IAS 1 ‘Presentation of financial statements’ comparative information requirements in respect of paragraph 79(a)(iv) of IAS 1;
paragraph 73(e) of IAS 16 ‘Property, plant & equipment’; and paragraph 118(e) of IAS 38 ‘Intangible assets’;
vii)
Paragraph 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and paragraphs 134-136, of IAS 1 ‘Presentation of financial
statements’; and
viii) Paragraphs 52 and 58 of IFRS 16 ‘Leases’.
The Company is the parent of The Weir Group PLC. Its principal activity is to act as a holding company for the Group and perform the head
office function.
The accounting policies which follow are consistent with those of the previous period with the exception of the following standards, amendments
and interpretations which are effective for the year ended 31 December 2021:
i) Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16;
The Company has applied the practical expedient to changes to interest rates resulting from IBOR reform. In all circumstances the
replacement of IBOR with an economically equivalent rate has resulted in a change in the effective interest rate for the liability affected.
These changes have had no impact on the Company Income Statement for the period.
ii) IFRS 16 Covid-19 Related Rent Concessions Amendment; and
On 31 March 2021 the IASB published a further amendment to the May 2020 practical expedient for lessees. The expedient provided lessees
with relief from assessing whether a rent concession in relation to Covid-19 is a lease modification. The 2020 amendment stated that any
reduction in lease payments affected only payments due on or before 30 June 2021. The March 2021 amendment extends the scope of the
exemption to 30 June 2022. There was no impact on the Company in the current or prior year.
iii) IFRIC IC – Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 ‘Intangible Assets’).
The Company has revised its accounting policy in relation to Software as a Service (SaaS) and related configuration and customisation costs in
response to the IFRIC configuration or customisation costs in a cloud computing arrangement (April 2021) agenda decision which clarified the
interpretation of the current accounting standard. SaaS arrangements provide the Company access to software via payment of a subscription.
Under the new guidance these contracts are service contracts and the expense is recognised in the Income Statement when the service is
received. The costs related to implementing the software are split into those which configure the software and those which generate a separate
asset controlled by the Company. The configuration costs are expensed to the Income Statement when the service is received. Any expenditure
resulting in a separate intangible asset is capitalised in accordance with the current Company policy as stated below.
The Company’s previous accounting policy has been to capitalise SaaS arrangements and related customisation and configuration costs as
intangible assets. In response to this agenda decision the Company has completed a review of the costs which are no longer eligible to be
capitalised as intangible assets and this has resulted in a reclassification to operating expenditure and the reversal of previously accumulated
amortisation. This policy has been applied retrospectively in accordance with IAS 8 resulting in reclassifications in the prior year financial
statements, with further details provided below.
The following new accounting standards and interpretations have been published but are not mandatory for 31 December 2021:
i) Narrow scope amendments to IFRS 3, IAS 16, IAS 37 and annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16;
ii) Amendments to IAS 1, ‘Presentation of financial statements' on classification of liabilities;
iii) Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8;
iv) Amendments to IAS 12 – deferred tax related to assets and liabilities arising from a single transaction; and
v) IFRS 17 ‘Insurance contracts’.
227
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
1. ACCOUNTING POLICIES continued
These amendments have not been early adopted by the Company. These standards are not expected to have a material impact on the Company
in the current or future reporting periods or on foreseeable future transactions.
Prior Period Restatement
All primary statements have been restated to retrospectively apply the voluntary change in accounting policy for Software as a Service as
discussed above. The directly impacted financial statement line items in the Balance Sheet are shown below, with the impact in 2020 reflected in
the Statement of Changes in Equity. There was no impact on the 2019 Balance Sheet or Statement of Changes in Equity.
Restated Company Balance Sheet (extract)
at 31 December 2020
Non-current assets
Intangible assets
Current assets
Trade & other receivables
CAPITAL & RESERVES
31 December 2020 restatement
Retained earnings
Use of estimates and judgements
As previously
reported
£m
SaaS
adjustment
£m
31 December
2020 restated
£m
Notes
3
7
1.8
95.8
1,394.4
451.5
(1.3)
0.2
(1.1)
(1.1)
0.5
96.0
1,393.3
450.4
The Company’s significant accounting policies are set out below. The preparation of the Company Financial Statements, in conformity with
FRS 101, requires management to make judgements that affect the application of accounting policies and estimates that impact the reported
amounts of assets, liabilities, income and expense.
Management bases these judgements and estimates on a combination of past experience, professional expert advice and other evidence that
is relevant to each individual circumstance. Actual results may differ from these judgements and estimates, which 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.
The area where management considers the more complex estimates are required is in respect of retirement benefits. The assumptions
underlying the valuation of retirement benefit assets and liabilities include discount rates, inflation rates and mortality assumptions which are
based on actuarial advice. Changes in these assumptions could have a material impact on the measurement of the Company’s retirement benefit
obligations. Sensitivities to changes in key assumptions are provided in note 8.
Foreign currency translation
The presentational 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
Income Statement.
Revenue recognition
Revenue is the consideration received or receivable which reflects the amount expected to be received, mainly the transaction price.
Revenue will only be recognised when the fulfilment of performance obligations is achieved. Revenue mainly relates to transactions with other
entities within the Group, primarily in relation to management recharges.
Property, plant & equipment
Property, plant & equipment comprises owned assets and right-of-use assets that do not meet the definition of investment property.
i. Owned assets
Owned property, plant & equipment is stated at cost less accumulated depreciation and any recognised impairment losses. Depreciation of
property, plant & equipment is provided on a straight-line basis so as to charge the cost less residual value, to the Income Statement over the
expected useful life of the asset concerned, and is in the following ranges:
Long leasehold land & buildings
20 years
Office & computer equipment
3 – 10 years
ii. Right-of-use asset and lease liability
At inception of a contract, the Company assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys
the right to control the use of an identified asset, the Company assesses whether it has both the right to obtain substantially all of the economic
benefits from use of the identified asset and the right to direct the use of the identified asset throughout the period of use.
The Company recognises a lease liability and right-of-use asset at the lease commencement date.
228
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 The lease liability is initially measured as the present value of the lease payments that are not paid at the commencement date, discounted using
the interest rate implicit in the lease, or where the interest rate implicit in the lease cannot be readily determined, the Company’s incremental
borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
Lease payments consist of the following components:
• fixed payments, including in-substance fixed payments, less any lease incentives receivable;
• variable lease payments that depend on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option (if the lessee is reasonably certain to exercise that option); and
• payments of penalties for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease).
The Company’s incremental borrowing rate is calculated by taking the Government borrowing rate in any given currency and adding the
estimated Company credit spreads for a variety of tenors. An interpolation is performed to obtain one rate for each of the major lease currencies
based on the weighted average life of the lease book.
The right-of-use asset is measured as equal to the lease liability and adjusted for:
• lease payments made to the lessor at or before the commencement date;
• lease incentives received;
• initial direct costs associated with the lease; and
• an initial estimate of restoration costs.
The right-of-use asset is depreciated using the straight-line method over the lease term. In addition, the right-of-use asset is periodically reduced
by any impairment losses.
The Company has adopted the exemption available for low value assets, with payments being recognised on a straight-line basis over the lease
term. Leases relating to laptops, desktop computers, mobile phones, photocopiers, printers and other office equipment, where the asset value
is less than £3,500 or the local currency equivalent have been treated as ‘low value’. Where the lease contract meets both ‘short-term’ and ‘low
value’ exemptions, the lease is reported within expenses relating to short-term leases.
For each lease, the lease term has been calculated as the non-cancellable period of the lease contract, except where the Company is reasonably
certain that it will exercise contractual extension options. In assessing whether a lessee is reasonably certain to exercise an option to extend a
lease, or not to exercise an option to terminate a lease, the Company shall consider all relevant facts and circumstances that create an economic
incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease. In certain circumstances
the Company will refer to the five-year strategic plan period as an appropriate period to consider whether the ‘reasonably certain’ criteria are met.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any recognised impairment losses.
The expected useful lives of acquired intangible assets are as follows:
Purchased software 4 – 8 years
Software as a Service (SaaS) arrangements provide the Company with the right to access cloud based software applications over a contractual
period. The software remains the intellectual property of the developer and as a result the Company does not recognise an intangible asset
in relation to subscription fees and costs incurred to customise or configure the software. The related costs are recognised in the Income
Statement when the service is received.
Costs incurred to enhance or develop an existing intangible asset or develop new software code which meet the definition and recognition
criteria of an intangible asset are capitalised as intangible software assets. Amortisation is recognised over the expected useful life of
the software.
Investments
Investments in subsidiaries are held at cost less accumulated impairment losses.
Loans are carried at amortised cost using the effective interest method.
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 such as
a significant change in the market or a deviation from budget in the year.
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. The value in use calculation is based on discounted cash flows from the board approved Budget
and Strategic plan prepared in the final quarter of 2021 and first quarter of 2022. Cash flows beyond the five-year period are extrapolated using an
estimated growth rate which is appropriate for the geographic location of the asset.
229
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
1. ACCOUNTING POLICIES continued
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.
Post-employment benefits
Post-employment benefits comprise pension benefits provided to certain current and former employees in the UK.
For defined benefit pension plans, the annual service cost is calculated using the projected unit credit method and is recognised over the future
service lives of participating employees, in accordance with the advice of qualified actuaries. Current service cost and administration expenses
are recognised in operating costs and net interest on net pension liability is recognised in finance costs.
The finance cost recognised in the Income Statement in the period reflects the net interest on the net pension liability. This represents the
change in the net pension liability resulting from the passage of time, and is determined by applying the discount rate to the opening net liability,
taking into account employer contributions paid into the plan, and hence reducing the net liability, during the period.
Past service costs resulting from enhanced benefits are recognised immediately in the Income Statement. Actuarial gains and losses,
which represent differences between interest on the plan assets, experience on the benefit obligation and the effect of changes in actuarial
assumptions, are recognised in full in other comprehensive income 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 yields at the balance sheet date on appropriate high-quality corporate bonds that have maturity dates
approximating the terms of the Company’s obligations and are denominated in the currency in which the benefits are expected to be paid,
minus the fair value of the plan assets, if any, at the balance sheet date. The balance sheet amount recognised is limited to the present value
of economic benefits which the Company expects to recover by way of refunds or a reduction in future contributions. In order to calculate the
present value of economic benefits, consideration is also given to any minimum funding requirements.
For defined contribution plans, the cost represents the Company’s contributions to the plans and these are 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 Share Reward Plan (SRP), formerly the Long Term Incentive
Plan (LTIP), the Weir ShareBuilder Plan (WSBP) and as a consequence of occasional one-off conditional awards made to employees.
The fair value of SRP awards and one-off conditional awards 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 or performance conditions where applicable. The conditions of the SRP for the Executive
Directors which took effect in 2018 are summarised in the Directors’ Remuneration Policy, which can be found on the Company’s website at
www.corporategovernance.weir. The conditions of the SRP for senior management are summarised in note 27 of the Group financial statements.
The fair value of WSBP awards at grant date is calculated as the share price at the date of the grant less an adjustment for loss of reinvestment
return on the dividend equivalent. There are no performance conditions attached to these awards but participants who leave the Company
prior to vesting lose their right to the awards. The terms of the share awards granted under the WSBP are set out on the plan’s website at
www.sharebuilder.weir.
Financial assets & liabilities
The Company’s principal financial assets and liabilities, other than derivatives, comprise bank overdrafts, short-term borrowings, loans and fixed-
rate notes, commercial paper, cash and short-term deposits. The Company also has other financial assets and liabilities such as trade receivables
and trade payables which arise directly from its operations.
A financial asset 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 de-recognition 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. Under IFRS 9, where the modification
is not substantial, the modified cash flows are discounted at the original effective interest rate to determine a revised carrying amount of the
liability, with any difference in carrying amount recognised in the Income Statement.
Derivative financial instruments
The Company uses derivative financial instruments, principally forward foreign currency contracts, 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 or liabilities measured at their fair values at the balance sheet date. The fair value of
forward foreign currency contracts is calculated as the present value of the estimated future cash flows based on spot and forward foreign
exchange rates. The fair value of interest rate swaps and cross-currency swaps is calculated as the present value of the estimated future cash
flows based on interest rate curves, spot foreign exchange rates and counterparty and own credit risk. Changes in their fair values have been
recognised in the Income Statement and presented within operating profit or finance costs dependent on their nature.
230
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Treasury shares
The Weir Group PLC shares held by the Company, or those held in Trust, 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 total comprehensive income on the
purchase, sale, issue or cancellation of equity shares.
Taxation
Current tax is the amount of tax payable or recoverable in respect of the taxable profit or loss for the period.
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 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.
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:
i) deferred tax is provided on temporary differences arising on investments in subsidiaries and joint ventures, 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;
and
ii) 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.
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.
2. PROFIT ATTRIBUTABLE TO THE COMPANY
The loss dealt with in the accounts of the Company was £28.2m (2020: restated profit of £163.6m). The corporate tax credit dealt with in the
accounts of the Company was £6.2m (2020: £2.6m).
Dividends paid & proposed
Declared & paid during the period
Equity dividends on ordinary shares
Final dividend for 2020: 0.00p (2019: 0.00p)
Interim dividend for 2021: 11.50p (2020: 0.00p)
Proposed for approval by Shareholders at the Annual General Meeting
Final dividend for 2021: 12.30p (2020: 0.00p)
2021
£m
–
29.8
29.8
31.9
2020
£m
–
–
–
–
The current year dividend is in line with the Group’s capital allocation policy announced in the 2020 Annual Report and Financial Statements,
under which the Group intends to distribute 33% of net adjusted earnings by way of dividend. As a result the Group’s dividend cover in 2021
is 3.0 times. In response to the Covid-19 pandemic, the Board did not propose an interim or final dividend for 2020.
The proposed dividend is based on the number of shares in issue, excluding treasury shares held, at the date that 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 this Annual Report and Financial Statements and the record date for the final dividend.
Employee benefits expense
Wages & salaries
Social security costs
Defined contribution plans
Share-based payments – equity settled transactions
2021
£m
25.8
3.6
0.7
10.9
41.0
2020
£m
17.6
2.7
0.7
9.3
30.3
During 2021, the average number of people employed by the Company was 280 (2020: 239).
Directors
Details of Directors’ remuneration, benefits and LTIP awards are included in the Remuneration Report on pages 121 to 145, and in note 28 to the
Group Consolidated Financial Statements.
Auditors’ remuneration
The total fees payable by the Company to PricewaterhouseCoopers LLP (PwC) for work performed in respect of the audit of the Company were
£24,675 (2020: £23,500). Fees paid to PwC for non-audit services to the Company itself are not disclosed in these accounts as the Group’s
Consolidated Financial Statements, in which the Company is included, are required to disclose such fees on a consolidated basis.
Fees payable by the Company to Ernst & Young LLP for work performed in respect of the audit of the pension scheme were £39,200
(2020: £39,800).
231
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
3. INTANGIBLE ASSETS
Cost
At 31 December 2020 (restated note 1)
Disposals
Reclassifications to property, plant & equipment (note 4)
At 31 December 2021
Accumulated amortisation
At 31 December 2020 (restated note 1)
Charge for the year
At 31 December 2021
Net book value at 31 December 2020 (restated note 1)
Net book value at 31 December 2021
4. PROPERTY, PLANT & EQUIPMENT
Cost
At 31 December 2020
Additions
Reclassifications from intangible assets (note 3)
At 31 December 2021
Accumulated depreciation
At 31 December 2020
Charge for the year
At 31 December 2021
Net book value at 31 December 2020
Net book value at 31 December 2021
Right-of-use assets
Purchased
software
total
£m
0.6
(0.4)
0.5
0.7
0.1
0.2
0.3
0.5
0.4
Total
£m
14.7
0.8
(0.5)
15.0
3.3
1.0
4.3
11.4
10.7
Owned long
leasehold land
& buildings
£m
Owned office
& computer
equipment
£m
Right-of-use
land & buildings
£m
Right-of-
use plant &
equipment
£m
3.7
–
–
3.7
0.9
0.2
1.1
2.8
2.6
2.0
0.8
(0.5)
2.3
0.6
0.3
0.9
1.4
1.4
8.8
–
–
8.8
1.7
0.5
2.2
7.1
6.6
0.2
–
–
0.2
0.1
–
0.1
0.1
0.1
The Company leases buildings, a vehicle and IT equipment. The current and non-current lease liabilities are disclosed in note 11. The following
table shows the breakdown of the lease expense between amounts charged to operating profit and amounts charged to finance costs in
the year.
2021
£m
0.5
–
0.5
0.2
0.7
2020
£m
0.9
(0.3)
0.6
0.2
0.8
Depreciation of right-of-use assets
Income from sub-leasing right-of-use assets
Charge to operating profit
Finance cost – interest expense related to lease liabilities
Charge to profit before tax
The total cash outflow in the year is £0.8m (2020: £0.9m).
232
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 5. INVESTMENTS IN SUBSIDIARIES & LOANS
Cost
At 31 December 2020
Additions
Settlement
Exchange
At 31 December 2021
Impairment
At 31 December 2020
Impairment
At 31 December 2021
Subsidiaries
shares
£m
3,828.6
557.8
–
–
4,386.4
1,312.3
439.6
1,751.9
Loans
£m
1,378.8
639.1
(816.8)
17.4
1,218.5
4.5
–
4.5
Total
£m
5,207.4
1,196.9
(816.8)
17.4
5,604.9
1,316.8
439.6
1,756.4
Net book value at 31 December 2020
2,516.3
1,374.3
3,890.6
Net book value at 31 December 2021
2,634.5
1,214.0
3,848.5
The subsidiaries and joint ventures of the Company are listed on pages 241 to 247.
During 2021, the Company carried out a corporate restructure for internal financing purposes. This resulted in a series of equity investments into
existing subsidiaries of £557.8m, changes to certain intercompany loans and preference share arrangements, and led to dividends being received.
Following completion of this restructuring, the Company carried out an impairment review of its investments and subsequently recorded
impairments totalling £439.6m which broadly reflect the dividends received as part of the restructuring exercise which totalled £434.9m.
The loan balances above are amounts owed by subsidiaries and represent short to long-term funding arrangements under term or
cash management loans. Additions and settlements are movements on these loan facilities due to changes in individual subsidiary
funding requirements.
Over the term of the loans, the Company accounts for its credit risk by appropriately providing for expected credit losses on a timely basis.
The majority of the Company’s loans are repayable on demand by the Company. In calculating the expected credit loss allowance of repayable on
demand loans, the Company considers the financial position and internal forecasts of each subsidiary and their ability to repay on request, or over
time. For those loans repayable on maturity, expected credit losses are calculated using market-implied probabilities of default and loss-given-
default estimations.
The Company considers the probability of default upon initial recognition of an asset and subsequently whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the
Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition.
The primary indicators considered are actual or expected significant adverse changes in business and financial conditions that are expected to
cause a significant change to the borrower’s ability to meet its obligations.
Independent of the primary indicators above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making
a contractual payment. A default on a financial asset is considered to occur when the counterparty fails to make contractual payments within 90
days of when they fall due. A write-off is considered to be required when there is no reasonable expectation of recovery, or when a debtor fails to
make contractual payments greater than 120 days past due. Where loans or receivables have been written-off, the Company continues to engage
in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in the Income Statement.
As at 31 December 2021 and 31 December 2020, the loss allowances for all loans to subsidiaries were measured at an amount equal to
12 month expected credit losses.
The carrying value of loans and investments is considered to be supported by the value in use and market capitalisation of the Group.
6. DEFERRED TAX ASSETS
Deferred income tax assets
Other timing differences
Retirement benefits
Deferred income tax assets
Deferred income tax assets
Recoverable after one year
2021
£m
10.8
3.3
14.1
2020
£m
8.3
18.2
26.5
14.1
26.5
Deferred tax assets of £14.1m include £7.9m (2020: £5.6m) recognised in respect of losses suffered in preceding periods. The movement in the
year is a direct result of the increase in the deferred tax rate from 19% to 25%. The deferred tax asset has been recognised on the basis that the
losses can be carried forward indefinitely and are available to surrender against UK taxable profits of the UK group in the future.
233
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
7. TRADE & OTHER RECEIVABLES
Trade & other receivables presented as non-current on the face of the Company balance sheet of £34.4m (2020: £37.0m) are in respect of a
prepayment recognised as a result of the pension funding partnership structure. Further information pertaining to this arrangement can be found
in note 8.
Amounts recoverable within one year:
Amounts owed by subsidiaries
Tax receivable
Other debtors
Prepayments & accrued income
Restated (note 1)
2020
£m
2021
£m
62.5
23.9
6.0
8.9
101.3
68.4
23.5
1.8
2.3
96.0
Amounts owed by subsidiaries relate to management recharges in respect of support services provided. Intercompany balances are typically
managed on a Group basis, and the Company’s credit risk management practices reflect this. The Group applies the IFRS 9 simplified approach
to measuring expected credit losses, which uses a lifetime expected loss allowance for all such trade receivables.
The amounts owed by subsidiaries do not carry an interest charge, and it is the Company’s expectation that materially all the amounts owed by
subsidiaries are fully recoverable over time. Expected credit losses at both 31 December 2021 and 31 December 2020 are therefore immaterial,
and there has been no material change to the expected loss allowance during the year.
8. RETIREMENT BENEFITS
At the balance sheet date, the Company has a funded defined benefit plan (the Main Plan) and an unfunded retirement benefit plan for retired
Executive Directors. The Company also operates a defined contribution plan, the contributions to which are in addition to those set out below, and
are charged directly to the Income Statement. The liabilities of the Company’s former Executive Plan, which was previously accounted for on the
balance sheet, were transferred in full to an insurer in 2020. The Executive Plan’s assets, primarily insurance policies, and liabilities were removed
from the Company’s balance sheet as at 31 December 2020.
For the defined benefit plans, benefits are related to service and final salary. The Main Plan closed to future accrual of benefits effective from
30 June 2015.
The weighted average duration of the expected benefit payments from the Main Plan is around 16 years.
The current funding target for the Main UK Plan is to maintain assets equal to the value of the accrued benefits. The Main Plan holds two
insurance policies which match the liabilities in respect of a significant proportion of deferred and retired pensioners.
The defined benefit plans expose the Company to a number of risks:
i) Uncertainty in benefit payments
The value of the Company’s liabilities for the defined benefit plans will ultimately depend on the amount of benefits paid out. This in turn will
depend on the level of inflation (for those benefits that are subject to some form of inflation protection) and how long individuals live. This risk
is significantly reduced through the insurance policies held.
ii) Volatility in asset values
The Company is exposed to future movements in the values of assets held in the funded defined benefit plans to meet future uninsured
benefit payments.
iii) Uncertainty in cash funding
The regulatory framework in the UK requires the Trustees and Company to agree upon the assumptions underlying the funding target,
and then to agree upon the necessary contributions required to recover any deficit at the valuation date. There is a risk to the Company
that adverse experience could lead to a requirement for the Company to make considerable contributions to recover any deficit. This risk is
significantly reduced through the insurance policies held. In addition, the Company is also exposed to adverse changes in pension regulation.
234
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Assumptions
The significant actuarial assumptions used for accounting purposes reflect prevailing market conditions and are as follows.
Significant actuarial assumptions:
Discount rate (% pa)
Retail Prices Inflation (RPI) assumption (% pa)
Post-retirement mortality (life expectancies in years):
Current pensioners at 65 – male
Current pensioners at 65 – female
Future pensioners at 65 – male
Future pensioners at 65 – female
Other related actuarial assumptions:
Rate of increases for pensions in payment (% pa)
Pre 6 April 2006 service
Post 5 April 2006 service
Consumer Prices Inflation (CPI) assumption (% pa)
2021
2020
1.9
3.4
21.6
23.4
22.9
24.9
3.2
2.1
2.6
1.4
3.0
21.3
23.2
22.6
24.8
2.9
2.1
2.1
The assumptions used to determine end-of-year benefit obligations are also used to calculate the following year’s cost.
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 a member retiring in 2042 (in 20 years
time). No specific allowance has been made in the mortality assumptions for the potential impact of Covid-19.
The assets and liabilities of the plans are as follows.
Plan assets at fair value:
Equities (quoted)
Diversified Growth Funds (c. 40% quoted)
Corporate bonds (quoted)
Government bonds (quoted)
Insurance policies (unquoted)
Private debt (unquoted)
Multi Asset Credit Funds (quoted)
Cash (quoted)
Fair value of plan assets
Present value of funded obligations
Net funded obligations
Present value of unfunded obligations
Net liability
Plans in deficit
2021
£m
207.7
70.1
44.4
106.8
293.2
44.5
39.7
10.4
816.8
(828.9)
(12.1)
(1.3)
(13.4)
(13.4)
2020
£m
211.2
65.1
45.1
102.6
330.4
26.3
39.3
11.3
831.3
(925.7)
(94.4)
(1.4)
(95.8)
(95.8)
Of the Government bonds held at 31 December 2021, 34% are fixed interest bonds. The pension plans have not directly invested in any of the
Company’s own financial instruments, or in properties or other assets used by the Company.
The investment strategy for the UK is to hold equities and other return-seeking assets such as Diversified Growth Funds and a mixture of bonds
to meet the assessed value of the benefits promised for the non-insured deferred pensioners. For the remaining deferred pensioners and the
bulk of pensioners currently receiving their benefit, the liabilities are backed by insurance policies and suitable bonds.
The change in net liabilities recognised in the Company Balance Sheet is comprised as follows.
Opening net liabilities
Expense charged to the Income Statement
Amount recognised in Statement of Comprehensive Income
Employer contributions
Closing net liabilities
2021
£m
(95.8)
(1.4)
79.5
4.3
(13.4)
2020
£m
(69.3)
(2.0)
(30.1)
5.6
(95.8)
235
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
8. RETIREMENT BENEFITS continued
The amounts recognised in the Income Statement and in the Statement of Comprehensive Income for the period are analysed as follows.
Recognised in the Income Statement
Past service cost
Administrative expenses
Included in operating profit
Interest on net pension liability
Total expense charged to the Income Statement
Recognised in the Statement of Comprehensive Income
Actual return on plan assets
Less: interest on plan assets
Other actuarial gains (losses) due to:
Changes in financial assumptions
Changes in demographic assumptions
Experience on benefit obligations
Actuarial gains (losses) recognised in the Statement of Comprehensive Income
2021
£m
–
(0.1)
(0.1)
(1.3)
(1.4)
14.7
(11.5)
3.2
43.7
(5.0)
37.6
79.5
2020
£m
(0.6)
–
(0.6)
(1.4)
(2.0)
96.2
(16.8)
79.4
(106.6)
(2.9)
–
(30.1)
Past service cost and administration expenses are recognised in operating costs and interest on net pension liability is recognised in other
finance costs.
Pension contributions are determined with the advice of independent qualified actuaries on the basis of regular valuations using the projected
unit method. The Company made special contributions of £4.3m in 2021 (2020: £5.5m) in addition to the Company’s regular contributions.
In 2015, the Company entered into a pension funding partnership structure under which it has contributed interests in a Scottish Limited
Partnership (‘SLP’) for the Main Plan. The Main Plan’s interests in the SLP reduce the deficit on a funding basis, although the agreement will not
affect the position directly on an FRS 101 accounting basis as the investments held do not qualify as assets for FRS 101 purposes. As a partner in
the SLP, the Main Plan is entitled to receive a share of the profits of the SLP once a year for 15 years, subject to conditions being met. The profits
to be shared with the Plan will be reflected in the Company’s financial statements as a pension contribution.
The latest actuarial funding valuation of the Main Plan as at 31 December 2020 is due to be finalised in 2022. Under the agreed recovery plan,
the Company has agreed to contribute £6.2m in each year from 2021 to 2029 inclusive. These contributions are primarily funded by the income
payments from the SLP described above. The contributions are subject to an annual review mechanism, and will temporarily cease if the Main
Plan’s funding level on a funding basis exceeds 105%.
The Trustees of the UK Executive Plan, which was previously consolidated within the Company’s accounting figures, entered into a full buy-in
transaction with Scottish Widows in 2017. A final balancing premium was paid during 2020, and the responsibility of this Plan is now with the
insurer. The Executive Plan was therefore removed from the Company’s balance sheet as at 31 December 2020, with £47.1m of liabilities and
plan assets being removed as disclosed below.
The Company has taken legal advice regarding its UK arrangements to confirm the accounting treatment under IFRIC 14 with regard to
recognition of a surplus and also recognition of a minimum funding requirement. This confirmed that there is no requirement to adjust the
balance sheet and that recognition of a current surplus is appropriate on the basis that the Company has an unconditional right to a refund of
a current (or projected future) surplus at some point in the future. For the same reason, there is no requirement for the Company to adjust the
balance sheet to recognise the future agreed deficit recovery contributions. Having considered the position, taking account of the legal input
received and noting that the Trustees of the UK arrangements do not have discretionary powers to unilaterally wind up the schemes without
cause, the Directors of the Company have concluded that the Company has an unconditional right to a refund of any surplus.
The total Company contributions for 2022 (including those expected from the SLP) are expected to be £8.2m.
Changes in the present value of the defined benefit obligations are analysed as follows.
Opening defined benefit obligations
Past service cost
Interest on benefit obligations
Benefits paid
Actuarial gains (losses) due to
Changes in financial assumptions
Changes in demographic assumptions
Experience on benefit obligations
Liabilities removed due to curtailments/settlements
Closing defined benefit obligations
236
2021
£m
(927.1)
–
(12.8)
33.4
43.7
(5.0)
37.6
–
(830.2)
2020
£m
(883.7)
(0.6)
(18.2)
37.8
(106.6)
(2.9)
–
47.1
(927.1)
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 Changes in the fair value of plan assets are analysed as follows.
Opening plan assets
Interest on plan assets
Employer contributions
Administrative expenses
Benefits paid
Actual return on plan assets less interest on plan assets
Assets distributed on settlements
Closing plan assets
Sensitivity analysis
2021
£m
831.3
11.5
4.3
(0.1)
(33.4)
3.2
–
816.8
2020
£m
814.4
16.8
5.6
–
(37.8)
79.4
(47.1)
831.3
Changes in key assumptions can have a significant effect on the reported net retirement benefit obligation and the Income Statement expense
for 2022. The effects of changes in those assumptions are set out in the table below.
Discount rate
Effect on defined benefit obligation of a 1.0% change
Effect on net liability of a 1.0% change
RPI inflation (and associated assumptions)
Effect on defined benefit obligation of a 1.0% change
Effect on net liability of a 1.0% change
Life expectancy
Effect on defined benefit obligation of a one year change
Effect on net liability of a one year change
Increase
2021
£m
Decrease
2021
£m
Increase
2020
£m
Decrease
2020
£m
119.9
93.4
(93.7)
(69.6)
(38.9)
(21.7)
(143.6)
(114.2)
84.6
62.1
38.9
21.7
143.2
110.4
(103.9)
(75.5)
(32.5)
(17.7)
(173.7)
(136.9)
94.0
67.6
32.5
17.7
The impact on the net liability is significantly reduced as a result of the insurance policies held. In the absence of such policies, the impact on the
net liability would be much closer to the significantly higher impact on the defined benefit obligation shown in the table.
These sensitivities have been calculated to show the movement in the defined benefit obligation and net liability in isolation and assume no
other changes in market conditions at the accounting date. In practice, for example, a change in discount rate is unlikely to occur without any
movement in the value of the invested (non-insurance policy) assets held by the plans.
9. DERIVATIVE FINANCIAL INSTRUMENTS
Non-current assets
Forward foreign currency contracts
Current assets
Forward foreign currency contracts
Current liabilities
Cross-currency swaps
Forward foreign currency contracts
Non-current liabilities
Forward foreign currency contracts
2021
£m
0.2
0.2
11.1
11.1
–
(9.6)
(9.6)
(0.2)
(0.2)
The figures in the above table include derivative financial instruments where the counterparty is a subsidiary of The Weir Group PLC.
2020
£m
0.1
0.1
22.9
22.9
(0.9)
(26.5)
(27.4)
(0.1)
(0.1)
237
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
10. TRADE & OTHER PAYABLES
Bank overdrafts & short-term borrowings
Loans from subsidiaries (note 11)
Lease liability (note 11)
Amounts owed to subsidiaries
Other taxes & social security costs
Other creditors
Accruals & deferred income
11. INTEREST-BEARING LOANS & BORROWINGS
Amounts due are repayable as follows:
Less than one year:
fixed-rate notes
loans from subsidiaries
lease liability
More than one year but not more than two years:
bank loans
fixed-rate notes
loans from subsidiaries
lease liability
More than two years but not more than five years:
bank loans
fixed-rate notes
loans from subsidiaries
lease liability
More than five years:
lease liability
Less current instalments due on:
fixed-rate notes
loans from subsidiaries
lease liability
2021
£m
479.0
961.8
0.6
5.2
2.1
13.1
24.9
1,486.7
2020
£m
–
1,203.5
0.6
8.3
1.3
7.3
17.7
1,238.7
2021
£m
2020
£m
435.9
961.8
0.6
(3.0)
147.7
102.6
0.6
–
586.5
467.8
1.9
5.7
2,708.1
(435.9)
(961.8)
(0.6)
1,309.8
–
1,203.5
0.6
198.9
432.2
110.2
0.6
468.8
146.2
–
1.9
6.3
2,569.2
–
(1,203.5)
(0.6)
1,365.1
The loans from subsidiaries with a maturity date of less than one year are repayable in 2022 and have an interest rate of 0.1%. The loans for
subsidiaries with a maturity date greater than one year and less than two years are repayable in 2023 and have an interest rate of 4.17%.
The loans for subsidiaries with a maturity date greater than two years and less than three years are repayable in 2024 and have an interest rate
of 2.43%. The loans for subsidiaries with a maturity date greater than four years and less than five years are repayable in 2026 and have an
interest rate of 2.85%.
Details of the interest and repayment terms of the bank loans and fixed-rate notes can be found in note 19 to the Group financial statements.
238
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 12. PROVISIONS
At 31 December 2020
Additions
Utilised
Released – unutilised
At 31 December 2021
Current 2021
Non-current 2021
At 31 December 2021
Current 2020
Non-current 2020
At 31 December 2020
Exceptional
items
£m
4.2
5.6
(8.9)
(0.3)
0.6
0.6
–
0.6
4.2
–
4.2
The provision mainly relates to costs associated with the cyber incident, but also some residual costs relating to the sale of the Oil & Gas Division
and the acquisition of Motion Metrics.
13. SHARE CAPITAL & RESERVES
Allotted, called up & fully paid
Ordinary shares of 12.5p each
Treasury shares
At the beginning of the year
Purchase of shares in respect of equity settled share-based payments
Utilised during the period in respect of equity settled share-based payments
At the end of the year
Equity settled share-based payments
Share awards outstanding at the end of the year
Merger reserve
2021
£m
32.5
2021
Number
million
0.4
0.8
(0.9)
0.3
1.7
2020
£m
32.5
2020
Number
million
–
1.0
(0.6)
0.4
2.2
The merger reserve relates to the issue of new equity as part of the consideration paid for an acquisition. Shares issued directly to ESCO
Shareholders on 12 July 2018, as part of the total acquisition consideration, qualified for merger relief under Section 612 of the Companies
Act 2006 and resulted in an increase to the reserve of £323.2m. The remaining reserve balance of £9.4m relates to shares issued in part
consideration for the acquisition of Delta Industrial Valves Inc. during 2015.
Capital redemption reserve
The capital redemption reserve was created by a repurchase and cancellation of own shares during the 53 weeks ended 1 January 1999.
Special reserve
The premium of £1.8m arising on the issue of shares for the acquisition of the entire share capital of Liquid Gas Equipment Limited in 1988 has
been credited to a special reserve in accordance with the merger relief provisions of the Companies Act 1985.
239
The Weir Group PLC Annual Report and Financial Statements 2021Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
14. CONTINGENT LIABILITIES & LEGAL CLAIMS
Guarantees
The Company has given guarantees in relation to the bank and other borrowings of certain subsidiary companies amounting to £660.4m
(2020: £686.0m) of which £213.5m (2020: £219.0m) was utilised at 31 December 2021. These guarantees are treated as contingent liabilities
until it becomes probable they will be called upon. The likelihood of the guarantees being called upon is considered remote.
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. Provisions have been made where the Directors have assessed that a cash outflow is probable. All other claims are believed to be
remote or are not yet ripe.
15. RELATED PARTY DISCLOSURES
The Company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions with related parties that are
wholly owned by a subsidiary of The Weir Group PLC. The following table provides the total amount of transactions which have been entered into
with non-wholly owned related parties for the relevant financial year and outstanding balances at the year end.
Related party
Weir ABF LP
Weir Minerals (India) Private Ltd
Vulco SA
2021
2020
2021
2020
2021
2020
Group charges
£m
–
–
0.8
0.7
2.7
4.1
Amounts
due by
£m
63.3
60.8
0.4
0.2
0.5
0.9
16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The description of the Group’s financial risk management objectives and policies is provided in note 29 to the Group financial statements.
These financial risk management objectives and policies also apply to the Company.
240
Financial StatementsThe Weir Group PLC Annual Report and Financial Statements 2021 SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings of the Company as at 31 December 2021 are noted below. Unless otherwise indicated, the Company’s
shareholdings are held indirectly.
Class name
Ordinary
Ordinary
Fixed Capital;
Variable Capital
Common;
Preferred Stock
CAD Common
Ordinary
Corporate
Relationship %
Fixed Capital
A Ordinary;
Ordinary
Interests
Interests
Company Name
Aislación Sismica Perú SA
Country
Peru
Aspir Pty Ltd
Bucyrus Blades de Mexico
S.A. DE C.V.
Bucyrus Blades Inc.
Australia
Mexico
Bucyrus Blades of Canada
ULC
CH Warman Asia Limited
Canada
Malta
Comercializadora TEP
Limitada
Electric Steel Foundry Co
Chile
United States C T Corporation System, 4400 Easton Commons Way,
Registered Office address
Av. Separadora Industrial, N° 2201 Urb Vulcano Ate,
Lima, Peru
1-5 Marden Street, Artarmon, NSW, 2064, Australia
Calle 14, Manzana 4, Lote 4, Parque Industrial, Apartado
Postal 129, Atlacomulco, Mexico
Suite 125, Columbus, OH, 43219, United States
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
Level 2 West, Mercury Tower, The Exchange Financial &
Business Centre, Elia Zammit Street, St. Julian's, STJ 3155,
Malta, STJ 3155, Malta
San José N° 0815, San Bernardo, Santiago de Chile, Chile
EnviroTech (Pty) Limited
South Africa
United States
31 Isando Road, Isando, Gauteng, 1600, South Africa
United States 780 Commercial Street SE, Suite 100, Salem, OR, 97301,
Canada
ESCO – Bucyrus Blades
Canada
ESCO – Bucyrus Blades
Financing Ltd. Partnership
(RH)
ESCO (UK) Holdings Limited England &
Canada
ESCO (UK) Limited
ESCO (Xuzhou) Wearparts
Co., Ltd.
Wales
England &
Wales
China
ESCO Australia Holdings Pty
Limited
ESCO Belgium SA
Australia
Belgium
ESCO Canada Finance
Company Inc.
ESCO Canada Ltd.
ESCO Dunedin Pty Ltd
ESCO Elecmetal Fundición
Limitada
ESCO Electric Steel Foundry
Company of Africa (Pty) Ltd
Canada
Canada
Australia
Chile
ESCO EMEA Holdings (UK)
Limited
ESCO Engineering Kingaroy
Pty Ltd
England &
Wales
Australia
ESCO Engineering Pty Ltd
ESCO GmbH
ESCO GP Ltd.
Australia
Germany
Canada
ESCO Group Holdings Pty
Ltd
ESCO Group LLC
Australia
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
Ings Road, Doncaster, DN5 9SN, United Kingdom
Ordinary
Ings Road, Doncaster, DN5 9SN, United Kingdom
Ordinary
DaZhai Road and CuiZhuan Nan Road, Tongshan Economic
Development Zone, Xuzhou City, Jiangsu Province, 221116,
China
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Rue des Fours a Chaux 122, Zoning Industriel, Frameries,
7080, Belgium
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Calle Miraflores, Numero 222, Piso veinticuatro, Santiago,
Chile
Corporate
Relationship %
Ordinary
Ordinary
Common
Ordinary
Ordinary
Corporate
Relationship %
Ordinary
Meadowview lane, Linbro Park, Johannesburg, 2090,
South Africa
Ings Road, Doncaster, DN5 9SN, United Kingdom
Ordinary
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Ordinary
D-Ordinary
F-Ordinary
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Ordinary
Marie-Bernays Ring 1, Moenchengladbach, 41199, Germany Ordinary
Common
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Ordinary
South Africa Meadowview Business Estate, CNR Clulee and
United States 1209 Orange Street, Wilmington, DE 19801, United States Membership
Units
Directly
Held By
PLC*
% of
class
99.98
100
100
100
100
100
99.59
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
241
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information SUBSIDIARY UNDERTAKINGS
CONTINUED
Company Name
ESCO Hydra (UK) Limited
ESCO Indonesia Investco
No 1 Pty Ltd
ESCO Indonesia Investco
No 2 Pty Ltd
ESCO International (H.K.)
Holdings Limited
ESCO International Holdings
SPRL
ESCO Japan, Inc.
Hong Kong
Belgium
Japan
Esco Latin América Comércio
e Indústria Ltda.
ESCO Limited
Brazil
Canada
ESCO Moçambique S.A.
ESCO Northgate Pty Limited Australia
ESCO Peru S.R.L.
ESCO RUS Limited Liability
Company
ESCO S.A.S.
ESCO Servicios Mineros S.A. Argentina
ESCO South Africa Wearparts
(Pty) Limited
Peru
Russian
Federation
France
Country
England &
Wales
Australia
Registered Office address
Ings Road, Doncaster, DN5 9SN, United Kingdom
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Class name
Ordinary
Ordinary-A
Ordinary
Australia
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Ordinary
Suites 5801, 5804-06,Central Plaza, 18 Harbour Road,
Wanchai, Hong Kong
122, Rue des Fours à Chaux, Zoning Industriel, Frameries,
7080, Belgium
Marunouchi Mitsui Building, 2-2-2 Marunouchi, Chiyoda-ku,
Tokyo, 100-0005, Japan
Rua Engenheiro Gerhard Ett, nº 1.215, Galpão 02, Distrito
Industrial Paulo Camilo Sul, Betim, 32668-110, Brazil
1800 – 510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
Ordinary
Ordinary
Common
Ordinary
Mozambique Avenida Kim Il Sung, no. 961, Maputo, Mozambique
25 Trade Street, Lytton, Queensland, QLD 4178, Australia
Av. Manuel Olguin 211, Suite 304, Surco, Lima, Peru
69 Leningradskoe shosse, Building 1, Moscow, 125445,
Russian Federation
57 rue d’Amsterdam, Paris, 75008, France
Tucuman 1, Piso 4, C1049AAA, Buenos Aires, Argentina
South Africa Meadowview Business Estate, CNR Clulee and
Meadowview lane, Linbro Park, Johannesburg, 2090,
South Africa
Directly
Held By
PLC*
% of
class
100
100
100
100
100
100
100
Class A Common
100
Ordinary
Ordinary
Common
Ordinary
Ordinary
Ordinary
Cumulative
Reedemable
Preference;
Empowerment
Shares;
Ordinary-A
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
99.35
100
100
100
100
ESCO Supply and Service
Kazakhstan
Esco Supply Carajás
Indústria de Peças e
Equipamentos Ltda
ESCO Turbine Components
Europe, sprl
ESCO Wearparts Supply
and Services (Namibia)
(Proprietary) Limited
ESCO Windber Inc.
Kazakhstan
Brazil
Belgium
Namibia
4th floor, 192/2 Dostyk avenue, Almaty city, 050051,
Kazakhstan
Rodovia PA-160, S/N, Sala B, Quadra 73, Lotes 1, 2, 3, 4,
5, 6, 7, 22, 23 e 24, Parque dos Carajas Il, Parauapebas/PA,
68515000, Brazil
122, Rue des Fours à Chaux, Zoning Industriel, Frameries,
7080, Belgium
Private Bag 12012, Ausspannplatz, Windhoek, Namibia
United States CT Corporation System, 600 North 2nd Street, Suite 401,
Common Stock
100
ESCOSupply Ltd.
Canada
Fabrica de Aisladores
Sismicos de Chile Limitada
Chile
Harrisburg, PA, 17101
2500, 10175 – 101 Street, Edmonton, Alberta, T5J 0H3,
Canada
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Fundición Vulco Ltda
Chile
San José N° 0815, San Bernardo, Santiago de Chile, Chile
G. & J. Weir, Limited
Inversiones ESCO Chile
Limitada
Inversiones Linatex Chile
(Holdings) Limitada
Linatex (H.K.) Limited
England &
Wales
Chile
Chile
Hong Kong
Linatex Africa (Pty) Limited
South Africa
c/o Weir Minerals Europe, Halifax Road, Todmorden,
Lancashire, OL14 5RT
Calle Miraflores, Numero 222, Piso veinticuatro, Santiago,
Chile
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Level 54, Hopewell Centre, 183 Queen’s Road East,
Hong Kong
5 Clarke Street, Alrode, Alberton, Gauteng, 1449,
South Africa
Class A Common
100
Corporate
Relationship %
– CLP
Corporate
Relationship %
– CLP
Ordinary
Corporate
Relationship %
Corporate
Relationship %
Ordinary
Ordinary
100
100
100
100
100
100
100
*
242
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 Company Name
Linatex Asset Holdings
Malaysia Sdn. Bhd.
Linatex Australia Pty Limited Australia
Country
Malaysia
Registered Office address
2nd Floor, No 2-4 Jalan Manau, Wilayah Persekutuan,
Wilayah Persekutuan, Kuala Lumpur, 50460, Malaysia
1-5 Marden Street, Artarmon, NSW, 2064, Australia
Linatex Chile Limitada
Chile
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Linatex Chile SpA
Chile
Santa Catalina de Chena 850, San Bernardo, Santiago de
Chile, Chile
Linatex Consolidated
Holdings Ltd
Linatex Limited
Linatex Rubber Limited
Linatex Rubber Products
Sdn. Bhd.
Metalúrgica Vulco Ltda
Motion Metrics Africa (Pty)
Ltd
Motion Metrics Australia
Pty. Ltd
Motion Metrics Brasil
Solucoes em Mineracao Ltda.
British Virgin
Islands
England &
Wales
England &
Wales
Malaysia
Chile
South Africa
Australia
Brazil
Kingston Chambers, PO Box 173, Tortola, Road Town,
British Virgin Islands
c/o Weir Minerals Europe, Halifax Road, Todmorden,
Lancashire, OL14 5RT
c/o Weir Minerals Europe, Halifax Road, Todmorden,
Lancashire, OL14 5RT
2nd Floor, No 2-4 Jalan Manau, Wilayah Persekutuan,
Kuala Lumpur, 50460, Malaysia
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Progressus Building Office No.3, Rietbok Street, Kathu,
Northern Cape, 8446, South Africa
25, Trade Street, Lytton, QLD 4178
Rue Paraiba 550 Sala 902- Funcionarios, Belo Horizonte,
Minas Gerais, CEP: 30.130-141, Brazil
Motion Metrics International
Corp.
Canada
1055 West Hastings Street, Suite 1700, Vancouver, BC,
V6E 2E9, Canada
Chile
Motion Metrics Latin America
SpA
Multiflo Pumps Pty Limited Australia
Overseas ESCO Corporation
Ltd.
PT ESCO Mining Products
British Virgin
Islands
Indonesia
PT Weir Minerals Contract
Services Indonesia
PT Weir Minerals Indonesia
Indonesia
Indonesia
PT Weir Oil & Gas Indonesia Indonesia
Edificio Nueva Santa Maria, Los Conquistadores 1730,
Of. 2805 Providencia, Santiago, Chile
1-5 Marden Street, Artarmon, NSW, 2064, Australia
The Lake Building, 1st Floor, Wickams Cay 1,Tortola,
P.O. Box 3152, Road Town, British Virgin Islands
The Garden Centre #3-04, Cilandak Commercial Estate, JL
Raya Cilandak KKO, Jakarta, 12075, Indonesia
Jl. Mulawarman Rt. 20 No. 20 Kelurahan Manggar, Kec,
Balikpapan Timur, Kota Balikpapan, 76116, Indonesia
Jl. Mulawarman Rt. 20 No. 20 Kelurahan Manggar, Kec,
Balikpapan Timur, Kota Balikpapan, 76116, Indonesia
Jl. Mulawarman Rt. 20 No. 20 Kelurahan Manggar, Kec,
Balikpapan Timur, Kota Balikpapan, 76116, Indonesia
Seaboard Holdings, LLC
Shanghai JF Engineering
Equipment Co. Ltd
Slurry Holdings Limited
Soldering Comercio e
Industria Ltda
Thandilwa Training Centre
(Pty) Ltd
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
No.572, Yonghe Road, Jing’an District, Shanghai, China
China
Malta
Brazil
Level 2 West, Mercury Tower, The Exchange Financial &
Business Centre, Elia Zammit Street, St. Julian's, STJ 3155,
Malta, STJ 3155, Malta
Rua Engenheiro Gerhard Ett, nº 1.215, Distrito Industrial
Paulo Camilo Sul, CEP 32669-110, Brazil
Ordinary
Ordinary
South Africa Meadowview Business Estate, CNR Clulee and
Ordinary
Meadowview lane, Linbro Park, Johannesburg, 2090,
South Africa
1st Floor, Goldie House, 1-4 Goldie Terrace, Upper Church
Street, Douglas, IM1 1EB, Isle of Man
Rue de Romont 35, c/o Daniel Schneuwly, Fribourg, 1700
FRIBOURG, Switzerland
Ordinary
Ordinary
The Weir Group Insurance
Company Limited
The Weir Group
International S.A.
Isle of Man
Switzerland
Class name
Ordinary
Class A Shares
Class B Shares
Corporate
Relationship %
Ordinary
Nominative
Share
Ordinary
Ordinary
Ordinary
Ordinary
Common Stock
Ordinary
Ordinary
Quotas in
Brazilian Real
Centavos
Class A Common
Stock; Class B
Common Stock
Quotas MM CLP
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary –
Class A
Ordinary –
Class B
Membership
Units
n/a
Directly
Held By
PLC*
% of
class
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
100
100
100
100
100
100
100
243
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information SUBSIDIARY UNDERTAKINGS
CONTINUED
Country
Scotland
Company Name
Registered Office address
The Weir Group Pension
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
Trust Limited
United Kingdom
Trio Engineered Products
Level 54, Hopewell Centre, 183 Queen’s Road East,
Hong Kong
(Hong Kong) Limited
Trio Engineered Products, Inc.United States CT Corporation System, 330 N. Brand Blvd., Glendale, CA,
Hong Kong
TWG Canada Holdings
Limited
TWG Cayman Limited
TWG Finance, Inc.
TWG Investments (No. 6)
Limited
TWG Investments (No. 7)
Limited
TWG Investments (No. 8)
Limited
TWG Investments (No.10)
Limited
TWG Investments (No.3)
Limited
TWG Investments (No.4)
Limited
TWG South America
Holdings Limited
TWG UK Holdings Limited
Scotland
91203 United States
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
M & C Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman, KY1-1104, Cayman Islands
Scotland
Scotland
Scotland
Cayman
Islands
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
Scotland
Scotland
Scotland
Scotland
Scotland
TWG US Finance LLC
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
TWG US Holdings LLC
TWG Young Limited
Vulco Peru SA
Vulco S.A.
Scotland
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
Av. Separadora Industrial, N° 2201 Urb Vulcano Ate,
Lima, Peru
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Chile
Peru
Warman Pumps Ltd
Weir ABF LP
Weir Australia Finance
Limited
Weir B.V.
Weir Brasil Comercio Ltda
Australia
Scotland
Scotland
Netherlands
Brazil
Weir Canada, Inc.
Canada
1-3 Marden Street, Artarmon, NSW, 2064, Australia
1 West Regent Street, Glasgow, G2 1RW, Scotland
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
PO Box 249, 5900 AE, Venlo, Netherlands
Rodovia BR-101, KM 43, N° 43.000, Galpão 10-C, Bairro Nova
Brasília, Joinville/SC, CEP 89213-125, Brazil
1800-510 West Georgia Street, Vancouver BC, V6B 0M3,
Canada
Weir Canadian Investments,
Inc.
Weir do Brasil Ltda
Weir Engineering Products
(Shanghai) Co., Ltd
Weir Engineering Services
Limited
Canada
Brazil
China
Scotland
1800-510 West Georgia Street, Vancouver BC, V6B 0M3
Canada
Av Jose Benassi, 2151, Sala A, Condominio Fazgran, Jundiaí/
SP, 13.213-085, Brazil
Room 318, Floor 3, No. 458, Fute North Road, Shanghai,
China
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
244
Class name
n/a
Ordinary
Directly
Held By
PLC*
*
% of
class
100
100
Common Stock
100
*
*
*
*
*
Ordinary
Ordinary
Preference
Common
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Preference
Ordinary
Preference
Ordinary
Preference
Ordinary
Membership
Units
Preferred Units
Units
Ordinary
Ordinary
Ordinary
Nominative
Share
Ordinary
n/a
Ordinary
Ordinary
Ordinary
Class A
Preferred;
Common
Common
Nominal
n/a
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.16
100
100
100
100
100
100
100
100
100
100
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 Registered Office address
1-5 Marden Street, Artarmon, NSW, 2064, Australia
Class name
Ordinary
% of
class
100
Directly
Held By
PLC*
*
Country
Australia
Scotland
Scotland
Hong Kong
Scotland
Scotland
Scotland
Company Name
Weir Group (Australian
Holdings) Pty Limited
Weir Group (Overseas
Holdings) Limited
Weir Group African IP
Limited
Weir Group Engineering
Hong Kong Limited
Weir Group Executive
SUURB Trustee Limited
Weir Group General Partner
Limited
Weir Group Holdings
Limited
Weir Group Inc.
Weir Group IP Limited
Weir Group Machinery
Equipment (Shanghai)
Co. Ltd.
Weir Group Management
Services Limited
Weir Group Trading Mexico,
S.A. de C.V.
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
Level 54, Hopewell Centre, 183 Queen’s Road East,
Hong Kong
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
Scotland
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
No.4918, Liuxiang Road, Xuxing Town, Jiading District,
Shanghai, China
China
Scotland
Mexico
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
Av. Nafta No. 775, Col. Parque Industrial, Stiva Aeropuerto,
Mexico
Weir HBF (Pty) Ltd
South Africa
Weir Holdings B.V.
Weir Investments Two
Limited
Weir Malaysia Sdn. Bhd.
Netherlands
Scotland
Malaysia
50 Strudebaker Street, Markman Industria, Port Elizabeth,
South Africa
PO Box 249, 5900 AE, Venlo, Netherlands
10th Floor, 1 West Regent Street, Glasgow, G2 1RW,
United Kingdom
2nd Floor, No 2-4 Jalan Manau, Wilayah Persekutuan,
Wilayah Persekutuan, Kuala Lumpur, 50460, Malaysia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common;
Preferred
Ordinary
n/a
Ordinary
Ordinary
Nominative
Share
Ordinary
Ordinary
Ordinary A
Preference
Ordinary –
Class A
Ordinary –
Class B
Ordinary
India
Weir Minerals (India) Private
Limited
Weir Minerals Africa
(Proprietary) Limited
Weir Minerals Armenia LLC Armenia
South Africa
NCC Urban Windsor, 1st Floor, New Airport Road, Opp.Jakkur
Aerodrome, Yelahanka, Bangalore, Karnataka, 560 064,India
5 Clarke Street South, Alrode, Alberton, 1149, South Africa
Ordinary
Weir Minerals Australia
Limited
Weir Minerals Balkan d.o.o.
Beograd
Weir Minerals Botswana
(Proprietary) Limited
Weir Minerals Caribe SRL
Weir Minerals Central Africa
Limited
Weir Minerals China Co.,
Limited
Weir Minerals Colombia SAS Colombia
China
Weir Minerals Czech &
Slovak, s.r.o.
Czech
Republic
22, Hanrapetutyan Str, 5th Floor, Yerevan Centre, 0010,
Armenia
1-3 Marden Street, Artarmon, NSW, 2064, Australia
Ordinary
Ordinary
Australia
Serbia
Dimitrija Tucovica 28b, Zvezdara, Belgrade, Serbia
Ordinary
Botswana
Dominican
Republic
Zambia
Plot 64518, Deloitte House, Fairgrounds, Gaborone,
Botswana
KK 22,5 Autopista Duarte, Parque Industrial Duarte,
Parque de Naves Pid 4, Santo Domingo, Dominican Republic
Plot 3655, Chimbuluma Road, Kitwe, Zambia
Ordinary
Ordinary
Ordinary
Factory #27, 158 Hua Shan Road, Suzhou New District,
Suzhou, 215011, China
Carrera 43 B # 16 41 Office 904, Building Staff, Medellin
Antioquia, Colombia
Hlinky 118, 603 00 Brno, Czech Rep., Brno, Czech Republic Ordinary
Ordinary
n/a
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
97.252
100
100
100
100
100
100
100
100
100
100
*
*
*
*
*
*
245
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information SUBSIDIARY UNDERTAKINGS
CONTINUED
Directly
Held By
PLC*
% of
class
65
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Company Name
Weir Minerals DRC
Country
South Africa
Weir Minerals East Africa
Limited
The United
Republic of
Tanzania
Weir Minerals Egypt (L.L.C) Egypt
Weir Minerals Europe
Limited
Weir Minerals Finland Oy
Weir Minerals France
Weir Minerals FZCO
Weir Minerals Germany
GmbH
Weir Minerals Hungary Kft
Weir Minerals Isando (Pty)
Ltd
Weir Minerals Italy S.r.l.
Weir Minerals Kazakhstan
LLP
Weir Minerals Kenya Limited Kenya
Registered Office address
222, Route Likasi, Quartier Musompo – Mutshatsha, Kolwezi,
Province de Lualaba, Congo (the Democratic Republic of the)
Plot No. 137, Capri Point, Mwanza, The United Republic of
Tanzania
Class name
A-Shares Voting
Rights; B-Shares
65.77% Voting
Rights
Ordinary
11, Hanin Ibn Isaac St, 7th District, Nasr City, Cario, 11727,
Egypt
Halifax Road, Todmorden, Lancashire, OL14 5RT
Ordinary
Ordinary
Askonkatu 13 D, Lahti, FIN-15100, Finland
10 rue Jacquard, Chassieu, 69680, France
Unit 2W, M058, Dubai Airport Free Zone Area, Dubai, UAE
Ordinary
Ordinary
Ordinary
Lise-Meitner-Straße 12, Heilbronn, 74074, Germany
Capital
Teleki László utca 11 1/.3, Tatabánya, 2800-HU, Hungary
5 Clarke Street, Alrode, Alberton, Gauteng, 1449,
South Africa
Via F.lli Cervi 1/D, Cernusco sul Naviglio, Milan, 20063, Italy Ordinary
4th Floor,192/2 Dostyk Avenue, Almaty, 050051, Kazakhstan Charter capital
Issued Capital
Ordinary
England &
Wales
Finland
France
United Arab
Emirates
Germany
Hungary
South Africa
Italy
Kazakhstan
Weir Minerals Madagascar
Sarlu
Weir Minerals Mexico
Servicios, S.A. de C.V.
Madagascar
Mexico
LR No. 1870/1/569, Ring Road Parklands, P.O. Box 764 –
00606 - Sarit Centre, Nairobi, Kenya
Immcuble Mining Business Center sis a Mamory Ivato,
10518 Ivato Aeroport ,Analamanga, Madagascar
Av. Nafta No. 775, Col. Parque Industrial, Stiva Aeropuerto,
Mexico
Weir Minerals México, SA
de CV
Mexico
Av. Nafta No. 775, Col. Parque Industrial, Stiva Aeropuerto,
Mexico
Weir Minerals Mongolia LLC Mongolia
Weir Minerals Mozambique
Ltd
Weir Minerals Netherlands
B.V.
Weir Minerals North Africa
SARL
Weir Minerals Panama S.A. Panama
Morocco
Netherlands
205, 2nd Khoroo, Bayangol District, Ulaanbaatar, Mongolia
Mozambique Mozambique, Maputo Cidade, Distrito urbano1, Bairro,
Centrall, AV. Zedequias ,Manganhela, Mozambique
PO Box 249, 5900 AE, Venlo, Netherlands
Boulevard Sidi Mohamed, Ben Abdellah, Im B, 1Er Etage
N 29., Casablanca, 20160, Morocco
Urbanización Vista Alegre, Edificio Parque Logístico
Panawest Bodega 7 Autopista, Panama-Arraijan, Panamá
ul. Ignacego Domeyki 2, Krakow, 30-066, Poland
Ordinary
Ordinary
Ordinary
Nominative
Share
Ordinary
Nominative
Share
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Weir Minerals Poland Sp.
z.o.o.
Weir Minerals Processing
Equipment & Services LLC
Weir Minerals Pump &
Mining Solutions Namibia
(Proprietary) Limited
Weir Minerals RFW LLC
(OOO)
Weir Minerals Shared
Services Proprietary Limited
Weir Minerals South Africa
Proprietary Limited
Weir Minerals Sweden AB
Poland
Company Capital
100
United Arab
Emirates
Namibia
EFCO Cement Products Factory, Plot No 597901, Dubai
Investment Park II, Dubai, United Arab Emirates
54 Hidipo Hamutenya Avenue, Swakopmund, Namibia
Ordinary
Ordinary
Russian
Federation
South Africa
Bolshaya Polyanka, Building 2, house 2, Moscow, 119180,
Russian Federation
5 Clarke Street South, Alrode, Alberton, 1149, South Africa
Corporate
Relationship %
Ordinary
South Africa
Sweden
5 Clarke Street, Alrode, Alberton, Gauteng, 1449,
South Africa
Polervägen 4, 774 41 Avesta, Sweden.
Ordinary
Ordinary – A
A-Class Shares
B-Class Shares
Share Capital
49
100
100
100
74.90
100
100
Weir Minerals Ukraine LLC Ukraine
2 Glinka str., letter 6-18, 6-1, Dnipropetrovsk Reg,
Dnipropetrovsk, 49000, Ukraine
246
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 Country
Ghana
Australia
Registered Office address
No.4, 3rd Close, Airport Residential Area, Accra Post Box
CT3170, Accra, Ghana
1-5 Marden Street, Artarmon, NSW, 2064, Australia
Class name
Ordinary
Ordinary
Directly
Held By
PLC*
% of
class
100
100
Company Name
Weir Minerals West Africa
Limited
Weir Oil & Gas Australia Pty
Limited
Weir Pump and Valve
Solutions, Inc
Weir Pumps Limited
Weir Services Australia Pty
Ltd
Weir Services Tanzania (Pty)
Limited.
Weir Slurry Group, Inc.
Scotland
United States The Corporation Company, 40600 Ann Arbour Road, Este,
201, Plymouth Mi 48170 4675, United States
10th Floor, 1 West Regent Street, Glasgow, G2 1RW, United
Kingdom
1-5 Marden Street, Artarmon, NSW, 2064, Australia
Australia
Plot No. 137, Capri Point, Mwanza, The United Republic of
Tanzania
The United
Republic of
Tanzania
United States CT Corporation System, 301 South Bedford Street, Suite 1,
Weir Sudamerica S.A.
Chile
Madison, WI, 53703
San José N° 0815, San Bernardo, Santiago de Chile, Chile
Weir Turkey Mineralleri
Limited Sirketi
Weir US Holdings Inc.
Turkey
1, 13, Tepeören Mah. Dervispasa Cad.Weir, Merkez-Merkez,
Tuzla, Istanbul, 3080535234, Turkey
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
United States CT Corporation System, 155 Federal Street, Suite 700,
Weir Valves & Controls USA
Inc.
Weir Vulco Argentina S.A.
Weir Warman (U.K.) Limited England &
Argentina
Common
Boston, MA, 02110, United States
Preferred
Sarmiento 511 Sur 1°Piso A, San Juan, CP 5400, Argentina Ordinary
Ordinary
Halifax Road, Todmorden, Lancashire, OL14 5RT
WHW Group Inc.
Wuxi Weir Minerals
Equipments Co., Ltd.
Wales
United States The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE, 19801, United States
Lot 265, Wuxi-Singapore Industrial Park, Wuxi City, Jiangsu
Province, China
China
Common
n/a
Common Stock
100
Ordinary
Ordinary
Ordinary
Common
Preferred Stock
Ordinary
Nominative
Share
Bearer
Common
100
100
100
100
99.99
100
100
100
100
100
100
100
*
The Group has an interest in a partnership, the Weir ABF LP, which is fully consolidated into these statements. The Group has taken advantage
of the exemption conferred by Regulation 7 of the Partnerships (Accounts) Regulations 2008 and has, therefore, not appended the accounts of
this qualifying partnership to these financial statements. Separate accounts for the partnership are not required to be, and have not been, filed at
Companies house in the UK.
247
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information SUBSIDIARY UNDERTAKINGS
CONTINUED
STATUTORY AUDIT EXEMPTIONS
The Weir Group PLC has issued guarantees over the liabilities of the following companies at 31 December 2021 under Section 479C of
Companies Act 2006 and these entities are exempt from the requirements of the Act relating to the audit of individual accounts by virtue of
Section 479A of the Act:
Company Name
ESCO (UK) Holdings Limited
ESCO EMEA Holdings (UK) Limited
Linatex Limited
TWG Canada Holdings Limited
TWG Investments (No.3) Limited
TWG Investments (No.4) Limited
TWG Investments (No.6) Limited
TWG Investments (No.7) Limited
TWG Investments (No.8) Limited
TWG South America Holdings Limited
TWG UK Holdings Limited
TWG US Finance LLC
Weir Engineering Services Limited
Weir Group (Overseas Holdings) Limited
Weir Group African IP Limited
Weir Group General Partner Limited
Weir Group Holdings Limited
Weir Group IP Limited
Weir Warman (U.K.) Limited
Company number
04743623
08690169
00246713
SC288837
SC197235
SC197236
SC292269
SC292270
SC292721
SC380944
SC311635
FC038907/BR024002
SC033381
SC054821
SC333781
SC522808
SC187227
SC267963
01636530
248
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 SHAREHOLDER INFORMATION
COMPANY SECRETARY & REGISTERED OFFICE
Graham Vanhegan
The Weir Group PLC
1 West Regent Street
Glasgow
G2 1RW
Registered in Scotland.
Company No. SC002934.
REGISTRAR
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Website: www.investorcentre.co.uk
Telephone: 0370 707 1402
Shareholder enquiries relating to shareholding, dividend payments,
change of name or address, lost share certificates or transfer of shares
etc. should be addressed to Computershare.
SHAREHOLDER COMMUNICATIONS
Online Communications
Shareholders are encouraged to visit the Company’s corporate website
(www.global.weir), which contains a wealth of information about the
Weir Group. The website includes information about the markets in
which we operate, our strategy and business performance, recent
news from the Group and product information. The investor section is
a key source of information for Shareholders, containing details on the
share price, our financial results, Shareholder meetings and dividends,
as well as a ‘Shareholders FAQ’ section.
E-Communications
We are encouraging our Shareholders to receive their information by
email and via our website. Not only is this quick, it helps to reduce
paper, printing and costs.
To register for e-communications, log on to www.investorcentre.co.uk/
ecomms
Follow us
ORDINARY SHAREHOLDER
ANALYSIS AT DECEMBER 2021
By country
UK Shareholders
Overseas Shareholders ■ 7.37%
■ 92.63%
By holding size
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-500,000
500,001-1,000,000
1,000,001-999,999,999
Total
By Shareholder category
Individuals
Bank or Nominees
Investment Trust
Insurance Company
Other Company
Pension Trust
Other Corporate Body
Total
No. of
Shareholders
2,415
1,032
165
258
148
45
49
4,112
Shares
%
932,868
58.73
2,200,307
25.10
1,178,580
4.02
8,704,591
6.27
33,853,115
3.60
30,852,111
1.09
1.19 181,891,945
100.00 259,613,517
%
0.36
0.85
0.46
3.35
13.04
11.88
70.06
100.00
Holdings
2,928
1,110
10
1
47
1
15
4,112
Shares
%
71.21
4,266,673
26.99 254,562,445
34,196
17,976
251,392
1
480,834
100.00 259,613,517
0.25
0.03
1.14
0.02
0.36
%
1.64
98.05
0.01
0.01
0.10
0.00
0.19
100.00
249
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information SHAREHOLDER INFORMATION
CONTINUED
ANNUAL AND INTERIM REPORTS
ANNUAL GENERAL MEETING 2022
Our Annual Report is available online. You can view or download
the full Annual Report and Interim Report from our website at
www.global.weir/investors/ reporting-centre.
Managing your shareholding online with Investor Centre is a free,
secure online service run by Computershare, giving you convenient
access to information on your shareholdings. Manage your
shareholding online and take advantage of all these features and more:
• View share balances and market values for all of your
Computershare managed holdings
• Update dividend mandate bank instructions including global
payments and view dividend payment history
• Register to receive company communications online
• Cast your Proxy Vote online for forthcoming General Meetings
• Update personal details, such as your address
Registration is quick and easy. Just visit www.investorcentre.co.uk
with your Shareholder Reference Number (SRN) to hand.
After registering, you may be sent an activation code in the post,
used to validate your account.
Annual General Meeting
Ex-dividend date
Record date
Mandatory Direct Credit deadline
Payment date
DIVIDEND HISTORY – (PENCE PER SHARE)
Our Annual General Meeting will be held at 2.30pm on Thursday
28 April 2022. Further details are contained in the Notice of Annual
General Meeting 2022, which is available to download from
our website at www.global.weir/shareholder-information/agm.
Please check this dedicated AGM page on our website for updates on
the arrangements for the forthcoming AGM.
VOTING
Information on how you can vote electronically on the resolutions
which will be put forward at our 2022 AGM can be obtained through
our Registrar by visiting www.investorcentre.co.uk/eproxy. You will
need details of the Control Number, your SRN and PIN which can be
found on the Form of Proxy or email, if you have asked to be sent
email communications.
28 April 2022
21 April 2022
22 April 2022
16 May 2022
6 June 2022
Interim
Final
Total
2015
15.0
29.0
44.0
2016
15.0
29.0
44.0
2017
15.0
29.0
44.0
2018
15.75
30.45
46.20
2019
16.50
0.0
16.50
2020
0.0
0.0
0.0
2021
11.50
12.30
23.80
IMPORTANT – PAYMENT OF DIVIDENDS BY MANDATORY
DIRECT CREDIT
In 2019, the Company simplified the way in which it pays dividends to
Shareholders and now pays cash dividends by direct credit only. If our
Registrar Computershare does not have any bank/building society
details on record for you, future payments will remain unissued and
you may then be charged to have your payments issued at a later date.
Paying dividends into a bank or building society account is a quicker
and more secure way for your dividends to be paid directly to you.
In order to receive your dividends directly into your bank account,
you will need to register your bank/building society details on our
Registrars’ website at investorcentre.co.uk. You will need your ten digit
Shareholder Reference Number (SRN) which starts with the letter C or
G to log in.
This can be found on your share certificate(s) and dividend
confirmation. Alternatively, you can call Computershare on the
dedicated Shareholder helpline 0370 707 1402, should you have any
questions about registering your payment instruction.
An Annual Dividend Confirmation detailing all payments made
throughout the tax year is sent once a year either electronically
or to your registered address.
Global Payment Service
If you live overseas, Computershare offers a Global Payment Service
which is available in certain countries. This may make it possible to
receive dividends direct into your bank account in your local currency.
Please note that the fees applied for this service will be automatically
deducted from the proceeds before it is paid to you. For further details
go to www.investorcentre.co.uk then select the information tab
followed by FAQs, then select the Dividends and Payments tab and
the Global Payment Service tab.
AMERICAN DEPOSITARY RECEIPT (ADR) PROGRAMME
The Company has a sponsored level 1 ADR programme in the United
States. Each ADR represents 0.5 ordinary shares of 12.5 pence each,
in the Company. The Company’s ADR programme is administered by
Citibank, who were appointed in February 2016.
250
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 Telephone share dealing – commission is 1% of the value of each
sale or purchase of shares, plus £50. In addition, stamp duty, currently
0.5%, is payable on purchases. You can contact Computershare
on 0370 703 0084. Shareholders should have their SRN ready
when making the call. The SRN appears on share certificates and
dividend documentation. Detailed terms and conditions are available
at www.investorcentre.co.uk or by contacting Computershare.
Please note this service is, at present, only available to Shareholders
resident in certain jurisdictions. Please refer to the Computershare
website for an up-to-date list of these countries.
These services are offered on an execution only basis and subject to
the applicable terms and conditions. Computershare Investor Services
PLC is authorised and regulated by the Financial Conduct Authority.
This is not a recommendation to buy, sell or hold shares in The Weir
Group PLC. 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.
SHAREHOLDER WARNING ALERT
Unsolicited investment advice and fraud
Many companies have become aware that their Shareholders have
received unsolicited phone calls or correspondence concerning
investment matters. Share scams are often run from ‘boiler rooms’
where fraudsters cold-call investors offering them worthless,
overpriced or even non-existent shares.
These callers can be very persistent and extremely persuasive and
their activities have resulted in considerable losses for some investors.
Whilst usually by telephone, the high-pressure sales tactics can also
come by email, post, word of mouth or at a seminar. Shareholders are
advised to be very wary of any unsolicited advice, offers to buy
shares at a discount, sell your shares at a premium or offers of free
company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and organisation
and take a note of any other details they provide, such as a
telephone number or address.
• Check that the caller is properly authorised by the Financial Conduct
Authority (FCA) by visiting www.fca.org.uk.
• Report any approach from such organisations to the FCA using the
share fraud reporting form at www.fca.org.uk/consumers/report-
scam-unauthorised-firm, where you can also find out about the
latest investment scams. You can also call the Consumer Helpline on
0800 111 6768.
• If calls persist, hang up.
ADR INVESTOR CONTACT
Telephone: +1 781 575 4555 Citibank representatives are available
from 8.30am to 6.00pm US Eastern Standard Time (EST) Monday to
Friday. Email: citibank@shareholders-online.com
In writing
Citibank Shareholder Services
P.O. Box 43077
Providence,
Rhode Island 029403077
ADR broker contact
Telephone: +1 212 723 5435 /
+44 207 500 2030
Email: citiadr@citi.com
DIVIDEND TAX ALLOWANCE
With effect from April 2018, the annual tax free allowance on dividend
income was reduced from £5,000 to £2,000.
Above this amount, individuals will pay tax on their dividend income
at a rate dependent on their income tax bracket and personal
circumstances. We will continue to provide registered Shareholders
with confirmation of the dividends paid and this should be included
with any other dividend income received when calculating and
reporting total dividend income received. It is a Shareholder’s
responsibility to include all dividend income when calculating any
tax liability.
This provision is enshrined in the Finance Act 2016. If you have any tax
queries, please contact a financial adviser.
UNITED KINGDOM CAPITAL GAINS TAX
For the purpose of capital gains tax, the market value of an ordinary
share of The Weir Group PLC as at 31 March 1982 was 29.75p.
This market value has been adjusted to take account of the sub-
Division of the share capital whereby each ordinary share of 25p was
sub-divided into two ordinary shares of 12.5p each on 28 June 1993.
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.
SHARE DEALING SERVICES
Shareholders have the opportunity to buy or sell The Weir Group
PLC shares using a share dealing facility operated by our Registrar,
Computershare. You will need to register for this service prior to using
it. To access this service, go to www.computershare.com/dealing/uk.
Internet share dealing – commission is 1% of the value of each sale or
purchase of shares, subject to a minimum charge of £30. In addition,
stamp duty, currently 0.5%, is payable on purchases. Real time
dealing is available during market hours (0800 to 1630 Monday to
Friday excluding bank holidays). 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, go to
www.computershare.com/dealing/uk. Shareholders should have
their SRN available. The SRN appears on share certificates and
dividend documentation.
Please note that, at present, this service is only available
to Shareholders in certain jurisdictions. Please refer to the
Computershare website for an up-to-date list of these countries.
251
The Weir Group PLC Annual Report and Financial Statements 2021Shareholder Information
GLOSSARY
Additive manufacturing
GAAP
RPI
Generally Accepted Accounting Practice
UK Retail Prices Index
The process of joining materials to make
objects from 3D model data (3D printing)
AGM
Annual General Meeting
Board
Greenfield
A term used to describe new
mine developments
Group
The Board of Directors of The Weir Group PLC
The Company together with its subsidiaries
BPS
Basis points
Capex
Capital expenditure
CGU
Cash generating unit
Comminution
Crushing, screening and grinding of materials
in mining and sand and aggregates markets
Company
The Weir Group PLC
Computershare EBT
Employee benefit trust (Computershare
Trustees (Jersey) Limited)
Director
A Director of The Weir Group PLC
HR
Human resources
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
IIoT
Industrial Internet of Things
Input
Orders received from customers
Internet of Things (IoT)
The network of physical objects (devices,
vehicles, buildings and other items) that
are embedded with electronics, software,
sensors and network connectivity, which
enables these objects to collect and
exchange data
EBIT
ISO
Scope 1 Emissions
Direct GHG emissions occur from sources
that are owned or controlled by the company,
for example, emissions from combustion
in owned or controlled boilers, furnaces,
vehicles, process emissions etc.
Scope 2 Emissions
Indirect GHG emissions. Scope 2 accounts
for GHG emissions from the generation
of purchased electricity, heat or steam
consumed by the company and is purchased
or otherwise brought into the organisational
boundary of the company.
Scope 3 Emissions
Other indirect GHG emissions across
the value chain scope 3 emissions are a
consequence of the activities of the company,
but occur from sources not owned or
controlled by the company. Some examples
of scope 3 activities are extraction and
production of purchased materials;
transportation of purchased fuels; and use of
sold products and services.
SHE
Safety, Health and Environment
SME
Earnings before interest and tax
International Organisation for Standardisation
Small and medium-sized enterprises
LTIP
Long Term Incentive Plan
NGO
Non-governmental organisation
Employee benefit trust (Estera Trust (Jersey)
Limited)
Operating margin
EBITDA
Earnings before interest, tax, depreciation
and amortisation
Emerging markets
Asia-Pacific, South America, Africa and the
Middle East
EPS
Earnings per share
Estera EBT
Excellence Committees
Weir Group Management Committees
ensuring best practice
External Auditors
PricewaterhouseCoopers LLP
Free cash flow
Operating cash flow (cash generated
from operations) adjusted for income
taxes, net capital expenditures, lease
payments, net interest payments, dividends
received from joint ventures, settlement
of derivatives, purchase of shares for
employee share awards and other awards and
pension contributions.
252
KPI
Key performance indicator
Like-for-like
SRP
Share Reward Plan
Subsidiary
On a consistent basis, excluding the impact
of acquisitions
An entity that is controlled, either directly or
indirectly, by the Company
tCO2e
Tonnes of carbon dioxide equivalent
TIR
Total Incident Rate (rate of any Incident that
causes an employee, visitor, contractor or
anyone working on behalf of Weir to require
off-site medical treatment per 200,000
hours worked)
Operating profit including our share of results
of joint ventures divided by revenue
Ordinary shares
TSR
Total Shareholder Return comprising
dividends paid on ordinary shares and the
increase or decrease in the market price of
ordinary shares
WACC
Weighted average cost of capital
The ordinary shares in the capital of the
Company of 12.5p each
OT
Operational Technology
PILON
Payment in lieu of notice
Registrar
Computershare Investor Services PLC
R&D
Research and development
Shareholder InformationThe Weir Group PLC Annual Report and Financial Statements 2021 Cautionary statement
This Annual Report contains forward-looking
statements with respect to the financial
condition, operations and performance of
the Group. By their nature, these statements
involve uncertainty since future events
and circumstances can cause results and
developments to differ materially from those
anticipated. The forward-looking statements
reflect knowledge and information available at
the date of preparation of this Annual Report
and the Company undertakes no obligation
to update these forward-looking statements.
Nothing in this Annual Report should be
construed as a profit forecast.
Designed and produced by Radley Yeldar www.ry.com
Printed in the UK by Pureprint using vegetable inks
and their environmental printing technology
Pureprint is a CarbonNeutral company.
Both Manufacturing mill and the printer are
registered to the Environmental Management
System ISO14001 and are Forest Stewardship
Council (FSC) chain-of-custody certified
The Weir Group PLC
1 West Regent Street
Glasgow
G2 1RW