TIDMWEIR
RNS Number : 2116I
Weir Group PLC
31 March 2020
The Weir Group PLC
31 March 2020
2019 Annual Report and 2020 Annual General Meeting
The following documents have today been posted or otherwise made
available to shareholders:
1. Annual Report and Financial Statements for the period ended
31 December 2019 (the "2019 Annual Report");
2. Notice of 2020 Annual General Meeting; and
3. Form of Proxy for the 2020 Annual General Meeting.
In accordance with Listing Rule 9.6.1, a copy of each of these
documents has been uploaded to the National Storage Mechanism and
will be available for viewing shortly at
http://www.morningstar.co.uk/uk/NSM.
The documents (except the Form of Proxy) are also available on
the Company's website at www.global.weir and in hard copy to
shareholders upon request to Investor Relations, The Weir Group
PLC, 1 West Regent Street, Glasgow, G2 1RW.
The Company currently intends to hold its 2020 Annual General
Meeting (the "AGM") at the Company's Head Office, 1 West Regent
Street, Glasgow, G2 1RW, on Tuesday 28 April 2020 at 2.30pm. As set
out in the Notice of AGM, the Company fully supports the Government
restrictions on mass gatherings, non-essential travel and social
contact currently in place. On this basis, the Board has concluded
that it is appropriate to strongly urge shareholders not to attend
the AGM in person this year. The Company may be required to further
revise its arrangements for the AGM if attending the meeting in
person is not lawful at the time the AGM is due to be held. The
Company will be closely monitoring the impact of COVID-19 and how
this may affect the arrangements for the AGM. Shareholders should
therefore continue to monitor the Company's website and
announcements for any updates in relation to the AGM.
The Company's full year results announcement of 26 February 2020
contained a management report as well as the audited financial
statements which were prepared in accordance with the applicable
accounting standards.
The 2019 Annual Report submitted to the National Storage
Mechanism today also contains information regarding the Company's
principal risks and uncertainties as at 26 February 2020 (being the
date of the 2019 Annual Report) and a responsibility statement
relating to the content of the 2019 Annual Report; an extract of
this information is provided below as required under paragraph
6.3.5 of the DTR, however this material should be read in
conjunction with and is not a substitute for reading the full 2019
Annual Report. Page numbers and cross-references in the following
appendices refer to page numbers and cross-references in the 2019
Annual Report.
APPICES
Appendix A: Principal risks and uncertainties as at 26 February
2020 (the date of the 2019 Annual Report)
A description of the principal risks and uncertainties that the
Company faces is extracted in full and unedited form pages 54 to 59
of the 2019 Annual Report.
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 key risks.
The Board has conducted a robust assessment of the principal
risks, alongside the Risk Appetite Statement set out on page 52
meeting the Board's responsibilities in connection with Risk
Management and Internal Control details in the UK Corporate
Governance Code. 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 registers 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 2019.
The identified principal risks were subjected to a detailed
assessment based on the following considerations:
-- 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 or
liquidity.
The principal risks set out on pages 54 to 59 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 or liquidity.
Principal Risks and Uncertainties
Market volatility (Risk trend: Increasing)
Changes in key markets, including commodity prices affecting mining and oil and gas, have
an adverse impact on customers' expenditure plans. Fundamental market structure changes could
alter the long-term economics of the business.
Why we think this is important How we are mitigating the Changes during 2019
risk
We need to remain sufficiently flexible to allow us to We continue to focus on
anticipate downturns, to allow us to We maintain regular customer
adjust our operations accordingly, and equally to meet engagement with our relationships, technology
growth in demand when our customers' customers to understand development and Value
markets are buoyant and therefore capital investment is their needs and Chain Excellence to manage
high. Otherwise, we are at risk of challenges, this risk.
incurring unnecessary costs during downturns, and not and ensure our business is The risk trend is
maximising our potential for growth appropriately aligned. increased to reflect the
in buoyant markets. shorter cycle nature of
Improved demand planning our North American oil
and forecasting including and gas markets and the
Sales and Operations associated challenging
Planning within VCE. market conditions. We have
responded to this
Our strategic planning with a GBP35m cost saving
utilises extensive market programme and our
intelligence to assist in intention to seek to
forecasting opportunities maximise value from our
and dips in markets. Oil
& Gas Division at the
We maintain contingency right time.
plans
for downturns.
--------------------------- ---------------------------
Technology (Risk trend: No change)
Failure of the Group to embrace technology and innovate and continue to develop and invest
in both our core product offering and technologically advanced next generation, sustainable
solutions and services for our customers, leaves the Group exposed in the defence of its market
leading positions and ability to deliver on its growth ambitions.
Why we think this is important How we are mitigating the Changes during 2019
risk
We need to continue to drive innovation across the Group This risk was updated and
and collaborate with research partners The Technology Vision & expanded to reflect the
to ensure there is a sustainable and evolving product Strategy is in place risk of failure to embrace
offering leveraging new and adjacent defining the strategic technology.
technologies. technology innovation
arenas and Weir Innovation
This can result in failure to achieve and maximise the Network strategic
expected sales opportunities from new approach. External
product launches and technological advances. partnering
to provide horizon
Failure to adapt our business model to capture economic technology scanning
value from technological advances service.
or prevent economic loss from other technological advances.
Advanced Manufacturing
Failure to develop products meeting the sustainable needs Centres established at key
of our customers and other stakeholders. manufacturing site to
develop new intellectual
property.
--------------------------- ---------------------------
Digital Transformation (Risk trend: Increasing)
Failure to adapt to the digital transformation & changing business models in our end markets
and adopt established digital foundations across the Group, results in an uncompetitive, underperforming
or an incompatible digital product offering which negatively affect the Weir brand and loses
connection with our customers.
Why we think this is important How are we mitigating the Changes during 2019
risk
The rapidly changing digital landscape, rate of Technological innovation
technological advances and ever increasing Our existing research and continues to be at the
levels of automation will impact the business, if we fail development initiatives forefront of the business
to anticipate these changes and within the business, at due to the increasingly
keep pace with market and customer expectations. Weir Advanced Research competitive market and the
Centre, are enhanced pressure to provide
Failure to manage this risk can result in loss of market through partnerships with customers solutions to
share due to disruptive technologies certain improve the efficiency
and advances in technology offerings from competitors. leading universities of their operations.
around the world.
Further information on
These partnerships are progress made in this area
designed to help the Group is set out on page 21.
develop game-changing
solutions to our Continued execution of the
customers' Technology Vision and
challenges and respond to Strategy through the year.
their changing needs. The Innovation
We devote skilled resource Strategy process has been
to reviewing and defined, organisational
responding to developing structures established,
technologies, with our and Group and divisional
agreements with specialist engineering strategies are
external parties to in place.
develop Internet of Things
(IoT) technology.
Engineering strategies are
in place at Group and
divisional levels with
strategic innovation
areas defined as part of
the innovation strategy
--------------------------- ---------------------------
Competition (Risk trend: Increasing)
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.
Why we think this is important How are we mitigating the Changes during 2019
risk
Increasing presence of low cost competitors with improving This risk is new in the
quality in our end markets can Horizon scanning for current year.
lead to significant pricing pressures and market competitor threats
deterioration. including patent searches
and applications.
Increased competition forces a continual release of longer
wear life products resulting in Continued development of
reducing our sales volumes with difficulty in realising operational efficiency and
commercial benefits. improvement plans.
Disruptive technologies or new entrants with alternative Technology solutions with
business models could also reduce differentiation on
our ability to sustainably win future business, achieve engineering expertise,
operating results and realise future aftermarket service and
growth opportunities. price.
--------------------------- ---------------------------
Value Chain Excellence (Risk trend: No change)
Failure to achieve Value Chain Excellence improvements and the associated reduction in costs
and enhanced capital efficiency.
Why we think this is important How are we mitigating the Changes during 2019
risk
If we fail to improve our value chain management, we risk:
* Failing to meet our customer needs in terms of Regular KPI monitoring of Value Chain Excellence is
product volume, quality and delivery, through a the value chain throughout a key area of strategic
failure in internal and external supply chains the organisation. focus for the Group with
resulting in a loss of reputation and sales; Value Chain Excellence
Value Chain Excellence initiatives continually
initiatives have been developing and the Group
* Failure to optimise our inventory thus inhibiting the operating throughout the realising the benefits of
Group investment strategy and creating slow moving Group to drive value these.
and obsolete inventory ultimately impacting our chain improvements
results; including expanding Value Chain Excellence is
production in best cost embedded into the
countries. divisions allowing for
* Failure to manage potential above inflationary Global and divisional
increases in procurement costs as commodity prices The Group's forward supply
increase thereby reducing our cost competitiveness purchase commitments are chain communities to share
and margins; and being closely monitored to best practice and leverage
manage inventories economies of scale.
at levels appropriate to
* Failure to develop organisational capability to market conditions.
sustain and improve operational performance results.
Our credit risk management
procedures are under
continuous appraisal and
review.
We regularly monitor
market activity to ensure
we remain competitive.
--------------------------- ---------------------------
Environmental Sustainability (Risk trend: Increasing)
Adverse effect of climate change and environmental events including extreme weather impacting
our business, our customers and our supply chain. Failure to adapt to changes in legal, technological,
social or market dynamics could affect our competitiveness, reputation, and ability to attract
and retain talent.
Why we think this is important How are we mitigating the Changes during 2019
risk
Failure to manage this risk could have significant impacts This is a new risk in
on us, our customers and our supply Our Technology Strategy in 2019.
chain. These impacts could be both physical and place has a significant
transitional. environmental focus and A new Chief Strategy and
our new sustainability Sustainability Officer
Furthermore, failure to manage these risks may have roadmap further underpins position appointed to the
political and legal implications following our strategic priorities Group Executive.
increased governmental focus. with clear and
appropriately stretching
There are also wider implications of this risk including goals.
loss of market share, negative impact
on reputation and failure to attract talent into the We are continuing strong
organisation. engagement with
stakeholders in this area.
We evolve our
environmental reporting
processes and governance,
including external rating
submissions FTSE4Good,
CDP, DJSI, etc to ensure
robust foundations.
--------------------------- ---------------------------
Information Security and Resilience (Risk trend: Increasing)
Failure to maintain the critical business systems and IT infrastructure required to meet the
operational needs of the business. Failure to minimise disruption to business operations because
of changes to business systems, including during planned transformation activities. Failure
to adequately protect core business and stakeholders from cyber crime and other information
security risk.
Why we think this is important How are we mitigating the Changes during 2019
risk
Failure to adequately protect and preserve the IT security and continuity
confidentiality, integrity and availability We have an IT Governance continues to be a matter
of information and systems from accidental, adversarial or Framework with a focus on of strategic priority for
environmental threats could structured change the Group in
lead to operational, reputational, regulatory or financial management techniques, an environment of
impact. including setting project increasingly sophisticated
governance levels in line cyber security threats.
with risk. Progress to strengthen
the Group's defences in
Policies, procedures and this respect is being made
baseline standards in through our IT
relation to cyber risk and transformational
IT security more programme.
generally are continuously
updated and rolled out to A new Chief Information
operations. A programme of Officer position was
user training appointed to the Group
in relation to cyber risk Executive. We continually
is in place. review the effectiveness
of our key IT security
All security related controls in consultation
incidents are reported to with external experts.
the Group Executive. We report upon any
unplanned outages and
Security Incident potential security
Responder teams monitor breaches, with lessons
our various security learned
systems. across the Group.
There is also a continued
focus on the area from
Internal Audit.
--------------------------- ---------------------------
Safety, Health and Environmental (SHE) (Risk trend: No change)
Failure to adequately protect our people and other stakeholders from harm associated with
a breach in SHE standards.
Why we think this is important How are we mitigating the Changes during 2019
risk
We operate in hazardous environments, and therefore have The Group continued to
a fundamental duty to protect our The Weir Behavioural drive its safety agenda in
people and other stakeholders from harm whilst conducting Safety system is in place 2019 which included the
our business. As well as the personal to reduce the risk of prioritisation of
impact on our people resulting from a failure to meet safety incidents. ESCO being fully
this obligation, we would also be at integrated and aligned to
risk of: In addition, there are the Weir global SHE
* Reputational damage leading to a loss of customers; initiatives to prevent the standards.
most common accident
types. The Weir global SHE also featured
* Legal action from regulators, including fines and SHE standards are prominently in the Group's
penalties; and continually reviewed. global employee engagement
survey programme which
The SHE Excellence was rolled out in 2019.
* Exclusion from markets important for our future Committee is responsible
growth. for monitoring performance The Group continues to
and compliance with monitor the potential
Group objectives, policies impact of the Coronavirus
and standards relating to (COVID -19), on its
SHE. operations and people.
The Chief Executive's
Safety Committee meets
monthly and is committed
to achieving the highest
of SHE standards.
There is a formal SHE
assurance programme with
issues escalated as
required through the
reporting
structures.
--------------------------- ---------------------------
Staff Recruitment, Development and Retention (Risk trend: No change)
Failure to recruit, develop or retain key management and staff may lead to disruption to the
Group's operations, functions and processes.
Why we think this is important How are we mitigating the Changes during 2019
risk
Our people represent our biggest asset and failure to The Talent Development and
attract, develop and retain key management Promotion of the Weir Succession Planning
and staff would have a detrimental impact on the Group's Group Values & Behaviours, process is being further
ability to deliver our key strategic Code of Conduct and HR developed.
objectives. Policies sets the
standards and expectations Global employee engagement
for all of our staff, surveys were completed.
reinforcing our stated
commitment to attracting All-employee share
and retaining the very ownership plan was
best people. launched globally. Global
HR management system being
High performer assessments deployed.
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.
Personal development
programmes including Weir
University and the Weir
Leadership Programme
are open to participation
by high potential staff
members and these continue
to attract high
calibre individuals.
--------------------------- ---------------------------
Political and Social (Risk trend: No change)
Adverse political action, or political and social instability, in territories in which we
operate may result in strategic, financial or personnel loss to the Group.
Why we think this is important How are we mitigating the Changes during 2019
risk
We operate across the globe and therefore have to work The geopolitical risk
within a wide range of political and Regular review of market landscape remained
social conditions. Adverse events may occur in the attractiveness. Monitoring unsettled throughout 2019
territories in which we operate that may travel by Weir employees resulting in an increase
require us to act swiftly to protect our people and our to higher risk in the frequency and
property, and regulatory changes could locations in accordance rigour of the Group's
impact our competitiveness. We need to be flexible and able with the Weir Group travel monitoring over a range of
to anticipate such issues. policy. exposures including
the political situation in
Expansions into new territories are only undertaken after External expert risk the Middle East and the
rigorous assessment of the risks, assessments and regular potential business impact
including the social and political situation within the monitoring in higher risk of Brexit.
territory. locations.
Contingency plans and exit
strategy planning.
Our strategic planning
assists in fore- casting
potential political and
social instability
in regions.
Continued assessment of
global tariffs.
Proactive monitoring of
evolving policy and
development of contingency
plans as situations
materialise.
--------------------------- ---------------------------
Ethics and Governance (Risk trend: No change)
Interactions with our people, customers, suppliers and other stakeholders are not conducted
with the highest standards of integrity which devalues our reputation and/or introduces a
level of contractual risk above our appetite.
Why we think this is important How are we mitigating the Changes during 2019
risk
We are unwilling to accept dishonest or corrupt behaviour The governance and
from our people, or external parties The Code of Conduct, legislative environment in
acting on our behalf, whilst conducting supplemented with Group which the Group operates
our business. If we fail to act with integrity, we are at policies on related continues to evolve
risk of: topics, provides a clear and become more complex.
* Reputational damage leading to a loss of customers; benchmark for how we We routinely review
expect our business will operations in geographies
be conducted. where ethical standards
* Increased scrutiny from regulators; may not be as well
Regular training is established as in other
provided using a range of countries.
* Legal action from regulators including fines, mechanisms including Town
penalties and imprisonment; Hall style sessions, Policies continue to be
online and induction updated and rolled out
training. including Data Privacy and
* Exclusion from markets important for our future Anti-Corruption.
growth; The financial control
framework is continually Compliance risk
monitored for assessments have been
* Failure to meet required social standards to maintain effectiveness. completed in several high
licence to operate in our communities; and risk locations.
Internal Audit's remit
includes regular review of
* Failure to comply with Group's process may lead to the anti-bribery and
businesses committing to onerous contract terms or corruption and financial
conditions. controls across the Group.
The Group Legal team is
responsible for monitoring
We expect all areas of the business to do the right thing compliance with
and conduct business in compliance the Code of Conduct.
with procedures, applicable laws, Weir Group operating
policies and procedures, and the highest The compliance 'sub-
ethical standards. function' within Group
Legal continues to enhance
global focus on
compliance.
A whistleblower hotline is
available to all members
of staff.
Reports are investigated
on a timely basis and
summary reports provided
to Group Executive
and Board.
--------------------------- ---------------------------
Appendix B: Directors' statement of 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
International Financial Reporting Standards (IFRS) as adopted by
the European Union and the Company financial statements in
accordance with UK Accounting Standards and applicable law.
In preparing those financial statements, the Directors are
required to:
-- Select suitable accounting policies and then apply them consistently.
-- Make judgements and estimates that are reasonable and prudent.
-- State that the Group financial statements have complied with
IFRS as adopted by the European Union, subject to any material
departures being disclosed and explained.
-- State for the Company financial statements whether the
applicable UK Accounting Standards have been followed, subject to
any material departures being disclosed and explained.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
Group financial statements comply with the 2006 Act and Article 4
of the IAS Regulation. They are also responsible for safeguarding
the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of accounts may differ
from legislation in other jurisdictions.
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.
Each of the Directors, as at the date of this report, confirms
to the best of their knowledge that:
-- The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
Group.
-- 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, together with a description of the principal
risks and uncertainties that it faces.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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