Weir Group Regulatory News (WEIR)

The Weir Group PLC reports its interim results for the six months ended 30 June 2019

http://www.rns-pdf.londonstockexchange.com/rns/1135H_1-2019-7-29.pdf

First half in line; sustainable technology gaining traction

§ 17% order growth (-7% LFL1) benefiting from recent portfolio transformation

o Minerals order intake +5%: aftermarket +8% and OE gathering momentum

o ESCO pro forma2 orders +1%

o Oil & Gas orders down 27%

·; Operating profit3 of £172m up 5% (-22% LFL1); in line with our expectations

o Minerals operating margin of 17.2%

o ESCO operating margin 14.1%, +300bps year-on-year

o Oil & Gas operating profit flat on H2 2018

·; H1 2019 Net debt impacted by working capital phasing and IFRS 16

·; Successful execution of portfolio transformation

o Flow Control sale completed for enterprise value of £275m

o Good progress on ESCO cost synergies; annualised run rate now $20m

§ Good traction for new technologies focused on productivity and sustainability

o Increasing adoption of Enduron® HPGR and interest in Terraflow® tailings technology

o New SPM® QEM 5000 pump supporting transition to electric fracking

§ Full year outlook continues to be for another year of good constant currency revenue and profit growth

o Oil & Gas operating profit now expected to be toward the lower end of its previous £55m-£95m range

See footnotes on page 4

Jon Stanton, Weir Group Chief Executive Officer said:

"The first half of the year progressed largely as we expected it to. We are making good progress in our mining equipment businesses benefiting from our focus on aftermarket-intensive applications, particularly for battery metals including copper, lithium, nickel and cobalt supported by our extensive installed base and global service network. Our pipeline of firm OE quotes has grown significantly year-on-year with encouraging demand for our technology that reduces water and energy consumption.

While oil and gas markets in North America continued to be challenging compared to the same period last year we saw good demand for our latest innovations. This included our Large Bore Simplified Frac System and our new QEM 5000 frack pump which is well positioned to support the development of future electric frack fleets.

As we look to the rest of 2019, we continue to anticipate another year of good constant currency revenue and profit growth."

A live webcast of the management presentation will begin at 0800 (BST) on 30 July 2019 at www.investors.weir. A recording of the webcast will also be available at www.investors.weir.

CHIEF EXECUTIVE OFFICER'S REVIEW

At Weir, we work in partnership with our customers to solve their toughest operating challenges safely, efficiently and sustainably, helping to provide the essential resources needed by a growing world.

Good first half performance resulting from recent portfolio transformation

Safety is our number one priority and I am pleased to report a 18% like-for-like reduction in the Group's Total Incident Rate to 0.58, supporting our journey to becoming a zero-harm workplace. This reflects our focus on behavioural change which also contributed to a reduction in the severity of incidents. While this is welcome progress, we still have more work to do to realise our ambition.

Following our recent portfolio changes our two mining focused divisions (Minerals and ESCO) now represent around 75% of Group revenues while recurring aftermarket sales represent almost 80% of total revenues. In the first half of 2019, Minerals orders grew 5% with aftermarket orders up 8%, reaching record levels. Original equipment orders, which are traditionally lumpier, fell by 2% year-on-year but returned to growth in Q2 and this is expected to accelerate in the second half. Operating margins of 17.2% were in line with expectations as we prioritise growing our installed base of original equipment which provides recurring higher-margin aftermarket revenues in the future.

We continued to see good growth from ESCO, both in terms of revenues, which were up 5% on a pro forma2 basis, and operating margins which have improved 300bps to 14.1% and continue to improve sequentially. Against our original medium-term target of $30m, annualised cost synergies reached $20m and are being delivered earlier than originally expected while revenue synergies are making good initial progress. Close collaboration between Minerals and ESCO colleagues secured market share gains in both Europe and Latin America, leveraging each other's established customer relationships.

Challenging market conditions in North America meant Oil & Gas orders fell 27% compared to the same period last year when there was a surge in pressure pumping refurbishment and replacement activity. That left pressure pumping markets over supplied and the market has yet to soak up that excess capacity. We are managing our cost base tightly in this environment where short-term visibility remains limited and we remain focused on the longer-term market opportunity with US shale expected to be the biggest source of global oil supply growth in the medium-term. We saw further encouraging signs of the recovery in international markets with an increase in drilling activity and in which our global wellhead growth strategy is starting to gain traction.

Market conditions in oil and gas and some project delivery deferrals in Minerals, alongside growth and normal seasonal patterns, contributed to a £181m working capital outflow which we expect to partly reverse in the second half.

Leading technology change

Productivity and sustainability are both big themes across our markets. In mining, strong demand for our HPGR technology reflects this trend as it can significantly reduce energy and water consumption. We also saw growing interest in our Terraflow® solution that enables tailings waste to be cost-effectively recycled or repurposed. Our GET Detect System was also launched. It provides instant feedback to the machine operator if one of the ground engaging tools used to extract minerals is lost or damaged.

In Oil & Gas, there has been strong adoption of the Simplified Frac System. It significantly reduces the amount and complexity of flow iron on a frack site reducing costs and improving safety. The division has now formally launched the QEM 5000 pump which is ideally placed to support the development of electric and gas turbine fracking capability, with proven technology based on the established QEM 3000 continuous duty field performance. This has the potential to reduce emissions and the frack fleet footprint by around 60%.

We are Weir - a platform for sustainable long-term growth

Our We are Weir strategic framework focuses on where we can deliver distinctive value - People, Customers, Technology and Performance. In the first half we launched a global share plan to give all our people a share in our future success, attracted more customers by providing new technology to solve complex productivity and sustainability challenges and improved margins in the ESCO division.

Dividend

The Board has approved an interim dividend of 16.50p (2018: 15.75p). The interim dividend will be paid on 5 November 2019 to shareholders on the register on 11 October 2019.  

Board changes

As previously announced, Barbara Jeremiah, who joined the Board as a Non-Executive Director in August 2017, will succeed Richard Menell as Senior Independent Director (SID) with effect from 1 January 2020. Richard Menell, who joined the Board in April 2009, will be stepping down from the Board after the 2020 AGM.

DIVISIONAL REVIEW

Minerals

Minerals is a global leader in the provision of mill circuit technology and services as well as the market leader in slurry-handling equipment and associated aftermarket support for abrasive high-wear applications. Its differentiated technology is used in mining, infrastructure, oil and gas and general industrial markets around the world.

2019 First Half Highlights

·; Positive market conditions

·; 8% increase in aftermarket orders; strong original equipment order book

·; Operating margins of 17.2% reflecting growth stage of the cycle

2019 First Half Market Review

In mining, commodity prices continued to be supportive underpinned by increased demand, particularly for battery metals such as copper, lithium, nickel and cobalt, while iron ore prices increased c.60% in the period.

Original equipment demand benefited from miners continuing to expand current operations and investment in new mines, with particular demand for new technologies that increase efficiency and sustainability while lowering total costs. Aftermarket demand was strong, due to production growth and structural trends. These include continued ore grade declines that increase the amount of rock that needs to be processed, intensifying wear and tear and leading to additional demand for spares and services.

At a regional level, Europe, Australia, North America and Latin America all experienced good growth while demand in Central Africa was more subdued.

In non-mining markets, there was strong demand in oil sands while industrial markets were stable.

2019 First Half Operating Review

In positive market conditions the division continued to leverage its technology leadership and comprehensive service network to support miners with solutions that sustainably improve efficiency while reducing total costs. This included strong demand for our Enduron® HPGR technology that reduces water and energy consumption including to support a large greenfield development in the UK.

The division's integrated solutions strategy, which involves engineers working on-the-ground with customers to understand their operating challenges and then offer comprehensive solutions delivered £58m in revenues in the first half. This programme is being supported with increased training and development, particularly sharing product knowledge across customer-facing teams, developing project management skills and entrepreneurial leadership.

The division also continued to extend its leading global service network with a new facility in Alaska. The service network gives the division the ability to rapidly respond to demand for spares and services and is a key differentiator in need-it-now mining markets, where production intensity is increasing, and the costs of unplanned downtime are significant. The effectiveness of this business model can be seen in the record aftermarket orders received in the first half.

Technology development continued to focus on incremental innovations and Mine of the Future developments aimed at solutions that are smarter, more efficient and sustainable. This included focusing research and development on new pump and alloy designs, digitisation, ore hoisting, hybrid separation and tailings management.

Operationally longer-term plans continued to be developed to optimise global manufacturing capability to take full advantage of positive market conditions.

2019 First Half Financial review

Orders increased by 5% on a constant currency basis to £797m (2018: £756m) with a book-to-bill of 1.13. Original equipment orders fell 2% reflecting some project delays but were up sequentially in Q2. Aftermarket orders increased by 8% reflecting continuing investment in the division's service network and on-the-ground engineering capability. Aftermarket orders represented 73% of total orders (2018: 71%). In total, mining end-market orders accounted for 75% of the total (2018: 71%).

Revenue was 6% higher on both a constant currency and reported basis at £706m (2018: £664m), reflecting order trends. Original equipment sales accounted for 25% (2018: 27%) of divisional revenues and were stable on the prior year. Aftermarket revenues were up 9% reflecting order trends and the benefits of the division's installed base and exposure to commodities such as copper where increased production is being driven by increased demand and continued declines in ore grades.

Operating profit2 increased by 5% on a constant currency basis to £121m (2018: £116m), driven by good underlying revenue growth.

Operating margin2 on a constant currency basis decreased by 20bps to 17.2% (2018: 17.4%), with good revenue growth and operating leverage more than offset by investment in support of the growing project pipeline.

Cash generated from operations decreased by 29% to £81m (2018: £115m), reflecting a step up in inventory to support the growing order book.

2019 Outlook

Assuming the current supportive market conditions continue, we continue to expect the division to deliver broadly stable operating margins and good growth in constant currency revenues and profits.

ESCO

ESCO is a global leader in the provision of Ground Engaging Tools (GET) for large mining machines. Its highly engineered technology improves productivity through extended wear life, increased safety and reduced energy consumption. The division also applies its differentiated technology to infrastructure markets including construction, dredging and sand and aggregates. The acquisition of ESCO was completed on 12 July 2018 and its results are included from that date.

2019 First Half Highlights

·; Positive market conditions continued

·; Delivered annualised cost synergies of $20m

·; 5% increase in pro forma revenues; good early progress in delivering revenue synergies

·; Operating margins of 14.1%; 300bps improvement year-on-year

2019 First Half Market Review

The division benefited from the same macro mining trends as Minerals including increased ore production and the focus by mining customers on optimising productivity. This supported demand for differentiated technology that is proven to sustainably increase efficiency. Regionally, there was good demand in North America, Latin America, Australia and Europe with Central Africa more subdued.

In non-mining markets, oil sands demand was strong while infrastructure markets, including construction, aggregates and dredging were also positive.

2019 First Half Operating Review

The division is focused on differentiating its offering through technology leadership and close customer proximity.

The first half of this year saw good progress towards those aims with early market share gains for the N70 Nemisys® lip system, which extends the division's leading Nemisys® technology. It is currently being trialled on smaller machine classes including front end loaders. The N70 improves customer productivity through increased wear life, lower fuel consumption and reduced maintenance costs.

The division has a target of delivering $50m in revenue synergies over five years by working in partnership with colleagues in Weir Minerals. In the first half there was good initial progress with ESCO increasing its direct-to-market offering to customers in previously under-represented markets, including West Africa.

Early order wins from collaboration between the divisions included market share gains for ESCO in Latin America, building on Minerals close customer relationships, and supporting Minerals to win additional rubber lining orders in Europe, leveraging ESCO's existing customer base.

Annualised cost synergies reached $20m including the removal of corporate costs, functional integration and the consolidation of service facilities. We are ahead of schedule in progress towards our medium-term target of $30m savings. Investment in the division was focused on upgrading foundry capacity and safety improvements to support the division's progress to becoming a zero-harm workplace.

2019 First Half Financial review

For comparative purposes below, we have included pro forma figures for H1 2018, which are based on ESCO's adjusted, unaudited US GAAP management accounts.

Orders increased 1% on a constant currency pro forma basis to £289m (2018: £288m) but were up 8% sequentially, reflecting good demand in both mining and infrastructure markets in North America and Latin America, as well as Europe and Australia. Aftermarket orders represented 96% of orders in line with ESCO's position as a provider of highly engineered consumables to abrasive operating environments.

Revenue increased 5% on a constant currency pro forma basis to £280m (2018: £267m). Mining represented 56% of revenues, infrastructure was 32% and other industrial markets represented 12%. The division saw similar customer trends to Minerals in its core mining markets with customers efforts focused on maximising production in all regions. Construction markets in North America were strong as were dredging markets.

Operating profit2 increased by 34% on a pro forma basis to £40m (2018: £30m), as a result of strong revenue growth, operating leverage and benefits from the post-acquisition integration synergies and cost savings.

Operating margin2 of 14.1% was up 300bps on a constant currency pro forma basis (2018: 11.1%), reflecting cost synergies and strong operating leverage.

Cash generated from operations was £32m representing good cash conversion.

2019 Outlook

Assuming supportive market conditions continue, the division expects to deliver good growth in constant currency revenues. Further margin progression will be supported by the ongoing delivery of cost and revenue synergies and operational improvements.

Oil & Gas

Weir Oil & Gas provides highly engineered mission-critical solutions to upstream energy markets. Products include pressure pumping and pressure control equipment, supported by Weir EDGE aftermarket spares, equipment repairs, upgrades, certification and asset management, and field services to customers around the world.

2019 First Half Highlights

·; 27% fall in orders due to significantly reduced North American refurbishment activity; operating margin 8.5%

·; Technology leadership; launch of new SPM® QEM 5000 frack pump for electric and gas turbine operations

·; International markets showed further progress

2019 First Half Market Review

As expected, the first half of 2019 saw a significant year-on-year reduction in demand for pressure pumping equipment in North American upstream markets. This compared to the first half of 2018 when there was strong demand as oilfield service companies refurbished and replaced their frack fleets.

This reduction in activity was caused by a combination of factors. These include increased capital discipline among Exploration and Production (E&P) companies, pipeline capacity constraints in both the Permian basin in Texas and Canada subduing growth in those regions, and uncertainty over oil prices.

This resulted in overcapacity and pricing pressure in pressure pumping markets with North American frack fleet utilisation estimated to be around 60%. There was, however, good demand for new technologies that significantly increase safety and productivity.

International markets continued their steady recovery with increased demand for services and wellheads.

2019 First Half Operating Review

In challenging market conditions, the division continued to help customers improve the safety, productivity and sustainability of their operations through advanced technology and customer service.

This included the successful commercialisation of its Simplified Frac System that significantly reduces the complexity and safety of frack sites and which saw strong demand in the first half of the year delivering c. £16m in first half revenues. Research and development activity focused on delivering further productivity and sustainability gains for customers including developing the QEM 5000 pump which is capable of supporting the development of electric and gas turbine frack sites which have the potential to reduce required fleet sizes by 60%.

The division also extended its service capability through its Weir EDGE offering that rapidly deploys engineers to customer sites to provide both root cause analysis and repair of breakdowns. This is supported by the division's comprehensive service centre network with its presence in the Permian basin in Texas being expanded with a new supercentre that provides pressure pumping and pressure control assembly, repair and testing facilities.

Internationally the division made good progress with order wins from international and national oil companies including a four-year contract in Oman to provide wellhead equipment and services. It is also developing plans to further expand its wellhead offering in the Middle East, including increased manufacturing capability in Saudi Arabia.

Operational improvements focused on supply chain enhancements and leveraging shared services to drive increased efficiencies across the division.

2019 First Half Financial review

Orders of £334m (2018: £455m) were down 27% on both a constant currency and a like-for-like basis, reflecting the significant reduction in refurbishment and replacement activity in North America compared to the prior year period. Aftermarket orders, which represented 71% (2018: 75%) of total orders, fell 31% due to the reduction in refurbishment demand seen in the first half of 2018. Original equipment orders were 14% lower with declines in pump demand partially offset by demand for the division's new technology including its Simplified Frac System. Pressure pumping orders were down sequentially in the second quarter as North American markets continued to soften due to capital and capacity constraints. Pressure Control demand was stable.

First half orders from international markets were higher year-on-year and increased sequentially as activity levels improved for both original equipment and aftermarket services.

Revenue reduced by 19% on a constant currency basis to £343m (2018: £426m). Original equipment and aftermarket revenues increased by 1% and reduced by 26% respectively, with aftermarket accounting for 70% of total revenues (2018: 76%).

North American revenues fell by 23% compared to the prior year reflecting challenging market conditions. International revenues were higher year-on-year due to increased project activity, particularly in the Middle East.

Operating profit2 including joint ventures was £29m (2018: £68m) on a constant currency basis. The decrease was driven by lower refurbishment activity levels and volumes in upstream North American markets and reduced operating leverage. There were also modest pricing declines in North America.

Operating margin2 at 8.5% was down 750bps on a constant currency basis as a result of the change in market conditions in North America, which impacted volumes and overhead recoveries.

Cash generated from operations decreased to an outflow of £16m (2018: inflow of £38m) primarily driven by a lower level of payables as the forward production plan was reduced to reflect weaker market conditions and receivables being impacted by the back-end loading of new product sales and a customer focus on cash in line with current market sentiment. 

2019 Outlook

Given capital constraints among E&P companies and ongoing overcapacity in pressure pumping markets, the division continues to anticipate lower year-on-year constant currency revenues with operating profits now expected to be towards the lower end of its previous £55m-£95m range.

GROUP FINANCIAL HIGHLIGHTS 

Continuing operations order input at £1,420m increased 17% on a constant currency basis with strong performances from Minerals and the newly acquired ESCO offsetting declines in Oil & Gas due to weaker market conditions. Excluding the acquisition of ESCO, orders were down 7% like-for-like. Original equipment orders were £326m. Aftermarket orders were £1,094m.

Continuing operations revenue of £1,329m showed growth of 22% on a constant currency basis (down 4% like-for-like) mainly reflecting the impact of ESCO and the continued strength in Minerals, offset by the reduction in orders in the Oil & Gas Division. Aftermarket accounted for 78% of revenues, compared to 74% in the prior year. Reported revenues increased 25%, benefiting from a foreign exchange translation tailwind of £25m.

Operating profit2 from continuing operations (before exceptional items and intangibles amortisation) increased by £8m (5%) to £172m on a reported basis. Excluding a £6m foreign currency translation tailwind, the constant currency increase was £3m, with a strong performance from Minerals and contribution from ESCO being largely offset by lower profits in Oil & Gas due to weaker market conditions.

Unallocated costs increased £3m from the prior year to £18m supporting the We are Weir strategy with increased investment in digital and advanced manufacturing technology as well as our all employee share plan. Reported operating profit for the period of £131m was £20m higher than the prior year mainly due to a £23m reduction in exceptional items and £8m improvement in underlying profit partly offset by a £11m increase in intangible amortisation resulting from the ESCO acquisition.

Continuing operations net finance costs before exceptional items were £25m (2018: £17m) and include £4m of interest related to IFRS 16 Leases, plus the impact of funding the ESCO acquisition.

Continuing operations profit before tax

Profit before tax from continuing operations (before exceptional items and intangibles amortisation) of £147m is in line with H1 2018. The reported profit before tax from continuing operations of £106m compares to £93m in 2018 due to a decrease in exceptional items.

Continuing operations taxation

The tax charge for the period of £37m (2018: £37m) on profit before tax from continuing operations (before exceptional items and intangibles amortisation) of £147m (2018: £147m) represents an underlying effective tax rate (ETR) of 25.3% (2018: 25.3%).

Continuing operations exceptional items and intangibles amortisation

Exceptional items decreased to £3m (2018: £25m) with intangibles amortisation increasing by £11m to £39m (2018: £28m).

Exceptional items of £3m primarily relate to the ESCO acquisition and integration (2018: £24m), while £9m of the increase in amortisation is also a result of the ESCO acquisition.

A tax credit of £9m has been recognised in relation to exceptional items and intangibles amortisation (2018: £8m).

Discontinued operations

Reported loss for the period from discontinued operations is £25m (2018: profit £3m), including an underlying loss of £4m (2018: profit £5m). Exceptional items of £21m (2018: £2m) primarily relate to the loss on disposal of the Flow Control division following its sale on 28 June 2019. The Group completed the sale for an enterprise value of £275m, subject to customary working capital and debt like adjustments.

A pre-tax loss on disposal of £5m has been recognised at June 2019 and reflects proceeds of £263m, net assets at the date of disposal of £271m, costs of disposal of £18m and a gain of £21m from the recycling of cumulative foreign exchange differences from the foreign currency translation reserve to the income statement.

The income tax charge of £15m primarily relates to the gain on disposal of the US entities and assets resulting in a total post-tax loss on disposal after tax of £20m.

The final proceeds will be determined as part of the agreed completion accounts process and reflected in the 2019 Annual Report.

Profit for the period

Profit for the period from total operations of £53m (2018: £67m) reflects an increase in profit from continuing operations of £14m to £78m (2018: £64m) offset by the loss from discontinued operations of £25m compared to the profit of £3m in 2018.

Earnings per share from continuing operations (before exceptional items and intangibles amortisation) decreased by 11% to 42.2p (2018: 47.4p) reflecting the increase in the weighted average number of shares in issue, with profits in line with prior year. The weighted average number of shares in issue increased to 259.7m (2018: 230.9m) following the issue of shares in April and July 2018 in respect of the ESCO acquisition and scrip dividends. Reported earnings per share including exceptional items, intangibles amortisation and profit from discontinued operations was 20.3p (2018: 29.1p).

Cashflow and net debt

Cash generated from total operations decreased by £85m to £54m in the period which reflected underlying profit growth offset by an increase in working capital of £181m (continuing operations £157m) compared to £60m (continuing operations £62m) in the prior period. The increased use of working capital of £95m for continuing operations reflected a step up in inventory to support the growing Minerals order book and a larger reduction in payables due to normal seasonality of bonus and other accruals as well as a reduction in the forward production plan for Oil & Gas reflecting weaker market conditions compared to the prior year. Receivables were also impacted by a back-end loading of new product sales in Oil & Gas and customer focus on cash in line with current market sentiment. As a result, working capital as a percentage of sales increased from 26.8% to 31.5% on a like-for-like basis. Net cash used in operating activities was £16m (2018: cash generated £93m).

Free cash flow (see note 1(e) of the interim financial statements) from total operations was an outflow of £198m (2018: £7m) before cash exceptional items of £26m (2018: £8m). The increase reflects the higher working capital outflow, the adverse impact of FX volatility on derivative cashflows, an increase in capex investment and the closure of the scrip dividend scheme.

Total Group exceptional cash items in the period mainly relate to items recognised in the income statement during 2018, primarily the ESCO acquisition and integration, with the remainder relating to the legacy warranty issue in Oil & Gas and restructuring and rationalisation actions.

The completion of the sale of Flow Control on 28 June 2019 resulted in cash proceeds, net of costs paid in the period, of £253m. The adoption of IFRS 16 'Leases' on 1 January 2019 led to the recognition of total lease liabilities of £185m.

The above movements resulted in closing Group net debt of £1,316m (December 2018: £1,127m). On a lender covenant basis, the ratio of net debt to EBITDA was 2.6 times (December 2018: 2.3 times).  

Principal risks and uncertainties

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

·; Technology and innovation

·; Political and social risk

·; Safety, health and environment

·; IT systems and cyber security

·; Ethics, governance and control

·; Value chain management

·; Staff recruitment, retention and development

·; Market volatility

·; Contract risk

Further details of the Group's policies on principal risks and uncertainties are contained within the Group's 2018 Annual Report, a copy of which is available at www.annualreport.weir.

Appendix 1 - 2018 / 2019 quarterly order trends (constant currency)

1 Continuing operations (excludes the Flow Control division which has been sold).

2 Like-for-like excludes the impact of acquisitions, KOP was acquired on 27 July 2017 and excluded for 2018. ESCO was acquired on 12 July 2018 and excluded from 2018 and 2019.

Appendix 2 - Foreign Exchange (FX) rates and profit exposure

This information includes 'forward-looking statements'.  All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding The Weir Group PLC's ("the Group") financial position, business strategy, plans (including development plans and objectives relating to the Group's products and services) and objectives of management for future operations, are forward-looking statements. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this document. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past business and financial performance cannot be relied on as an indication of future performance. 

The cash flows from discontinued operations included above are disclosed separately in note 6.