SpiraxSarco Engineering

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Spirax-Sarco Engineering

• 2003 Interim Results
• September 2003

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2003 Interim results

• Marcus Steel - Chief Executive
• David Meredith - Director - Finance
• September 2003

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Highlights

• Sales up 6
• Sales growth in all regions
• Operating profit up 1 after charging
  production transfer costs of 1½m
• Underlying operating profit margin up to 14.1
  (2002 13.8)
• EPS Dividend up 3

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UK
Employees 1104

• Difficult domestic market trading environment
• Targeted sales opportunities notably
  hospitals prefabricated units
• Increased domestic sales
• Overseas demand on factories grew
• Profit increased

www.SpiraxSarcoEngineering.com
5
Voridian, UK

• UK plastic bottle manufacturer (division of
  Eastman Chemical Company)
• Variety of chemicals on site require steam
  heating (tracing) to protect against weather
  conditions
• Existing tank farm tracer system suffering
  operating maintenance problems costing over
  100K / year
• Spirax Sarco replaced system using prefabricated
  manifolds and traps with quick fit couplings for
  reliability and easy maintenance
• Investment of 35K netted first year savings of
  70K improvements now planned for remainder of
  site

www.SpiraxSarcoEngineering.com
6
Continental Europe
Employees 1129

• Sales increased generally despite weak economic
  conditions
• Increased sales coverage
• Good progress in France following
  reorganisation
• Results helped by strength of euro
• Closure of Spanish factory cost 1½m
• Overall sales and profit increased

www.SpiraxSarcoEngineering.com
7
ColorMatrix Europe

• Global leader in liquid colorant / additive
  technologies for the plastics industry
• WMB awarded prestigious contract for design of
  CM500 peristaltic dosing unit for injection
  moulding or extrusion machines
• Unit benefits from rapid changeovers (up to 50
  colours a day) without need for cleaning
• ColorMatrix Europe say the unit is popular with
  our customers, being easy to set up and usewe
  would certainly be prepared to work with WMB on
  future projects

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Americas
Employees 848

• Market conditions were generally unhelpful
• Grew sales in local currency in all markets
  except Mexico
• Subdued USA market but sales increased
  marginally
• Argentina and Brazil continued to make good
  gains
• Total profits increased in currency
• US weakness reduced sterling sales and profits
  below H1 2002

www.SpiraxSarcoEngineering.com
9
Sankyo Oil, Japan

• Major producer of oil and petrochemical products
  for the printing, rubber, automotive and
  metalworking industries
• Objective to reduce energy bill
• Spirax Sarco in partnership with Nisseki Oil was
  asked to survey the plant and identify areas of
  steam wastage
• Received order for supply and installation of all
  replacement products
• Customer energy savings in one year 100K
• Payback period 16 months
• We continue to work with Sankyo

www.SpiraxSarcoEngineering.com
10
Asia, Australasia and Africa
Employees 945

• Good sales increase in the region
• Sales growth in China, India, Japan and Korea
• Margins generally under pressure from currency
  transaction effect
• Trading profit increased in local currency
• Currency weakness undermined sterling sales and
  profit increases

www.SpiraxSarcoEngineering.com
11
Financial aspects

• First half First half
• m 2003 2002 change
• Sales 154.0 144.9 6
• Operating profit 20.3 20.0 1
• Margin 14.1 13.8
• Interest (0.7) (1.1)
• Profit before tax 19.6 18.9 4
• Tax rate 32.8 33.1
• EPS 17.2p 16.7p 3
• DPS 6.0p 5.8p 3
• Underlying operating profit margin improved to
  14.1
• Lower interest cost
• Tax charge 32.8

after charging goodwill of 0.3m (2002 0.3m)
and in 2003 production transfer costs of 1½m
before charging production transfer costs in Spain
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Cash Flow

• First Half First Half Year
• m 2003 2002 2002
• Operating profit 20.3 20.0 42.7
• Depn/amortisation 6.8 6.3 12.5
• Working capital changes (6.5) (1.6) 3.4
• Interest paid (0.6) (1.2) (1.9)
• Taxation (9.0) (5.8) (11.6)
• Net capital expenditure (6.5) (5.2) (11.3)
• Acquisitions (1.2) (1.2) (1.4)
• Dividends paid (10.2) (9.9) (14.5)
• Shares issued 0.2 0.3 1.1
• Exchange (1.0) (2.0) (1.2)
• Movement in net debt (7.7) (0.3) 17.8
• Opening net debt (22.7) (40.5) (40.5)
• Closing net debt (30.4) (40.8) (22.7)

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Productivity
8
Sales / employee
-1
Employees
7
Sales
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Key statistics

• First Half First Half
• 2003 2002
• Net debt 30.4m 40.8m
• Net gearing 19 28
• Capital expenditure / depreciation 101 89
• Goodwill amortisation 0.3m 0.3m
• Operating cash flow 20.6m 24.6m

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Sell on technical expertise performance not
price
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Commitment to training our engineers and customers
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Service

• Customers growing requirement for support
• Free advice and technical knowledge
• Site surveys
• Worldwide same day dispatch capability from
  local stocks
• Local sales engineers provide advice
  assistance and technical support
• Free system design
• Manufacture to international standards

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Velke Popovice Brewery, Czech Republic

• Major East European beer producer
• Most plant cleaned automatically using
  cleaning-in-place (CIP) systems
• Previous system suffered poor control and
  waterhammer
• Automated Spirax Sarco Easiheat unit now used to
  heat sodium hydroxide solution to desired
  temperature
• Thermal insulation prohibited due to hygiene
  regulations efficiency is paramount
• Cleaning process now speeded up, and productivity
  has significantly improved

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Spirax Sarco

• Focused on growth and
• creating shareholder value

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Spirax-Sarco Engineering plc

• 2003 Interim Results
• September 2003
• Questions

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Appendix - Currencies

• First half 2003 First half 2002 Year 2002
• Average Exchange rates
• Bank of England sterling index 101.0 106.3 106.1
• US 1.61 1.45 1.50
• Euro 1.46 1.61 1.59
• Won 1,939 1,864 1,876
• Period End Exchange rates
• Bank of England sterling index 100.4 103.7 104.5
• US 1.65 1.52 1.61
• Euro 1.44 1.54 1.53
• Won 1,971 1,834 1,909