Spirax Sarco Interim Results

1
Spirax Sarco Interim Results

• Tim Fortune - Chairman
• Marcus Steel - Chief Executive
• David Meredith - Director Finance
• September 2000

2
Highlights

• Good underlying performance, offset by weak
  euro
• Organic sales up 7
• Strong sales and profit growth in Asia
• Growth in USA and Continental Europe, difficult
  trading in UK
• 5 EPS growth
• Before the loss on disposal of fixed assets

3
Overview
6 months to 30th June

• 2000 1999 Change
• Turnover 133.5m 126.5m 6
• Operating profit 19.2m 19.1m 1
• Margin 14.4 15.1
• Pre-tax profit 18.2m 18.6m -2
• EPS 16.0p 15.3p 5
• DPS 5.4p 5.2p 4
• Before the loss on disposal of fixed assets

4
Sales changes
1999 2000 H1 Sales
Organic Acquisitions Exchange
H1 Sales sales
growth
effect

m
0.8m
8.4m
133.5m
-2.2m
126.5m
Organic growth 7 Acquisitions 1 Exchange
effect -2 6
5
Future GrowthBuilding on world market leadership

• Market share expansion
• Wider product range
• Geographic expansion
• Focus on specific market segments
• e-communications
• Acquisitions

6
Grangemouth
Outsourcing - Steam system management
7
Operating profit changes
1999
2000 H1 Profit Profit growth
Exchange effects H1 Profit
m
1.3m
19.2m
19.1m
-1.2m
Profit growth 7 Exchange effects
-6 1
8
UK

• Difficult domestic market - industrial plants
  still closing
• Euro undermining UK economic competitiveness
• New product releases in Spirax Sarco Watson-
  Marlow Bredel
• Good demand on factories from overseas companies
• Reducing production costs - productivity,
  material resourcing overseas

9
Pilkington switch to peristaltic pumps
Ceramic tile plant Pumping very abrasive slip 16
pumps working well Reduced down time
spares costs power costs Improved quality
10
Continental Europe

• Improving trading environment
• Weak euro reduced sales and operating profits
• Sales growth at constant exchange
• Factories all experienced good increases in
  demand and are reducing total manufacturing
  costs
• Profits up at constant exchange - down in
  sterling

11
Modular units - competitive advantage
AstraZeneca Packaged units Quick
commissioning Heat exchanger alliance with Alfa
Laval Guaranteed performance
12
Americas

• Overall growth in turnover operating profits
• USA Mexican companies increased business
• South Carolina factory improving customer
  service and profit
• Watson-Marlow Bredel further good progress
• South America lower profit, Argentina weak

13
Asia, Australasia and Africa

• Continued recovery in 2000
• Strong growth in sales and profits
• Most companies improved results - particularly
  Korea
• Encouraging signs in Japan
• Good underlying growth in China offset by
  non-repeat of pharma order in 1999
• Taiwan still depressed from earthquake
• Good progress

14
Financial issues

• Exchange rates
• Interest
• Share buy-back
• Cash flow

15
Results

• 6 months to
  30th June
• m 2000 1999 change
• Sales 133.5 126.5 6
• Operating profit 19.2 19.1 1
• Margin 14.4 15.1
• Interest payable 1.0 0.5 105
• Profit before tax 18.2 18.6 -2
• Tax rate 31.7 33.0
• EPS 16.0p 15.3p 5
• DPS 5.4p 5.2p 4
• Before the 0.9m loss on disposal of fixed
  assets

16
Cash flow
-10 -20 -30 -40
m
1
21
-2
-2
-3
-6
-35
-16
-42
Net Operating Other Acquisitions Share
Exchange Net
Interest, Net debt cash flow
buy-back effects capital
tax, debt 31.12.99
expenditure dividends 30.06.00
17
Key statistics
Interim
Full year

• 2000 1999
• Net debt
  42.2m 34.8m
• Net gearing
  31 28
• Interest cover
  20x 44x
• Capital expenditure / depreciation 168
  149
• Goodwill amortisation
  0.2m 0.2m
• Operating cash flow
  21.3m 42.1m

(H1/99 18.6m)
18
Productivity First half 2000
Employees
2
Sales
7
5
Sales / employee
19
Spirax Sarco

• Focused on growth and
• creating shareholder value

www.SpiraxSarcoEngineering.com
20
Appendix Share buy-back

• Shares Value m
• 1998 1,160,000 6.1
• 1999 4,505,032 22.6
• 2000 - 6 months 665,000 2.5
• Total 6,330,032 31.2
• Shares in issue
• 30th June 2000 74,592,000
• Average shares in issue
• 2000 First half 74,913,269
• 1999 First half 78,687,786

21
Appendix Currencies

• First half 2000 First half 1999 Year 1999
• Average exchange rates
• Bank of England sterling index 108.30 102.60 103.7
  0
• US 1.57 1.61 1.62
• Euro 1.64 1.49 1.52
• DM 3.21 2.92 2.97
• FFr 10.76 9.79 9.96
• Lira 3,175.40 2,888.72 2,940.01
• Won 1,758.33 1,924.84 1,923.33
• Period end exchange rates
• Bank of England sterling index 104.30 103.90 107.2
  0
• US 1.51 1.58 1.61
• Euro 1.58 1.53 1.61
• DM 3.09 2.99 3.14
• FFr 10.36 10.03 10.55
• Lira 3,057.98 2,959.56 3,113.37
• Won 1,687.98 1,824.51 1,825.73

22
Appendix