Front cover Spirax-Sarco Engineering plc 2008 Half Year Results 30 th June 2008

Front cover

Spirax-Sarco Engineering plc

2008 Half Year Results

30th June 2008

Spirax-Sarco Engineering plc 2008 Half Year Results

Mark Vernon - Chief Executive

David Meredith - Finance Director

200

8 H

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Overview of First Half 2008

• Continued strong sales growth of 19% (12% at constant currency)

• Operating profit up 29% (15% at constant currency)

• Good sales and profit growth from all regions

• Operating profit margin improved to 17.1% (2007: 15.8%)

• Interim dividend increase of 20%

• Good cash flow - significant capital investment in 2008 and 2009

2008 2007 Change Change

excl XR

Revenue £238.7m £200.1m +19% +12%

Operating profit* £40.8m £31.6m +29% +15%

Margin* 17.1% 15.8%

Pre-tax profit* £42.7m £33.1m +29% +15%

EPS* 38.0p 29.1p +31% +17%

DPS 10.0p 8.3p +20%

Ove

r vie

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*Excludes amortisation of acquired intangibles of £0.8m (2007:£0.2m) of which £0.2m relates to Associates (2007: nil)

Geographical analysis of revenue

North America

18%

UK & Republic of Ireland

11%

Asia 19%

Continental Europe

39%

Rest of World: South America, Africa, Australasia13%

Sales are by geographical location of the customer

Seg

men

ts

2008 2007

UK and ROI 11% 11%

Cont. Europe 39% 38%

N. America 18% 19%

Asia 19% 20%

Rest of world 13% 12%

100% 100%

Revenue changes

0

2

4

6

8

10

12

14

Continental NorthUK&ROI Europe America Asia ROW Exchange+£2.6m +£7.3m +£4.3m +£5.1m +£5.7m +£13.6m£m

Note : Sales are based on the geographical location of the customer.

: Segmental splits are shown at constant exchange rates.

+/- % YOY H1Organic Sales +10%Acquisitions +2%Exchange +7%

Total +19%

Rev

enu

e C

han

ge

2008 increase

excl XR

+/-%

UK and ROI +11

Cont. Europe +8

N. America +11

Asia +13

Rest of world +22

Exchange +7

+19

2008 sales

(by customer)

£’m

UK and ROI 25.1

Cont. Europe 93.4

N. America 43.0

Asia 45.2

Rest of world 32.0

238.7

0

1

2

3

4

+/-% YOY H1Operating profit +29%Operating margin 2008 17.1%Operating margin 2007 15.8%

Note: Segmental splits are shown at constant exchange rates.

Operating profit changesContinental North

UK&ROI Europe America Asia ROWExchange

+£1.4m* +£1.5m* +£0.9m* +£0.9m* +£0.7m* +£3.8m£m

Pr o

fit

Ch

ang

e

2008 increase

excl XR

+/-%

UK and ROI +21

Cont. Europe +9

N. America +34

Asia +12

Rest of world +25

Exchange +12

+29


UK & Republic of Ireland

2008 2007 change change

excl XR

Sales to customers £25.1m £22.4m +12% +11%

Sales by operation* £64.9m £58.6m +11% +11%

Operating profit £8.2m £7.6m +9% +21%

Margin* 12.7% 12.9%

• Organic sales growth in domestic market 11%

• Sales focus on energy saving projects for customers and newer products

• Demand on factories increased from overseas

• Efficiency gains in the factories offset higher energy and material costs

UK

& R

OI

*Sales by operation comprise customer and intra-group sales Margin based on gross sales

Spirax help UK hospital cut energy bill by 15%

• Previously, six calorifiers supplied heating and domestic hot water to areas of the hospital, designed to run on waste heat from the hospital’s combined heat and power (CHP) plant.

• Spirax provided a complete turnkey solution: engineering, packaging and installation.

• Spirax replaced the six calorifiers with four compact packaged heat exchangers that predominantly run on waste heat to provide hot water for heating.

• The Spirax heat exchanger packages are more efficient than calorifiers and 25% of the size, are easier to control & maintain, and provide more efficient heat transfer.

• Hospital calculates savings of 15%, equivalent to over £5,000 a month.

Cas

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Continental Europe

• Market conditions were generally positive – economic environment weakening

• Significant gains from stronger euro

• Continued good performance overall – sales up 8% at constant exchange

• Flexicon integration progressing well

Eu

r op

e


excl XR




Margin* 15.2% 12.9%


North America

• Organic sales up 11%

• Good sales of traditional products

• Economic background deteriorating

• Profit held back by exchange

• Profit up 34% at constant currency

No

r th

Am

eric

a


excl XR




Margin* 7.7% 7.2%


Spirax saves $4.7million for USA oil refinery • Spirax identified steam losses that resulted in millions of

dollars of energy savings.

• Steam trap audits by Spirax identified five problem areas:

- Improperly installed and leaking steam traps

- Freezing sulphur

- Water hammer problems

- Wasted blowdown

- Steam turbine inefficiencies

• Spirax recommended engineering solutions and provided installation services resulting in reduced annual operating costs of nearly $800k in year one.

• The new steam trap program reduced the failure rate from 6% to nearly 1% over five years.

• $4.7 million has been saved over the past five years.

Cas

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tud

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Asia

• Continued overall strong performance

• Organic sales up 13%

• Good results in China

• Generally strong currencies – notably China but exchange disbenefit in Korea

Asi

a


excl XR




Margin* 18.5% 18.4%


Rest of the world

• Sales up 32% (22% at constant currency)

• Exchange disbenefit in South Africa but overall favourable exchange movements

• Organic sales growth in nearly all markets

• South America results exceptionally good

• Operating profit well ahead in constant currency

Res

t o

f W

or l

d


excl XR




Margin* 11.2% 10.2%


Financial aspects – Half Year

2008 2007 change Changeconstant ccy

Revenue £238.7m £200.1m +19% +12% Operating Profit* £40.8m £31.6m +29% +15%Margin 17.1% 15.8% Net finance income £0.8m £0.9mAssociates £1.2m £0.6mProfit before tax* £42.7m £33.1m +29% +15%Tax rate (ex Assoc.)* 32.8% 34.1%EPS* 38.0p 29.1p +31% +17%DPS 10.0p 8.3p +20%

Fi n

anci

al

• Reduced net finance income – Pensions• Pre-tax profit up 29%• Lower tax rate – profit mix• Strong EPS growth +31%• Interim dividend +20%


Cash flow

Cas

h f

l ow

Operating profit 40.1 31.4Dep’n & amortisation 8.2 7.0Equity settled share plans 1.1 0.8Working capital changes (9.6) (5.5)Pension pay’t > P&L charge (0.2) (5.5)Net interest (0.1) (0.6)Taxation paid (10.8) (8.8)Net capital expenditure (8.4) (6.9)Free Cash Flow 20.2 11.9Net dividends (16.2) (14.3)Acquisitions (12.2) (0.7)Shares issued 2.3 1.7Cash Flow (5.9) (1.4)

• Good free cash flow• Working capital up 1% (constant currency excl acquisitions)• Capex increased - China• Interest payable reduced – good cash flow• Dividends paid up 13%• Some Treasury shares reissued for options exercised

First Half First Half£m 2008 2007

Key statistics

Key

sta

t ist

ics

First Half First Half2008 2007

Net cash/(debt) £12.2m (£7.2)m

Capital expend / depreciation 118% 102%

Amortisation acquired intangibles £0.8m £0.2m

Sales per employee +7% +10%

Free Cash Flow £20.2m £11.9m

Operating profit margin 17.1% 15.8%

IAS19 Pension deficit (30th June) £47.0m £2.5m

• Net cash – good cash flow• IAS 19 Pension deficit £47m at June 2008• Higher capex in 2008 and in to 2009

Spirax-Sarco Engineering plc

Driving growth through excellence and innovation

to create shareholder value

Appendix I – Currencies

First half First half Year

2008 2007 2007

Average exchange rates

Bank of England sterling index 94.4 104.4 103.3

US$ 1.99 1.97 2.00

Euro 1.30 1.48 1.46

Won 1954 1844 1858

Period end exchange rates

Bank of England sterling index 93.2 105.0 96.8

US$ 1.99 2.01 1.99

Euro 1.26 1.49 1.36

Won 2082 1854 1863

Ap

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Appendix II – 25 Years of sales performance

Sales for 2003 and prior years have been adjusted to IFRS basis

£0

£50

£100

£150

£200

£250

£300

£350

£400

£450

£500

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

mil

lio

ns

Sterling weakening

Sterling strengthening

Ap

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II

Full year

Appendix III – EPS & DPS performance

Note: Figures exclude non-operating and exceptional itemsFrom 2004 IFRS figures used excluding amortisation of acquired intangibles

KeyEPSDPS

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

p/s

ha

re

Ap

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III

Full year

Appendix IV – Growth Opportunities A

pp

end

i x I

V

Industry growth

Market share gains

Market expansion

Acquisitions

Spirax Sarco Growth

Opportunity for market share gains across product range (especially newer products)

Expanding selling opportunities into packaged engineered systems and services

High cost of energy provides good tailwind

Good exposure to Asia (20% sales) and peristaltics provide higher market growth

Energy savings

Bolt-ons to fill product & geographical gaps, add technology and expand application range

Documents

Front cover Spirax-Sarco Engineering plc 2008 Half Year Results 30 th June 2008