2006 Interim Results

1
Spirax-Sarco Engineering plc 2006 Interim
Results 30th June 2006
2
2006 Interim Results

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

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Overview of Interim 2006

• 2006 2005 Change
• Revenue 185.9m 166.6m 12
• Operating profit 28.2m 25.0m 13
• Margin 15.2 15.0
• Pre-tax profit 30.0m 26.0m 16
• EPS 26.2p 23.0p 14
• DPS 7.5p 6.8p 10

• Continuing good growth in Asia and North America
• Noticeable improvement in Continental Europe
• Margin growth despite higher material and energy
  costs and the Brazilian result
• Pre-tax profit up 16
• Interim Dividend up 10
• Continuing bolt-on acquisitions

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Geographical Analysis of Sales
UK Republic of Ireland 11
North America 20
Rest of World 12
Continental Europe 37
Asia 20
Sales are by geographical location of the customer
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Sales Changes
m
/- YOY Organic Sales 6 Acquisitions 2 Exc
hange 4 Sales Increase 12
Sales are by geographical location of the customer
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Operating Profit Changes
m
/- YOY Operating profit 13 Operating margin
H1 2006 15.2 Operating margin H1 2005 15.0
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UK Republic of Ireland
2006 2005 change change excl XR Sales to
customers 20.5m 21.0m -3 -3 Sales by
operation 53.5m 51.8m 3 3 Operating
profit 5.7m 6.7m -15 -13 Margin 10.7 13.0

• UK market remains subdued
• Domestic sales declined 3
• Demand on factories increased from overseas
• Higher material and energy costs, and investment
  in efficiency improvement for the longer term

Sales by operation comprise customer and
intra-group sales
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Tate Lyle Saves energy with Spirax Sarco
Engineered System

• EasiHeat steam to hot water packaged system
  installed in Manchester facility providing 5
  tonnes of instantaneous hot water per hour
• Increased capacity - can now meet peaks in demand
  for liquid sugar - previously restricted by plant
  design
• Increased flexibility - within 20 minutes of
  start-up, there is enough hot water to begin
  processing the sugar
• Reduced energy consumption
• Expected payback in less than 12 months

9
Continental Europe
2006 2005 change change excl XR Sales to
customers 68.5m 62.4m 10 9 Sales by
operation 85.2m 77.5m 10 9 Operating
profit 10.2m 8.6m 19 18 Margin 11.9
11.0

• Organic third party sales grew 2
• European markets mainly weak
• Exchange boosted sales by 8
• Profit includes factory closure net charge of 1¼
  million
• Good profit growth helped by France exchange

• European economies generally improved
• Good performance overall sales up 10
• Strong results from the Czech Republic, Germany,
  Russia, Spain and WM Alitea
• Good demand on factories
• Profit up 19 - widespread improvements

Sales by operation comprise customer and
intra-group sales
10
Redacre Revolutionary dosing system uses
Watson-Marlow peristaltic pumpheads

• OEM supplying dosing systems for agriculture and
  water treatment in applications across the globe
• Ease of use was critical to the system, allowing
  farmers and technicians to change the tubes and
  adjust dose rates as required
• Robust design to withstand the agricultural
  environment and pump aggressive substances
• Highly accurate dosing of sometimes small amounts
  of critical fluids (vaccines, water treatment
  etc)
• No cross-contamination

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Asia
2006 2005 change change excl XR Sales to
customers 36.3m 30.1m 20 13 Sales by
operation 34.2m 27.5m 24 15 Operating
profit 6.5m 4.2m
53 26 Margin 19.0 15.4

• Continued overall strong performance
• Organic sales up 13
• Good results in China, Korea, Malaysia and
  Singapore
• Significant exchange gains notably Korea and
  China
• Profit well ahead and further margin improvement

Sales by operation comprise customer and
intra-group sales
12
Korean Telecom Reduced energy costs through our
Steam System Service

• KT branch offices have steam systems for space
  heating, humidification and generating hot water
• Spirax conducted surveys on 9 KT branch offices
  as part of ongoing Steam System Service contract
• Asked to carry out corrective maintenance
• Installed new Spirax equipment
• Provided training for the operators in effective
  boiler operation
• Provided significant energy savings, and peace of
  mind
• Expansion to cover 20 KT branch offices expected

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North America
2006 2005 change change excl XR Sales to
customers 37.6m 32.6m 16 9 Sales by
operation 37.7m 33.0m 14 8 Operating
profit 3.6m 2.6m 38 16 Margin 9.5 7.
9

• Sales up 16 - including acquisitions
• Significant exchange benefit (USA and Canada)
• EMCO and AFTCO metering acquisitions in USA being
  integrated
• Profit up 38
• Operating margin improved

Sales by operation comprise customer and
intra-group sales
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Rest of the World
2006 2005 change change excl XR Sales to
customers 22.9m 20.5m 12 3 Sales by
operation 24.2m 20.8m 17 7 Operating
profit 2.2m 2.9m -23 -40 Margin 9.2 14
.1

• Sales up 12
• Big exchange benefit Brazilian Real
• Brazilian market difficult and profits sharply
  down
• Mitech control valve acquisition being integrated
  in South Africa
• Operating profit and margin lower

Sales by operation comprise customer and
intra-group sales
15
Nestlé - East London, South Africa Energy savings
through reduced steam usage and water consumption

• Nestle requested our help to reduce cost of steam
  bought in from outside supplier
• Spirax carried out an audit of the full steam and
  condensate loop
• Made recommendations on configuration,
  installation, application and sizing of equipment
• More efficient steam distribution and reduced
  water use
• Full steam trap audit conducted failed units
  repaired or replaced
• Steam usage reduced by 26

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Financial Aspects - Interim

• m 2006 2005 change
• Revenue 185.9 166.6 12
• Operating profit 28.2 25.0 13
• Margin 15.2 15.0
• Net finance income 1.2 0.6
• Associates 0.6 0.4
• Profit before tax 30.0 26.0 16
• Tax rate 32.7 32.7
• EPS 26.2p 23.0p 14
• DPS 7.5p 6.8p 10

• Improved finance income good cash flow and
  increased net pension finance income
• Associates (India Mexico) well ahead
• Pre-tax profit up 16
• Tax rate unchanged in line with underlying rate
• Strong EPS growth 14
• Interim dividend up 10

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Cash Flow

• First Half First Half
• m 2006 2005
• Operating profit 28.2 25.0
• Depn amortisation 6.8 6.1
• Equity settled share plans 0.7 0.5
• Working capital changes (9.7) (5.4)
• Pension payt gt PL charge (1.0) 0.5
• Net interest received 0.2 0.1
• Taxation paid (8.4) (9.5)
• Net capital expenditure (7.1) (6.1)
• Free Cash Flow 9.7 11.2
• Net dividends (12.9) (11.5)
• Acquisitions (1.6) (4.9)
• Share buy-back/Issued (12.1) 4.5
• Cash Flow (16.9) (0.7)

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• Working capital up 8 - mainly stocks
• Extra pension payment 1m
• Capital Expenditure increased
• Dividends paid up 12
• Buy-back 1.5m shares so far
• Acquisition of AFTCO April 2006 - metering
  business in USA
• Special pension contribution made in second half
  of 14.5m

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Key Statistics

• First half First half
• 2006 2005
• Net cash balance 2.2m 1.5m
• Capital expend / depreciation 112 105
• Free Cash Flow 9.7m 11.2m
• Operating profit margin 15.2 15.0
• Pension deficit (net of deferred
  tax) 22.0m 36.2m

• Net cash 2.2m
• Pension deficit much reduced
• Acquired 80 of UltraPure in July 2006 for 2.7m

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Spirax Sarco

• Focused on growth and
• creating shareholder value

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Spirax-Sarco Engineering 2006 Interim
Results 30th June 2006 Questions
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Appendix - Currencies

• First half 2006 First half 2005 Year 2005
• Average exchange rates
• Bank of England sterling index 99.4 102.4 101.0
• US 1.79 1.88 1.82
• Euro 1.45 1.46 1.46
• Won 1,727 1,911 1,866
• Period end exchange rates
• Bank of England sterling index 100.5 100.9 98.3
• US 1.85 1.79 1.72
• Euro 1.45 1.48 1.46
• Won 1,755 1,853 1,735

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Appendix Sources of Growth

• Geographic expansion - new and increased
  penetration
• Market share - traditional and newer products
• Product additions and developments
• Focus on market segments where we are
  under-represented
• Increased sales coverage
• Increase in industrial activity
• Acquisitions