Smiths Group Plc · LSE:SMIN
Smiths — Investor Presentation (April 2005)
23 slides from Smiths's investor presentation, Apr 5, 2005
Slide 1: Meeting with UK Shareholders' Association
Smiths Group Meeting with UK Shareholders’ Association Smiths Group HQ, London, Tuesday 5th April 2005 Presentation by: Alan Thomson, Financial Director Russell Plumley, Director, Investor Relations www.smiths-group.com/ir UKSA 2005 Register here to receive regular information 1
Slide 2: Welcome to the HQ of Smiths Group
Welcome to the HQ of Smiths Group In this building since 1981 (Smiths was local to this area) 140 people in corporate and divisional roles The Board meets here regularly: Chairman Executive Directors Non-executives Donald Brydon Alan Thomson (FD) Peter Jackson John Ferrie (Aero) David Challen
Slide 3: Smiths Group: Interim Results 2005 Highlights
Smiths Group: Interim Results 2005 Highlights • Headline profit before tax up 16% at £155m* • Headline earnings per share up 17% at 20.4p* • At constant currency, all four divisions contributed to sales growth of 11%, headline operating profit growth of 16% • Medex acquisition scheduled to complete
Slide 4: Operating performance for H1 2005
Operating performance: for H1 2005 £m H1 2005 H1 2004 Sales 1,344 1,264 Headline operating profit 153 141 Margin 11% 11% Net interest (6) (9) Pensions financing 8 1 Headline profit before tax 155 133 EPS 20.4p 17.5p Dividend 9.25p 8.75p UKSA 2005 4
Slide 5: Four strongly-performing divisions
Smiths Group: Four strongly-performing divisions Aerospace Detection Medical Specialty Eng Smiths Aerospace Smiths Detection Smiths Medical Specialty Engineering Systems and equipment for Equipment for protection Devices for critical care Application-specific electronic military and commercial aircr
Slide 6: Significant progress on reshaping Smiths Group
Significant progress on reshaping Smiths Group ACQUISITIONS £490m £218m Medex Aerospace £240m Detection £65m Heimann Medical Aerospace (Detection) Interconnect Medical £60m (financial years Interconnect Aerospace ending July 31st) 2002 2003 2004 2005 £125m Net debt £235m Industrial Net debt £1.1 bil
Slide 7: The profit profile of Smiths has changed
The profit profile of Smiths has changed: now focused on sectors with strong growth Aerospace Medical Cyclical markets for commercial, Relentless increase in healthcare strong momentum business spending drives continuous in defence growth in devices market Upswing in commercial is With Medex, Medica
Slide 8: The financial resources are available for continued development
The financial resources are available for the continued development of Smiths LIQUIDITY 01 02 03 04 Pro-forma incl Medex Debt/equity ratio (market value of debt & equity at July 31) 27% 18% 19% 8% 20% Interest cover (interest/EBITDA) 7x 9x 14x 28x 15x CASH-GENERATION 56.5p Free cash-flow 48.4p 45.5p
Slide 9: Continuing progress on acquisitions
Continuing progress on acquisitions cost Aerospace DGT • engine components £57m Integrated Aerospace • landing gear systems £57m Cyrano • miniaturised detector £8m Detection SensIR • hazmat detection £41m Farran • millimetre wave technology £16m Medical DHD • US respiratory care devices £30m Spec. E
Slide 10: Smiths Aerospace: overview
Smiths Aerospace: overview First tier supplier of integrated systems Electronic systems Mechanical systems Engine components With technology leadership in vital areas of the aircraft R&D/Sales Company-funded (expensed to profit) 8% Common Core Computing on B787 Customer-funded (largely govt./militar
Slide 11: Aerospace: performance in H1 2005
Smiths Aerospace: performance in H1 2005 at constant Aerospace 25% £m H1 2005 currency Sales 514 +17% Operating profit 39 +24% Contribution to operating profit Margin 8% Boeing 787 • Delivered first systems for: Airbus A380, F-35 JSF, C-130 AMP • Development work on Boeing 787 Dreamliner on schedule
Slide 12: Aerospace: sales trends
Smiths Aerospace: sales trends 2003 2004 2005 2005 sales (underlying growth, excluding acquisitions, (expected) at constant currency) 20% 10% Civil OE Commercial OE Military OE 10% Aftermarket Military OE 10% Aftermarket UKSA 2005 12
Slide 13: Detection: Fundamental strengths
Smiths Detection: Fundamental strengths Market leadership in both Trace and X-ray detection Broadest range of applications Not dependent on airport security Significant investment in product innovation Worldwide sales base, incl. military customers Smiths Detection: built from strong organic growth
Slide 14: Detection: performance in H1 2005
Smiths Detection: performance in H1 2005 at constant Detection 13% £m H1 2005 currency Sales 153 +10% Operating profit 21 +22% Contribution to operating profit Margin 13% • Timing of deliveries variable, government order patterns skewed to second half • Significant military awards, including: - US A
Slide 15: Detection: a broad spread of applications
Smiths Detection: a broad spread of applications Military Airports Non-security applications Ports & borders Current sales Critical infrastructure First responders UKSA 2005 15
Slide 16: Medical: Fundamental strengths
Smiths Medical: Fundamental strengths Strong market niches in specialised devices Smiths is well-placed in the hospital and in the ex-hospital recovery sector Market grows steadily at 5-6% p.a Recent product intros are adding to current growth Nearly three-quarters of profits are generated in dynami
Slide 17: Medical: performance in H1 2005
Smiths Medical: performance in H1 2005 at constant Medical 26% £m H1 2005 currency Sales 237 +6% Operating profit 39 +7% Contribution to operating profit Margin 17% Epidural kit Two-thirds of profit generated in North America, significant translation impact Strong growth in safety devices, US ma
Slide 18: The acquisition of Medex: significant presence in critical care
The acquisition of Medex: Gives Smiths a significant presence in the critical care sector The combined range meets 95% of …and 90% of the requirement the requirement for safety devices… for anaesthesia disposables Other Hypodermic Spinals and Medex range epidurals Syringe pumps syringes IV sets Mede
Slide 19: The acquisition of Medex: comprehensive integration plan
The acquisition of Medex: A comprehensive integration plan is in place • Medex joined Smiths Medical in March • Medex senior team secured • Overall organisation established • Medex and Smiths Anaesthesia & Safety Devices combined • New Critical Care division established • International organisation
Slide 20: Specialty Engineering: significant contributor to profits
Specialty Engineering: A significant contributor to Smiths’ profits. Businesses with good margins and respectable growth rates FlexTek Interconnect Hoses, ducting for domestic Connection & protection of appliances, aircon electronic circuits, currently achieving double digit growth from aero and tel
Slide 21: Specialty Engineering: performance in H1 2005
Specialty Engineering: performance in H1 2005 at constant Spec. Eng. 36% £m H1 2005 currency Sales 440 +9% Operating profit 54 +14% Contribution to operating profit Margin 12% TRAK Higher sales and profits in all four activities John Crane - grew strongly in America John Crane - but was held bac
Slide 22: Group: Looking ahead
Smiths Group: Looking ahead Pick-up in commercial aerospace will continue R&D, new products generating incremental sales Recent acquisitions are contributing strongly The benefit of Medex starts in H2 Further productivity gains from current restructuring Smiths’ “second half” pattern will be repeate
Slide 23: Smiths Group
Smiths Group www.smiths-group.com/ir UKSA 2005 Register here to receive regular information 23