Front cover

1
Front cover
Spirax-Sarco Engineering plc 2006 Preliminary
Results 31st December 2006
2
2006 Preliminary results
2006 Results
Mike Townsend Chairman Marcus Steel - Chief
Executive David Meredith - Director - Finance
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Overview of 2006 results
Overview
2006 2005 Change Revenue 384.2m 349.1m 10
Operating profit 62.3m 55.3m 13
Margin 16.2 15.9 Pre-tax profit 65.7m 57.1m
15 EPS 58.1p 50.2p 16 DPS 26.5p 23.8p
11

• Good sales growth particularly Asia and
  Continental Europe
• Increasing investments for growth
• Improved operating margin of 16.2
• Pre-tax profit up 15 and EPS up 16
• Good underlying cash flow
• Final dividend up 12

Operating profit, Pre-tax profit and EPS
exclude amortisation of acquired intangible
assets of 0.4m (2005 0.2m)
4
Segmental analysis of revenue
Segments
2006 2005 UK and ROI 10.6 11.5 Cont.
Europe 36.0 35.9 Asia 20.1 18.9 N.
America 20.8 20.9 Rest of world 12.5 12.8 10
0.0 100.0
UK Republic of Ireland 10.6
North America 20.8
Continental Europe 36.0
Asia 20.1
Rest of World South America, Africa,
Australasia 12.5
Sales are by geographical location of the customer
5
Revenue changes
Revenue Change
Continental North UK Europe Asia America RO
W Exchange 0.6m 13.6m 9.6m 7.5m 3.2m
0.7m
m
2006 increase /- UK and ROI 2 Cont.
Europe 11 Asia 14 N. America 10 Rest of
world 7 Exchange 0 10
Note Sales are based on the geographical
location of the customer. Segmental splits
are shown at constant exchange rates.
/- YOY H1 H2 Year Organic Sales
6 12 9 Acquisitions 2 1 1 Exchange 4
-4 0 Total 12 9 10
6
Operating profit changes
Profit Change
Continental North UK Europe Asia America RO
W Exchange 0.1m 3.8m 2.8m 1.1m -1.3m
0.4m
m
2006 increase /- UK and ROI 1 Cont.
Europe 20 Asia 23 N. America 14 Rest of
world -21 Exchange 1 13
/- YOY H1 H2 Year Operating profit 13 12 13
Operating margin 2006 15.3 17.1 16.2 Operatin
g margin 2005 15.0 16.6 15.9
Segmental splits are shown at constant
exchange rates.
7
UK Republic of Ireland
UK Eire
2006 2005 change change excl XR Sales to
customers 40.7m 40.1m 2 2 Sales by
operation 107.9m 102.5m 5 5 Operating
profit 11.0m 10.9m 1 1 Margin 10.2 10.7

• UK domestic market remains subdued
• Sales to domestic customers up 2
• Increased demand on factories from overseas
  markets
• Profit held back by higher raw material,
  pension share-based payment costs

Sales by operation comprise customer and
intra-group sales. Margin is Operating profit as
of sales by operation
8
Continental Europe
Europe
2006 2005 change change excl XR Sales to
customers 138.3m 125.3m 10 11 Sales by
operation 172.4m 156.1m 10 11 Operating
profit 22.4m 18.7m 20 20 Margin 13.0 12
.0

• European industrial markets generally positive
• Sales up 11 - broadly spread
• Sales growth in France, Germany, Italy, Spain
  young company in Russia
• Profit up 20 due mainly to sales growth
  increased demand on factories

Sales by operation comprise customer and
intra-group sales. Margin is Operating profit as
of sales by operation
9
Asia
Asia
2006 2005 change change excl XR Sales to
customers 77.1m 65.8m 17 14 Sales by
operation 72.2m 61.3m 18 15 Operating
profit 15.1m 11.4m 32 23 Margin 20.9 18.
7

• Economic activity remained strong
• Exchange gain from stronger Won RMB
• Organic sales up 14 - widely spread
• Good performance in China, Korea South East
  Asia
• Profit up 23 at constant exchange and margin
  improved
• India (an Associate) strong growth

Sales by operation comprise customer and
intra-group sales. Margin is Operating profit as
of sales by operation
10
North America
North America
2006 2005 change change excl XR Sales to
customers 80.0m 73.1m 9 10 Sales by
operation 80.6m 73.2m 10 11 Operating
profit 8.9m 8.0m 11 14 Margin 11.0 10.9

• Sales increases were part organic part
  acquisition
• Increased sales and profits in USA
• Operating profit up 14 at constant exchange
• Margin restrained by weakness of US
  integration of acquisitions
• Mexico (an Associate) also performed well

Sales by operation comprise customer and
intra-group sales. Margin is Operating profit as
of sales by operation
11
Rest of the world
Rest of World
2006 2005 change change excl XR Sales to
customers 48.2m 44.8m 8 7 Sales by
operation 48.3m 45.9m 5 5 Operating
profit 4.8m 6.3m -23 -21 Margin 10.0 13.6

• Brazil business well down, but better second
  half
• Inflationary pressure in Argentina reduced
  profits margin
• Growth in Australasia
• South African profits down due to costs of
  consolidating businesses
• Margin down South America South Africa lower

Sales by operation comprise customer and
intra-group sales. Margin is Operating profit as
of sales by operation
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Investments in Geography
Investments

• New premises in South Africa (2006)
• Expanding sales coverage globally including
  profitable trading company in Russia
• New premises in Korea (2006 / 2007)
• Growing young Watson-Marlow Bredel companies
• Brazil
• China
• Korea
• New factory and offices in China (2007 / 2008)

New sales company in Russia
The new premises in South Africa
Artists impression of new facility in China
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Investment in training
Investment

• Canadian training centre
• Steam centre of excellence showcasing expertise
  to customers
• US training centre
• Modernised hands-on environment for customer
  training and training our own engineers
• UK training centre (2007)
• Upgraded and expanded to
  cope with demand

Canadian training centre
Artists impression of the new UK training centre
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Investments in manufacture
Investments

• Bredel Hose Pumps - Netherlands
• Make-to-order lean manufacturing investment
  programme
• Reduced lead times
• Automated paint plant and hose production
• Cellular assembly
• Increased efficiency and reduced work in
  progress/stock
• New Capsule production facility Cheltenham
• Automated BP99/32 bar capsule production
• Increased production capacity
• Reduced costs / downtime
• Improved quality

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Evolving steam marketClimate change renewable
energy
Steam market

• Major worldwide investment in Biofuel processes
  compatible with today's fuel types
• Biofuel types
• Bioethanol
• Biodiesel
• Biobutanol
• Biogas
• Benefits of biodiesel include zero sulphur
  content, 70 reduction in carbon monoxide exhaust
  emissions, comparable energy power content.
• Spirax Sarco has been successful in the
  application of equipment in many countries,
  including Brazil, Malaysia and the UK.

Golden Hope plant, Malaysia
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Financial aspects
Financial
2006 2005 change Revenue 384.2m 349.1m 10
Operating profit 62.3m 55.3m 13
Margin 16.2 15.9 Net finance income 2.0m
0.9m Associates 1.4m 0.9m Profit before tax
65.7m 57.1m 15 Tax rate 32.4 32.9 EPS 58.
1p 50.2p 16 DPS 26.5p 23.8p 11

• Improved finance income pensions
• Tax rate 32.4
• Strong results in Associates India Mexico
• Strong EPS growth
• Dividend up 11

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Cash flow
Cash Flow
m Operating profit 62.3 Depreciation and
share-based 13.8 Working capital (13.7) Cash
generated from operations 62.4 Interest
paid (0.2) Tax paid (16.5) Capital expenditure
(net incl Development) (19.9) Dividends
paid (18.3) Underlying cash flow 7.5 Special
pension payments (15.9) Treasury shares purchased
(net) (14.2) Acquisitions (4.0) Cash flow for
year (26.6)
m Opening net cash 19.0 Cash
flow (26.6) Exchange 1.0 Net debt 31.12.06 (6.6)

• Good underlying cash flow of 7.5m after
  working capital and increased capex
• Special pension payments, buy-back and
  acquisitions of 34m
• Closing net debt 6.6m
• 2007/2008 - 9m investment in new facility in
  China

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Key financial statistics
Key Statistics

• 2006 2005
• Operating profit margin 16.2 15.9
• Amortisation of acquisition intangibles 0.4m 0.2
  m
• Sales per employee 5 4
• Return on capital employed 32.2 30.4
• Net (debt)/cash (6.6m) 19.0m
• Cash from operations 62.4m 64.2m
• Capital expenditure as of depreciation 158 102
  
• Cash conversion 68 92
• Pension liability IAS19 basis (after
  tax) 20.2m 31.4m

App I EPS / DPS App II ROCE App III Cash
conversion App IV Currencies

• Further productivity gains sales/employee 5
  
• 1,980,500 shares bought-in for 18.1m
• Lower cash conversion higher capex funding
  the growth
• 16m special pension contributions, further 5m
  paid in 2007
• Main DB schemes in balance on actuarial basis

Excludes special pension contributions of 15.9m
in 2007 (2005 4.0m)
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Spirax Sarco Engineering plc
Share Value

• Focused on consistent growth and
• creating shareholder value

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Spirax-Sarco Engineering plc 2006 Preliminary
Results 31st December 2006
Questions
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Appendix EPS/DPS
Appendix I
Key EPS DPS
Pence per share
39 year dividend record
50.2 58.1 35.3 38.5 43.1
38.0 38.3 34.5 36.1 37.4 34.4 18.6 21.6 27.9
33.8
9.3 9.9 11.5 13.2 14.8 15.8 16.5 17.3
18.0 18.6 19.3 20.1 21.4 23.8 26.5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Note Figures exclude non-operating and
exceptional items From 2004 figures have been
prepared under IFRS and exclude amortisation of
acquired intangibles
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Appendix Return on capital employed
Appendix II

• m 2006 2005
• Capital Employed
• Property, plant equipment 88.8 85.8
• Inventories 67.7 64.2
• Trade receivables 90.0 83.3
• Prepayments, other current assets 10.5 9.1
• Trade, other payables current
  tax (57.8) (54.2)
• 199.2 188.2
• Average Capital Employed 193.7 182.2
• Operating Profit
• As reported 61.9 55.2
• Amortisation of acquisition intangibles
  0.4 0.2
• 62.3 55.3
• ROCE 32.2 30.4

Further improvement in ROCE in 2006
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Appendix Cash conversion
Appendix III

• m 2006 2005
• Cash generated from operation 46.6 60.2
• Net capital expenditure (property, plant
• equipment, software and development) (19.9) (13.0
  )
• Add back special pension payments 15.9 4.0
• 42.5 51.2
• Operating Profit 61.9 55.2
• Amortisation of acquisition intangibles 0.4 0.2
• 62.3 55.3
• Cash conversion 68 92

Cash conversion in 2006 held back by higher
capex and sales growth effect on working capital
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Appendix - Currencies
Appendix IV

• Year First Half Year
• 2005 2006 2006
• Average exchange rates
• Bank of England sterling index 101.0 99.4 101.2
• US 1.82 1.79 1.85
• Euro 1.46 1.45 1.47
• Won 1,866 1,727 1,763
• Period end exchange rates
• Bank of England sterling index 98.3 100.5 104.2
• US 1.72 1.85 1.96
• Euro 1.46 1.45 1.48
• Won 1,735 1,755 1,820

2006 period end rates would give unfavourable
currency movement in 2007
25
Appendix Sources of growth
Appendix V

• 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