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This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements. Nothing in this document should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document save as would arise under English law. This presentation contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law. | 2
WHAT IT MEANS TO BE SMITHS LEADING POSITIONS IN TARGETING ATTRACTIVE MARKETS STRONG STRONG OPERATIONAL GROWTH EXECUTION PERFORMANCE & RETURNS STRONG FINANCIAL FINANCIAL DISCIPLINE PERFORMANCE A HIGH PERFORMING, DIVERSIFIED TECHNOLOGY COMPANY | 3
SMITHS GROUP TODAY A HIGH PERFORMING, DIVERSIFIED TECHNOLOGY COMPANY SMITHS GROUP JOHN SMITHS SMITHS SMITHS FLEX-TEK End markets CRANE MEDICAL DETECTION INTERCONNECT • Founded in 1851 Solutions for high- Innovative Mission-critical High-quality, cost- A global leader in MEDICAL • c.22,000 speed, secure components to heat solutions for global effective medical the detection and TECHNOLOGY connectivity in and move fluids and energy and process devices and authentication of employees demanding gases industries consumables that security threats and • Operating in over applications are vital to patient contraband SECURITY & DEFENCE 50 countries care • Serving customers in c.200 countries GENERAL INDUSTRY and territories • Revenue £3.2bn OIL & GAS • Headline OP £544m SPACE & 27% of Group revenue 28% of Group revenue 25% of Group revenue 9% of Group revenue 11% of Group revenue COMMERCIAL AEROSPACE 34% of Group OP 26% of Group OP 22% of Group OP 7% of Group OP 11% of Group OP Based on reported FY 2018 numbers | 4
STRATEGIC PROGRESS 2018 2017 2016 2019 AMBITION OUTPERFORMING A NEW SIGNIFICANT RETURN TO SUSTAINABLE OUR CHOSEN DIRECTION PROGRESS GROWTH GROWTH MARKETS | 5
CHARACTERISTICS OF A SMITHS BUSINESS – OUR DNA HIGH PROPORTION SUSTAINABLY INCREASING TECHNOLOGY OF AFTERMARKET COMPETITIVE AND DIGITISATION DIFFERENTIATION AND SERVICES ASSET LIGHT TARGETED IN GROWING MARKETS | 6
TARGETED IN GROWING MARKETS MEDICAL SECURITY & GENERAL OIL & SPACE & TECHNOLOGY DEFENCE INDUSTRIAL GAS COMMERCIAL AEROSPACE - Market growth: GDP+ - Market growth: 3-4% 1 - Market growth: 4-6% 2 - Market growth: 1-2% 3 - Market growth: 4-6% 4 - John Crane; Smiths - Smiths Medical; - Smiths Detection; - John Crane - Flex-Tek; Smiths Smiths Interconnect Interconnect; Flex-Tek Smiths Interconnect; Interconnect Flex -Tek OVERALL MARKET GROWTH RATE: 3-4% (1) Health Research International 2016; BMI 2017; McKinsey analysis (3) BP Energy Outlook 2017 Source: (2) IHS Markit; Frost & Sullivan; Markets and Markets; Smiths Detection analysis (4) Bishop Report, Markets and Markets, Boeing Current Market Outlook (2017-2036) | 7
TOP 3 LEADERSHIP IN TARGETED MARKET SEGMENTS MARKET FIX ATTRACTIVENESS - Size EXIT C. 60 % C. 80 % - Growth - Segment profitability - Competitor landscape SPACE & MEDICAL SECURITY & GENERAL OIL & COMMERCIAL COMPETITIVE TECHNOLOGY DEFENCE INDUSTRIAL GAS AEROSPACE POSITION - Relative market share - Infusion systems - Air transportation - Pharma - Oil refineries - Aircraft - Vascular access - Ports and borders - Chemical - Gas processing - Satellites - Relative growth - Vital care - Military - Processing - Pipelines - Relative profitability - Urban security - Rail - Semiconductor test - Construction | 8
PARALLEL PATH FY2016 FY2018 Medium term HIGH GRADING THE BUSINESSES C. 60 % C. 80 % 85 %+ A WORLD LEADING TECHNOLOGY COMPANY RISK OF EXECUTION PORTFOLIO PRIORITISATION CAPITAL ALLOCATION DECISIONS RISK ASSESSMENT | 9
A WORLD LEADING TECHNOLOGY COMPANY INVESTMENT RETURNS GROWTH Outperforming our Out performing our chosen markets chosen markets MARGIN Achieving world-class 18-20% competitiveness ROCE Strong financial 16-18% framework CASH CONVERSION 100%+ | 10
MEDIUM TERM AMBITION OPERATIONAL FINANCIAL PERFORMANCE PERFORMANCE Outperforming our Competitive position Top 3 Organic revenue growth chosen markets R&D % sales 5-6% Operating margin 18-20% Vitality index ~20% ROCE 16-18% Stock turns ~6x WC % sales ~20% Aftermarket % 60%+ Cash conversion 100%+ | 11
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SMITHS GROUP – FY 2018 SMITHS SMITHS JOHN CRANE SMITHS MEDICAL FLEX-TEK GROUP DETECTION INTERCONNECT Revenue £881m £885m £793m £300m £354m £3,213m (£’m) Revenue growth* +5% (2)% +1% (1)% +10% +2% (%) Operating profit £202m £156m £134m £42m £67m £544m** (£’m) Operating margin 22.9% 17.6% 16.9% 14.1% 18.9% 16.9% (%) ROCE 22.9% 13.1% 12.1% 11.9% 35.0% 14.6% Aftermarket 67% 82% 44% n/a n/a 57% % of revenue R&D 1.3% 5.8% 7.4% 7.0% 0.6% 4.6% % sales * Underlying modifies headline performance to: adjust prior year to reflect an equivalent period of ownership for divested businesses; include restructuring and pension administration costs as headline for both years; and exclude the effects of foreign exchange, acquisitions and supplemental sales for divested businesses. ** Includes £(30)m of corporate costs | 13
REVENUE ANALYSIS - FY 2018 JOHN CRANE SMITHS MEDICAL SMITHS DETECTION SMITHS INTERCONNECT FLEX-TEK 14% 19% 21% 30% 44% 33% 10% 34% 40% 4% 8% 7% 56% 26% 68% 11% 25% 33% Mission-critical solutions for global energy and process industries 17% Infusion systems Oil & gas Air transportation Defence Construction Products Non-oil & gas Vascular access Ports and borders Semiconductor Fluid Management Vital Care Defence Medical Heat SoIutions Urban security Space Flexible Solutions Commercial aerospace Rail, Industrial, Other | 14
JOHN CRANE: Mission-critical solutions for global energy and process industries Revenue £881m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE (27% of Group) • • A global leader in flow control for rotating Oil & gas markets recovering driven by • Flowserve equipment underlying energy demand Headline OP • EagleBurgmann • • £202m Strong proprietary technology and expertise in Expansion in high-growth markets applied engineering • (34% of Group) Pent-up demand for maintenance and • Broad installed base in Oil & Gas and Non-Oil & upgrades in oil & gas and petrochemical Gas Margin • Need for operational improvements in non- 22.9% • Strong aftermarket service offering with c.200 oil & gas industries sales and service centres • Disruptive innovations including material • Long-term customer relationships science advancements and digital R&D % sales transformation 1.3% OE/AM GEOGRAPHIES END MARKETS c.56% OIL & GAS c.44% NON-OIL & GAS Aftermarket 67% Americas 43% - 85% downstream - Pharmaceutical Original Equipment 33% Europe 26% - 15% midstream - Chemicals APAC 18% - Pulp & paper - Water treatment RoW 13% | 15
SMITHS MEDICAL: High-quality, cost-effective medical devices and consumables that are vital to patient care globally Revenue £885m COMPETITIVE STRENGTHS GROWTH DRIVERS COMPETITIVE LANDSCAPE (28% of Group) • • A category leader in our chosen markets Ageing populations with increasing • Medtronic personalised healthcare and patient Headline OP • Trusted brands with a reputation for quality and • Becton-Dickinson expectation/quality of life £156m safety • Baxter • Increasing incidence of chronic diseases • Strong, defensible intellectual property (26% of Group) • B Braun • Increasing need for connected systems and • c.80% of revenue from single-use devices and data analytics Margin proprietary consumables 17.6% • Growth of alternate site and home-based • Strong customer relationships and extensive healthcare global sales network • Growing healthcare spend in developing R&D % sales markets 5.8% OE/AM GEOGRAPHIES END MARKETS Infusion systems 34% Consumables 82% Americas 56% Vascular access 33% Original Equipment 18% Europe 25% Vital Care and APAC 17% Specialty products 33% RoW 2% | 16
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