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24 March 2017


Strong operational performance, further progress on strategic initiatives

Key points

  • Group headline revenue in line on an underlying1 basis; up 18% on a reported basis
  • Group headline operating profit up 8% on an underlying1 basis; up 27% on a reported basis
  • Cash conversion strong at 115% with a 44% increase in free cash flow
  • Headline basic EPS up 30% at 45.7 pence per share
  • Proposed interim dividend of 13.55 pence per share, up 2.3%
  • Operational improvements support increased R&D investment in long-term growth opportunities
  • Balance sheet strengthened by business disposals and improved pension funding
  • Morpho Detection acquisition in final stages, with approval and completion expected shortly

1 Underlying excludes the impact of acquisitions and divestments, and the effects of foreign exchange translation


Interim results for the six months ended 31 January 2017

  Headline* Statutory
Reported growth Underlying growth 2017
Revenue 1,616 1,372 18% 0% 1,617 1,372
Operating profit 277 217 27% 8% 377 183
Operating margin 17.1% 15.8% 130 bps 150 bps 23.3% 13.3%
Pre-tax profit 248 189 31% 10% 346 168
Basic EPS 45.7p 35.2p 30%   76.5p 32.8p
Headline free cash-flow 252 174 44%      
Dividend 13.55p 13.25p 2.3%   13.55p 13.25p
Return on capital employed 16.3% 15.4% 90 bps      

*In addition to statutory reporting, Smiths Group reports its continuing operations on a headline basis. Definitions of headline metrics, and information about the adjustments to statutory measures are provided in the notes to the financial statements


Andy Reynolds Smith, Group Chief Executive, said:

“In the past six months we have made good progress to focus our portfolio and run our businesses better. Strong cash conversion and improved margins across the Group provide us with additional resources to invest for the future. By laying the foundations for organic growth through targeted investments and by taking a disciplined approach to acquisitions and disposals, we are building a bigger, better and more focused Smiths.

“While sales were flat for the first six months of the year, Smiths Group delivered good underlying profit growth. Once again, Smiths Detection delivered strong growth in revenue and profit, offsetting declines at Smiths Medical and John Crane, and reinforcing our view that the acquisition of Morpho Detection makes compelling sense and will increase our exposure to a growing market. We are in the final stages of securing all necessary regulatory approvals, and expect to complete the acquisition shortly. In tough markets, John Crane continued to show resilience with a modest return to growth in the aftermarket, which now accounts for two-thirds of the division’s revenue. Smiths Medical had a weak first half and performance at Smiths Interconnect and Flex-Tek was in line with expectations.

“In September, we set out a new strategy for Smiths. We’re now implementing measures across the Group that we believe, in the medium term, will deliver our twin priorities of chosen market outperformance and world-class competitiveness. We’ve made good progress, generating over £330m of proceeds from the disposal of three non-core businesses, investing for growth with increased R&D spend and introducing the Smiths Excellence System.

“Overall, the outlook for 2017 is unchanged. Group performance is expected to be slightly weighted towards the second half, albeit with a more balanced split between the first and second half than we saw last year. We expect some improvement in Smiths Medical’s revenue performance in the second half. John Crane’s first-fit end markets are expected to remain tough, somewhat counterbalanced by continued resilience in aftermarket. We anticipate sales growth at Smiths Detection in the second half, albeit at lower levels than we saw in the first half, and margins will moderate given contract mix and investment in new products. Smiths Interconnect and Flex-Tek are expected to continue to perform in line with the first half. We expect cash conversion to continue to be strong as the rate of progress on inventory management improves. The depreciation of sterling is expected to provide a tailwind to reported revenue and operating profit, should current rates prevail.”

Statutory reporting
Statutory reporting takes account of all items excluded from headline performance. On a statutory basis, pre-tax profit from continuing operations was £346m (2016: £168m) and basic earnings per share were 76.5p (2016: 32.8p).

See Accounting policies for an explanation of the presentation of results and note 3 to the accounts for an analysis of non-headline items.


To view the full press release please click here


Contact details

Investor enquiries
Andrew Lappin, Smiths Group
+44 (0)20 7004 1657
+44 (0)78 0500 7035

Marion Le Bot, Smiths Group
+44 (0)20 7004 1672
+44 (0)75 8315 4386

Media enquiries
Andrew Lorenz, FTI Consulting
+44 (0)20 3727 1323
+44 (0)77 7564 1807

Deborah Scott, FTI Consulting
+44 (0)20 3727 1459
+44 (0)79 7953 7449


The presentation slides and a live webcast of the presentation to analysts are available at at 09.00 (UK time) on Friday 24 March. A recording of the webcast is available later that day. A live audio broadcast of the presentation is also available by dialling (no access code required):

UK toll free: 0808 237 0062
International: +44 (0)20 3427 0662
US/Canada toll free: +1 866 928 6048

An audio replay is available for thirty days on the following numbers (access PIN 683518#)

UK toll free: 0808 237 0026
International: +44 (0)20 3426 2807
US/Canada toll free: +1 866 535 8030

Original high-resolution photography and broadcast quality video is available to the media from the media contacts above or from

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 press release contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.


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