Annual Results for the year ended 31 July 2022

Smiths Group plc – full year results for 12 months ended 31 July 2022

A year of accelerating growth and stronger execution

Pioneers of progress – improving our world through smarter engineering

ACCELERATING GROWTH – +3.8% organic revenue growth, fastest in nearly a decade

• Organic revenue growth ahead of expectations, +3.8%¹ (H1: +3.4%; H2: +4.1%); 5 consecutive quarters of growth; reported growth of +6.7%
• Headline² EPS growth +17.8%
• High demand across most end markets with strong order growth of +11%³
• £51m of revenue from new products launched in FY2022; R&D investment increased +14%
• Targeted M&A contributed +1.8% of reported growth
• Increasing returns to shareholders with proposed total dividend of 39.6p, +5%

STRONGER EXECUTION – Smiths Excellence System fully embedded

• Resilient operating margin of 16.3% with operating profit² of £417m
• Price offsetting inflation and mitigating other supply chain impacts
• Solid operating cash conversion⁴ of 80%; investment in working capital and capex to support growth and mitigate supply chain impacts
• More focused portfolio following completion of Smiths Medical sale and rapid return of proceeds with share buyback programme now 76% complete
• Smiths Excellence System now fully embedded, with high impact projects underway and targeted savings actions to drive enhanced efficiency

INSPIRING & EMPOWERING OUR PEOPLE – an energised and focused team

• A refreshed leadership team with new senior appointments throughout the year
• Introduced Smiths Leadership Behaviours to build on our strong culture
• Driving an even more dynamic and inclusive culture with greater focus on diversity
• Continuing to translate our commitment to ESG leadership into action

STRONG BALANCE SHEET – well positioned to execute our growth strategy

• £380m reduction in gross debt; leverage of 0.3x net debt/headline EBITDA⁴
• Final buy-in of the TI Group Pension Scheme, delivering certainty for scheme members and shareholders

FY2023 Outlook

• Expect to deliver 4.0-4.5% organic revenue growth with moderate margin improvement
• Strong order books and leading market positions support sustained momentum
• Cost inflation being actively managed through productivity programmes and pricing actions
• Macroeconomic and geopolitical uncertainty as well as supply chain challenges continue

Paul Keel, Chief Executive Officer, commented:

“We continued to demonstrate strong progress in FY2022, executing at pace on our growth strategy. We delivered growth ahead of expectations, our fastest organic growth in nearly a decade. Along with accelerating growth, we further strengthened our company through increased investments in innovation, commercialisation and supply chain. Still more, we returned £661m of cash to our shareholders through dividends and share repurchases.

All of this gives us confidence for continued progress in FY2023. Despite an uncertain macro environment, we expect to deliver 4.0-4.5% organic revenue growth with moderate margin improvement. By focusing on our top priorities of growth, execution, and people, we are creating value for our customers, colleagues, communities and investors. Together, we’re building an ever-stronger future for Smiths.

Many thanks to my colleagues around the world for doing what we do best – improving our world through smarter engineering.”

Investor enquiries

Jemma Spalton, Smiths Group
+44 (0)7867 390350
jemma.spalton@smiths.com

Stephanie Heathers, Smiths Group
+44 (0)7584 113633
stephanie.heathers@smiths.com

Media enquiries

Alex Le May, FTI Consulting
+44 (0)7702 443312
smiths@fticonsulting.com

Presentation

The webcast presentation and Q&A will begin at 08.30 (UK time) today at:
https://smiths.com/investors/results-reports-and-presentations
A recording will be available from 13.00 (UK time).

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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 the intentions, beliefs and/or current expectations of Smiths Group plc (the “Company”) and its subsidiaries (together, the “Group”) and those of their respective officers, directors and employees concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies, and the businesses operated by the Group. 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. The Company and its directors accept no liability to third parties. This document contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.