Earnings Release • Apr 17, 2025
Earnings Release
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"We have delivered another strong financial performance which, combined with ongoing strategic and operaƟonal progress, underpins our confidence in achieving our twice-raised full year guidance.
"The porƞolio acƟons that we announced in January 2025 are being advanced with pace and purpose, with the separaƟon processes for Smiths Interconnect and Smiths DetecƟon underway.
"The aƩracƟon of FutureSmiths is compelling. By focusing on our world-class, high-performance John Crane and Flex-Tek businesses we will deliver sustainable growth, higher margins, returns and earnings growth, as reflected in our new enhanced medium-term financial targets. Our strong cash generaƟon enables us to conƟnue to invest in the business organically, and inorganically, whilst being able to distribute significant capital to shareholders. We believe this will deliver substanƟal value creaƟon.
"My thanks to all our Smiths colleagues across the world for your ongoing dedicaƟon and commitment as we work through these plans. We remain focused on achieving our purpose of engineering a beƩer future, for the benefit of all our stakeholders."
| Headline2 | HY2025 | HY2024 | Reported | Organic1 |
|---|---|---|---|---|
| Revenue | £1,608m | £1,507m | +6.7% | +9.1% |
| Operating profit | £269m | £246m | +9.5% | +12.6% |
| Operating profit margin4 | 16.7% | 16.3% | +40bps | +50bps |
| Basic EPS | 55.5p | 48.7p | +14.0% | |
| ROCE4 | 17.1% | 15.7% | +140bps | |
| Operating cash conversion4 | 94% | 89% | +5pps | |
| Statutory | HY2025 | HY2024 | Reported | |
| Revenue | £1,608m | £1,507m | +6.7% | |
| Operating profit | £242m | £192m | +26.0% | |
| Profit for the half year (after tax) | £168m | £111m | +51.4% | |
| Basic EPS | 48.8p | 32.0p | +52.5% | |
| Dividend per share | 14.23p | 13.55p | +5.0% |
Statutory reporƟng takes account of all items excluded from headline performance. See accounƟng policies for an explanaƟon of the presentaƟon of results and note 3 to the financial statements for an analysis of non-headline items. The following definiƟons are applied throughout the financial report: 1 Organic is headline adjusted to exclude the effects of foreign exchange and acquisiƟons.
2Headline: In addiƟon to statutory reporƟng, the Group reports on a headline basis. DefiniƟons of headline metrics, and informaƟon about the adjustments to statutory measures, are provided in note 3 to the financial statements.
3FutureSmiths refers to Smiths Group excluding Smiths DetecƟon and Smiths Interconnect.
4 AlternaƟve Performance Measures (APMs) and Key Performance Indicators (KPIs) are defined in note 19 to the financial statements.
A webcast presentaƟon and Q&A will begin at 08.00 (UK Ɵme) today at: hƩps://smiths.com/investors/results-reports-andpresentaƟons. A recording will be available from 13.00 (UK Ɵme).
Investor enquiries Steph Heathers, Smiths Group +44 (0)7584 113633 [email protected]
Siobhán Andrews, Smiths Group +44 (0)7920 230093 [email protected]
Media enquiries Tom Steiner, Smiths Group +44 (0) 7787 415891 [email protected]
Alex Le May, FTI Consulting +44 (0)7702 443312 [email protected]
Ana Pita da Veiga, Smiths Group +44 (0)7386 689442 [email protected]
We are pioneers of progress – engineering a beƩer future. We are focused on solving the toughest problems for our customers, helping address criƟcal global needs such as safety and security, decarbonisaƟon and the ever-increasing demand for connecƟvity. At the same Ɵme, we are building the long-term strength and resilience of Smiths Group and our global operaƟons. We are united by our purpose. It is what we do, how we think, and how we will conƟnue to use our passion for innovaƟve technology and engineering.
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 intenƟons, beliefs and/or current expectaƟons of Smiths Group plc (the Company) and its subsidiaries (together, the Group) and those of their respecƟve officers, directors and employees concerning, amongst other things, the results of operaƟons, financial condiƟon, 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 anƟcipated. The forward-looking statements reflect knowledge and informaƟon available at the date of preparaƟon of this document and, unless otherwise required by applicable law, the Company undertakes no obligaƟon to update or revise these forward-looking statements. The Company and its directors accept no liability to third parƟes. This document contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.
| Date | Event |
|---|---|
| 20 May 2025 | Q3 Trading Update |
| 23 September 2025 | FY2025 Full Year Results |
| 19 November 2025 | Q1 Trading Update and Annual General MeeƟng |
We are pleased to report another period of strong financial performance. Organic revenue grew +9.1%, with operaƟng profit growth of +12.6% and a +50bps margin expansion, both on an organic basis, and headline EPS growth of +14.0%. First half operaƟng cash conversion was good at 94%.
We deployed capital in line with our allocaƟon framework. We enhanced returns to shareholders with £213m returned year to date through both the dividend in the first half and the compleƟon of the first £150m of the £500m share buyback. We also made two value-accreƟve acquisiƟons for a total of £97m in the first half and announced today the bolt-on acquisiƟon of Duc-Pac CorporaƟon ("Duc-Pac") for £32m. Our balance sheet remains strong and we enter the next phase of our growth and value creaƟon journey from a posiƟon of strength.
We are today reaffirming our twice-raised FY2025 outlook for the Group of 6-8% organic revenue growth and margin expansion of 40-60bps, as well as announcing new medium-term financial targets for FutureSmiths.
In the first half, we focused on driving the performance of our businesses, reflected in today's results, and implemenƟng our Group-wide AcceleraƟon Plan, which is progressing well. We also concluded an evaluaƟon of our strategic opƟons to address the persistent discount to the significant value embedded within the Group. This review culminated in the strategic acƟons announced on 31 January 2025, designed to maximise value creaƟon and enhance returns to shareholders. As a result, going forward, Smiths will focus on our world-class, high performance industrial technology businesses of John Crane and Flex-Tek, with the sale of Smiths Interconnect, followed by the separaƟon of Smiths DetecƟon by way of a UK demerger or sale. We also announced a substanƟal increase in our share buyback from £150m to £500m, to be completed by the end of calendar year 2025.
Smiths will be a global specialist engineering company, delivering high performance technologies for efficient flow and heat management. A simplified and efficient structure will unlock significant value for all stakeholders and enable greater strategic focus, financial flexibility and operaƟonal efficiency.
John Crane and Flex-Tek are high quality industrial engineering businesses, and each is well-posiƟoned to deliver sustainable and resilient growth with high returns. John Crane's product technology, strong customer relaƟonships and global presence posiƟons it as a leader in its field and as a reliable and trusted partner. The large installed base provides a high margin revenue stream from the aŌermarket (>70% of revenue) over the long term.
These aƩracƟve characterisƟcs posiƟon John Crane well to maximise aƩracƟve growth opportuniƟes across both energy and industrial markets. Key demand drivers include the global demand for secure energy supply and the increased demand for more efficient and cleaner industrial processes. Market growth is forecast at a compound annual growth rate ("CAGR") of 3-4% in energy and 4-5% in industrial from 2024-2029.
Flex-Tek's strong market posiƟon is derived from deep customer relaƟonships based on reliable, highquality products and customer-led innovaƟon. Flex-Tek is well-placed to meet the ongoing customer demand for efficiency and performance improvement, and emissions reducƟon in its main product markets of HVAC systems, aerospace tubing and ducƟng, industrial process heat and specialist industrial tubing. From an end market perspecƟve, construcƟon is predicted to grow 3-4% CAGR, industrial 4-5% CAGR and aerospace 5-6% CAGR over the 2024-2029 period.
We expect to deliver growth above that of our markets, and this organic growth in both businesses will be augmented with disciplined bolt-on M&A, as has been demonstrated by Flex-Tek's strong track record of acquisiƟons.
On a combined, pro-forma basis, FutureSmiths revenue totals £1,919m (FY2024) with a headline operaƟng profit margin of 19.5% (including FY2024 central costs of £49m). It has a strong track record of financial
performance, above that of Smiths Group. Going forward, there are significant opportuniƟes to enhance growth, improve profitability and expand capabiliƟes, supported by our AcceleraƟon Plan.
We have made good progress on our Group-wide AcceleraƟon Plan, announced with our FY2024 results. The AcceleraƟon Plan iniƟaƟves are focused on producƟvity and capability enhancements, including delivering end-to-end process improvements, opƟmising operaƟonal footprint and enhancing margin. This will further improve our businesses and create a streamlined cost base.
In the first half, we incurred £7m of cost and now expect FY2025 costs to be £20-25m, following refinements to the programme. The remainder of the total £60-65m costs will be incurred in FY2026. We now expect the AcceleraƟon Plan to deliver £40-45m annualised benefits in FY2027 and beyond. Around two-thirds of both costs and benefits relate to FutureSmiths.
As part of the AcceleraƟon Plan, we have commiƩed to right-sizing the Group central costs in line with the porƞolio changes. Following compleƟon of the separaƟon processes, we aim for central costs to remain around 1.5-1.7% of revenue, below the median of our UK industrial peers.
We are announcing today enhanced medium-term financial targets reflecƟng the aƩracƟve financial profiles and growth potenƟal of FutureSmiths. These new targets are through-cycle under the FutureSmiths structure, following the compleƟon of both separaƟon processes, with FY2026 being a transiƟon year.
We have raised our organic revenue growth target from 4-6% to 5-7%. This reflects the growth opportuniƟes in both our core markets and adjacencies, as well as from new products and services. As detailed below, EPS growth, operaƟng profit margin and ROCE are all increased, reflecƟng the high returns of these businesses, and the further improvement to be delivered through operaƟonal excellence and the AcceleraƟon Plan. The operaƟng cash conversion target is unchanged at ~100%, allowing for the opportunity to invest in future growth whilst maintaining a high level of cash generaƟon.
| Medium-term targets (through-cycle) |
Current target | New target |
|---|---|---|
| Organic revenue growth | 4-6% (+ M&A) | 5-7% (+ M&A) |
| Headline EPS growth | 7-10% (+ M&A) | >10% (+ M&A) |
| Headline operaƟng profit margin | 18-20% | 21-23% |
| ROCE | 15-17% | >20% |
| Headline operaƟng cash conversion | ~100% | ~100% |
The separaƟon processes have both started and are progressing with pace and rigour. We remain on track to announce a sale of Smiths Interconnect by the end of calendar year 2025 and a UK demerger or sale of Smiths DetecƟon will follow. Advisers have been appointed and governance commiƩees established to provide oversight and robust execuƟon to deliver the best value for shareholders.
Since the announcement, we have engaged with our employees and other stakeholders, recognising the impact such changes will have, and we remain committed to respectful and timely engagement as we progress.
As announced on 31 January 2025, we have increased the previously announced £150m buyback to £500m. As at 24 March 2025, we have completed £150m and expect to complete the remaining £350m by the end of calendar year 2025. As previously guided, we will return a large porƟon of proceeds from divestments to shareholders via buyback, while aiming to maintain an investment grade raƟng.
Our strong first half results were delivered despite a cyber security incident at the end of January. Due to our rapid response in isolaƟng our systems and acƟvaƟng business conƟnuity plans, we were able to minimise disrupƟon to our operaƟons. The most notable financial impact in the half was in John Crane
where recovery took longer due to the number of systems involved. This affected John Crane's revenue and orders in January which conƟnued into Q3, moderaƟng our full year growth expectaƟons for this business. In FY2025, we expect to recognise costs of £4-5m in relaƟon to the cyber incident. All criƟcal systems across the Group are now fully recovered and operaƟng as usual.
We reaffirm our FY2025 guidance of 6-8% organic revenue growth and margin expansion of 40-60bps for the Group. This guidance reflects continued strength in our end markets, with the exception of US construction for Flex-Tek where the market remains subdued. It also incorporates the potential impact of US tariffs currently in place and we continue to monitor how the landscape evolves. The second half outlook is supported by good order book visibility and also reflects the tougher year-on-year comparator (H2 2024: +6.8%).
We expect the 40-60bps of margin expansion to be achieved through operaƟng leverage and conƟnued savings driven through the Smiths Excellence System ("SES") in the second half, whilst conƟnuing to invest in the business. We expect cash conversion to be in the low nineƟes percent, as previously guided, and which we now expect to be more evenly spread between the first and the second half of the year, reflecƟng the Ɵming of increased capital investment, parƟcularly in John Crane.
In the first half, Smiths delivered strong growth, margin expansion and returns. We exceeded our current Group medium-term financial targets for organic revenue growth, EPS and ROCE, with operating profit margin and operating cash conversion both showing year-on-year improvement in line with our FY2025 guidance.
| Targets | Medium-term target | HY2024 | HY2025 |
|---|---|---|---|
| Organic revenue growth | 4-6% (+ M&A) | +3.9% | +9.1% |
| Headline EPS growth | 7-10% (+ M&A) | +4.5% | +14.0% |
| ROCE | 15-17% | 15.7% | 17.1% |
| Headline operaƟng profit margin | 18-20% | 16.3% | 16.7% |
| Headline operaƟng cash conversion | ~100% | 89% | 94% |
Revenue grew +6.7% on a reported basis to £1,608m (HY2024: £1,507m). This included £(48)m of negaƟve foreign exchange translaƟon and +£16m from acquisiƟons, including the first half acquisiƟons of Modular Metal Fabricators, Inc ("Modular Metal") and WaƩco, Inc ("WaƩco") and £4m from the HeaƟng and Cooling Products ("HCP") acquisiƟon made in August 2023.
| £m | HY2024 | Foreign exchange |
AcquisiƟons | Organic movement |
HY2025 |
|---|---|---|---|---|---|
| Revenue | 1,507 | (48) | 16 | 133 | 1,608 |
| Headline operaƟng profit | 246 | (11) | 4 | 30 | 269 |
| Headline operaƟng profit margin | 16.3% | 16.7% |
We conƟnue to extend a track record of consistent organic growth, and first half growth was delivered by all four businesses.
| Organic revenue growth (by business) | H1 2024 | H2 2024 | HY2025 |
|---|---|---|---|
| John Crane | +12.7% | +7.1% | +3.8% |
| Flex-Tek | (4.1)% | +2.6% | +2.5% |
| Smiths DetecƟon | +8.9% | +13.2% | +15.3% |
| Smiths Interconnect | (13.7)% | +0.4% | +26.8% |
| Smiths Group | +3.9% | +6.8% | +9.1% |
| FutureSmiths | +5.5% | +5.3% | +3.3% |
John Crane's growth was led by original equipment sales ("OE") across both energy and industrial. The moderation in growth reflects the strong prior year comparator of +12.7%, and the impact of the cyber incident in January;
Our business currently operates across four major global end markets: General Industrial, Safety & Security, Energy and Aerospace & Defence.
| Organic revenue growth | % of Smiths | H1 2024 | H2 2024 | HY2025 |
|---|---|---|---|---|
| (by end market) | revenue | |||
| General Industrial | 39% | (5.5)% | (1.5)% | +7.7% |
| Safety & Security | 28% | +8.9% | +13.2% | +15.3% |
| Energy | 22% | +16.6% | +15.3% | +3.3% |
| Aerospace & Defence | 11% | +2.9% | +4.8% | +10.9% |
| Smiths Group | 100% | +3.9% | +6.8% | +9.1% |
Organic growth is supported by new product development and commercialisaƟon. In the first half, +80bps of growth was delivered from new products including the conƟnued expansion of John Crane's unique Diamond® Seal Face technology porƞolio, Flex-Tek's heaƟng soluƟon supporƟng the producƟon of commercial green steel, the broadening of Smith DetecƟon's digital soluƟons and next generaƟon highspeed test sockets in Smiths Interconnect.
We conƟnue to focus on driving efficient execuƟon throughout our operaƟons with the support of SES. Headline operaƟng profit rose +12.6% (+£30m) on an organic basis, and +9.5% (+£23m) on a reported basis, to £269m (HY2024: £246m). AcquisiƟons contributed £4m to operaƟng profit.
| HY2024 | Foreign exchange |
AcquisiƟons | Organic movement |
HY2025 | |
|---|---|---|---|---|---|
| £m | |||||
| Headline operaƟng profit | 246 | (11) | 4 | 30 | 269 |
| Headline operaƟng profit margin | 16.3% | (20)bps | +10bps | +50bps | 16.7% |
Headline operaƟng profit margin was 16.7%, up +50bps on an organic basis, reflecƟng volume growth, pricing ahead of inflaƟon, benefits of efficiency savings, including SES, parƟally offset by product and business mix. On a reported basis, margin expanded +40bps including the impact of FX and acquisiƟons.
| Headline operaƟng profit margin (by business) | HY2024 | HY2025 |
|---|---|---|
| John Crane | 23.0% | 22.9% |
| Flex-Tek | 21.2% | 19.8% |
| Smiths DetecƟon | 10.7% | 11.3% |
| Smiths Interconnect | 12.2% | 17.2% |
| Smiths Group | 16.3% | 16.7% |
By business, operaƟng margin expansion reflected:
ROCE increased +140 bps to 17.1% (HY2024: 15.7%), above our medium-term target, reflecƟng the higher profitability and efficient use of capital.
Headline EPS grew +14.0% to 55.5p. This reflected a headline tax charge of £65m (25.5% effecƟve tax rate) (HY2024: £59m, 26.0%), a £5m reducƟon in headline finance costs and the benefit of the share buyback programme, parƟally offset by foreign exchange impact. We expect the full year tax rate to be 25.5%.
Headline operaƟng cash conversion was 94% (HY2024: 89%), supported by a year-on-year improvement in working capital. Headline operaƟng cashflow was £254m (HY2024: £218m) and free cashflow generaƟon increased +27.7% to £143m (HY2024: £112m) or 53% of headline operaƟng profit (HY2024: 45%).
In the first half, we conƟnued to drive sustainable pracƟces throughout the business and are progressing well towards all our FY2025 and FY2027 targets, as outlined in our latest Sustainability at Smiths report. SES, now fully embedded throughout the organisaƟon, conƟnues to yield benefits, as evidenced by our profit margin expansion.
The safety, health and well-being of our people remain an essenƟal foundaƟon of our success at Smiths. Our HY2025 recordable incident rate improved to 0.23 (HY2024: 0.46), an industry top quarƟle ranking, driven by our conƟnued focus on delivering a zero-harm culture.
Our focus on talent development and succession planning was demonstrated in the half as we announced a number of changes at the Board and ExecuƟve CommiƩee level. In January, we announced Clare Scherrer's decision to reƟre as Chief Financial Officer, being succeeded by Julian Fagge, formerly President of Smiths Interconnect, from 1 February. Julian has been at Smiths for over 12 years in financial, strategic and operaƟonal roles including Group Financial Controller, M&A and Strategy Director and President of Flex-Tek. Julian's experience posiƟons him well to deliver on the strategic acƟons currently underway.
As a result of the CFO change, there were other changes to the ExecuƟve CommiƩee, with Vera Parker, previously Chief People Officer, replacing Julian as President of Smiths Interconnect. Kini Pathmanathan's role was expanded to include People in addiƟon to Sustainability and Excellence. We also announced that Bernard Cicut decided to reƟre as President of John Crane, being succeeded by Ruben Álvarez, a 27-year veteran of John Crane whose prior role was Vice President of Porƞolios and Customer OperaƟons.
At Board level, we announced the appointment of Simon Pryce as an independent Non-execuƟve Director, and as a member of both the Audit & Risk CommiƩee and the SeparaƟon Oversight CommiƩee, with effect from 1 February 2025. Simon is a highly experienced business leader of customer focused, global, industrial manufacturing and service businesses, with experience that is directly relevant to Smiths Group's key end markets, customers and supply chains.
We take a disciplined approach to our use of capital; invesƟng in our businesses to fuel organic growth, pursuing strategic and disciplined bolt-on acquisiƟons and returning excess capital to shareholders. As announced in January, we are acceleraƟng execuƟon against this with enhanced returns to shareholders through our increased share buyback programme.
In the first half, we invested £48m in R&D (HY2024: £52m), of which £35m (HY2024: £35m) was an income statement charge, £3m was capitalised (HY2024: £7m) all in Smiths DetecƟon, primarily next-generaƟon hold and cabin baggage screening, and £10m (HY2024: £10m) was funded by customers in Smiths DetecƟon and Smiths Interconnect. In addiƟon, there was a further £20m spend (HY2024: £20m) on customer-specific engineering-related projects in John Crane, taking total spend for HY2025 from 3.0% to 4.3% of sales.
Capex increased by £3m to £41m (HY2024: £38m), reflecƟng planned investment in capacity and automaƟon at John Crane. Further spend on this, as well as capex related to the AcceleraƟon Plan, is forecast in the second half with FY2025 capex expected of ~£100m (FY2024: £86m).
In the first half, consistent with our strategic and disciplined M&A approach, we completed the acquisiƟons of Modular Metal and WaƩco with a combined value of £97m at an EBITDA mulƟple of c.8x, expanding Flex-Tek's HVAC and electrical heaƟng soluƟons plaƞorms. An addiƟonal amount of up to £15m is payable subject to the performance of one of the acquisiƟons over a three-year period.
AŌer the period end, in February 2025, we completed the acquisiƟon of Duc-Pac, a US-based metal ducƟng manufacturer. This acquisiƟon further builds on the acquisiƟons of HCP and Modular Metal in expanding our geographical coverage for metal and flexible ducƟng products to include the north-eastern US through its established brand, deep customer relaƟonships and strong operaƟonal business model. Duc-Pac was acquired for \$40.5m (~£32m), at a 12-month trailing EBITDA mulƟple of 7.2x, and with an operaƟng margin accreƟve to that of Flex-Tek.
As announced on 31 January 2025, we increased our share buyback programme to £500m (from £150m announced on 13 November 2024), with the first £150m having now been completed. The remaining £350m will be launched imminently and is expected to be completed by the end of calendar year 2025.
The Board is declaring an interim dividend of 14.23p, a year-on-year increase of +5.0% (HY2024: 13.55p). The interim dividend will be paid on 14 May 2025 to shareholders on the register at close of business on 4 April 2025.
Net debt at 31 January 2025 was £299m (FY2024: £213m) with a net debt to headline EBITDA raƟo of 0.5x (FY2024: 0.3x). Net headline finance costs for the half decreased by £5m to £13m (HY2024: £18m), principally due to higher average cash balances.
As at 31 January 2025, borrowings were £675m (FY2024: £659m) comprising a €650m bond which matures in February 2027 and £131m of lease liabiliƟes. There are no financial covenants associated with these borrowings. Cash and cash equivalents as at 31 January 2025 were £392m (FY2024: £459m). Together with a \$800m (£642m at the half-year end exchange rate) revolving credit facility, which matures in May 2029, total liquidity was £1bn at the end of the period.
Following the sale of Smiths Medical in January 2022, the Group held a financial asset reflecƟng our equity ownership in ICU Medical, Inc ("ICU"). During FY2024, we sold 2,030,000 ICU shares (8.34% of ICU's issued share capital), with net proceeds of \$240m (£187m). During the first half of this year, we sold the remaining shareholding with net proceeds of \$68m (£53m).
The £27m difference (HY2024: £54m) between headline operaƟng profit of £269m and statutory operaƟng profit of £242m is non-headline items. The largest of these relate to the amorƟsaƟon of acquired intangible assets of £27m, a £12m net credit for asbestos liƟgaƟon provision in John Crane Inc, and £7m of cost in relaƟon to the AcceleraƟon Plan, with a total of £5m relaƟng to the fair value movement on sale
of ICU shares and acquisiƟon-related costs in Flex-Tek. Statutory finance costs were £14m, £7m lower than prior year (HY2024: £21m).
The statutory effecƟve tax rate was 26.1% (HY2024: 35.0%) and includes a non-headline tax credit of £5m (HY2024: £1m charge). Statutory profit aŌer tax for the Group was £168m (HY2024: £111m) and statutory basic EPS was 48.8p (HY2024: 32.0p).
Statutory net cash inflow from operaƟng acƟviƟes for the Group was £205m (HY2024: £168m).
During the first half, £7m of pension contribuƟons (HY2024: £3m) were made, which relate to funded, unfunded and overseas schemes and healthcare arrangements. Of this, £5m related to the US defined benefit pension plan.
No contribuƟons were made in the first half to either the TI Group Pension Scheme ("TIGPS") or the Smiths Industries Pension Scheme ("SIPS") and it is not anƟcipated that any further contribuƟons will be made. For the TIGPS, the liabiliƟes have now been insured via a series of buy-in annuiƟes with Smiths and the TIGPS Trustee working toward final buy-out of the scheme. The SIPS is in surplus on the Technical Provisions funding basis, and Smiths and the SIPS Trustee conƟnue to work together to progress towards the long-term funding target of full buy-out funding.
These two UK schemes and the US pension plan are well hedged against changes in interest and inflaƟon rates. Their assets are invested in third-party annuiƟes, government bonds, investment grade credit or cash, with a small proporƟon of equity investments held by the US pension plan. As at 31 January 2025, 60% of the UK liabiliƟes had been de-risked through the purchase of annuiƟes from third party insurers.
The results of overseas operaƟons are translated into sterling at average exchange rates. Net assets are translated at period-end rates. The Group is exposed to foreign exchange movements, mainly US Dollar and Euro. The principal exchange rates, expressed in terms of the value of Sterling, are as follows:
| Average rates | Period-end rates | |||
|---|---|---|---|---|
| 31 Jan 2025 (6 months) |
31 Jan 2024 (6 months) |
31 Jan 2025 | 31 Jan 2024 | |
| USD | 1.28 | 1.25 | 1.25 | 1.27 |
| EUR | 1.19 | 1.16 | 1.20 | 1.17 |
John Crane is a global leader in mission-critical technologies for the energy and process industries and an innovator in rotating equipment, encompassing mechanical seals, couplings, filtration systems and cutting-edge asset management and digital diagnostics solutions. 63% of revenue is derived from the energy sector (downstream and midstream oil & gas and power generation, including renewable and sustainable energy sources). 37% is from other process industries including chemical, life sciences, mining, water treatment and pulp & paper. 71% of John Crane revenue is from aftermarket sales. John Crane represents 34% of Group revenue.
| HY2025 | HY2024 | Reported | Organic | |
|---|---|---|---|---|
| £m | £m | growth | growth | |
| Revenue | 551 | 555 | (0.9)% | +3.8% |
| Original Equipment ("OE") | 87 | 80 | +7.8% | +12.2% |
| Aftermarket | 258 | 271 | (4.4)% | +0.6% |
| Energy | 345 | 351 | (1.6)% | +3.3% |
| Original Equipment | 74 | 72 | +2.2% | +5.8% |
| Aftermarket | 132 | 132 | (0.6)% | +4.0% |
| Industrial | 206 | 204 | +0.4% | +4.6% |
| Headline operating profit | 126 | 128 | (1.4)% | +3.9% |
| Headline operating profit margin | 22.9% | 23.0% | (10)bps | +10bps |
| Statutory operating profit | 129 | 106 | +21.7% | |
| Return on capital employed | 24.9% | 25.1% | (20)bps | |
| R&D cash costs as % of sales1 | 5.2% | 5.2% | - |
1 Includes cash R&D expenditure (1.5% of sales) and spend on customer-specific engineering-related projects (3.7%)
| HY2024 | Foreign | Organic | HY2025 | |
|---|---|---|---|---|
| £m | reported | exchange | movement | reported |
| Revenue | 555 | (24) | 20 | 551 |
John Crane delivered organic revenue growth of +3.8% in the first half, against a strong prior year growth comparator of +12.7%. Growth was partly constrained by the cyber incident where recovery took longer due to the number of systems involved.
Reported revenue was down marginally year-on-year at £551m, reflecƟng the organic growth, offset by a negaƟve (4.7)% foreign exchange impact.
In Energy, organic revenue grew +3.3% (HY2024: +16.6%) benefiƟng from a conƟnued focus on energy security and efficiency, as well as emissions reducƟon soluƟons, supporƟng medium-term growth. OE sales were parƟcularly strong, up +12.2%, especially for John Crane's gas compression and systems offerings. AŌermarket organic revenue was flat year-on-year, partly reflecƟng large one-off orders in the prior year. During the period, a significant new asset management contract was signed to provide asset management and predicƟve maintenance technologies to a customer in Saudi Arabia, the third of such contracts in the Kingdom.
Within energy transiƟon, the pipeline of opportuniƟes John Crane is pursuing in CCUS, hydrogen and biofuels conƟnues to expand, currently at 170 projects. A recent example is a strategic partnership to supply dry gas seals and a gas seal system for a groundbreaking supercriƟcal CO2 ("sCO2") pilot project to develop an innovaƟve, economically viable and easily replicable sCO2 power block to enhance the flexibility of concentrated solar power plants.
In Industrial, organic revenue grew +4.6% with growth in both OE and aŌermarket. Regionally, growth was largely driven by the Americas and by industry, in water treatment and marine markets. Notable contract wins in the first six months included a mulƟ-year gas seal management programme contract with SK Advanced, a major producer and seller of propylene, located in South Korea.
Growth in the second half is expected to improve compared to the first half supported by a robust order book and market demand. However, the cyber incident disrupted orders in January which conƟnued into Q3, moderaƟng our growth expectaƟons for the full year.
| HY2024 | Foreign | Organic | HY2025 | |
|---|---|---|---|---|
| £m | reported | exchange | movement | reported |
| Headline operating profit | 128 | (7) | 5 | 126 |
| Headline operating profit margin | 23.0% | 22.9% |
Headline operaƟng profit of £126m grew +3.9% on an organic basis, resulƟng in a margin of 22.9%, a +10bps improvement on an organic basis, albeit 10bps lower on a reported basis reflecƟng a negaƟve FX translaƟon impact. This organic improvement was driven by increased pricing and SES benefits partly offset by a negaƟve mix impact from strong OE sales and higher investment in growth. This investment to increase capacity and efficiency, including markeƟng and commercial, are both key to service current demand and propel future growth.
On a reported basis, headline operaƟng profit was down (1.4)%, with the organic improvement offset by a (5.3)% negaƟve foreign exchange impact. The difference between statutory and headline operaƟng profit includes the net changes in relaƟon to the provision for John Crane, Inc. asbestos liƟgaƟon and costs incurred in relaƟon to the AcceleraƟon Plan.
ROCE was 24.9%, with the headline operaƟng profit growth, offset by a higher capital base and the impact of FX.
Cash R&D expenditure was 1.5% of sales (HY2024: 1.6%). In addiƟon, the business spent a further 3.7% of sales (HY2024: 3.6%) on customer-specific engineering-related projects for a total investment in product development of 5.2% of sales (HY2024: 5.2%).
John Crane's R&D is primarily focused on gas compression projects and enhancing the efficiency, performance and sustainability of heavy-duty seals and hydrogen compressors. John Crane is also well placed to support energy transiƟon projects with its extreme temperatures and high-pressure sealing soluƟons and conƟnues to work with universiƟes and customers to develop and bring to market these innovaƟve soluƟons. In the first half, it announced a strategic mulƟ-year partnership and collaboraƟon agreement with the University of Sheffield to advance high-performance sealing technologies, crucial for the energy transiƟon.
Data services products are also an area of focus and in August 2024, it launched its John Crane Sense® Monitor soluƟon. This enables customers to track the health of their assets remotely using near real-Ɵme data, noƟfying them of potenƟal faults and helping to minimise unplanned downƟme.
Flex-Tek is a global provider of engineered components that heat and move liquids and gases for the construction, industrial and aerospace markets. 81% of Flex-Tek's revenue is derived from the Industrial sector and 19% from the Aerospace sector. Flex-Tek represents 25% of Group revenue.
| HY2025 | HY2024 | Reported | Organic |
|---|---|---|---|
| £m | £m | growth | growth |
| 401 | 384 | +4.4% | +2.5% |
| 325 | 310 | +4.9% | +2.0% |
| 76 | 74 | +2.2% | +4.8% |
| 80 | 81 | (2.3)% | (5.1)% |
| 19.8% | 21.2% | (140)bps | (160)bps |
| 64 | 74 | (13.5)% | |
| 24.8% | 26.1% | (130)bps | |
| 0.3% | 0.4% | (10)bps | |
| HY2024 | Foreign | Organic | HY2025 | ||
|---|---|---|---|---|---|
| £m | reported | exchange | Acquisitions | movement | reported |
| Revenue | 384 | (9) | 16 | 10 | 401 |
Organic revenue grew +2.5% in the first half, with growth across both Industrial and Aerospace. Revenue on a reported basis grew +4.4%, supported by +£16m from acquisitions, primarily related to the acquisitions of Modular Metal and Wattco (acquired in the first quarter of FY2025), and despite a negative foreign exchange translation effect.
In Industrial, organic revenue was up +2.0%, a result of a good performance in our HVAC business, ahead of a subdued US housing market. HVAC growth for the second half will reflect the pace of market recovery in US housing, the timing for which remains uncertain.
Flex-Tek's solutions for industrial applications includes the partnership with Midrex to deliver electrical heating solutions that enable the production of commercial green steel. Organic revenue declined, as expected, reflecting contract timing. Revenue was helped by a positive contribution from the Wattco acquisition and the business is well placed to capitalise from the transition to electrical industrial heat.
In Aerospace, organic revenue grew +4.8% in the first half, with the second quarter reflecting a slight moderation in growth largely related to customer contract scheduling. A continued strong order book supports a positive outlook for FY2025 and beyond.
Operating profit and ROCE
Headline operating profit declined (5.1)% on an organic basis. Despite positive pricing and SES savings, organic operating margin declined (160)bps to 19.8% partly as a result of a strong comparator in the prior year related to mix benefits from high margin industrial heating contracts. On a reported basis, headline operating profit declined (2.3)% whilst operating margin declined (140)bps.
The difference between statutory and headline operating profit reflects the amortisation of acquired intangible assets and the provision for Titeflex Corporation subrogation claims.
ROCE declined (130)bps to 24.8%, reflecting the headline operating profit decline and the impact of acquisitions.
The integration of Modular Metal is progressing well, with increased revenue in the year against the challenging construction market background. The acquisition expanded Flex-Tek's presence in the North American HVAC market by extending its customer base and product offering of Modular Metal's sealed flexible duct solution.
The integration of Wattco is also progressing well, with revenue contributing positively to the electrical industrial heating business. The acquisition expanded our portfolio to a wider range of industrial electric heating products, including medium temperature immersion and circulation heating, which are highly complementary to our existing open coil electrical heating products.
Building on recent acquisitions, in February, Flex-Tek acquired Duc-Pac, expanding its HVAC presence into the north-eastern US market. The purchase price was \$40.5m (~£32m), equating to a 7.2x 12-month trailing EBITDA multiple. Duc-Pac generated revenue of ~£16m in the last twelve months, with an operaƟng margin accreƟve to that of Flex-Tek.
Cash R&D expenditure was 0.3% of sales (HY2024: 0.4%). R&D is focused on developing new products for the aerospace markets and construction and new electrification opportunities within industrial markets.
Smiths Detection is a global leader in threat detection and screening technologies for aviation, ports and borders, urban security and defence. Smiths Detection delivers the solutions needed to protect society from the threat and illegal passage of explosives, prohibited weapons, contraband, toxic chemicals, biological agents and narcotics – helping make the world a safer place. 52% of Smiths Detection's sales are derived from the aftermarket. Smiths Detection represents 28% of Group revenue.
| HY2025 | HY2024 | Reported | Organic | |
|---|---|---|---|---|
| £m | £m | growth | growth | |
| Revenue | 454 | 404 | +12.5% | +15.3% |
| Original Equipment | 156 | 112 | +39.9% | +43.2% |
| Aftermarket | 181 | 157 | +15.4% | +18.4% |
| Aviation | 337 | 269 | +25.6% | +28.7% |
| Original Equipment | 63 | 74 | (15.5)% | (13.4)% |
| Aftermarket | 54 | 61 | (11.1)% | (8.8)% |
| Other Security Systems ("OSS") | 117 | 135 | (13.5)% | (11.3)% |
| Headline operating profit | 51 | 43 | +19.3% | +23.2% |
| Headline operating profit margin | 11.3% | 10.7% | +60bps | +70bps |
| Statutory operating profit | 39 | 33 | +18.2% | |
| Return on capital employed | 10.0% | 7.9% | +210bps | |
| R&D cash costs as % of sales | 5.8% | 7.6% | (180)bps |
| Revenue | ||||
|---|---|---|---|---|
| HY2024 | Foreign | Organic | HY2025 | |
| £m | reported | exchange | movement | reported |
| Revenue | 404 | (10) | 60 | 454 |
Smiths Detection delivered +15.3% organic revenue growth, converting its strong order book into revenue. This included significant growth in Aviation, driven by both strong OE and aftermarket sales, partly offset by a decline in OSS revenue.
Reported revenue was up +12.5% reflecting the strong organic growth, partially offset by a (2.8)% unfavourable foreign exchange impact.
Order intake during the period continued to reflect the ongoing demand for airport scanner upgrades. In aftermarket, Smiths Detection announced the award of a contract to service hold baggage X-ray inspection systems at airports across the United States.
In Aviation, organic revenue grew +28.7%, with OE growth of +43.2%, reflecting the continued strong demand for Smiths Detection's latest range of 3D-image computed tomography machines for cabin baggage, CTiX. Smiths Detection has now sold more than 1,600 CTiX scanners and has secured a good win rate of the contracts awarded to date, which cover around half of the units that it anticipates will be upgraded. Notable wins during the first half included airports in Australia, Germany, Japan, Poland and the UAE. Contracts awarded to date support production through FY2025 and into FY2026, and it is expected that the airports' upgrade programme will continue for the next 2-3 years.
OSS sales declined (11.3)% organically, primarily reflecting a tough comparator last year (HY2024 +12.8%), as well as the phasing of service contracts and defence programmes, with OE growth in ports and borders offset by declines in defence and urban security.
In defence, Smiths Detection generated revenue from its multi-year chemical detection contract with the UK Ministry of Defence. It also announced a contract to supply LCD 4 personal chemical detectors to the Japanese Ministry of Defence, for delivery in 2025 and 2026.
| HY2024 | Foreign | Organic | HY2025 | |
|---|---|---|---|---|
| £m | reported | exchange | movement | reported |
| Headline operating profit | 43 | (1) | 9 | 51 |
| Headline operating profit margin | 10.7% | 11.3% |
Headline operating profit increased +23.2% on an organic basis for the year, reflecting the strong volume growth and pricing improvement, as well as benefits from SES savings and cost actions. Headline operating profit margin increased to 11.3%, +70bps on an organic and +60bps on a reported basis.
On a reported basis, headline operating profit increased +19.3%, including a negative foreign exchange translation, with the difference between statutory and headline operating profit reflecting amortisation of acquired intangibles.
ROCE increased +210bps to 10.0%, reflecting the growth in operating profit.
Cash R&D was £26m (HY2024: £30m), representing 5.8% of sales (HY2024: 7.6%), to support Smiths Detection investment in next-generation detection capabilities. Spend included £9m in customer funded projects (HY2024: £9m).
Following the pre-launch last year of its X-ray scanner utilising diffraction technology, the SDX 10060 XDi is currently undergoing certification in Europe.
Smiths Detection is also advancing its software offering. Its iCMORE Automated Prohibited Items Detection Systems ('APIDS') algorithm received approval from the Netherlands' National Coordinator for Security and Counter-terrorism. Smiths Detection becomes the first and only supplier to receive this approval. iCMORE APIDS uses AI to identify a wide range of prohibited objects at airport security checkpoints, automating the detection of an extensive list of prohibited items while bags pass through CT security screening machines. It enhances security, creating a faster and more seamless experience for passengers and is a major step towards full automation and alarm-only viewing, enabling airports to achieve substantial operaƟonal savings.
Smiths Interconnect is a leading provider of high reliability connectivity products and solutions serving segments of aerospace and defence, medical, semiconductor test and industrial markets. Smiths Interconnect represents 13% of Group revenue.
| HY2025 | HY2024 | Reported | Organic | |
|---|---|---|---|---|
| £m | £m | growth | growth | |
| Revenue | 202 | 164 | +23.5% | +26.8% |
| Headline operating profit | 35 | 20 | +74.6% | +80.3% |
| Headline operating profit margin | 17.2% | 12.2% | +500bps | +510bps |
| Statutory operating profit | 34 | 19 | +78.9% | |
| Return on capital employed | 13.8% | 10.5% | +330bps | |
| R&D cash costs as % of sales | 6.1% | 6.8% | (70)bps |
| HY2024 | Foreign | Organic | HY2025 | |
|---|---|---|---|---|
| £m | reported | exchange | movement | reported |
| Revenue | 164 | (5) | 43 | 202 |
Smiths Interconnect's organic revenue growth was very strong, up +26.8% in the first half, with growth across all business units, albeit against a weak comparator in HY2024 of (13.7)%.
Reported revenue increased +23.5% reflecting a (3.3)% negative foreign exchange impact.
Growth in Industrial was broad based across businesses demonstrating the strength of our innovative product offering, particularly in semi-test markets. We delivered outstanding growth in semi-test reflecting key programme wins, particularly in high-speed GPUs and AI, and end market recovery. Strong growth in Aerospace and Defence reflected high demand for our fibre-optic, radio-frequency and connector products.
The improvement in market activity, together with our view of orders and upcoming pipeline underpin our second half outlook where we expect the growth to continue, albeit at a lower rate given the marginal growth booked in the second half of last year.
| HY2024 | Foreign | Organic | HY2025 | |
|---|---|---|---|---|
| £m | reported | exchange | movement | reported |
| Headline operating profit | 20 | (1) | 16 | 35 |
| Headline operating profit margin | 12.2% | 17.2% |
Headline operating profit increased +80.3% on an organic basis, resulting in a +510bps organic improvement in headline operating profit margin to 17.2%. This primarily reflected the notably higher volume alongside pricing, positive mix effects and benefits from SES and automation. On a reported basis, headline operating profit increased +74.6% and statutory operating profit rose +78.9%.
The difference between statutory and headline operating profit reflects the amortisation of acquired intangibles and acquisition-related costs.
ROCE increased +330bps to 13.8%, driven by the notably higher operating profit.
Cash R&D expenditure was £13m (HY2024:£11m) representing 6.1% as a percentage of sales (HY2024: 6.8%). R&D is focused on developing and customising new products that improve connectivity and product integrity in demanding operating environments.
Within Aerospace and Defence, space grade products in particular are a key development focus especially in radio frequency and optical products. During the period, Smiths Interconnect's products supported several high-profile space campaigns, including the forthcoming Europa Clipper mission to explore one of Jupiter's moons and the Sentinel-1C satellite, the EU's leading Earth observation initiative. Smiths Interconnect provided cutting-edge connectivity solutions – supplying isolators, hyperboloid and spring probe solutions, and circulators, which are designed to withstand the harsh conditions of space and ensure consistent performance.
The success of DaVinci 112, the next generation of Smiths Interconnect's high-speed semiconductor test sockets, has been noted by industry with the receipt of several awards, recognising its significant impact on electronics innovation. Smiths Interconnect received the prestigious Best Test Measurement Award of the Year at the Global Electronics Achievement Awards and Emerging Technology of the Year at the UK's Institution of Engineering and Technology Excellence and Innovation Awards. The DaVinci 112 technology is engineered to meet the high-speed demands of IC chips driven by advancement in AI, data centres, high speed computing and self-driving vehicles.
The Group has a risk management structure and internal controls in place which are designed to identify, manage and mitigate business risks. Smiths faces a number of risks and uncertainties which could have a material impact on the Group's long-term performance. The Group's principal risks and uncertainties are detailed on pages 42 to 48 of the 2024 Annual Report. The principal risks and uncertainties affecting the Group for the second half of the financial year continue to be those set out briefly below and more fully in the Annual Report.
The directors confirm that, to the best of our knowledge:
the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial ReporƟng as adopted by the United Kingdom and in accordance with international accounƟng standards in conformity with the requirements of the Companies Act 2006; and
For and on behalf of the Board of directors:
Roland Carter Julian Fagge
Chief ExecuƟve Officer Chief Financial Officer
24 March 2025
We have been engaged by Smiths Group Plc ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2025 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash-flow statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2025 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the halfyearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Mike Barradell
for and on behalf of KPMG LLP Chartered Accountants 15 Canada Square London E14 5GL
24 March 2025
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | ||||||
|---|---|---|---|---|---|---|---|
| Notes | Headline £m |
Non-headline (note 3) £m |
Total £m |
Headline £m |
Non-headline (note 3) £m |
Total £m |
|
| Revenue | 2 | 1,608 | – | 1,608 | 1,507 | – | 1,507 |
| Operating costs | 2 | (1,339) | (27) | (1,366) | (1,261) | (54) | (1,315) |
| Operating profit/(loss) | 269 | (27) | 242 | 246 | (54) | 192 | |
| Interest receivable | 19 | – | 19 | 11 | – | 11 | |
| Interest payable | (32) | – | (32) | (29) | – | (29) | |
| Other financing losses | – | (3) | (3) | – | (6) | (6) | |
| Other finance income – retirement benefits | – | 2 | 2 | – | 3 | 3 | |
| Finance costs | (13) | (1) | (14) | (18) | (3) | (21) | |
| Profit/(loss) before taxation | 256 | (28) | 228 | 228 | (57) | 171 | |
| Taxation | 5 | (65) | 5 | (60) | (59) | (1) | (60) |
| PROFIT/(LOSS) FOR THE PERIOD | 191 | (23) | 168 | 169 | (58) | 111 | |
| Earnings per share | 4 | ||||||
| Basic | 48.8p | 32.0p | |||||
| Diluted | 48.7p | 32.0p | |||||
| Dividends per share (declared) | 14 | 14.23p | 13.55p |
| Six months ended |
Six months ended |
||
|---|---|---|---|
| Notes | 31 January 2025 £m |
31 January 2024 £m |
|
| Profit for the period | 168 | 111 | |
| Other comprehensive income (OCI) | |||
| OCI which will not be reclassified to the income statement: | |||
| Re-measurement of post-retirement benefits assets and obligations | (8) | (100) | |
| Taxation on post-retirement benefits movements | 1 | 12 | |
| Fair value movements on financial assets at fair value through OCI | 8 | (167) | |
| 1 | (255) | ||
| OCI which will be reclassified and reclassifications: | |||
| Fair value gains and reclassification adjustments: | |||
| – deferred in the period on cash-flow and net investment hedges | (7) | (2) | |
| – reclassified to income statement on cash-flow hedges | 1 | – | |
| (6) | (2) | ||
| Foreign exchange movements net of recycling: | |||
| Exchange gains on translation of foreign operations | 42 | 5 | |
| Total other comprehensive expenditure for the period, net of taxation | 37 | (252) | |
| TOTAL COMPREHENSIVE INCOME | 205 | (141) | |
| Attributable to: | |||
| Smiths Group shareholders | 204 | (141) | |
| Non-controlling interests | 1 | – | |
| 205 | (141) |
| 31 January | 31 July | ||
|---|---|---|---|
| Notes | 2025 £m |
2024 £m |
|
| Non-current assets | |||
| Intangible assets | 7 | 1,622 | 1,521 |
| Property, plant and equipment | 8 | 288 | 270 |
| Right of use assets | 9 | 117 | 110 |
| Financial assets – other investments | 10 | 6 | 53 |
| Retirement benefit assets | 6 | 122 | 132 |
| Deferred tax assets | 99 | 94 | |
| Trade and other receivables | 97 | 96 | |
| 2,351 | 2,276 | ||
| Current assets | |||
| Inventories | 709 | 643 | |
| Current tax receivable | 35 | 24 | |
| Trade and other receivables | 801 | 826 | |
| Cash and cash equivalents | 11 | 392 | 459 |
| Financial derivatives | 11 | 3 | 4 |
| 1,940 | 1,956 | ||
| Total assets | 4,291 | 4,232 | |
| Current liabilities | |||
| Financial liabilities: | |||
| – short-term borrowings | 11 | (8) | (2) |
| – lease liabilities | 11 | (35) | (32) |
| – financial derivatives | 11 | (5) | (4) |
| Provisions | (67) | (75) | |
| 13 | |||
| Trade and other payables | (761) | (764) | |
| Current tax payable | (83) | (70) | |
| (959) | (947) | ||
| Non-current liabilities | |||
| Financial liabilities: | |||
| – long-term borrowings | 11 | (536) | (534) |
| – lease liabilities | 11 | (96) | (91) |
| – financial derivatives | 11 | (16) | (13) |
| Provisions | 13 | (217) | (219) |
| Retirement benefit obligations | 6 | (97) | (103) |
| Deferred tax liabilities | (43) | (32) | |
| Trade and other payables | (32) | (41) | |
| (1,037) | (1,033) | ||
| Total liabilities | (1,996) | (1,980) | |
| Net assets | 2,295 | 2,252 | |
| Shareholders' equity | |||
| Share capital | 18 | 129 | 130 |
| Share premium account | 365 | 365 | |
| Capital redemption reserve | 26 | 25 | |
| Merger reserve | 235 | 235 | |
| Cumulative translation adjustments | 395 | 353 | |
| Retained earnings | 1,313 | 1,306 | |
| Hedge reserve | (191) | (184) | |
| Total shareholders' equity | 2,272 | 2,230 | |
| Non-controlling interest equity | 23 | 22 | |
| Total equity | 2,295 | 2,252 | |
| Notes | Share capital and share premium £m |
Other reserves £m |
Cumulative translation adjustments £m |
Retained earnings £m |
Hedge reserve £m |
Equity shareholders' funds £m |
Non-controlling Interest £m |
Total equity £m |
|
|---|---|---|---|---|---|---|---|---|---|
| At 31 July 2024 | 495 | 260 | 353 | 1,306 | (184) | 2,230 | 22 | 2,252 | |
| Profit for the period | – | – | – | 167 | – | 167 | 1 | 168 | |
| Other comprehensive income: | |||||||||
| – foreign exchange movements net of recycling | – | – | 42 | – | – | 42 | – | 42 | |
| – re-measurement of post-retirement benefits | – | – | – | (7) | – | (7) | – | (7) | |
| and related tax | |||||||||
| – fair value losses and related tax | – | – | – | 9 | (7) | 2 | – | 2 | |
| Total comprehensive income for the period | – | – | 42 | 169 | (7) | 204 | 1 | 205 | |
| Transactions relating to ownership interests | |||||||||
| Purchase of shares by Employee Benefit Trust | – | – | – | (22) | – | (22) | – | (22) | |
| Share buybacks | 18 | (1) | 1 | – | (44) | – | (44) | – | (44) |
| Dividends: | |||||||||
| – equity shareholders |
14 | – | – | – | (104) | – | (104) | – | (104) |
| Share-based payment | – | – | – | 8 | – | 8 | – | 8 | |
| At 31 January 2025 | 494 | 261 | 395 | 1,313 | (191) | 2,272 | 23 | 2,295 |
| Notes | Share capital and share premium £m |
Other reserves £m |
Cumulative translation adjustments £m |
Retained earnings £m |
Hedge reserve £m |
Equity shareholders' funds £m |
Non-controlling Interest £m |
Total equity £m |
|
|---|---|---|---|---|---|---|---|---|---|
| At 31 July 2023 | 496 | 259 | 386 | 1,431 | (188) | 2,384 | 22 | 2,406 | |
| Profit for the period Other comprehensive income: |
– | – | – | 111 | – | 111 | – | 111 | |
| – foreign exchange movements net of recycling | – | – | 5 | – | – | 5 | – | 5 | |
| – re-measurement of post-retirement benefits and related tax |
– | – | – | (88) | – | (88) | – | (88) | |
| – fair value losses and related tax | – | – | – | (167) | (2) | (169) | – | (169) | |
| Total comprehensive income for the period | – | – | 5 | (144) | (2) | (141) | – | (141) | |
| Transactions relating to ownership interests | |||||||||
| Purchase of shares by Employee Benefit Trust | – | – | – | (16) | – | (16) | – | (16) | |
| Share buybacks | 18 | (1) | 1 | – | (29) | – | (29) | – | (29) |
| Dividends: | |||||||||
| – equity shareholders |
14 | – | – | – | (100) | – | (100) | – | (100) |
| Share-based payment | – | – | – | 6 | – | 6 | – | 6 | |
| At 31 January 2024 | 495 | 260 | 391 | 1,148 | (190) | 2,104 | 22 | 2,126 |
| Six months | Six months | ||
|---|---|---|---|
| Notes | ended 31 January 2025 £m |
ended 31 January 2024 £m |
|
| Net cash inflow from operating activities | 16 | 205 | 168 |
| Cash-flows from investing activities | |||
| Expenditure on capitalised development | (3) | (7) | |
| Expenditure on other intangible assets | (1) | (1) | |
| Purchase of property, plant and equipment | (37) | (30) | |
| Disposal of financial assets | 53 | 1 | |
| Acquisition of businesses (net of £8m of cash acquired with businesses) | 15 | (89) | (65) |
| Disposal of subsidiaries – post-sale expenses | (12) | – | |
| Net cash-flow used in investing activities | (89) | (102) | |
| Cash-flows from financing activities | |||
| Share buybacks | 18 | (44) | (29) |
| Purchase of shares by Employee Benefit Trust | (22) | (16) | |
| Settlement of share awards in cash | – | (2) | |
| Dividends paid to equity shareholders and non-controlling interests | (104) | (100) | |
| Cash inflow/(outflow) from matured derivative financial instruments | 2 | 1 | |
| Lease payments | (21) | (19) | |
| Net cash-flow used in financing activities | (189) | (165) | |
| Decrease in cash and cash equivalents | (73) | (99) | |
| Cash and cash equivalents at beginning of the period | 459 | 285 | |
| Exchange differences | 6 | (6) | |
| Cash and cash equivalents at end of the period | 392 | 180 | |
| Cash and cash equivalents at end of the period comprise: | |||
| – cash at bank and in hand | 193 | 111 | |
| – short-term deposits | 199 | 69 | |
| 392 | 180 |
The financial information for the period ended 31 January 2025 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 July 2024 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The condensed consolidated interim financial report for the half-year reporting period ended 31 January 2025 included in this announcement has been prepared on a going concern basis using accounting policies consistent with UK-adopted International Accounting Standards, in accordance with IAS 34 Interim Financial Reporting, and in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 July 2024, which has been prepared in accordance with UK-adopted International Accounting Standards.
The interim financial statements are prepared on a going concern basis. The Directors have assessed the principal risks discussed on page 18. The Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily, and have a reasonable expectation that the Group will have adequate resources to continue in operation for at least 12 months from the signing date of these condensed consolidated interim financial statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
The interim financial information was approved by the Board on 24 March 2025.
The same accounting policies, estimates, presentation and methods of computation are followed in the condensed interim financial statements as applied in the Group's latest annual audited financial statements.
No new standards, new interpretations, or amendments to standards or interpretations have been published which are expected to have a significant impact on the Group's financial statements.
In order to provide users of the accounts with a clear and consistent presentation of the performance of the Group's ongoing trading activity, the income statement is presented in a three column format with 'headline' profits shown separately from non-headline items in a form consistent with the prior year.
Judgement is required in determining which items should be included as non-headline. The amortisation of acquired intangibles, legacy liabilities, material one-off items and certain re-measurements are included in a separate column of the income statement. See note 3 for a breakdown of the items excluded from headline profit.
Performance measures for the Group's ongoing trading activity are described as 'headline' and used by management to measure and monitor performance. See note 2 for disclosures of headline operating profit and note 19 for more information about the alternative performance measures ('APMs') used by the Group.
In addition, the Group reports organic growth rates for revenue and underlying growth rates for profit where the determination of adjustments requires judgement. See note 19 for more information about the key performance indicators (KPIs) used by the Group.
The Group is organised into four major business segments: John Crane, Flex-Tek, Smiths Detection and Smiths Interconnect. These business segment design and manufacture the following products:
The position and performance of each business segment is reported at each Board meeting to the Board of Directors. This information is prepared using the same accounting policies as the consolidated financial information, except that the Group uses headline operating profit to monitor segmental results and operating assets to monitor segmental position. See note 3 and note 19 for more information on which items are excluded from headline profit measures.
Intersegment sales and transfers are charged at arm's-length prices.
| Six months ended 31 January 2025 | ||||||
|---|---|---|---|---|---|---|
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate costs £m |
Total £m |
|
| Revenue | 551 | 401 | 454 | 202 | – | 1,608 |
| Segmental headline operating profit Corporate headline operating costs |
126 – |
80 – |
51 – |
35 – |
– (23) |
292 (23) |
| Headline operating profit/(loss) Items excluded from headline measures (note 3) |
126 3 |
80 (16) |
51 (12) |
35 (1) |
(23) (1) |
269 (27) |
| Operating profit/(loss) for the period | 129 | 64 | 39 | 34 | (24) | 242 |
| Headline operating margin | 22.9% | 19.8% | 11.3% | 17.2% | 16.7% | |
| Six months ended 31 January 2024 | ||||||
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate costs £m |
Total £m |
|
| Revenue | 555 | 384 | 404 | 164 | – | 1,507 |
| Segmental headline operating profit Corporate headline operating costs |
128 – |
81 – |
43 – |
20 – |
– (26) |
272 (26) |
| Headline operating profit/(loss) Items excluded from headline measures (note 3) |
128 (22) |
81 (7) |
43 (10) |
20 (1) |
(26) (14) |
246 (54) |
| Operating profit/(loss) for the period | 106 | 74 | 33 | 19 | (40) | 192 |
| Headline operating margin | 23.0% | 21.2% | 10.7% | 12.2% | 16.3% |
Segment assets
| 31 January 2025 | ||||||
|---|---|---|---|---|---|---|
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate and non-headline £m |
Total £m |
|
| Property, plant, equipment, right of use assets, development projects, other intangibles and investments |
184 | 116 | 142 | 65 | 12 | 519 |
| Inventory, trade and other receivables | 522 | 280 | 636 | 157 | 12 | 1,607 |
| Segment assets | 706 | 396 | 778 | 222 | 24 | 2,126 |
| 31 July 2024 | ||||||
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate and non-headline £m |
Total £m |
|
| Property, plant, equipment, right of use assets, development projects, other intangibles and investments |
168 | 103 | 153 | 65 | 61 | 550 |
| Inventory, trade and other receivables | 528 | 254 | 612 | 153 | 18 | 1,565 |
| Segment assets | 696 | 357 | 765 | 218 | 79 | 2,115 |
Non-headline assets comprise receivables relating to non-headline items, acquisitions and disposals.
Segment liabilities
| 31 January 2025 | ||||||
|---|---|---|---|---|---|---|
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate and non-headline £m |
Total £m |
|
| Segmental liabilities | (197) | (102) | (389) | (68) | – | (756) |
| Corporate and non-headline liabilities | – | – | – | – | (321) | (321) |
| Segment liabilities | (197) | (102) | (389) | (68) | (321) | (1,077) |
| 31 July 2024 | ||||||
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Corporate and non-headline £m |
Total £m |
|
| Segmental liabilities | (202) | (99) | (398) | (59) | – | (758) |
| Corporate and non-headline liabilities | – | – | – | – | (341) | (341) |
| Segment liabilities | (202) | (99) | (398) | (59) | (341) | (1,099) |
Non-headline liabilities comprise provisions and accruals relating to non-headline items, acquisitions and disposals.
| Assets | Liabilities | |||
|---|---|---|---|---|
| 31 January 2025 £m |
31 July 2024 £m |
31 January 2025 £m |
31 July 2024 £m |
|
| Segment assets and liabilities | 2,126 | 2,115 | (1,077) | (1,099) |
| Goodwill and acquired intangibles | 1,514 | 1,404 | – | – |
| Derivatives | 3 | 4 | (21) | (17) |
| Current and deferred tax | 134 | 118 | (126) | (102) |
| Retirement benefit assets and obligations | 122 | 132 | (97) | (103) |
| Cash and borrowings | 392 | 459 | (675) | (659) |
| Statutory assets and liabilities | 4,291 | 4,232 | (1,996) | (1,980) |
Capital employed is a non-statutory measure of invested resources. It comprises statutory net assets adjusted to add goodwill recognised directly in reserves in respect of subsidiaries acquired before 1 August 1998 of £478m (31 July 2024: £478m), and eliminate post-retirement benefit assets and liabilities and litigation provisions relating to non-headline items, both net of related tax, and net debt. See note 19 for additional details.
The 12-month rolling average capital employed by business segment, which Smiths uses to calculate segmental return on capital employed, is set out below:
| 31 January 2025 | |||||
|---|---|---|---|---|---|
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Total £m |
|
| Average segmental capital employed | 1,048 | 641 | 1,098 | 463 | 3,250 |
| Average corporate capital employed | (34) | ||||
| Average total capital employed | 3,216 | ||||
| 31 January 2024 | |||||
|---|---|---|---|---|---|
| John Crane £m |
Flex-Tek £m |
Smiths Detection £m |
Smiths Interconnect £m |
Total £m |
|
| Average segmental capital employed | 1,026 | 587 | 1,158 | 477 | 3,248 |
| Average corporate capital employed | (30) | ||||
| Average total capital employed | 3,218 |
The revenue for the main product and service lines for each business segment is:
| John Crane | Original equipment £m |
Aftermarket £m |
Total £m |
|---|---|---|---|
| Revenue six months ended 31 January 2025 | 161 | 390 | 551 |
| Revenue six months ended 31 January 2024 | 152 | 403 | 555 |
| Flex-Tek | Aerospace £m |
Industrials £m |
Total £m |
| Revenue six months ended 31 January 2025 | 76 | 325 | 401 |
| Revenue six months ended 31 January 2024 | 74 | 310 | 384 |
| Smiths Detection | Aviation £m |
Other security systems £m |
Total £m |
| Revenue six months ended 31 January 2025 | 337 | 117 | 454 |
| Revenue six months ended 31 January 2024 | 269 | 135 | 404 |
| Smiths Interconnect | Components, Connectors & Subsystems £m |
||
| Revenue six months ended 31 January 2025 | 202 | ||
| Revenue six months ended 31 January 2024 | 164 |
Segmental revenue is analysed by the Smiths Group key global markets as follows:
| John Crane | General Industrial £m |
Safety & Security £m |
Energy £m |
Aerospace & Defence £m |
Total £m |
|---|---|---|---|---|---|
| Revenue six months ended 31 January 2025 | 206 | – | 345 | – | 551 |
| Revenue six months ended 31 January 2024 | 204 | – | 351 | – | 555 |
| Flex-Tek | |||||
| Revenue six months ended 31 January 2025 | 325 | – | – | 76 | 401 |
| Revenue six months ended 31 January 2024 | 310 | – | – | 74 | 384 |
| Smiths Detection | |||||
| Revenue six months ended 31 January 2025 | – | 454 | – | – | 454 |
| Revenue six months ended 31 January 2024 | – | 404 | – | – | 404 |
| Smiths Interconnect * | |||||
| Revenue six months ended 31 January 2025 | 101 | – | – | 101 | 202 |
| Revenue six months ended 31 January 2024 | 74 | 66 | – | 24 | 164 |
| Total | |||||
| Revenue six months ended 31 January 2025 | 632 | 454 | 345 | 177 | 1,608 |
| Revenue six months ended 31 January 2024 | 588 | 470 | 351 | 98 | 1,507 |
* Following a review of the Smiths Interconnect segmental revenue reporting in August 2024, the Group has reanalysed this segment's revenue by key global market. The driver of this reanalysis is to better align Smiths Interconnect's reporting with how the business is run and the revenue reporting of Smiths Interconnect's peer group. The updated revenue analysis has been applied prospectively from August 2024 onwards. The Aerospace key global market has been renamed Aerospace & Defence and £79m of HY25 revenue that would have previously been reported as Safety & Security revenue is now reported as Aerospace & Defence revenue.
The Group's statutory revenue is analysed as follows:
| Services recognised over time 405 Revenue 1,608 |
386 1,507 |
|---|---|
| Sale of goods recognised over time 26 |
28 |
| Sale of goods recognised at a point in time 1,177 |
1,093 |
| Six months ended 31 January 2025 £m |
Six months ended 31 January 2024 £m |
Headline operating costs are analysed as follows:
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | ||||||
|---|---|---|---|---|---|---|---|
| Non-headline | Non-headline | ||||||
| Headline £m |
(note 3) £m |
Total £m |
Headline £m |
(note 3) £m |
Total £m |
||
| Cost of sales - direct materials, labour, production and | 1,011 | – | 1,011 | 945 | – | 945 | |
| distribution overheads | |||||||
| Selling costs | 109 | – | 109 | 107 | – | 107 | |
| Administrative expenses | 219 | 27 | 246 | 209 | 54 | 263 | |
| Operating costs | 1,339 | 27 | 1,366 | 1,261 | 54 | 1,315 |
The Group seeks to present a measure of performance which is not impacted by material non-recurring items or items considered non-operational in nature. This measure of profit is described as 'headline' and is used by management to measure and monitor performance. See the disclosures on presentation of results in accounting policies for an explanation of the adjustments. The items excluded from 'headline' are referred to as 'nonheadline' items.
The non-headline items included in statutory operating profit are as follows:
| Six months ended |
Six months ended |
|
|---|---|---|
| 31 January 2025 £m |
31 January 2024 £m |
|
| Acquisition and disposal related transaction costs | ||
| Post-acquisition integration costs and fair value adjustment unwind | (1) | – |
| Business acquisition costs | (2) | (1) |
| Fair value loss on contingent consideration | – | (10) |
| Loss on disposal of financial asset | (3) | – |
| Legacy pension scheme arrangements | ||
| Scheme administration costs | (2) | (3) |
| Non-headline litigation provision movements | ||
| Provision for John Crane, Inc. asbestos litigation | 12 | (22) |
| Movement in provision held against Titeflex Corporation subrogation claims | 3 | 7 |
| Other items | ||
| Amortisation of acquisition related intangible assets | (27) | (25) |
| Corporate restructuring costs | (7) | – |
| Non-headline items in operating profit | (27) | (54) |
The £1m (31 January 2024: £nil) of post-acquisition integration costs and fair value adjustment unwind relate to Flex-Tek's acquisitions of HCP, Wattco and Modular Metal Fabricators (Modular Metal). These include £1m of defined project costs for the integration of these businesses into the existing Flex-Tek business and the unwinding of the acquisition balance sheet fair value adjustments required by IFRS 3 'Business Combinations'. These have been recognised as a non-headline as the charge did not relate to trading activity.
The £2m (31 January 2024: £1m) of business acquisition costs represent incremental costs related to the Group's Mergers & Acquisitions (M&A) activity. These items do not include the cost of employees working on transactions and are reported as non-headline because they are dependent on the level of M&A activity being undertaken and do not relate to trading activity.
In the prior year, the £10m fair value loss on contingent consideration represents the write down of the remaining fair value of the Group's contingent consideration from the sale of the Smiths Medical to ICU Medical, Inc. (ICU).
In the current year, the Group sold the remainder of its equity investment in ICU. The £3m loss (31 January 2024: £nil) on disposal of financial assets relates to the block sale discount on the disposal of these remaining ICU shares. This is considered a non-headline charge as it did not relate to trading activity.
Scheme administration costs of £2m (31 January 2024: £3m) relates to the TIGPS legacy pension scheme and SIPS 'path to buy-in' costs. As the Group has no expectation of receiving a refund from the scheme, an economic benefit value of zero has been placed on the TIGPS surplus. These are non-headline charges as the Smiths Group effectively has no economic exposure to these costs and they are paid from cash retained within the scheme.
The following litigation costs and recoveries have been treated as non-headline items because the provisions were treated as non-headline when originally recognised and the subrogation claims and litigation relate to products that the Group no longer sells in these markets:
Acquisition related intangible asset amortisation costs of £27m (31 January 2024: £25m) were recognised in the current period. This is considered to be a non-headline item on the basis that these charges result from acquisition accounting and do not relate to current trading activity.
Corporate restructuring charges of £7m (31 January 2024: £nil) were incurred on the previously announced Group-wide Acceleration Plan and are treated as non-headline due to being material and part of a pre-approved programme.
The non-headline items included in finance (costs)/income are as follows:
| Six months | Six months | |
|---|---|---|
| ended | ended | |
| 31 January 2025 | 31 January 2024 | |
| £m | £m | |
| Other financing gains/(losses) | 2 | (2) |
| Unwind of discount on provisions | (5) | (4) |
| Other finance income – retirement benefits | 2 | 3 |
| Non-headline items in finance (costs)/income | (1) | (3) |
| Non-headline loss before taxation | (28) | (57) |
The £2m of other financing gains (31 January 2024: £2m losses) represent foreign exchange movements on borrowings and fair value movements on financial instruments. The current period gain includes £1m (31 January 2024: £1m loss) due to foreign exchange translation gains and £1m gain (31 January 2024: £1m loss) due to hedge ineffectiveness on the Group's 2027 Eurobonds, which will reverse over the remaining period to maturity. These foreign exchange and fair value movements are excluded from headline net finance costs when the following requirements are met:
The financing elements of non-headline legacy liabilities, including the £5m (31 January 2024: £4m) unwind of discount on provisions, are excluded from headline finance costs because these provisions were originally recognised as non-headline and this treatment has been maintained for ongoing costs and credits.
Other finance income comprises £2m (31 January 2024: £3m) of financing credits relating to retirement benefits. These are excluded from headline finance costs because the ongoing costs and credits are a legacy of previous employee pension arrangements.
The non-headline items included in taxation are as follows:
| Six months | Six months | |
|---|---|---|
| ended | ended | |
| 31 January 2025 | 31 January 2024 | |
| £m | £m | |
| Increase in unrecognised UK deferred tax asset | 6 | (12) |
| Tax credit on non-headline loss | (1) | 11 |
| Non-headline taxation (charge)/credit | 5 | (1) |
| Continuing operations – non-headline gain/(loss) for the year | (23) | (58) |
The £5m non-headline taxation credit (31 January 2024: £1m charge) comprises a charge of £1m (31 January 2024: £12m charge), being a reduction in the UK deferred tax asset. This is offset by credits for the non-headline items above.
Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders of the Company by the average number of ordinary shares in issue during the period.
| Six months ended 31 January 2025 |
Six months ended 31 January 2024 |
|---|---|
| Profit attributable to equity shareholders for the period - £m 167 |
111 |
| Weighted average number of shares in issue for basic earnings per share 342,492,542 |
346,626,154 |
| Adjustment for potentially dilutive shares 142,927 |
161,251 |
| Weighted average number of shares in issue for diluted earnings per share 342,635,469 |
346,787,405 |
| Statutory earnings per share total – basic 48.8p |
32.0p |
| Statutory earnings per share total – diluted 48.7p |
32.0p |
A reconciliation of statutory and headline earnings per share is as follows:
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | ||||||
|---|---|---|---|---|---|---|---|
| £m | Basic EPS (p) |
Diluted EPS (p) |
£m | Basic EPS (p) |
Diluted EPS (p) |
||
| Basic earnings per share: | |||||||
| Total profit attributable to equity shareholders of the Parent Company | 167 | 48.8p | 48.7p | 111 | 32.0p | 32.0p | |
| Exclude: Non-headline items (note 3) | 23 | 58 | |||||
| Headline earnings per share | 190 | 55.5p | 55.5p | 169 | 48.7p | 48.7p |
The interim tax rate of 26.1% (31 January 2024: 35.0%) is calculated by applying the estimated effective headline tax rate of 25.5% (31 January 2024: 26.0%) for the year ended 31 July 2025 to headline profit before tax and then taking into account the tax effect of non-headline items in the interim period.
A reconciliation of headline and total tax charge is as follows:
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | |||
|---|---|---|---|---|
| £m | Tax rate | £m | Tax rate | |
| Headline tax rate | ||||
| Headline profit before taxation | 256 | 228 | ||
| Taxation on headline profit | (65) | 25.5% | (59) | 26.0% |
| Adjustments | ||||
| Non-headline items excluded from profit before taxation (note 3) | (28) | (57) | ||
| Taxation on non-headline items and non-headline tax adjustment | 5 | (1) | ||
| Total interim tax rate | ||||
| Profit before taxation | 228 | 171 | ||
| Taxation | (60) | 26.1% | (60) | 35.0% |
| The changes in the value of the net tax asset in the period were: | ||||
| Current | Deferred | Net tax |
| At 31 July 2024 Foreign exchange gains/(losses) Charge to income statement Charge to other comprehensive income Acquisitions Tax paid |
£m | tax £m |
balance £m |
|---|---|---|---|
| (46) | 62 | 16 | |
| – | 2 | 2 | |
| (60) | – | (60) | |
| – | 2 | 2 | |
| – | (10) | (10) | |
| 58 | – | 58 | |
| At 31 January 2025 | (48) | 56 | 8 |
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates and the legislation will be effective for the Group's financial year beginning 1 January 2024. On 11 July 2023, the UK government enacted Pillar Two legislation and Smiths Group plc, a UK incorporated company falls within the scope of the legislation. The rules apply to Smiths Group from 1 August 2024.
A Pillar Two impact assessment using financial data for year ended 31 July 2024, has been carried out, taking into account known changes impacting the constituent entities within Smiths Group. The impact assessment included considering eligibility for the Transitional Country by County Reporting Safe Harbours on a jurisdiction by jurisdiction basis. The Group considers that implementation of Pillar Two income taxes by countries with qualified domestic minimum top-up taxes and the income inclusion rule in the UK will not have a material impact on the Group's ETR for the Year Ended 31 July 2025.
The Group is continuing to assess the impact of the Pillar Two income taxes legislation on future financial performance.
The Group provides post-retirement benefits to employees in a number of countries throughout the world. The arrangements include defined benefit and defined contribution plans and, mainly in the United Kingdom (UK) and United States of America (US), post-retirement healthcare. The principal defined benefit pension plans are in the UK and US, and these have been closed so that no future benefits are accrued.
Where any individual scheme shows a post restriction surplus under IAS 19, this is disclosed on the balance sheet as a retirement benefit asset. The IAS 19 surplus of any one scheme is not available to fund the IAS 19 deficit of another scheme. The surplus is recognised as a retirement benefit asset to the extent the employers have the right to recover the surplus at the end of the life of the scheme, assuming all liabilities have been extinguished. The schemes are mature with a duration averaged over all scheme participants of 11 years (HY24: 12 years).
| 31 January 2025 £m |
31 July 2024 £m |
|
|---|---|---|
| Market value of scheme assets | 2,458 | 2,583 |
| Present value of funded scheme liabilities | (2,339) | (2,456) |
| Surplus restriction | (9) | (11) |
| Surplus | 110 | 116 |
| Unfunded pension plans | (81) | (81) |
| Post-retirement healthcare | (4) | (6) |
| Present value of unfunded obligations | (85) | (87) |
| Net retirement benefit asset | 25 | 29 |
| Post-retirement assets | 122 | 132 |
| Post-retirement liabilities | (97) | (103) |
| Net retirement benefit asset | 25 | 29 |
The decrease in the value of scheme liabilities is principally due to changes in market conditions and the resulting increase in the discount rate assumptions. The changes in market conditions also led to a corresponding decrease in the value of scheme assets which was broadly in line with the decrease in liabilities, leading to a small reduction in the surplus recognised in the balance sheet at 31 January 2025.
The changes in market conditions has had no impact on any funding arrangements.
| 31 January 2025 | 31 July 2024 | |||
|---|---|---|---|---|
| UK | US | UK | US | |
| Weighted average rate of increase in benefits for active deferred members | 4.1% | n/a | 4.0% | n/a |
| Rate of increase in pensions in payment | 3.4% | n/a | 3.3% | n/a |
| Rate of increase in deferred pensions | 3.4% | n/a | 3.3% | n/a |
| Discount rate | 5.4% | 5.6% | 5.0% | 5.2% |
The methods for setting the assumptions are consistent with those used for the 31 July 2024 valuation. The UK discount rate has been set based on the weighted average duration across the two key pension arrangements.
| 31 January 2025 – £m | 31 July 2024 – £m | |||||
|---|---|---|---|---|---|---|
| SIPS | TIGPS | US schemes | SIPS | TIGPS | US schemes | |
| Present value of funded scheme liabilities | ||||||
| – Active deferred members | (12) | (9) | (26) | (13) | (9) | (28) |
| – Deferred members | (360) | (287) | (79) | (379) | (304) | (80) |
| – Pensioners | (871) | (575) | (92) | (915) | (609) | (93) |
| Present value of funded scheme liabilities | (1,243) | (871) | (197) | (1,307) | (922) | (201) |
| Market value of scheme assets | 1,365 | 880 | 191 | 1,439 | 933 | 190 |
| Surplus restriction | – | (9) | – | – | (11) | – |
| Surplus/(deficit) | 122 | – | (6) | 132 | – | (11) |
Company contributions to funded and unfunded defined benefit pension and post-retirement healthcare plans totalled £7m (HY24: £3m), which included a planned £5m (HY24: £nil) contribution to the US funded pension scheme.
| Net retirement benefit asset at end of period | 25 | 29 |
|---|---|---|
| Unrecognised assets due to surplus restriction | 2 | – |
| Actuarial losses | (10) | (66) |
| Contributions by employer | 7 | 16 |
| Finance income – retirement benefits | 2 | 6 |
| Past service costs, curtailments and settlements – benefit equalisations | – | (4) |
| Non-headline scheme administration costs | (2) | (6) |
| Headline scheme administration costs | (2) | (3) |
| Current service cost | (1) | (4) |
| Foreign exchange rate movements | – | 1 |
| At beginning of period | 29 | 89 |
| Six months ended 31 January 2025 £m |
Year ended 31 July 2024 £m |
In July 2024, the UK Court of Appeal upheld the High Court's ruling in the Virgin Media v NTL Pension Trustees II court case relating to section 37 of the Pension Schemes Act 1993 and amendments to benefits for contracted-out defined benefit schemes, such as SIPS and TIGPS. The ruling confirmed the need for an actuarial certificate where such schemes made changes to benefits between 6 April 1997 and 5 April 2016, and any amendments that affected relevant benefits were void without the appropriate certificate. The Trustees of SIPS and TIGPS have sought legal advice on what actions, if any, should be taken and are awaiting the outcome of further legal cases associated with this matter, which are expected to be heard later in 2025. In the meantime, SIPS and TIGPS will continue to be administered on the current basis until the legal position has been clarified.
| Goodwill £m |
Development costs £m |
Acquired intangibles £m |
Software, patents and intellectual property £m |
Total £m |
|
|---|---|---|---|---|---|
| Cost | |||||
| At 31 July 2024 | 1,276 | 205 | 645 | 162 | 2,288 |
| Exchange adjustments | 23 | 1 | 18 | 1 | 43 |
| Additions | – | 3 | – | 1 | 4 |
| Business combinations | 67 | – | 40 | – | 107 |
| At 31 January 2025 | 1,366 | 209 | 703 | 164 | 2,442 |
| Amortisation | |||||
| At 31 July 2024 | 64 | 124 | 453 | 126 | 767 |
| Exchange adjustments | – | 1 | 11 | 1 | 13 |
| Charge for the period | – | 6 | 27 | 7 | 40 |
| At 31 January 2025 | 64 | 131 | 491 | 134 | 820 |
| Net book value at 31 January 2025 | 1,302 | 78 | 212 | 30 | 1,622 |
| Net book value at 31 July 2024 | 1,212 | 81 | 192 | 36 | 1,521 |
In accordance with IAS 34 'Interim financial reporting', management has undertaken a review for indications of impairment and concluded that no impairment assessment trigger events have occurred in the half year.
| Land and buildings £m |
Plant and machinery £m |
Fixtures, fittings, tools and equipment £m |
Total £m |
|
|---|---|---|---|---|
| Cost or valuation | ||||
| At 31 July 2024 | 181 | 496 | 114 | 791 |
| Exchange adjustments | 3 | 8 | 1 | 12 |
| Additions | 2 | 33 | 2 | 37 |
| Business combinations | – | 1 | – | 1 |
| Disposals | (3) | (5) | (4) | (12) |
| At 31 January 2025 | 183 | 533 | 113 | 829 |
| Depreciation | ||||
| At 31 July 2024 | 113 | 314 | 94 | 521 |
| Exchange adjustments | 2 | 5 | 1 | 8 |
| Charge for the period | 4 | 15 | 2 | 21 |
| Disposals | (2) | (4) | (3) | (9) |
| At 31 January 2025 | 117 | 330 | 94 | 541 |
| Net book value at 31 January 2025 | 66 | 203 | 19 | 288 |
| Net book value at 31 July 2024 | 68 | 182 | 20 | 270 |
| Properties £m |
Vehicles £m |
Equipment £m |
Total £m |
|
|---|---|---|---|---|
| Cost | ||||
| At 31 July 2024 | 212 | 36 | 2 | 250 |
| Foreign exchange rate movements | 3 | – | – | 3 |
| Business combinations | 4 | – | – | 4 |
| Recognition of right of use assets | 17 | 3 | – | 20 |
| Derecognition of right of use assets | (6) | – | – | (6) |
| At 31 January 2025 | 230 | 39 | 2 | 271 |
| Depreciation | ||||
| At 31 July 2024 | 116 | 23 | 1 | 140 |
| Foreign exchange rate movements | 2 | – | – | 2 |
| Charge for the year | 15 | 3 | – | 18 |
| Derecognition of right of use assets | (6) | – | – | (6) |
| At 31 January 2025 | 127 | 26 | 1 | 154 |
| Net book value at 31 January 2025 | 103 | 13 | 1 | 117 |
| Net book value at 31 July 2024 | 96 | 13 | 1 | 110 |
| At 31 January 2025 | – | 5 | 1 | 6 |
|---|---|---|---|---|
| Disposals | (55) | – | – | (55) |
| Fair value change through Other Comprehensive Income | 8 | – | – | 8 |
| At 31 July 2024 | 47 | 5 | 1 | 53 |
| Investment in ICU Medical, Inc equity £m |
Investments in early stage businesses £m |
Cash collateral deposit £m |
Total £m |
This note sets out the calculation of net debt, an important measure in explaining our financing position. The net debt figure includes accrued interest and fair value adjustments to debt relating to hedge accounting.
| 31 January 2025 £m |
31 July 2024 £m |
|
|---|---|---|
| Cash and cash equivalents | ||
| Net cash and cash equivalents | 392 | 459 |
| Short-term borrowings | ||
| Lease liabilities | (35) | (32) |
| Interest accrual | (8) | (2) |
| (43) | (34) | |
| Long-term borrowings | ||
| €650m 2.00% Eurobond 2027 | (536) | (534) |
| Lease liabilities | (96) | (91) |
| (632) | (625) | |
| Borrowings/gross debt | (675) | (659) |
| Derivatives managing interest rate risk and currency profile of the debt | (16) | (13) |
| Net debt | (299) | (213) |
| Non-current | Current | Current | Non-current | Net | |
|---|---|---|---|---|---|
| assets | assets | liabilities | liabilities | balance | |
| £m | £m | £m | £m | £m | |
| Derivatives managing interest rate risk and currency profile of the debt | – | – | – | (16) | (16) |
| Foreign exchange forward contracts | – | 3 | (5) | – | (2) |
| At 31 January 2025 | – | 3 | (5) | (16) | (18) |
| Derivatives managing interest rate risk and currency profile of the debt | – | – | – | (13) | (13) |
| Foreign exchange forward contracts | – | 4 | (4) | – | – |
| At 31 July 2024 | – | 4 | (4) | (13) | (13) |
| Cash and cash equivalents £m |
Short-term borrowings £m |
Long-term borrowings £m |
Interest rate and cross currency swaps £m |
Net debt £m |
|
|---|---|---|---|---|---|
| At 31 July 2024 | 459 | (34) | (625) | (13) | (213) |
| Foreign exchange gains/(losses) | 6 | (1) | 2 | – | 7 |
| Net decrease in cash and cash equivalents | (73) | – | – | – | (73) |
| Lease payments | – | 21 | – | – | 21 |
| Interest paid | – | 23 | – | – | 23 |
| Interest expense | – | (32) | – | – | (32) |
| Fair value movements | – | – | (5) | (3) | (8) |
| Lease liabilities acquired | – | (4) | – | – | (4) |
| Net movement from new leases and modifications | – | (20) | – | – | (20) |
| Reclassifications | – | 4 | (4) | – | – |
| At 31 January 2025 | 392 | (43) | (632) | (16) | (299) |
| As at 31 January 2025 | As at 31 July 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Basis for determining fair value |
At amortised cost £m |
At fair value through profit or loss £m |
At fair value through OCI £m |
Total carrying value £m |
Total fair value £m |
At amortised cost £m |
At fair value through profit or loss £m |
At fair value through OCI £m |
Total carrying value £m |
Total fair value £m |
|
| Financial assets | |||||||||||
| Other investments | A | – | 1 | – | 1 | 1 | – | 1 | 47 | 48 | 48 |
| Other investments | F | – | – | 5 | 5 | 5 | – | – | 5 | 5 | 5 |
| Cash and cash equivalents | A | 392 | – | – | 392 | 392 | 459 | – | – | 459 | 459 |
| Trade and other financial receivables | B/C | 784 | – | – | 784 | 784 | 797 | – | – | 797 | 797 |
| Derivative financial instruments | C | – | 3 | – | 3 | 3 | – | 4 | – | 4 | 4 |
| Total financial assets | 1,176 | 4 | 5 | 1,185 | 1,185 | 1,256 | 5 | 52 | 1,313 | 1,313 | |
| Financial liabilities | |||||||||||
| Trade and other financial payables | B | (486) | – | – | (486) | (486) | (495) | – | – | (495) | (495) |
| Short-term borrowings | B/D | (8) | – | – | (8) | (8) | (2) | – | – | (2) | (2) |
| Long-term borrowings | D | (536) | – | – | (536) | (535) | (534) | – | – | (534) | (529) |
| Lease liabilities | E | (131) | – | – | (131) | (131) | (123) | – | – | (123) | (123) |
| Derivative financial instruments | C | – | (21) | – | (21) | (21) | – | (17) | – | (17) | (17) |
| Total financial liabilities | (1,161) | (21) | – | (1,182) | (1,181) | (1,154) | (17) | – | (1,171) | (1,166) |
The fair value of a financial instrument is the price at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction. Fair values have been determined with reference to available market information at the balance sheet date, using the methodologies described below:
IFRS 13 defines a three level valuation hierarchy:
| Headline | Non-headline and legacy | |||||
|---|---|---|---|---|---|---|
| £m | John Crane, Inc. litigation £m |
Titeflex Corporation litigation £m |
Other £m |
£m | ||
| Current liabilities | 10 | 32 | 13 | 20 | 75 | |
| Non-current liabilities | 3 | 188 | 23 | 5 | 219 | |
| At 31 July 2024 | 13 | 220 | 36 | 25 | 294 | |
| Foreign exchange rate movements | – | 6 | – | – | 6 | |
| Business combinations | – | – | – | 17 | 17 | |
| Provision charged | 6 | – | 1 | – | 7 | |
| Provision released | (2) | (12) | (3) | – | (17) | |
| Unwind of provision discount | – | 4 | 1 | – | 5 | |
| Utilisation | (3) | (8) | (4) | (13) | (28) | |
| At 31 January 2025 | 14 | 210 | 31 | 29 | 284 | |
| Current liabilities | 12 | 28 | 10 | 17 | 67 | |
| Non-current liabilities | 2 | 182 | 21 | 12 | 217 | |
| At 31 January 2025 | 14 | 210 | 31 | 29 | 284 |
The John Crane, Inc. and Titeflex Corporation litigation provisions are the only provisions which are discounted.
At 31 January 2025 there are warranty and product liability provisions of £9m (31 July 2024: £9m). Warranties over the Group's products typically cover periods of between one and three years. Provision is made for the likely cost of after-sales support based on the recent past experience of individual businesses.
The Group has on occasion been required to take legal action to protect its intellectual property and other rights against infringement. It has also had to defend itself against proceedings brought by other parties, including product liability and insurance subrogation claims. Provision is made for any expected costs and liabilities in relation to these proceedings where appropriate, although there can be no guarantee that such provisions (which may be subject to potentially material revision from time to time) will accurately predict the actual costs and liabilities that may be incurred.
In the ordinary course of its business, the Group is subject to commercial disputes and litigation such as government price audits, product liability claims, employee disputes and other kinds of lawsuits, and faces different types of legal issues in different jurisdictions. The high level of activity in the US, for example, exposes the Group to the likelihood of various types of litigation commonplace in that country, such as 'mass tort' and 'class action' litigation, legal challenges to the scope and validity of patents, and product liability and insurance subrogation claims. These types of proceedings (or the threat of them) are also used to create pressure to encourage negotiated settlement of disputes. Any claim brought against the Group (with or without merit) could be costly to defend. These matters are inherently difficult to quantify. In appropriate cases a provision is recognised based on best estimates and management judgement, but there can be no guarantee that these provisions (which may be subject to potentially material revision from time to time) will result in an accurate prediction of the actual costs and liabilities that may be incurred. There are also contingent liabilities in respect of litigation for which no provisions are made.
The Group operates in some markets where the risk of unethical or corrupt behaviour is material and has procedures, including an employee 'Ethics Alertline', to help it identify potential issues. Such procedures will, from time to time, give rise to internal investigations, sometimes conducted with external support, to ensure that the Group properly understands risks and concerns and can take steps both to manage immediate issues and to improve its practices and procedures for the future. The Group is not aware of any issues which are expected to generate material financial exposures.
John Crane, Inc. ("JCI") is one of many co-defendants in numerous lawsuits pending in the US in which plaintiffs are claiming damages arising from alleged exposure to, or use of, products previously manufactured which contained asbestos. The JCI products generally referred to in these cases consist of industrial sealing product, primarily packing and gaskets. The asbestos was encapsulated within these products in such a manner that causes JCI to believe, based on tests conducted on its behalf, that the products were safe. JCI ceased manufacturing products containing asbestos in 1985.
The table below summarises the JCI claims experience over the last 40 years since the start of this litigation:
| 31 January 2025 | 31 July 2024 | 31 July 2023 | 31 July 2022 | 31 July 2021 | |
|---|---|---|---|---|---|
| JCI claims experience | |||||
| Claims against JCI that have been dismissed | 312,000 | 312,000 | 310,000 | 306,000 | 305,000 |
| Claims in which JCI is currently a defendant | 21,000 | 20,000 | 20,000 | 22,000 | 22,000 |
| Cumulative final judgments, after appeals, against JCI since 1979 | 156 | 156 | 154 | 149 | 149 |
| Cumulative value of awards (\$m) since 1979 | 191 | 191 | 190 | 175 | 175 |
JCI has certain excess liability insurance which may provide coverage for certain asbestos claims. JCI has also collected recoveries from its insurers in settlement of now concluded litigation in the US. JCI meets its asbestos defence costs directly. The calculation of the provision does not take account of any recoveries from insurers. See table below for the cost recovery achieved in both the current and prior periods.
The provision is based on past history and published tables of asbestos incidence projections and is determined using asbestos valuation experts, Bates White LLC. The assumptions made in assessing the appropriate level of provision include: the period over which the expenditure can be reliably estimated; the future trend of legal costs; the rate of future claims filed; the rate of successful resolution of claims; and the average amount of judgments awarded.
| Six months | Year ended 31 July |
Year ended 31 July |
Year ended 31 July |
||
|---|---|---|---|---|---|
| ended 31 January |
Year ended 31 July |
||||
| 2025 | 2024 | 2023 | 2022 | 2021 | |
| £m | £m | £m | £m | £m | |
| John Crane, Inc. litigation provision | |||||
| Gross provision | 255 | 261 | 246 | 258 | 220 |
| Discount | (45) | (41) | (42) | (29) | (8) |
| Discounted provision | 210 | 220 | 204 | 229 | 212 |
| Taxation | (52) | (54) | (51) | (57) | (54) |
| Discounted post-tax provision | 158 | 166 | 153 | 172 | 158 |
| Operating profit (credit)/charge | |||||
| (Decreased)/Increased provision for adverse judgments and legal defence costs | (8) | 28 | 28 | 24 | 10 |
| Change in US risk free rates | (4) | 1 | (15) | (18) | (5) |
| Subtotal – items (released)/charged to the provision | (12) | 29 | 13 | 6 | 5 |
| Litigation management expense - legal fees in connection with litigation | – | – | 2 | 1 | 1 |
| against insurers and defence strategy | |||||
| Recoveries from insurers | – | (3) | (7) | – | (9) |
| Total operating profit (credit)/charge | (12) | 26 | 8 | 7 | (3) |
| Cash-flow | |||||
| Provision utilisation - legal defence costs and adverse judgements | (8) | (21) | (32) | (21) | (13) |
| Litigation management expense | – | – | (2) | (1) | – |
| Recoveries from insurers | – | 3 | 7 | – | 9 |
| Net cash outflow | (8) | (18) | (27) | (22) | (4) |
The provision may be subject to potentially material revision from time to time if new information becomes available as a result of future events. There can be no guarantee that the assumptions used to estimate the provision will result in an accurate prediction of the actual costs that may be incurred because of the significant uncertainty associated with the future level of asbestos claims and of the costs arising out of related litigation.
In order to evaluate the statistical reliability of the projections, a population of outcomes is modelled using randomised verdict outcomes. This generated a distribution of outcomes with future spend at the 5th percentile of £187m and future spend at the 95th percentile of £251m (31 July 2024: £200m and £258m, respectively). Statistical analysis of the distribution of these outcomes indicates that there is a 50% probability that the total future spend will fall between £237m and £268m (31 July 2024: between £245m and £271m), compared with the gross provision value of £255m (31 July 2024: £261m).
If the asbestos litigation environment becomes more volatile and uncertain, the time horizon over which the provision can be calculated may reduce. Conversely, if the environment became more stable, or JCI changed approach and committed to long term settlement arrangements, the time period covered by the provision might be extended.
The projections use a 10 year time horizon. Reducing the time horizon by one year would reduce the discounted pre-tax provision by £15m (31 July 2024: £16m) and reducing it by five years would reduce the discounted pre-tax provision by £86m (31 July 2024: £87m).
We consider, after obtaining advice from Bates White LLC, that to forecast beyond ten years requires that the litigation environment remains largely unchanged with respect to the historical experience used for estimating future asbestos expenditures. Historically, the asbestos litigation environment has undergone significant changes more often than every ten years. If one assumed that the asbestos litigation environment would remain unchanged for longer and extended the time horizon by one year, it would increase the discounted pre-tax provision by £13m (31 July 2024: £13m); extending it by five years would increase the discounted pre-tax provision by £45m (31 July 2024: £47m). However, there are also reasonable scenarios that, given certain recent events in the US asbestos litigation environment, would result in no additional asbestos litigation for JCI beyond ten years. At this time, how the asbestos litigation environment may evolve beyond 10 years is not reasonably estimable.
Provision has been made for future defence costs and the cost of adverse judgments expected to occur. JCI's claims experience is significantly impacted by other factors which influence the US litigation environment. These include: changing approaches on the part of the plaintiffs' bar; changing attitudes amongst the judiciary at both trial and appellate levels; and legislative and procedural changes in both the state and federal court systems. As a result, whilst the Group anticipates that asbestos litigation will continue beyond the period covered by the provision, the uncertainty surrounding the US litigation environment beyond this point is such that the costs cannot be reliably estimated.
Although the methodology used to calculate the JCI litigation provision can in theory be applied to show claims and costs for longer periods, the directors consider, based on advice from Bates White LLC, that the level of uncertainty regarding the factors used in estimating future costs is too great to provide for reasonable estimation of the number of future claims, the nature of such claims or the cost to resolve them for years beyond the 10 year time horizon.
In recent years Titeflex Corporation, a subsidiary of the Group in the Flex-Tek business segment, has received a number of claims from insurance companies seeking recompense on a subrogated basis for the effects of damage allegedly caused by lightning strikes in relation to its flexible gas piping product. It has also received a number of product liability claims regarding this product, some in the form of purported class actions. Titeflex Corporation believes that its products are a safe and effective means of delivering gas when installed in accordance with the manufacturer's instructions and local and national codes; however some claims have been settled on an individual basis without admission of liability. Equivalent third-party products in the US marketplace face similar challenges.
The continuing progress of claims and the pattern of settlement provide sufficient evidence to recognise a liability in the accounts. Therefore provision has been made for the costs which the Group is expected to incur in respect of future claims to the extent that such costs can be reliably estimated. Titeflex Corporation sells flexible gas piping with extensive installation and safety guidance (revised in 2008) designed to assure the safety of the product and minimise the risk of damage associated with lightning strikes.
The assumptions made in assessing the appropriate level of provision, which are based on past experience, include: the period over which expenditure can be reliably estimated; the number of future settlements; the average amount of settlements; and the impact of statutes of repose and safe installation initiatives on the expected number of future claims. The assumptions relating to the number of future settlements exclude FY21 claims history as the number of claims arising in this financial year is considered to be artificially deflated due to the impact of COVID-19 lockdowns.
The provision of £31m (31 July 2024: £36m) is a discounted pre-tax provision using discount rates, being the risk-free rate on US debt instruments for the appropriate period. The deferred tax asset related to this provision is shown within the deferred tax balance.
| Discounted post-tax provision | 24 | 27 |
|---|---|---|
| Discounted pre-tax provision | 31 | 36 |
| Taxation | (7) | (9) |
| Gross provision | 63 | 69 |
| Discount | (32) | (33) |
| 31 January 2025 £m |
31 July 2024 £m |
The significant uncertainty associated with the future level of claims and of the costs arising out of related litigation means that there can be no guarantee that the assumptions used to estimate the provision will result in an accurate prediction of the actual costs that may be incurred. Therefore the provision may be subject to potentially material revision from time to time, if new information becomes available as a result of future events.
The projections incorporate a long-term assumption regarding the impact of safe installation initiatives on the level of future claims. If the assumed annual benefit of bonding and grounding initiatives were 0.5% higher, the discounted pre-tax provision would be £1m (31 July 2024: £2m) lower, and if the benefit were 0.5% lower, the discounted pre-tax provision would be £2m (31 July 2024: £2m) higher.
The projections use assumptions of future claims that are based on both the number of future settlements and the average amount of those settlements. If the assumed average number of future settlements increased 10%, the discounted pre-tax provision would rise by £2m (31 July 2024: £2m), with an equivalent fall for a reduction of 10%. If the assumed amount of those settlements increased 10%, the discounted pre-tax provision would rise by £2m (31 July 2024: £2m), also with an equivalent fall for a reduction of 10%.
Legacy provisions comprise provisions relating to former business activities and properties no longer used by Smiths. Non-headline provisions comprise provisions that were disclosed as non-headline items when they were charged to the consolidated income statement and provisions recognised as a result of business acquisition. These provisions include non-headline reorganisation, separation expenses, acquisition earnouts, disposal indemnities and litigation in respect of old products and discontinued business activities.
| Dividends paid in the period 104 |
100 |
|---|---|
| 31 January 2025 £m |
31 January 2024 £m |
| Six months ended | Six months ended |
| The following dividends were declared and paid in the period: |
In the current period an ordinary final dividend of 30.2p (31 January 2024: 28.7p) was paid on 22 November 2024.
An interim dividend of 14.23 pence per share was declared by the Board on 24 March 2025 and will be paid to shareholders on 14 May 2025. This dividend has not been included as a liability in these accounts and is payable to all shareholders on the register of members at close of business on 4 April 2025.
The Company offers a Dividend Reinvestment Plan ("DRIP") enabling shareholders to use their cash dividend to buy further shares in the Company – see www.shareview.co.uk/info/drip and our website for details. The DRIP is provided by Equiniti Financial Services Limited. To participate in the DRIP, shareholders must submit their election notice to be received by 22 April 2025 ("the Election Date"). Elections received after the Election Date will apply to dividends paid after 14 May 2025. Purchases under the DRIP are made on, or as soon as practicable after, the dividend payment date and at prevailing market prices.
During September 2024, the Group acquired 100% of the share capital of Wattco, Inc. (19th September 2024) and acquired 100% of the share capital of Modular Metal (1st October 2024).
Wattco is a manufacturer of industrial heating solutions and control panels which will expand Flex-Tek's industrial heat business. The total cash consideration for this acquisition was £66m, with deferred contingent consideration valued at £12m. The deferred consideration is contingent on the post-acquisition performance of the business and has been valued using a probability weighted expected return model.
Modular Metal is a manufacturer of metal and flexible duct which will expand Flex-Tek's HVAC business. The total cash consideration for this acquisition was £31m, with deferred consideration being circa £4m.
Both acquisitions were financed using the Group's own cash resources. The intangible assets recognised on acquisition comprise customer relationships, trade names and non-compete agreements. Goodwill represents the expected synergies from the strategic fit of the acquisition and the value of the expertise in the assembled workforce.
From the date of acquisition to 31 January 2025, Wattco contributed £5m to revenue and £1m to profit before taxation and amortisation. If the Group had acquired Wattco at the beginning of the financial year, the acquisition would have contributed an additional £6m to revenue and £2m to profit before taxation and amortisation.
From the date of acquisition to 31 January 2025, Modular Metal contributed £7m to revenue and £2m to profit before taxation and amortisation. If the Group had acquired Modular Metal at the beginning of the financial year, the acquisition would have contributed an additional £5m to revenue and £1m to profit before taxation and amortisation.
The provisional balance sheets at the dates of acquisition are:
| Wattco £m |
Modular Metal £m |
Total £m |
||
|---|---|---|---|---|
| Non-current assets | - acquired intangible assets | 23 | 17 | 40 |
| - plant and machinery | 1 | – | 1 | |
| - right of use assets | 3 | 1 | 4 | |
| Current assets | - inventory | 3 | 8 | 11 |
| - trade and other receivables | 1 | – | 1 | |
| - cash and cash equivalents | 2 | 6 | 8 | |
| Current liabilities | - trade and other payables | (5) | (1) | (6) |
| Non-current liabilities | - deferred tax | (6) | (3) | (9) |
| - lease liability | (3) | (1) | (4) | |
| Net assets acquired | 19 | 27 | 46 | |
| Goodwill on current period acquisitions | 59 | 8 | 67 | |
| Cash paid during the period | 66 | 31 | 97 | |
| Deferred/contingent consideration | 12 | 4 | 16 | |
| Total consideration | 78 | 35 | 113 |
On 28 February 2025, the Group acquired 100% of the share capital of Duc-Pac, for consideration of approximately £32m, financed using the Group's own cash resources. Duc-Pac is a manufacturer of metal and flexible ducting products, and will expand Flex-Tek's presence in the North-Eastern American HVAC market.
The acquisition has historically contributed £16m of annualised revenue and £5m of annualised earnings before interest, tax, depreciation and amortisation. Due to the short time between the completion of the acquisition and the announcement date, it has not been possible to complete the determination of the fair values of the acquired balance sheet.
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | |||||
|---|---|---|---|---|---|---|
| Headline £m |
Non-headline (note 3) £m |
Total £m |
Headline £m |
Non-headline (note 3) £m |
Total £m |
|
| Operating profit/(loss) | 269 | (27) | 242 | 246 | (54) | 192 |
| Amortisation of intangible assets | 13 | 27 | 40 | 4 | 25 | 29 |
| Depreciation of property, plant and equipment | 21 | – | 21 | 22 | – | 22 |
| Depreciation of right of use assets | 18 | – | 18 | 17 | – | 17 |
| Loss/(gain) on fair value of contingent consideration | – | – | – | – | 10 | 10 |
| Loss on disposal of property, plant and equipment | 2 | – | 2 | – | – | – |
| Loss on disposal of financial asset | – | 3 | 3 | – | – | – |
| Share-based payment expense | 8 | – | 8 | 8 | – | 8 |
| Retirement benefits | 2 | (5) | (3) | 4 | – | 4 |
| (Increase) in inventories | (48) | – | (48) | (2) | – | (2) |
| (Increase)/decrease in trade and other receivables | 35 | 1 | 36 | (7) | 3 | (4) |
| (Decrease)/increase in trade and other payables | (27) | 2 | (25) | (38) | (8) | (46) |
| Increase/(decrease) in provisions | 2 | (29) | (27) | 2 | (1) | 1 |
| Cash generated from operations | 295 | (28) | 267 | 256 | (25) | 231 |
| Interest paid | (23) | – | (23) | (22) | – | (22) |
| Interest received | 19 | – | 19 | 11 | – | 11 |
| Tax paid | (58) | – | (58) | (63) | 11 | (52) |
| Net cash inflow/(outflow) from operating activities | 233 | (28) | 205 | 182 | (14) | 168 |
The split of tax payments between headline and non-headline only considers the nature of payments made. No adjustment has been made for reductions in tax payments required as a result of tax relief received on non-headline items.
The Group measure of headline operating cash excludes interest and tax, and includes capital expenditure supporting organic growth. The Group uses operating cash-flow for the calculation of cash conversion and free cash-flow for management of capital purposes. See note 19 for additional details.
The table below reconciles the Group's net cash-flow from operating activities to headline operating cash-flow and free cash-flow:
| Six months ended 31 January 2025 | Six months ended 31 January 2024 | |||||
|---|---|---|---|---|---|---|
| Headline £m |
Non-headline £m |
Total £m |
Headline £m |
Non-headline £m |
Total £m |
|
| Net cash inflow/(outflow) from operating activities | 233 | (28) | 205 | 182 | (14) | 168 |
| Include: | ||||||
| Expenditure on capitalised development, other intangible assets and property, plant and equipment |
(41) | – | (41) | (38) | – | (38) |
| Repayment of lease liabilities | (21) | – | (21) | (19) | – | (19) |
| Investment in financial assets relating to operating activities | – | – | – | 1 | – | 1 |
| Free cash-flow | 143 | 112 | ||||
| Exclude: | ||||||
| Investment in financial assets relating to operating activities | – | – | – | (1) | – | (1) |
| Repayment of lease liabilities | 21 | – | 21 | 19 | – | 19 |
| Interest paid | 23 | – | 23 | 22 | – | 22 |
| Interest received | (19) | – | (19) | (11) | – | (11) |
| Tax paid | 58 | – | 58 | 63 | – | 63 |
| Operating cash-flow | 254 | (28) | 226 | 218 | (14) | 204 |
Headline cash conversion
Headline operating cash conversion for continuing operations is calculated as follows:
| Six months | Six months | |
|---|---|---|
| ended | ended | |
| 31 January 2025 | 31 January 2024 | |
| £m | £m | |
| Headline operating profit | 269 | 246 |
| Headline operating cash-flow | 254 | 218 |
| Headline operating cash conversion | 94% | 89% |
| Six months ended |
Six months ended |
|
|---|---|---|
| 31 January 2025 £m |
31 January 2024 £m |
|
| Free cash-flow | 143 | 112 |
| Acquisition of businesses | (89) | (65) |
| Disposal of subsidiaries – post-sale expenses | (12) | – |
| Disposal of financial assets | 53 | – |
| Other net cash-flows used in financing activities (note: repayment of lease liability is included in free cash-flow) | (168) | (146) |
| Decrease in cash and cash equivalents | (73) | (99) |
The related party transactions in the period were consistent with the nature and size of transactions disclosed in the Annual Report for the year ended 31 July 2024.
| Number of shares |
Issued capital £m |
Consideration £m |
|
|---|---|---|---|
| Ordinary shares of 37.5p each | |||
| At 31 July 2023 | 349,302,990 | 131 | |
| Share buybacks | (1,764,660) | (1) | (29) |
| At 31 January 2024 | 347,538,330 | 130 | |
| At 31 July 2024 | 345,097,794 | 130 | |
| Share buybacks | (2,485,179) | (1) | (44) |
| At 31 January 2025 | 342,612,615 | 129 |
On 26 March 2024, the Company announced a £10 0m share buyback programme to purchase ordinary shares in the capital of the Company. The first £50m tranche completed on 6 September 2024. Under this scheme, 534,006 ordinary shares of 37.5p were repurchased during the period, for a total consideration of £9,389,882.
On 13 November 2024, the Company announced the increase in its original March 2024 share buyback programme from £100m to £150m. Under the second £100m tranche, 1,951,173 ordinary shares of 37.5p each were repurchased during the period, for a total consideration £34,083,668, of which 27,000 shares with a value of £504,207 were yet to settle and be cancelled.
A further 2,281,502 ordinary shares have been repurchased during the period of 1 February 2025 to 7 March 2025. The programme completed on 21 March 2025.
On 31 January 2025, the Company announced an increase in the £150m share buyback programme to £500m. Following completion of the previous £150m tranche, the additional £350m will commence and is expected to be completed by the end of calendar year 2025.
The Group uses several alternative performance measures ('APMs') in order to provide additional useful information on underlying trends and the performance and position of the Group. APMs are non-GAAP and not defined by IFRS; therefore they may not be directly comparable with other companies' APMs and should not be considered a substitute for IFRS measures.
The Group uses APMs which are common across the industry, in both planning and reporting, to enhance the comparability of information between reporting periods and business units. The measures are also used in discussions with the investment analyst community and by credit rating agencies.
We have identified and defined the following key measures which are used within the business by management to assess the performance of the Group's businesses:
| APM term | Definition and purpose |
|---|---|
| Capital employed | Capital employed is a non-statutory measure of invested resources. It comprises statutory net assets and is adjusted as follows: |
| to add goodwill recognised directly in reserves in respect of subsidiaries acquired before 1 August 1998; to eliminate the Group's investment in ICU Medical, Inc equity and deferred consideration contingent on the future share price performance of ICU Medical, Inc; and to eliminate post-retirement benefit assets and liabilities and non-headline litigation provisions related to John Crane, Inc. and Titeflex Corporation, both net of deferred tax, and net debt. |
|
| It is used to monitor capital allocation within the Group. See below for a reconciliation from net assets to capital employed. |
|
| Capital expenditure | Comprises additions to property, plant and equipment, capitalised development and other intangible assets, excluding assets acquired through business combinations; see notes 7 & 8 for an analysis of capital expenditure. This measure quantifies the level of capital investment into ongoing operations. |
| Divisional headline operating profit ('DHOP') |
DHOP comprises divisional earnings before central costs, finance costs and taxation. DHOP is used to monitor divisional performance. A reconciliation of DHOP to operating profit is shown in note 2. |
| Free cash-flow | Free cash-flow is calculated by adjusting the net cash inflow from operating activities to include capital expenditure, the repayment of lease liabilities, the proceeds from the disposal of property, plant and equipment and the investment in financial assets relating to operating activities and pensions financing outstanding at the balance sheet date. The measure shows cash generated by the Group before discretionary expenditure on acquisitions and returns to shareholders. A reconciliation of free cash-flow is shown in note 16. |
| Gross debt | Gross debt is total borrowings (bank, bonds and lease liabilities). It is used to provide an indication of the Group's overall level of indebtedness. See note 11 for an analysis of gross debt. |
| Headline | The Group has defined a 'headline' measure of performance that excludes material non-recurring items or items considered non-operational/trading in nature. Items excluded from headline are referred to as non-headline items. This measure is used by the Group to measure and monitor performance excluding material non-recurring items or items considered non-operational. See note 3 for an analysis of non-headline items. |
| Headline EBITDA | EBITDA is a widely used profit measure, not defined by IFRS, being earnings before interest, taxation, depreciation and amortisation. See below for a reconciliation of headline operating profit to headline EBITDA. |
| Net debt | Net debt is total borrowings (bank, bonds and lease liabilities) less cash balances and derivatives used to manage the interest rate risk and currency profile of the debt. This measure is used to provide an indication of the Group's overall level of indebtedness and is widely used by investors and credit rating agencies. See note 11 for an analysis of net debt. |
| Non-headline | The Group has defined a 'headline' measure of performance that excludes material non-recurring items or items considered non-operational/trading in nature. Items excluded from headline are referred to as non-headline items. This is used by the Group to measure and monitor material non-recurring items or items considered non operational. See note 3 for an analysis of non-headline items. |
| Operating cash-flow | Comprises free cash-flow and excludes cash-flows relating to the repayment of lease liabilities, interest and taxation. The measure shows how cash is generated from operations in the Group. A reconciliation of operating cash-flow is shown in note 16. |
| Operating profit | Operating profit is earnings before finance costs and tax. A reconciliation of operating profit to profit before tax is shown on the consolidated income statement. This common measure is used by the Group to measure and monitor performance. |
| Return on capital employed ('ROCE') |
Smiths ROCE is calculated over a rolling 12-month period and is the percentage that headline operating profit represents of the monthly average capital employed on a rolling 12-month basis. This measure of return on invested resources is used to monitor performance and capital allocation within the Group. See below for Group ROCE and note 2 for divisional headline operating profit and divisional capital employed. |
The key performance indicators ('KPIs') used by management to assess the performance of the Group's businesses are as follows:
| KPI term | Definition and purpose |
|---|---|
| Dividend cover – headline |
Dividend cover is the ratio of headline earnings per share (see note 4) to dividend per share (see note 14). This commonly used measure indicates the number of times the dividend in a financial year is covered by headline earnings. |
| Earnings per share ('EPS') growth |
EPS growth is the growth in headline basic EPS (see note 4), on a reported basis. EPS growth is used to measure and monitor performance. |
| Free cash-flow (as a % of operating profit) |
This measure is defined as free cash-flow divided by headline operating profit averaged over a three-year performance period. This cash generation measure is used by the Group as a performance measure for remuneration purposes. |
| Greenhouse Gas (GHG) Emissions Reduction |
GHG reduction is calculated as the percentage change in normalised Scope 1 & 2 GHG emissions. Normalised is calculated as tCO2e per £m of revenue. This measure is used to monitor environmental performance. |
| Gross Vitality | Gross Vitality is calculated as the percentage of revenue derived from new products and services launched in the last five years. This measure is used to monitor the effectiveness of the Group's new product development and commercialisation. |
| My Say Engagement Score |
The overall score in our My Say employee engagement survey. The biannual survey is undertaken Group-wide. This measure is used by the Group to monitor employee engagement. |
| Operating cash conversion |
Comprises cash-flow from operations before non-headline items, as a percentage of headline operating profit. This measure is used to show the proportion of headline operating profit converted into cash-flow from operations before investment, finance costs, non-headline items and taxation. The calculation is shown in note 16. |
| Operating profit margin | Headline operating profit margin is calculated by dividing headline operating profit by revenue. This measure is used to monitor the Group's ability to drive profitable growth and control costs. |
| Organic growth | Organic growth adjusts the movement in headline performance to exclude the impact of foreign exchange and acquisitions. Organic growth is used by the Group to aid comparability when monitoring performance. |
| Organic revenue growth (Remuneration) |
Organic revenue growth (remuneration) is compounded annualised growth in revenue after excluding the impact of foreign exchange and acquisitions. The measure used for remuneration differs from organic revenue growth in that it is calculated on a compounded annualised basis. This measure has historically been used by the Group for aligning remuneration with business performance. |
| Percentage of senior leadership positions taken by females |
Percentage of senior leadership positions taken by females is calculated as the percentage of senior leadership roles (G14+ group) held by females. This measure is used by the Group to monitor diversity performance. |
| R&D cash costs as a % of sales |
This measure is defined as the cash cost of research and development activities (including capitalised R&D, R&D directly charged to the P&L and customer-funded projects) as a percentage of revenue. Innovation is an important driver of sustainable growth for the Group and this measures our investment in research and development to drive innovation. |
| Recordable Incident Rate (RIR) |
Recordable Incident Rate is calculated as the number of recordable incidents – where an incident requires medical attention beyond first aid – per 100 colleagues, per year across Smiths. This measure is used by the Group to monitor health and safety performance. |
Capital employed is a non-statutory measure of invested resources. It comprises statutory net assets adjusted to add goodwill recognised directly in reserves in respect of subsidiaries acquired before 1 August 1998 of £478m (31 January 2024: £478m), and to eliminate post-retirement benefit assets and liabilities, litigation provisions relating to John Crane, Inc. and Titeflex Corporation, both net of related tax, the investment in ICU Medical, Inc. equity, the deferred consideration contingent on ICU Medical, Inc's share price and net debt.
| Notes | 31 January 2025 £m |
31 January 2024 £m |
|
|---|---|---|---|
| Net assets | 2,295 | 2,126 | |
| Adjust for: | |||
| Goodwill recognised directly in reserves | 478 | 478 | |
| Retirement benefit assets and obligations | 6 | (25) | 13 |
| Tax related to retirement benefit assets and obligations | 18 | 19 | |
| John Crane, Inc. litigation provisions and related tax | 158 | 167 | |
| Titeflex Corporation litigation provisions and related tax | 24 | 26 | |
| Investment in ICU Medical, Inc equity | – | (180) | |
| Deferred contingent consideration | – | (3) | |
| Net debt | 299 | 505 | |
| Capital employed | 3,247 | 3,151 |
| 31 January 2025 |
31 January 2024 |
||
|---|---|---|---|
| Notes | £m | £m | |
| Headline operating profit for previous 12 months | 549 | 506 | |
| Average capital employed | 3,216 | 3,218 | |
| Return on capital employed ("ROCE") | 17.1% | 15.7% |
The Group monitors the ratio of net debt to headline earnings before interest, tax, depreciation and amortisation as part of its management of credit ratings. This ratio is calculated as follows:
Headline earnings before interest, tax, depreciation and amortisation ("headline EBITDA")
| Notes | Six months ended 31 January 2025 £m |
Six months ended 31 January 2024 £m |
|
|---|---|---|---|
| Headline operating profit | 2 | 269 | 246 |
| Exclude: | |||
| – depreciation of property, plant and equipment | 8 | 21 | 22 |
| – depreciation of right of use assets | 9 | 18 | 17 |
| – amortisation of development costs | 7 | 6 | 1 |
| – amortisation of software, patents and intellectual property | 7 | 7 | 3 |
| Headline EBITDA | 321 | 289 |
| Notes | Year ended 31 January 2025 £m |
Year ended 31 January 2024 £m |
||
|---|---|---|---|---|
| Headline EBITDA for the period | 321 | 289 | ||
| Add: | Headline EBITDA for the previous year | 611 | 584 | |
| Exclude: Headline EBITDA for the first six months of the previous year | (289) | (284) | ||
| Annualised headline EBITDA | 643 | 589 |
Ratio of net debt to annualised headline EBITDA
| Year ended 31 January 2025 £m |
Year ended 31 January 2024 £m |
|
|---|---|---|
| Annualised headline EBITDA Net debt |
643 299 |
589 505 |
| Ratio of net debt to headline EBITDA | 0.5 | 0.9 |
On 28 February 2025, the Group completed the acquisition of Duc-Pac, see note 15 for details.
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