Smiths Group (SMIN) Investor Update summary

Strategic portfolio actions

• Refocusing on high-performance industrial technology businesses, John Crane and Flex-Tek, with Smiths Interconnect to be divested and Smiths Detection to be separated via demerger or sale, following a strategic review from a position of strength.

• Smiths Interconnect divestment process begins immediately, targeting a transaction announcement by end of 2025; Smiths Detection separation to follow.

• Both divisions have strong market positions and recent performance improvements.

• National security and control issues are considered in the separation process.

• A new Board committee with significant M&A experience will oversee execution of these strategic actions.

Capital allocation and shareholder returns

• Share buyback programme increased to £500 million, with £150 million to be completed by March 2025 and an additional £350 million by year-end 2025.

• Large portion of disposal proceeds to be returned to shareholders while maintaining an investment-grade rating.

• Ongoing investment in R&D (3–4% of revenue) and value-creating bolt-on acquisitions in high-growth adjacencies.

• Pension liabilities are well managed, with schemes insured or in process.

• Tax structure allows for minimal leakage on proceeds.

Operational and financial performance

• Achieved 7% compound annual organic revenue growth (FY2021–FY2024), 130bps margin expansion to 16.8%, and 88% average cash conversion.

• John Crane and Flex-Tek have operating profit margins above 20% and returns on capital employed over 25% in FY2024.

• Streamlined group cost structure to be addressed through an acceleration plan.

• Central costs will be right-sized, with more details to follow.

• Completed five acquisitions for £255m at an average 8.0x EV/EBITDA and returned over £1.2bn to shareholders via dividends and buybacks.