SMITHS GROUP PLC - FULL YEAR RESULTS FOR 12 MONTHS ENDED 31 JULY 2025

Pioneers of progress - engineering a better future

Strong performance, ahead of guidance, and strategic actions progressing

Delivering on our value creation strategy

·    Group¹ delivered strong performance ahead of twice-raised growth guidance delivering +8.9% organic² revenue growth; +60bps organic operating profit margin expansion to 17.4%; +14.8% headline³ EPS growth; 18.1% ROCE and 99% operating cash conversion

·    Continuing operations¹ delivered +7.2% organic revenue growth; 17.3% operating profit margin and 18.3% ROCE

·    Disciplined capital allocation and balance sheet strength: dividend +5.1%; £398m of £500m share buyback completed to 10 September; £121m invested in accretive acquisitions; 0.6x net debt/headline EBITDA

·    Progressing well with the previously outlined strategic actions to focus Smiths as a high-performance industrial engineering business, to enhance growth, improve the financial profile and deploy capital to deliver strong cashflow and returns

·    Separation processes for Smiths Interconnect and Smiths Detection progressing; continue to expect an announcement on Smiths Interconnect by end of December 2025

·    Acceleration Plan on track - £22m of costs incurred in FY2025, with initial benefits being delivered;  expected run-rate of £40-45m of benefits for FY2027 onwards

·    FY2026 outlook (continuing operations) - expect organic revenue growth of 4-6%, with continuing margin expansion; remain confident in delivering our enhanced medium-term financial targets

Statutory reporting and definitions

Roland Carter, Chief Executive Officer, commented:

"This has been another successful year for the Group, building on our strong track record of consistent growth and returns. We exceeded our twice-raised organic revenue growth guidance, delivering +8.9% growth, and operating margin was 17.4%, at the top of our guided range. This strong performance reflects the quality of our business and agility managing ongoing macro-economic uncertainties.

"Our order book and momentum in the business support our confidence in our positive outlook for FY2026, and we expect organic revenue growth of 4-6% and continuing margin expansion towards our medium-term targets.

"FY2025 has been a pivotal year and the strategic actions we have announced to focus Smiths as a world-class industrial engineering company to unlock significant value and enhance returns to shareholders are well underway.

"None of this would be possible without our dedicated people, and I would like to thank colleagues across Smiths for their support, diligence and commitment, particularly as we navigate a period of rapid change."

Presentation

A webcast presentation and Q&A will begin at 08.00 (UK time) today at: https://smiths.com/investors/results-reports-and-presentations. A recording will be available from 13.00 (UK time).

Broadcast interview

Smiths Group plc CEO, Roland Carter, has been interviewed by business journalist Ian King on the key elements of today's results. The link is here: https://smiths.com/investors/results-reports-and-presentations

About Smiths           

We focus on solving the toughest problems for our customers, helping address critical global needs such as decarbonisation and the ever-increasing demand for process and energy efficiency. We use our deep domain engineering expertise and strong practical knowledge to develop mission-critical products and services which support customers in energy, construction and industrial markets. We share the same goals: to build resilient businesses and create value from what we do.

We are pioneers of progress. Engineering a better future, we drive efficiency for customers in mission-critical situations.

We are united by our purpose. It is what we do, how we think, and how we will continue to use our passion for innovative engineering. For more information visit www.smiths.com

Legal Entity Identifier (LEI): 213800MJL6IPZS3ASA11

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs and/or current expectations of Smiths Group plc (the Company) and its subsidiaries (together, the Group) and those of their respective officers, directors and employees concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies, and the businesses operated by the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements. The Company and its directors accept no liability to third parties. This document contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.

UPCOMING EVENTS

SUMMARY

We are pleased to report another year of strong financial performance, extending our track record to four consecutive years of consistent organic revenue growth averaging +7.4%. Group organic revenue grew +8.9%, with organic operating profit growth of +13.1%, a headline operating profit margin of 17.4% and headline EPS growth of +14.8%. ROCE improved significantly to 18.1% and operating cash conversion was strong at 99%. Growth was ahead of twice-raised guidance of +6-8% and operating profit margin was at the top end of the guided range of a +40-60bps expansion. We exceeded our guidance despite the uncertain macro and tariff environment, a challenging US construction market and interruption from the cyber security incident in January, with the most notable impact being in John Crane.

We deployed capital dynamically, in line with our allocation framework, investing 4.3% of revenue organically in RD&E (research, development and engineering) and inorganically, spending £121m on three margin-accretive acquisitions in Flex-Tek. Reflecting our commitment to delivering attractive returns to our shareholders, we enhanced returns to shareholders. We have executed £398m of the £500m share buyback as of 10 September and are announcing a +5.1% increase in the dividend. This represents the 74^th consecutive year of dividend payments to our shareholders. Our balance sheet remains strong with net debt/headline EBITDA of 0.6x and we enter the next phase of our growth and value creation journey from a position of financial strength.

In January, we announced strategic actions designed to maximise value creation, unlock value in the portfolio and enhance returns to shareholders. The separation processes of Smiths Interconnect and Smiths Detection are progressing, with Smiths Interconnect now reported as discontinued operations.

The Acceleration Plan to deliver productivity and capability enhancements and a streamlined cost base, continues at pace, and will help support the achievement of the new enhanced medium-term financial targets that we set out in March.

Smiths is continuing to evolve, and the drivers of our success endure. Our purpose, values, culture and commitment to operational excellence are the foundations of how we operate, and we continue to invest in, develop and support our people. It is their talent and commitment that has delivered the positive results we are announcing today.

STRATEGY UPDATE

Our strategy is to be a focused, efficient and value creating industrial engineering company, operating in the attractive and growing market segments of energy, industrial and construction.

Smiths Interconnect and Smiths Detection separation processes

The separation processes for Smiths Interconnect and Smiths Detection are progressing with pace and purpose, with separation workstreams in train for both businesses. A formal sales process is underway for Smiths Interconnect. A parallel process for both a UK demerger and a sale is being run in relation to Smiths Detection, with a clear focus to maximise value creation and execution certainty.

We remain on track to announce a sale of Smiths Interconnect by the end of calendar year 2025, with the separation of Smiths Detection by way of a UK demerger or sale to follow.

Our business model going forward

Smiths specialises in high-performance technologies in flow management and thermal solutions with leading positions in attractive, growing market segments aligned with structural megatrends. We have valued customer relationships based on customised technologies, products and solutions with more than 70% aftermarket, recurring or repeatable revenue. Smiths has a high-performance culture centred on values, innovation and excellence. It also has a strong financial profile of sustainable growth, high returns and good cash generation with both organic and inorganic expansion opportunities.

Our businesses are exposed to similar end market trends and are underpinned by common capabilities, resources and assets that provide competitive advantage. Supporting them is a lean corporate centre providing support and focusing on core competencies including strategy, capital allocation, M&A and compliance. Common activities and best practice such as supply chain management, procurement, Smiths Excellence continuous improvement and global business services are coordinated across Smiths, with product development, customer focus and operational delivery sitting within the businesses.

Sustainable organic growth drivers

Our key end markets and adjacencies, and their underlying megatrends and geo-political dynamics, ensure we remain well positioned to access market growth opportunities. Key trends underpinning demand for our products include the need for secure energy, emissions reductions, and cleaner industrial processes, as well as the increased demand for greater efficiency and productivity improvements by our customers.

In our key end markets of energy, industrial and construction, these trends underpin a market compound annual growth rate (CAGR) forecast of 4-5% over the next decade.

Our medium-term targets, announced in March, anticipate above market growth, driven by:

·    Leveraging our existing portfolio of leading brands - supported by customer intimacy and leading aftermarket expertise;

·    Commercial excellence - enhancing operational processes, to deliver exceptional customer service and drive value add for us and our customers;

·    Innovation and new product development - investment in new products, innovation and commercialisation to support customer needs; and

·    Market adjacencies - targeting higher growth and higher margin market sub-segments across geographies, products or customers.

Organic growth will be augmented with disciplined value accretive M&A in core and adjacent markets, as demonstrated by Flex-Tek's strong track record, with a further three businesses added in FY2025. 

Margin expansion drivers

We also have several levers supporting our margin expansion ambitions:

·    Operating leverage - drive a higher contribution margin as we grow revenue and build scale;

·    Acceleration Plan - execute initiatives that deliver productivity and capability enhancements, including end-to-end process improvements and optimising operational footprint. It also targets a lean corporate centre with central costs remaining at 1.5-1.7% of revenue, following completion of the separation processes; 

o In FY2025, we saw initial benefits and remain on track to deliver £40-45m annualised benefits in FY2027 and beyond, with approximately half expected in FY2026. In the year, we incurred £22m of cost, with the remainder of the total £60-65m expected in FY2026. Around 2/3 relates to the retained businesses.

·    Operational excellence - deliver ongoing efficiency savings and productivity improvements supported by our continuous improvement programme, Smiths Excellence; and

·    Portfolio - capturing higher margin segments of our markets, for example a greater share of aftermarket, as well as high-grading the portfolio towards higher growth and returns.

New enhanced medium-term targets

In March, we announced new enhanced medium-term financial targets. These targets reflect the superior financial profile of the remaining businesses, with higher growth, margin and returns and further improvement expected from Smiths Excellence and the Acceleration Plan, driving enhanced returns and value creation. The new targets are through-cycle and apply from FY2027 following the completion of both separation processes, with FY2026 being a transition year towards these new ranges.

Disciplined capital allocation

In support of these targets, our capital allocation strategy will continue to prioritise disciplined investment for growth, both organically and inorganically, and deliver enhanced returns to shareholders, while maintaining a strong balance sheet:

·    Organic investment - investing in capital expenditure and in RD&E for new product development and commercialisation to support our customers and drive organic revenue growth, spending ~3-4% of revenue on RD&E;

·    Value-accretive acquisitions - investing in core and adjacent markets to augment organic growth;

·    Dividends - a progressive dividend, balancing the cashflow needs of the business against the delivery of value to our shareholders; and

·    Enhanced returns to shareholders - returning excess cash to shareholders, via share buyback or other appropriate mechanism.

Our intent is to maintain an investment grade credit rating and we will balance this alongside our desire to have an efficient balance sheet. Our credit rating is underpinned by our financial track record, leading market positions, significant share of recurring revenue, including from aftermarket services, and importantly our financial discipline and commitment to the rating.

As we progress the separation of Smiths Interconnect and Smiths Detection, we remain committed to returning a large portion of disposal proceeds to shareholders, with a decision on the scale that will be returned to be made when we have certainty on the timing and magnitude of sale proceeds. The proportion returned will balance our cashflow generation and the use of sales proceeds in the context of our organic investment in RD&E, acquisition pipeline, dividend policy and leverage.

FY2026 outlook - continuing operations

We expect organic revenue growth (on a continuing operations basis) to be in the 4-6% range, noting the strong first quarter comparator in FY2025. This outlook reflects the strength of our order book, as well as the ongoing macro environment uncertainty, with tariffs and increased geo-political risks causing market instability.

·    Improving growth for John Crane is supported by the recent momentum coming into the year, our strong order book and improved execution;

·    For Flex-Tek, our outlook assumes a continuing subdued view on US construction based on current leading indicators (housing starts, building permits and builders confidence), alongside a strong order book in aerospace; and

·    Smiths Detection's growth will continue to be supported by the aviation upgrade programme, albeit at a moderated pace compared with FY2025.

We expect continuing margin expansion to be achieved through operating leverage, the benefits of the Acceleration Plan and continued efficiency savings supported by Smiths Excellence. This also incorporates the net negative impact from US tariffs currently in place.

We expect headline cash conversion in the mid-nineties percent.

FY2025 BUSINESS PERFORMANCE 

Group performance versus FY2025 guidance

In FY2025, Smiths delivered strong growth, margin expansion, cash flow and returns. On a Group basis, the performance was ahead of our FY2025 guidance.

Group revenue grew +8.9% on an organic basis and +6.5% on a reported basis to £3,336m (FY2024: £3,132m). This included £(108)m of negative foreign exchange translation and +£41m from acquisitions, including Modular Metal Fabricators, Inc (Modular Metal), Wattco, Inc (Wattco), Duc-Pac Corporation (Duc-Pac) in FY2025 and £5m from the Heating and Cooling Products (HCP) acquisition made in August 2023. Continuing operations revenue increased +7.2% on an organic basis and 5.0% on a reported basis.

We continue to extend our track record of consistent organic growth. All businesses contributed to growth this year, and we have now delivered more than four consecutive years of organic revenue growth, with average growth of +7.4% over this period.

We exceeded our organic revenue growth guidance despite the uncertain macro environment, a challenging US construction market and interruption from the now resolved cyber security incident in January, with the most notable impact being in John Crane.

·    John Crane's growth was led by good original equipment (OE) sales, particularly in the first half. Growth in the second half was constrained by a number of operational delivery challenges resulting from the upgrade in machining and testing capabilities and exacerbated by a longer than expected recovery from the January cyber incident. In H2, the business saw sequential quarterly improvement in performance;

·    Flex-Tek delivered good growth in its construction business, despite the subdued US construction market, with continued strength in aerospace reflecting new build programmes;

·    Smiths Detection's growth reflected notable strength in aviation as the airport checkpoint upgrade programmes continued, partly offset by lower revenue in Other Detection Systems;

·    Smiths Interconnect's organic revenue increased strongly in the year, supported by a recovery in the semiconductor market and an improved market for connectors, especially in the faster growing aerospace and defence segments, and the benefit of new product launches.

Organic growth is supported by new product development and commercialisation and improved pricing. In the year, +165bps of growth was delivered from new products including John Crane's mechanical seal designed specifically for ethane and ethylene pipeline operators; initial sales from Flex-Tek's new sealed duct system and the broadening of Smiths Detection's digital solutions, in particular its iCMore threat detection software.

We continue to focus on improving operational leverage and enhancing productivity and efficiency throughout our operations. Group headline operating profit rose to £580m (FY2024: £526m); +13.1% (+£66m) on an organic basis, and +10.3% (+£54m) on a reported basis. Acquisitions contributed £10m to operating profit and were accretive to margin.

For continuing operations, headline operating profit of £505m (FY2024: £477m) was 8.5% higher organically and 6.0% higher on a reported basis.

Group headline operating profit margin was 17.4%, up +60bps on both an organic and a reported basis. Continuing operations headline operating profit margin was 17.3%. This reflected volume growth, pricing ahead of inflation, benefits of efficiency savings, including Smiths Excellence, partially offset by product and business mix, and the impact of tariffs.

The overall margin performance was at the top end of the guided range of +40-60bps expansion.

·    A +60bps margin expansion in John Crane was driven by cost efficiency, the benefits of Smiths Excellence and other productivity improvements, partly offset by adverse foreign exchange;

·    Margin decline at Flex-Tek reflected operating leverage and Smiths Excellence savings being offset by adverse mix, with a lower contribution from higher margin industrial heating contracts. It also reflected an £8m in-year charge for a non-material balance sheet overstatement related to an isolated US industrial site, with the issue thoroughly investigated and now resolved;

·    Margin improvement in Smiths Detection was driven by notably higher volumes, alongside pricing and mix benefits, as well as continued enhancement in operational efficiency.

·    Margin improvement in Smiths Interconnect was driven by higher pricing and volume, alongside positive mix effects, efficiency improvements and Smiths Excellence benefits.

The Group margin improvement also reflected initial benefits from the Acceleration Plan, with savings mostly in John Crane and a reduction in central costs.

Group ROCE increased +170 bps to 18.1% (FY2024: 16.4%), reflecting the higher profitability and efficient use of capital. ROCE on a continuing operations basis was 18.3%.

Group headline EPS grew +14.8% to 121.2p (FY2024: 105.5p). This included a headline tax charge of £137m (25.0% effective tax rate) (FY2024: £122m, 25.0%), a £7m reduction in headline finance costs and the benefit of the share buyback programme, partially offset by foreign exchange impact.

Group headline operating cash conversion was 99% (FY2024: 97%), supported by the year-on-year improvement in profit. Headline operating cashflow was £576m (FY2024: £509m) and free cashflow generation increased +12.8% to £336m (FY2024: £298m) or 58% of headline operating profit (FY2024: 57%).

Discontinued operations

Smiths Interconnect has been classified as discontinued operations, and the assets and liabilities have been classified as held for sale. The headline profit after tax from the discontinued operations was £57m (FY2024: £35m), and £16m (FY2024: £29m) on a statutory basis.

CAPITAL ALLOCATION

We take a disciplined approach to our use of capital; investing in our businesses to support organic growth, pursuing strategic and disciplined acquisitions, adopting a progressive dividend policy and returning excess capital to shareholders. As announced in January, we are accelerating execution against this with enhanced returns to shareholders through our increased share buyback programme. Our dividend policy aims to increase dividends in line with growth in earnings and cashflow, with the objective of maintaining minimum dividend cover of around two times.

Organic investment

During the year, the Group invested £143m in RD&E (FY2024: £150m), of which £120m (FY2024: £114m) was an income statement charge, £4m was capitalised (FY2024: £14m) all in Smiths Detection, primarily next-generation hold and cabin baggage screening, and £19m (FY2024: £22m) was funded by customers, largely related to Smiths Detection. This includes £46m spend (FY2024: £50m) on customer-specific engineering-related projects predominantly in John Crane. Total spend for FY2025 represents 4.3% of sales (FY2024: 4.8%).

Capex decreased to £80m (FY2024: £86m) and included planned investment in capacity and automation at John Crane and initiatives under the Acceleration Plan.

M&A

During the year, we completed the acquisitions of Modular Metal, Wattco and Duc-Pac with net acquisition spend of £121m at attractive valuation multiples and accretive margins. The acquisitions extended Flex-Tek's geographical reach within its HVAC business and broadened its portfolio of energy efficient thermal solutions for industrial applications with an operating margin accretive to that of Flex-Tek.

Shareholder returns - share buyback and dividend

As announced on 31 January 2025, we increased our share buyback programme to £500m. Since the start of the programme in March 2024 up to 31 July 2025, we had completed £349m. A further £49m has been completed since the year-end up to 10 September. The remainder is expected to be completed by the end of calendar year 2025.

The Board is recommending a final dividend of 31.77p, bringing the total dividend for the year to 46.0p (FY2024: 43.75p), a year-on-year increase of +5.1%. The final dividend will be paid on 21 November 2025 to shareholders on the register at close of business on 17 October 2025.

Net debt

Group net debt at 31 July 2025 increased to £441m (FY2024: £213m) with a net debt to headline EBITDA ratio of 0.6x (FY2024: 0.3x), with the year-on-year increase reflecting the share buyback programme, net acquisition spend of £121m, partly offset by net proceeds of £53m from the sale of the remaining ICU Medical, Inc shareholding. On a continued operations basis, net debt was £462m (FY2024: £213m).

Net headline finance costs for the year decreased to £31m (FY2024: £38m), principally due to interest on higher average cash balances.  

As at 31 July 2025, Group borrowings were £677m (FY2024: £659m) comprising a €650m bond which matures in February 2027 and £118m of lease liabilities. There are no financial covenants associated with these borrowings. Cash and cash equivalents as at 31 July 2025 were £226m (FY2024: £459m).

On a continued operations basis, borrowings were £667m (FY2024: £659m) comprising the €650m bond and £108m of lease liabilities. Cash and cash equivalents as at 31 July 2025 were £195m (FY2024: £459m).

Together with an $800m (£605m at the year-end exchange rate) revolving credit facility, which matures in May 2030 and a £200m revolving credit facility, which matures in June 2027, total liquidity was £1bn at the end of the period.

STATUTORY RESULTS

Income statement and cashflow

The £95m difference (FY2024: £108m) between continuing operations headline operating profit of £505m and statutory profit of £410m is non-headline items. The largest of these relate to the amortisation of acquired intangible assets of £50m, a £12m net credit for asbestos litigation provision in John Crane Inc, and £22m of cost in relation to the Acceleration Plan. Smiths Detection separation costs amounted to £10m and £4m costs were charged in relation to cyber remediation costs. A £15m impairment charge was recognised related to prior-year adjustments for non-material working capital balances which were assessed to be overstated at a standalone Flex-Tek US industrials business, with the issue thoroughly investigated and now resolved.

The Smiths Interconnect discontinued operation headline operating profit for the period was £75m (FY2024: £49m), to bring the total Group headline operating profit to £580m (FY2024: £526m). A further £40m (FY2024: £3m) was charged through non-headline for Smiths Interconnect specific items, including a £30m impairment as a result of an agreement to sell its US sub-systems business unit and £8m of separation costs.

Total Group operating profit (including discontinued operations) for the period was £445m (FY2024: £415m). Total finance costs for the Group were £35m, £8m lower than the prior year (FY2024: £43m).

The total Group effective tax rate (including discontinued operations) was 28.8% (FY2024: 32.5%) and includes a non-headline tax credit of £19m (FY2024: £1m). Statutory profit after tax for the Group was £292m (FY2024: £251m) and statutory basic EPS was 85.7p (FY2024: 72.3p).

Statutory net cash inflow from operating activities for the Group was £456m (FY2024: £418m). 

Pensions

During the year, £11m of pension contributions (FY2024: £16m) 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 contributions were made in FY2025 to either the TI Group Pension Scheme (TIGPS) or the Smiths Industries Pension Scheme (SIPS) and it is not anticipated that any further contributions will be made. For the TIGPS, the liabilities have now been insured via a series of buy-in annuities, with Smiths and the TIGPS Trustee working toward final buy-out of the scheme. The SIPS is now fully funded on the Technical Provisions basis and buy-out funding basis, significantly ahead of target. Smiths and the SIPS Trustee are now working together to consider the next steps for the scheme.

These two UK schemes and the US pension plan are well hedged against changes in interest and inflation rates. Their assets are invested in third-party annuities, government bonds, investment grade credit or cash, with a small proportion of equity investments held by the US pension plan. As at 31 July 2025, 60% of the funded UK liabilities had been de-risked through the purchase of annuities from third party insurers.

Foreign exchange

The results of overseas operations 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:

Sustainability, Excellence and People combine to drive improved execution

During FY2025, our people, sustainability and Smiths Excellence functions were combined under one leadership to foster a cohesive approach and further embed them into our businesses and culture. These initiatives also support improved execution and the delivery of both our sustainability, and our medium-term financial targets. Our new 'Better Connected' newsletter was launched to amplify the effect of these combined functions. A great example of this collaborative approach was in John Crane India, where our team created a new carbide recycling process that enables this finite material to be used more efficiently, reduces pollutive waste and brings money back to the business.

We refreshed our double materiality and gap assessment to evaluate our sustainability focus areas in preparation for future reporting requirements and are making good progress. We continue proactively to manage reductions in the environmental impact of our operations and manufacturing processes and have set new targets for FY2025-2027 for supplier engagement, water, waste and biodiversity, alongside our SBTi emissions targets. During the year, we migrated to the Watershed sustainability platform to increase the accuracy of our energy, GHG, water and waste reporting and audit practices, and enable more effective modelling and targeted action.

We have made good progress in the deployment of the EcoVadis platform to align our suppliers with our efforts. By the end of the year, 28% of suppliers by spend had completed evaluation on the platform. We intend to merge all supplier onboarding processes into one ecosystem on EcoVadis.

1 The energy reduction target is expressed as the MWh energy consumed (excluding renewable electricity produced and consumed onsite), compared to a revenue-adjusted MWh baseline (excluding price growth within the measurement year), and excludes the acquisitions of Wattco, Modular Metal and Duc-Pac

2 Scope 1, 2 and 3 GHG emissions calculated in accordance with the WRI/WBCSD Greenhouse Gas Protocol

3 Excluding acquisitions of Wattco, Modular Metal and Duc-Pac

4 Normalised to reported revenue

5 Across 10 identified water stressed areas

Safety, alongside health and well-being, is an essential foundation of our success and our key focus is to create injury-free workplaces through continuous improvement. Our FY2025 recordable incident rate was 0.28 (FY2024: 0.44), with the improvement reflecting our enhanced targeted and sustainable preventative action. Supplementing our focus on physical safety, we also work to support colleagues' mental health and well-being. We have mental health first aiders at a number of sites and include mental health and well-being courses in our training suite. We recognise that colleagues involved in the separations of businesses may need additional support for their mental health.

Continued development of our people also underpins our success. A key achievement this year has been the continued roll-out of Smiths Excellence Fundamentals training. More than 9,000 colleagues have now completed the module, which delivers grassroots understanding of Smiths Excellence principles. We also completed deployment of our Lean programme to all sites with more than 100 colleagues.

Our people are enthusiastic about supporting our communities and our annual Smiths Day in June celebrated both our culture and our communities, with many colleagues volunteering for local causes. The Smiths Group Foundation has now made grants totalling almost £1.7m to 19 charities in 11 countries supporting STEM, safety and connectedness and environmental sustainability. To support STEM development and our own businesses in the UK, we joined the Manufacturing Technology Centre core research programme. This provides an opportunity to collaborate closely with universities, industry leaders and cutting-edge engineers to accelerate future waves of innovation and will help us continue to grow our global competitiveness and better support our customers.

Executive Committee and Board changes

During the year, there were several changes to the Board and Executive Committee. In February, Julian Fagge was appointed as Chief Financial Officer, having formerly been President of Smiths Interconnect and Group Financial Controller, succeeding Clare Scherrer.

As a result of this change, Vera Parker, was appointed President of Smiths Interconnect; Kini Pathmanathan's role was expanded to include People in addition to Sustainability and Excellence; and Ruben Álvarez, was promoted to be President, John Crane, following Bernard Cicut's retirement.

In August 2025, Ted Wan came off the Executive Committee as a result of retiring the China operational structure; Diana Houghton, Group Head of Strategy and Communications, and Pat McCaffrey, President of Flex-Tek, both departed Smiths. Flex-Tek is now being co-led by Chris Edwards, President of Flex-Tek Construction and Heat, and Mike Stern, President of Flex-Tek Aerospace, who have been at Flex-Tek for 20 years and six years, respectively. They joined the Executive Committee in September 2025.

At Board level, Simon Pryce was appointed as a Non-executive Director in February. In August 2025, as part of its orderly succession planning, and the strategic actions progress to become a more focused Smiths, it was announced that Mark Seligman, Noel Tata and Karin Hoeing will retire from the Board at the conclusion of the AGM in November. Dame Ann Dowling will then be appointed as the Senior Independent Director.

JOHN CRANE

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, dry gas 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 33% of Group revenue.

¹ Research, development and customer-specific engineering

Revenue

John Crane delivered organic revenue growth of +3.0% for the year, against a strong prior year comparator of +9.8% growth. Following a robust first half performance, growth in the second half was constrained by a number of operational delivery challenges resulting from the upgrade in machining and testing capabilities, and exacerbated by a longer than expected recovery from the January cyber incident. In H2, John Crane saw sequential quarterly improvement in its operation and organic revenue growth, with momentum gained in the fourth quarter delivering growth of +3.9%. Growth for the year was driven by a stronger performance in original equipment compared to aftermarket, which was more impacted by the cyber incident, though showed good recovery in the fourth quarter.

Market demand remains healthy, with a strong order intake performance in FY2025 resulting in a positive book to bill ratio providing good coverage for the upcoming year. Alongside improved execution, as demonstrated by key operational performance metrics, this supports a positive outlook for FY2026.  

Reported revenue declined (1.6)% to £1,115m, reflecting the organic growth offset by a negative (4.6)% foreign exchange impact.

In Energy, organic revenue grew +1.4% (FY2024: +15.9%) with OE growth of +2.3%, benefiting from a continued focus on energy security and efficiency, as well as emissions reduction solutions. Performance was particularly strong in the first half at +12.2%, with the second half decline reflecting a strong prior year comparator of +17.5%. New contracts in the year included a large scale retrofit project in the Middle East to upgrade existing seals with patented diamond-coated technology to reduce friction, increase reliability, and improve energy efficiency. John Crane also secured a supply agreement for high-performance couplings, gas filters, and nitrogen filters as part of a large-scale energy development. These solutions contribute to safer, cleaner, and more efficient operations across critical energy infrastructure.

In energy transition, the pipeline of opportunities John Crane is pursuing across the portfolio, including CCUS, hydrogen and biofuels, continues to expand, currently at c.250 projects (FY2024: c.170). As an example, John Crane played a critical role in supporting renewable energy infrastructure in Europe by supplying sealing systems for more than 300 pumps across three biorefinery projects. These projects support the production of lower-carbon fuels and reinforce environmental compliance across essential transport and energy sectors.

General Industrial showed good growth of +5.6% and was broad based across OE and aftermarket. Growth was largely driven by chemicals, general industry and marine segments, and supported by good growth in aftermarket sales. Elsewhere, in pulp & paper, John Crane renewed and increased the scope of an existing contract with a leading company in Asia for a 5-year period, more than doubling the number of pumps and increasing the use of John Crane Sense Monitor and Smartflow Control, making it the largest managed reliability programme in the region.

Operating profit and ROCE

Headline operating profit of £265m grew +6.3% on an organic basis, resulting in +80bps of organic margin expansion to 23.8%. This was largely a result of productivity improvements, pricing and efficiency benefits from Smiths Excellence, as well as initial savings from the Acceleration Plan. This performance was in the context of higher investment to increase capacity and efficiency through higher automation and testing capabilities. The programme is substantially completed and expected to finalise in FY2026 and is key to service the current demand and propel future growth.

On a reported basis, headline operating profit was up +1.1%, including a negative foreign exchange impact. The difference between statutory and headline operating profit includes the net cost in relation to the provision for John Crane, Inc. asbestos litigation and costs incurred in relation to the Acceleration Plan.

ROCE was 25.2%, down (10)bps, reflecting the higher level of investment on automation and capacity.

RD&E and new product development

Cash RD&E (research, development and customer-specific engineering) expenditure was broadly flat at 5.1% of sales (FY2024: 5.2%). Excluding customer-specific engineering-related projects, the business spent 1.5% of sales (FY2024: 1.6%). John Crane's RD&E focus continues to be on gas compression projects and enhancing the efficiency, performance and sustainability of heavy-duty seals and hydrogen compressors.

In June, John Crane launched its Type 93AX Coaxial Separation Seal, a next generation dry gas sealing solution engineered to help customers reduce emissions, improve equipment reliability, and lower operational costs. The Type 93AX is designed to mitigate both operational performance and financial risks for customers by extending the reliability of the seal system and reducing nitrogen consumption by up to 80% compared to conventional radial separation seals. The initial positive reception of this new innovative product is encouraging, recognising that new product uptake ramps up over time.

John Crane is well placed to support energy transition projects with its extreme temperatures and high-pressure sealing solutions and continues to work with universities, such as the University of Sheffield, to advance on these programmes.

FLEX-TEK

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 general industrial, including construction, and 19% from aerospace. Flex-Tek represents 25% of Group revenue.

Revenue

Organic revenue increased +4.4% in the year, with growth improving in the second half to +6.3%, following first half growth of +2.5%. Revenue on a reported basis grew +6.6%, with a £41 million contribution from the acquisitions of Modular Metal, Wattco and Duc-Pac, partially offset by a negative foreign exchange translation.

In General Industrial, organic revenue increased +4.0% despite challenging conditions in the US construction market which has persisted throughout FY2025. Flex-Tek has performed strongly against this backdrop reflecting increased demand for heat kits and a notably strong third quarter in our HVAC flexible ducting products. Flex-Tek is well positioned to benefit from a construction market recovery when mortgage rates moderate and given the meaningful housing inventory deficit in the USA.

Flex-Tek's energy efficient solutions for industrial applications posted flat revenue year-on-year, reflecting the phasing of heater product deliveries to support one of its larger contracts, which concludes in H1 FY2026. Flex-Tek is well placed for further industrial heating project wins, further strengthened following the acquisition of Wattco which brings manufactured process skid systems. Its products, such as certified pressure vessels, integral electric heating platforms, thermodynamic isolation module systems and steam heating support the ever-expanding clean energy and data demand opportunities. A notable recent win was a contract for the provision of electric heaters for an ultra-low carbon emissions electro-fuel project in North America.

In Aerospace, organic revenue grew strongly at +6.3% supported by a healthy order book. Strong growth in the first quarter was supported by buoyant demand across the year, reflecting ongoing aerospace build programmes. In addition, several long-term agreements are being re-negotiated which will help support the future growth of the aerospace business. Flex-Tek aerospace again ended the year with a strong order book which supports healthy demand into FY2026.

Operating profit and ROCE

Headline operating profit increased £3m and included an £8m in-year charge to correct for a non-material balance sheet overstatement, as further detailed below. The organic operating margin declined by (120)bps, with the underlying performance reflecting ongoing cost control, partly offset by higher materials costs reflecting mix impacts, and a positive contribution from acquisitions. On a reported basis, headline operating profit increased +1.6%, although the margin declined (100)bps.

The difference between statutory and headline operating profit reflects the amortisation of acquired intangible assets and the provision for Titeflex Corporation subrogation claims. It also includes a £15m charge relating to prior years' balance sheet overstatements at a standalone US industrial site. The issue, which is isolated to this site, has been independently investigated and is now resolved. 

ROCE decreased (290)bps to 23.7% reflecting the headline operating profit decline.

During FY2025, three bolt-on acquisitions were completed for a combined net acquisition spend of £121m. In construction, Modular Metal expanded Flex-Tek's HVAC presence into the western US market and broadened its product offering to include Modular Metal's sealed flexible duct solution; Duc-Pac expanded its geographical metal duct coverage into the north-east USA and Wattco expanded the industrial heating portfolio. Integration of all acquisitions is proceeding to plan.

RD&E and new product development

Cash RD&E expenditure was 0.7% of sales (FY2024: 0.4%), with the increase partly reflecting a re-categorisation of spend from cost of goods sold. RD&E is focused on developing new products for the construction and aerospace markets, and new electrification opportunities within industrial markets.

During FY2025, Flex-Tek launched its 'Blue Series' sealed metal duct system. It uses an innovative approach to sealing which eliminates leakage to provide a more energy efficient solution which reduces installation time, saving contractors cost on materials and labour.

Within General industrial, product development included new heat exchanger systems and medium voltage applications to support growth from energy storage and renewable energy requirements.

SMITHS DETECTION

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. 51% of Smiths Detection's sales are derived from the aftermarket. Smiths Detection represents 29% of Group revenue.

¹ Formerly 'Other Security Systems'

Revenue

Smiths Detection delivered +15.2% organic revenue growth, successfully converting its strong order book into revenue, driven by significant growth in Aviation, across both OE and aftermarket segments, partly offset by a modest decline in Other Detection Systems (ODS). Looking ahead, its multi-year order book remains strong with growth to continue to be supported by the aviation upgrade programme, albeit at a moderated pace.

Reported revenue was up +12.1% reflecting the strong organic growth, partially offset by an unfavourable foreign exchange impact.

In Aviation, organic revenue grew +23.4%, with OE growth of +27.8%, reflecting the continued strong demand for the latest range of 3D-image computed tomography (CT) machines for cabin baggage, CTiX. Smiths Detection continues to achieve a good win rate globally in aviation, and to date, has now sold c.1,800 CTiX scanners, which are the first ones to have received the 'up to two litres' re-certification in the UK and EU.

Order intake during the year continued to reflect the ongoing demand for airport scanner upgrades, with notable wins in Australia, Germany, Japan, Poland, Switzerland and the UAE. It is anticipated that the global upgrade programme will continue with the current level of cabin baggage activity into FY2026, along with the associated longer-term aftermarket revenue stream.

Smiths Detection is well positioned for the next upgrade cycle of hold baggage, expected to happen later in the decade. Smiths Detection launched the SDX 10060 XDi, based on X-ray diffraction technology, which allows highly accurate material and substance identification based on an object's molecular structure. Smiths Detection is the first company in the aviation sector to have launched this product, which is currently pending regulatory certification. As of July 2025, four units were in operation.

In Aviation aftermarket, Smiths Detection was awarded the renewal of two significant long-term contracts to service both hold and passenger baggage X-ray inspection systems at airports across the USA.

ODS sales declined (3.3)% organically. Following an (11.3)% decline in the first half, reflecting a strong prior year comparator and the phasing of certain contracts, revenue grew +5.2% in the second half driven by ports & borders and urban security products. In urban security, Smiths Detection secured a contract to supply mobile solutions (SDX 6040 X-ray inspection systems) to a major cruise line.

In ports and borders, the business installed four state-of-the-art HCVM™ XL mobile scanners to the Customs and Excise Division of Trinidad & Tobago, as part of a broader effort to enhance national security. In the USA, the business installed three Multi-Energy Portals in Texas enhancing the ability to screen road cargo for dangerous or illegal items ensuring a safer and more secure border. Looking ahead, increased focus on border security controls support improved growth prospects in ports and borders.

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 personal chemical detectors to the Japanese Ministry of Defence, for delivery in 2025 and 2026.

Operating profit and ROCE

Headline operating profit increased +23.3% on an organic basis for the year, reflecting the strong organic revenue growth and favourable pricing combined with a positive mix effect and focus on cost efficiencies. Headline operating profit margin of 12.7% was up 80bps on both an organic and reported basis, building further on a recent history of consistent margin expansion, with further upside potential.

On a reported basis, headline operating profit was up +20.1%, including a negative foreign exchange translation, with the difference between statutory and headline operating profit reflecting amortisation of acquired intangibles.

ROCE increased by +230bps to 11.4%, driven by the headline operating profit growth.

On 1 August 2025, Smiths Detection acquired Med Graphix Inc. (MGI), based in New Jersey, USA, a service and repair partner of over two decades and third-party depot supplier. This acquisition, although small in nature, enhances Smiths Detection's sustainable service offering by extending the lifecycle of critical components through repair, refurbishment, and reuse. This capability reduces operational risk and further improves our ability to meet customer service needs.

RD&E and new product development

Smiths Detection's strong competitive positioning in Aviation is a reflection of its technical leadership, world-class innovation capabilities, and commitment to quality, reliability and safety. These strengths are further reinforced by deep, long-standing relationships with customers and regulators, a comprehensive global service network, and advanced digital capabilities.

In FY2025, the business invested 5.7% of sales in RD&E in cash terms (FY2024: 7.8%) to support investment in next-generation detection capabilities, with the year-on-year decline largely a reflection of the strong revenue growth. This included £17m in customer funded projects (FY2024: £20m).

As a result, Smiths Detection continues to maintain a leadership position in aviation security through a series of industry-first innovations. As an example in FY2025, its iCMORE APIDS (Automated Prohibited Items Detection System) software solution became the first automation platform to receive regulatory approval for deployment in a live airport environment, with successful implementation at Schiphol Airport. This underscores the company's commitment to innovation, regulatory alignment, and operational excellence.

Smiths Detection also continues to partner with companies and universities in the development of new products. For example, in May 2025 it signed a partnership with Xbat.ai to develop an innovative battery sorting solution, and since April 2024, it has been collaborating with University of Exeter to advance in the enhancement of our aftermarket service offering through digital solutions.

SMITHS INTERCONNECT

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.

Revenue

Smiths Interconnect's organic revenue increased +22.5% in FY2025, supported by strong growth in the semiconductor market, new product launches and improved market conditions in the growing aerospace and defence segments in both the USA and in Europe. 

Reported revenue increased +18.9%, with the organic movement partly offset by a negative foreign exchange impact.

Growth was broad based across all businesses, demonstrating the strength of the portfolio and the innovative product offering. There was particularly strong growth in semi-conductor test reflecting our leading market position in high performance products. Semi-test growth reflected large programme wins from major global technology customers, particularly in test products for high-speed GPU and AI semi-conductor chips, which drove revenue growth significantly above the market.

Growth in aerospace and defence was also strong, reflecting high demand for differentiated technology in fibre-optic, radio-frequency and connector products, with particularly notable demand for our interposer and optical transceiver products. The robust market backdrop, combined with our strong customer programme wins, underpins our growth expectations for FY2026.

Operating profit and ROCE

Headline operating profit increased +57.2% on an organic basis, resulting in a +390bps rise in organic operating profit margin to 17.8%. The year-on-year improvement reflected strong operational leverage, efficiency improvements and Smiths Excellence benefits, partly offset by higher employee-related costs in the light of the improved year-on-year performance. On a reported basis, headline operating profit increased +51.9% and statutory operating profit declined (23.9)%.

The difference between statutory and headline operating profit reflects the amortisation of acquired intangibles and disposal-related costs. In addition, an impairment on disposal of £30m was recorded as a result of an agreement to sell its US sub-systems business unit, as part of the strategic initiative to separate Smiths Interconnect. (See note 28.) 

ROCE improved +630bps to 16.7%, driven by the higher operating profit.

RD&E and new product development

Cash RD&E expenditure as a percentage of sales was 6.1% of sales (FY2024: 6.2%). RD&E is focused on developing highly specialised new products that improve connectivity and product integrity in demanding operating environments in mission critical end markets where precision, reliability and durability are vital.

Following the recent success of the industry award-winning DaVinci 112 high-speed semiconductor test socket, Smiths Interconnect launched DaVinci Gen V, the latest flagship product in this portfolio. It delivers ultra-reliable testing at the fastest speeds for some of the most complex functionality of integrated circuits of chips, used in AI, data centres, 6G communications and advanced computing applications. As integrated circuits evolve - doubling in bandwidth and computational power every two years - DaVinci Gen V is designed for seamless integration, allowing manufacturers to transition effortlessly, reduce development cycles and accelerate time-to-market.

In connectors, Smiths Interconnect launched the EZiCoax interposer connectors, designed to be used in high-value aerospace and defence applications, such as satellites and advanced radar sy--stems, where it will help enable secure, precise and reliable communications. Also, Smiths Interconnect extended its high density modular and mini-modular connectors ranges with the addition of the Cat5e and Cat6A data transmission modules. These products deliver reliable performance in harsh environments providing efficient signal transmission, reducing data errors and ensuring high-speed communication for customers.

Smiths Interconnect's UK facility in Dundee successfully launched its new CAD-to-FAB capability this year, accelerating growth in defence and aerospace programmes by leveraging rapid-prototyping and design innovation alongside cost-effective production processes. Supported by the UK Space Agency's Space Clusters Infrastructure Fund, CAD-to-FAB initiatives are now delivering isolators, circulators, filters and multi-function assemblies to a growing number of UK and global defence and aerospace customers. Continued technical advancements and collaborative efforts in this capability will maintain its leadership in high-performance RF ferrite device manufacturing, further expanding its global footprint.

Space grade products are a key development focus, particularly in radio frequency and optical products.  During the year, Smiths Interconnect's products supported several high-profile space campaigns, including the 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.