SMITHS GROUP PLC - HALF YEAR RESULTS FOR 6 MONTHS ENDED 31 JANUARY 2026

Pioneers of progress - engineering a better future

Excellent strategic progress, strengthening focus on higher growth and margin

·    Excellent progress on strategic actions to reshape the portfolio:

o Sales of Smiths Interconnect and Smiths Detection agreed at attractive valuations for a combined enterprise value of £3.3bn, ahead of market expectations

o Smiths Interconnect approaching completion; Smiths Detection on track to close in second half of CY2026

·    Disciplined capital allocation delivering enhanced shareholder returns plus growth accretive M&A:

o Current CY2026 £1bn share buyback underway, following completion of CY2025 £500m buyback in December

o Announcing today, a further £1.5bn to be returned to shareholders via a combination of structured return (tender offer or special dividend) and share buyback through CY2027, to commence following completion of Smiths Detection sale

o Dividend +5.4% to 15.00p, continuing track record of dividend growth

o Agreement signed in March to acquire DRC Heat Transfer for £164m, extending Flex-Tek's offering into industrial cooling technologies with exposure to high growth markets, including data centres

·    Solid financial performance, with positive Q2 momentum into the second half:

o Group¹ delivered +4.0% organic² revenue growth; headline³ operating profit margin +50bps to 17.2%

§ John Crane: mid-single digit growth in Q2; order book underpins continuing momentum into the second half with mid-single digit growth expected

§ Flex-Tek: continuing strong growth in aerospace, offset by weakness in construction reflecting the continued challenging US construction market

§ Smiths Detection: conversion of strong order book, with growth driven by aviation

·    FY2026 outlook updated for Smiths to exclude Smiths Detection:

o Expect organic² revenue growth of 3-4%, with H2 growth within medium-term 5-7% target range and operating profit margin of ~20%, progressing towards 21-23% target range

Statutory reporting and definitions

Roland Carter, Chief Executive Officer, commented:

"The first half was important for Smiths with the announcement of the transformational sale of Smiths Detection and Smiths Interconnect, achieving multiples above market expectations and ahead of schedule.

"2026 is a significant year of progress as we reposition Smiths towards higher growth and higher returns markets. We delivered increased momentum in the second quarter, and our strong order book supports an improved second-half performance.

"Following the completion of the disposals, Smiths will be a focused, premium industrial engineering company. Our strategy is delivering significant value and supporting enhanced, sustainable returns, alongside our continued investment into Smiths, and commitment to a further £1.5bn of returns to shareholders.

"During a period of considerable change, I want to recognise our colleagues' continued dedication to delivering for our customers, living our Values, and fulfilling our purpose."

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).

About Smiths            

For 175 years, we have been pioneers of progress, engineering a better future. Our strategy is to be a focused, efficient and value creating industrial engineering company operating in the attractive and growing market segments of energy, industrials, construction and aerospace.

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 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 and its subsidiaries 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

The first half of FY2026 was a period of excellent strategic progress for Smiths, with the strong execution of the value‑accretive sales of Smiths Interconnect and Smiths Detection.

As a result of these changes to the Smiths portfolio, we have updated our guidance for FY2026 to exclude Smiths Detection which is now classified as discontinued operations. Our guidance reflects momentum building in John Crane in the second quarter supported by a strong and growing order book, alongside continuing weakness in the US construction market impacting Flex‑Tek.

In line with our commitment to return a large portion of sale proceeds to shareholders, today we are announcing plans to return an additional £1.5bn via a combination of a structured return (tender offer or special dividend) and further buyback programme utilising proceeds from the sale of Smiths Detection, to commence post sale completion. This planned return of capital is in addition to the CY2026 £1bn buyback that is underway.

In March, we announced the acquisition of DRC Heat Transfer ('DRC') for £164m, broadening Flex-Tek's offering and expanding into higher growth adjacencies.

We are rapidly repositioning Smiths as a focused premium industrial engineering company, aligned to structural megatrends, supported by an enhanced emphasis on innovation, operational excellence, a high-performing culture and our Smiths Values, to drive long‑term value for all stakeholders.

STRATEGY UPDATE

Smiths Interconnect and Smiths Detection sales announced and on track for completion in CY2026

In October, we announced the sale of Smiths Interconnect to Molex Electronic Technologies Holdings, LLC for £1.3bn enterprise value representing a 15.1x multiple of FY2025 headline EBITDA. In December, we announced the sale of Smiths Detection to CVC Capital Partners for £2.0bn enterprise value representing a 16.3x multiple of FY2025 headline operating profit and 12.5x headline EBITDA. Both transactions were executed at highly attractive multiples, demonstrating the quality of the businesses and the quality of execution.

The separation processes and regulatory clearances for both transactions are progressing well. Smiths Interconnect is approaching completion and we remain on track to complete the sale of Smiths Detection in the second half of this calendar year.

As part of our strategy to refine and high-grade the portfolio, a decision has been taken to divest parts of the Flex-Tek industrial portfolio and allocate capital to higher growth and higher margin market sub-segments. This has resulted in the proposed exit of certain general industrial businesses within Flex-Tek, improving the growth prospects and the margin profile of Flex-Tek. In HY2026, these businesses contributed £25m to revenue with a £2m operating loss (FY2025: £54m revenue and £5m loss) and are now reported as discontinued operations in the presentation of the half year results.

Enhanced returns to shareholders

The reshaping of our portfolio has enabled enhanced returns to shareholders. Following the completion of the FY2025 £500m share buyback programme in December, a new CY2026 £1bn programme was launched, delivering on our commitment to return a large portion of the proceeds from the sale of Smiths Interconnect. In the first half, we executed £180m and to date a further £127m has been executed, with the programme on track for £600m to be completed by the end of the fiscal year.

Following the close of the Smiths Detection transaction, we intend to return £1.5bn of the cash proceeds. The precise mechanics and timing will be announced closer to the time, and we expect to return proceeds using a combination of a structured return (either tender offer or special dividend) with an on-market share buyback programme to run from completion of the current £1bn programme through calendar year 2027. The approach of returning a large portion of disposal proceeds to shareholders reflects our disciplined approach to capital allocation, the intent to operate an efficient balance sheet whilst retaining a solid investment grade credit rating.

Focused on sustainable growth pillars aligned with structural megatrends

The actions we have taken create a focused Smiths, with clear strategic priorities, a strong financial profile of sustainable growth, structurally higher margin and returns, with good cash conversion.

Our two businesses, John Crane and Flex-Tek, specialise in high-performance products and solutions that are positioned in sub-segments of highly attractive and growing markets. Trends in these markets underpin a market compounded annual growth rate forecast of 4-5% over the next decade. We are positioned to leverage the underlying trends in our markets to drive outperformance and deliver our enhanced medium-term target of 5-7% organic revenue growth through cycle.

·    John Crane

·    Flow control (60% of Smiths revenue) - John Crane has a leading position in industrial flow control focused on highly-engineered mechanical seals and associated products and aftermarket services. It serves a large and growing addressable market supported by rising energy demand and a focus on industrial process efficiency and emissions control. Its leading technologies, attractive aftermarket model servicing an extensive installed base, global service network, advanced capabilities in manufacturing and test and expertise in supporting customers with uptime, safety and reliability are key competitive strengths from which to drive above-market growth.

·    Flex-Tek

·    Construction (19%) - Flex-Tek's multi-ducting and tubing portfolio has been expanded and enhanced through acquisition over the past five years, establishing itself as one of the few nationwide players in a predominantly regional US market. With a strong focus on market penetration and innovation alongside deep distributor relationships, the business is well positioned to deliver growth as the US housing market recovers, and new capacity is added to address the North American market's housing deficit.

·    Thermal Solutions (9%) - Flex-Tek's industrial heat business has been enhanced with the acquisitions of Wattco and the recently-announced DRC, expanding the product offering into the medium-heat market and cooling solutions, respectively. With the structural growth trends of industrial electrification, expansion in data centres and power generation underpinning demand, Flex-Tek's thermal solutions business is well positioned to deliver sustainable growth with its expanded product portfolio and customised approach to working with customers.

·    Aerospace (12%) - Flex-Tek is well positioned for strong growth in the commercial and defence aerospace market with its fluid and gas conveyance solutions for airframe and jet engine manufacturers. Its flexible hosing and rigid tubing products and growing aftermarket business, coupled with its global footprint and agility to create strong customer relationships, position Flex-Tek as a critical supplier in the sector, where surging commercial air travel demand and increased defence spending is driving new aircraft orders and underpinning strong growth.

Across both businesses, expectations for above market growth are underpinned by a combination of leading brands, commercial excellence, innovation, disciplined pricing, and expansion into high-growth adjacencies:

·    Leveraging our portfolio of leading businesses - driving growth through deep and lasting ways of working with customers supported by our leading product and aftermarket expertise to deliver customised solutions for their key challenges, delivering value-add for both parties. Key examples in the first half Include:

o John Crane signed a multi-year global framework agreement with a major energy company to improve equipment reliability and standardise performance across their global operations;

o In Flex-Tek, the aerospace business extended its near 30-year relationship with the Indian Space Research Organisation to supply advanced space‑enabled products for their high‑altitude ground test rigs;

·    Commercial excellence - enhancing operational processes, for example the recent automation and new machining capacity upgrades at John Crane is now allowing us to better react to customer requirements with improved delivery and lead times to capture orders, and drive value-add for us and our customers;

·    Innovation and new product development - delivering new products and services that our customers value. Examples in the first half include the roll-out of John Crane's Type 93AX Coaxial Separation Seal, and the launch of its Performance Plus modular service offering, deploying John Crane's aftermarket expertise to advise and partner with customers and capture a greater share of the aftermarket;

·    Pricing - continuing to ensure we capture price that reflects the value we deliver for our customers, and we continued to deliver pricing above inflation in the first half;

·    Market adjacencies - targeting higher growth and higher margin market sub-segments, with a recent example being the acquisition of DRC in Flex-Tek, which provides new market access opportunities to cross-sell our existing product lines to a wider customer base, adding to organic growth.

Margin expansion drivers

We have several levers supporting our margin expansion plan towards our medium-term target of 21-23% operating profit margin:

·    Operating leverage - drive a higher contribution margin as we grow revenue and build scale whilst continuing to invest in RD&E (research, development and engineering);

·    Operational excellence - Group-wide programme of continuous improvement, investment in leading manufacturing, test and automation capabilities, Smiths Excellence and the application of VAVE (value analysis and value engineering) supported the first half margin improvement;

·    Acceleration Plan - the initiatives to drive productivity and capability enhancements delivered benefits for Smiths of £8.6m in the first half and we remain on track for the full annualised benefits to be delivered in FY2027, and beyond; and

·    Portfolio - capturing higher margin segments of our chosen markets, as well as high-grading the portfolio towards higher growth and returns, as demonstrated by the decision to exit certain lower margin Flex-Tek general industrial businesses and the focus within John Crane on capturing a greater share of higher margin aftermarket revenue.

Disciplined capital allocation

In support of our medium-term targets, our capital allocation strategy will continue to prioritise disciplined investment for growth, both organically and inorganically, and deliver enhanced returns to shareholders. Our intent is to maintain a solid investment grade credit rating, and we will balance this alongside our desire to have an efficient balance sheet. The issuance of a €650m bond during the first half supported this approach. Leverage at the end of the first half was 1.2x net debt to EBITDA with the net proceeds of the divestments still to be received, ensuring our balance sheet is well positioned to support ongoing organic and inorganic investment. 

Organic investment in RD&E for Smiths was 3.5% of revenue in the half. John Crane's investment focuses on enhancing the efficiency, performance and sustainability of heavy-duty seals for traditional applications, as well as for carbon capture and hydrogen, alongside gas compression and filtration new product developments. Flex-Tek continues to extend its Blue Series product programme, as well as improve both product performance and manufacturing efficiency. 

On the acquisition front, in March, an agreement was signed to acquire DRC for a purchase price of £164m, representing a multiple of 10x adjusted EBITDA for the calendar year 2025. DRC is a US-based designer and manufacturer of custom heat transfer and cooling solutions, primarily for the power generators used in data centres, and will be integrated into Flex-Tek's industrial heat business. The acquisition is consistent with the strategy of building into high growth adjacencies and will enable Flex-Tek to serve a wider customer group in fast-growing end markets through DRC's products and solutions that are additive to Flex-Tek's existing portfolio, enabling cross-selling opportunities within its thermal solutions business.

FY2026 outlook - continuing operations

Following the reclassification of Smiths Detection as discontinued operations, we have updated our FY2026 outlook for continuing operations, i.e. the combination of John Crane and Flex-Tek.

We expect FY2026 organic revenue growth of 3-4%, with stronger momentum in the second half and expect H2 growth within our medium-term 5-7% target range.

·    Improving growth for John Crane follows a stronger second quarter, with growth of mid-single digits providing momentum into the second half. Further supported by a strong order book in both OE and aftermarket, which gives us visibility through FY2026, and underpinned by the now fully implemented investments in advanced manufacturing and testing capabilities, we expect second half growth to be at a similar level to the second quarter;

·    Expectations for the second half in Flex-Tek reflect strong growth in aerospace, with good order book visibility, and continuing weakness in the US construction market.

We expect to make positive progress towards our medium-term operating profit margin target through operating leverage, the benefits of the Acceleration Plan and continued Smiths Excellence efficiency savings, with FY2026 headline operating margin expected to be ~20%.

The Acceleration Plan updated for Smiths is expected to deliver £30-35m of annualised benefits in FY2027, and beyond, with around half expected in FY2026, for £40-45m of total cost.

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

In respect of the Iran conflict, we are prioritising the safety of our people who work in the region. We continue to monitor the potential size and duration of any impacts on performance which are not incorporated into our current guidance. In HY2026, the Middle East region contributed c.7% of revenue for Smiths, primarily John Crane.

HY2026 BUSINESS PERFORMANCE 

Group revenue increased +4.0% on an organic basis and +2.2% on a reported basis to £1,437m (HY2025: £1,406m). This included £(36)m of negative foreign exchange translation and a +£12m contribution from the acquisitions of Modular Metal Fabricators, Inc ('Modular Metal'), Wattco, Inc ('Wattco'), Duc-Pac Corporation ('Duc-Pac') in FY2025.

Revenue from continuing operations increased +0.4% on an organic basis and declined (1.0)% on a reported basis, with +2.0% organic revenue growth in John Crane and the contribution from acquisitions partly offset by a (2.0)% organic revenue decline in Flex-Tek and a (2.8)% impact from foreign exchange translation.

·    John Crane's growth was led by good sales in energy markets, especially in aftermarket and overall, it saw a sequential quarterly advancement in performance with mid-single-digit second quarter growth. This reflected delivery of its order book, which continues to expand, alongside an improvement in operational execution following the machining capacity investments;

·    Flex-Tek saw continued growth in aerospace reflecting ongoing new build programmes, more than offset by the impact of the weak US construction market on HVAC revenue, and lower revenue from thermal solutions largely reflecting the impact from customer destocking of heat kits;

·    Smiths Detection's growth reflected notable strength in aviation as the airport checkpoint upgrade programmes continued, together with strong growth in Other Detection Systems.

Group headline operating profit rose to £248m (HY2025: £234m); +7.2% (+£17m) on an organic basis, and +5.6% (+£14m) on a reported basis. Acquisitions contributed £3m to operating profit and were accretive to margin.

For continuing operations, headline operating profit of £181m (HY2025: £181m) was +1.6% higher organically and flat on a reported basis.

Group headline operating profit margin was 17.2%, up +50bps on both an organic and a reported basis. This reflected the impact of volume, benefits of efficiency savings, including Smiths Excellence, partially offset by product and business mix, and the impact of tariffs.

Continuing operations headline operating profit margin was +20bps higher on both an organic and a reported basis at 19.8%, demonstrating steady progress towards the medium-term target range of 21-23%.

·    A +50bps organic margin expansion in John Crane was driven by increased pricing and positive mix, plus Smiths Excellence and Acceleration Plan benefits, partly offset by the phasing of strategic investments and some limited impact from US tariffs;

·    Margin decline at Flex-Tek reflected mix impacts following the completion of a higher-margin heating project as well as higher materials costs, despite strict cost management, positive pricing and Smiths Excellence savings;

·    Margin improvement in Smiths Detection was driven by notably higher volumes, and pricing improvement, as well as benefits from mix, Smiths Excellence savings and cost actions, and despite the impact of US tariffs.

The margin improvement also reflected benefits of £8.6m in Smiths from the Acceleration Plan, with savings mostly in John Crane and a reduction in central costs.

Total Group ROCE increased to 18.4% (HY2025: 17.1%), reflecting the higher profitability and efficient use of capital. ROCE on a continuing operations basis was 23.5% (HY2025: 23.7%).

Total Group headline EPS grew +11.7% to 62.0p (HY2025: 55.5p). This included a headline tax charge of £72m (HY2025: £65m) and a £9m increase in headline finance costs. For Smiths, the headline tax charge was £39m (24.4% effective tax rate) (HY2025: £41m, 24.1%) and a £10m increase in headline finance costs. On an organic basis, EPS increased +8.4%, benefiting from the share buyback programme.

Total Group headline operating cash conversion was 78% (HY2025: 94%), supported by the year-on-year improvement in profit. Headline operating cashflow was £220m (HY2025: £254m) with the increase in operating profit and lower capex offset by working capital movements, reflecting an increase in inventory levels to improve delivery of the order book and service customers. Free cashflow generation decreased to £74m (HY2025: £143m) or 26% of headline operating profit (HY2025: 53%), also reflecting the Acceleration Plan and separation costs.

Discontinued operations

Smiths Detection, Smiths Interconnect and certain general industrial businesses within Flex-Tek are now 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 £82m (HY2025: £64m), and £47m (HY2025: £57m) 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.

Organic investment

In the first half for the Total Group, £72m was invested in RD&E (HY2025: £68m), of which £62m (HY2025: £55m) was an income statement charge. Primarily related to Smiths Detection, £10m (HY2025: £10m) was funded by customers. Total Group spend represents 4.5% of sales (HY2025: 4.3%) and included £24m (HY2025: £22m) on customer-specific engineering-related projects, predominantly in John Crane.

Capex decreased to £29m (HY2025: £41m) and included planned investment in capacity and automation and initiatives under the Acceleration Plan.

Value-creative M&A

In March, we announced the agreement to acquire DRC for £164m, with completion expected in the third quarter of fiscal year 2026. DRC will be integrated into Flex-Tek's industrial heat business and is consistent with the strategy of building into high growth adjacencies. DRC generated £73m in revenue in the calendar year 2025. Integrations of the three acquisitions made in Flex-Tek in FY2025 are now mostly complete or progressing to plan.

Enhanced shareholder returns - share buyback and dividend

In December, the £500m share buyback programme completed. A new £1bn programme was subsequently launched to return a large portion of the proceeds from the sale of Smiths Interconnect. To date, we have completed £307m, of which £180m was in the first half. £600m is expected to be completed by the end of fiscal year 2026, with the remainder to be substantially complete by the end of calendar year 2026.

The Board is recommending an interim dividend of 15.00p, a year-on-year increase of +5.4%. The interim dividend will be paid on 13 May 2026 to shareholders on the register at close of business on 7 April 2026.

Net debt

Total Group net debt at 31 January 2026 increased to £843m (HY2025: £299m) with a net debt to headline EBITDA ratio of 1.2x (HY2025: 0.5x), with the year-on-year increase primarily reflecting the bond issuance and the share buyback programme.

Net headline finance costs for the year increased to £23m (HY2025: £13m), principally due to interest on lower average cash balances and interest payments related to the new €650m bond.  

As at 31 January 2026, borrowings were £1,212m (FY2025: £667m) comprising a €650m bond which matures in February 2027, a €650m bond which matures in 2033 and £87m of lease liabilities. There are no financial covenants associated with these borrowings. Cash and cash equivalents as at 31 January 2026 were £345m (FY2025: £195m).

Together with an $800m (£584m at the half 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 £1.1bn at the half year end.

STATUTORY RESULTS

Income statement and cashflow

The £22m difference (HY2025: £14m) between continuing operations headline operating profit of £181m and statutory profit of £159m are non-headline items. The largest of these relate to the amortisation of acquired intangible assets of £15m, a £8m net credit for asbestos litigation provision in John Crane Inc, £8m of cost in relation to the Acceleration Plan and £4m of provision costs for the Titeflex subrogation claims.

Discontinued operations include the Smiths Interconnect, Smiths Detection and certain Flex-Tek general industrial businesses. Headline operating profit in discontinued operations was £54m greater than statutory operating profit due to non-headline items. The largest of these relate to the impairment of the Flex-Tek general industrial businesses of £25m, separation costs of £20m and £6m relating to the Acceleration Plan. Amortisation of acquired intangible assets of £6m was offset by a gain of £3m on the sale of Smiths Interconnect Inc. 

Total Group operating profit (including discontinued operations) for the period was £219m (HY2025: £242m). Total finance costs for the Group were £27m (HY2025: £14m).

The tax rate for continuing operations was 32.9% (HY2025: 25.9%) and includes a non-headline tax charge of £3m (HY2025: £nil). Statutory profit after tax for the Total Group was £131m (HY2025: £168m) and statutory basic EPS was 40.3p (HY2025: 48.8p).

Statutory net cash inflow from operating activities for the Total Group was £123m (HY2025: £205m). 

Pensions

During the year, £11m of pension contributions (HY2025: £7m) were made, which relate to funded, unfunded and overseas schemes and healthcare arrangements. Of this, £10m related to the US defined benefit pension plan. As at 31 January 2026, 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:

Our people, culture and Values combine to drive improved performance

Smiths has a long and proud history and 2026 represents our 175-year anniversary year. Our ability to evolve, adapt and grow over this time is underpinned by our strong purpose and Values. As we navigate this period of significant organisational change, our Values become more important than ever, and we have refreshed them this year. We are proud of our heritage and focused on our future - with our Values to help guide us along the way.

The safety, health and well-being of our people remain an essential foundation of our success at Smiths. The HY2026 recordable incident rate for the Total Group was 0.50 (HY2025: 0.23). Although still an industry top quartile ranking, the year-on-year deterioration is taken seriously, and targeted activities are being implemented to drive improvements for the second half of the year to ensure we focus on delivering a zero-harm culture. There has also been an increased focus on mental health and well-being including a bespoke wellbeing training session for our people leaders to raise awareness and skills on mental health and wellbeing to better support their teams, and specialist training for mental health first aiders.

At Smiths, our goal is to nurture STEM talent, developing the next generation of engineers who will help shape our future and we are laying the foundations for that vision through a dedicated focus on talent development and clear, structured career pathways. We now employ more than 90 apprentices in the UK on a range of learning pathways across the company and this is the only the start of our ambition. To support our communities on this front, the Smiths Group Foundation continues to extend its reach and has now made grants totalling almost £3m to 32 charities in 16 countries supporting STEM, safety and connectedness and environmental sustainability.

In the first half, we continued to drive sustainable practices throughout the business and are progressing well towards our targets, with enhanced data and decision making following last year's introduction of the Watershed sustainability platform. This will support the preparation of a re-submission to SBTi for Smiths (John Crane and Flex-Tek) given the planned separations, including re-baselining and revising targets and defining an impactful strategy for the future.

We were pleased to receive an MSCI score of AAA (from AA) and a 'Prime' rating from ISS in the half as we continue to enhance our sustainability credentials and reporting thereof. All of these initiatives support improved execution and the delivery of both our sustainability, and our medium-term financial targets.

BUSINESS REVIEW

JOHN CRANE (Continuing operations)

John Crane is a global leader in mission-critical technologies, products and services 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. 64% of revenue is derived from energy (downstream and midstream oil and gas and power generation, including renewable and sustainable energy sources). 36% is from other process industries including chemical, pulp and paper, mining and water treatment. 71% of revenue is from aftermarket sales. John Crane represents 60% of Smiths revenue.

1 Includes cash R&D expenditure (1.7% of sales) and spend on customer-specific engineering-related projects (3.6%)

Revenue

John Crane delivered organic revenue growth of +2.0% in the first half with improving momentum through the period. After a marginal decline against a strong prior year comparator in the first quarter, John Crane posted mid-single-digit growth in the second quarter. This reflected strong growth in energy and improvement in operational execution following the machining capacity investments, with the prior year having been partly constrained by the cyber incident.

Growth for John Crane in the second half is expected to be at a similar level to the second quarter supported by a strong and expanding order book in both original equipment and aftermarket, with a positive book to bill and visibility through FY2026. Although demand remains healthy, some market-driven project timing shifts continue to be witnessed, with certain energy projects being delayed.

Reported revenue was flat year-on-year at £551m, with the organic growth offset by a negative (2.0)% foreign exchange impact.

In Energy, organic revenue grew +3.9% (HY2025: +3.3%) with growth in both OE and aftermarket sales. This was despite some ongoing project phasing delays, which particularly impacted Europe and parts of Asia and China. Sales were strong in the USA and in Latin America, reflecting strong customer demand in both OE and aftermarket. In OE, demand for dry gas seals was good reflecting both high aftermarket orders from previous OE sales, as well as new OE gas-related projects delivered in the first half. However, systems sales were down notably, reflecting ongoing project phasing.

Aftermarket organic revenue increased +4.6% year-on-year, with an increasing focus on customer aftermarket service contracts. A key highlight was the signing of a major global framework agreement with a large international energy company, formalising a long-term partnership focused on improving equipment reliability, and standardising performance across its global operations. Under the multi-year framework, John Crane will provide a comprehensive range of sealing technologies and lifecycle services, providing the customer with a consistent reliability model across all participating sites. 

Within energy transition, the pipeline of opportunities John Crane is pursuing in CCUS, hydrogen and biofuels continues to expand. A recent example was the supply of dry gas seals for use in centrifugal compressors at a new carbon dioxide compression facility in north Wales, to transport carbon dioxide captured from industrial plants in the region and permanently store it in depleted offshore fields. In the USA, John Crane was selected to supply a comprehensive suite of sealing technologies for high-performance turbomachinery applications for a next generation geothermal power generation project, ensuring operational reliability and safety in a technically demanding environment, and expanding John Crane's presence in energy transition.

In Industrial, organic revenue declined (1.1)% and was lower in both OE and aftermarket against a strong comparator. Growth in mining and pulp and paper sectors in the Americas, Saudi Arabia and Australia, was offset by over-capacity in the Chinese chemicals market. Notable contract wins in the first six months included the installation of mechanical sealing solutions to an international pulp and paper mill customer in the USA, enabling a 90% reduction in water usage.

Operating profit and ROCE

Headline operating profit of £128m grew +4.2% on an organic basis, resulting in a margin of 23.2%, a +50bps improvement on an organic basis, and +30bps higher on a reported basis.

This organic improvement was driven by increased pricing and positive aftermarket mix, Smiths Excellence and Acceleration Plan programme benefits, partly offset by the phasing of strategic investments projects more heavily weighted to the first half this year, and some limited impact of US tariffs.

On a reported basis, headline operating profit was up +1.6%, with the organic improvement partly offset by a (2.6)% negative foreign exchange impact. The difference between statutory and headline operating profit includes the net changes in relation to the provision for John Crane, Inc. asbestos litigation and costs in relation to the Acceleration Plan.

ROCE was 25.0%, with the headline operating profit growth partly offset by a higher capital base and the FX impact.

RD&E and new product development

Cash RD&E expenditure increased in the half to 5.3% of sales (HY2025: 5.2%) of which 3.6% (HY2025: 3.7%) related to customer-specific engineering-related projects, reflecting a continued focus on product innovation.

John Crane's R&D is focused on enhancing the efficiency, performance and sustainability of heavy-duty seals for traditional applications, alongside new platforms for gas compression and filtration product developments. Following the FY2025 launch of the Type 93AX Coaxial Separation Seal, uptake has been positive and it is currently being tested for a number of installations. During the half, John Crane launched the Type 8628VL, a next generation mechanical seal engineered to address the challenge of maintaining seal integrity in multi-phase ethane and ethylene pipelines. The product launch was supported by a leading ethane transmission company operating along the US Gulf Coast which experienced measurable operational improvements following the seal installation.

Enhancing its service offering is also a key focus and in November, John Crane re-launched Performance Plus™ - a next-generation modular service framework - to support our ambition to expand our aftermarket offering. The tailored service solutions adapt to each customer's operational experience, bringing together smart technology, data insights and expertise to keep operations running smoothly, reliably, safely and sustainably. Its seal reliability management contracts or long-term agreements help customers achieve continuous reliability improvement and predictable maintenance costs enhancing customer intimacy for John Crane, a value-add proposition for both parties.

FLEX-TEK (Continuing operations)

Flex-Tek is a global provider of engineered components that heat and move liquids and gases for the construction, thermal and aerospace markets. 47% of Flex-Tek's revenue is derived from Construction, 23% from Thermal Solutions and 30% from Aerospace. Flex-Tek represents 40% of Smiths revenue.

1. The comparatives for HY2025 have been represented to reflect the reclassification of certain Flex-Tek's general industrial businesses as discontinued operations with HY2026 contribution of £25m to revenue with a £2m to operating loss (FY2025: £54m revenue and £5m loss)

Revenue

Organic revenue declined (2.0)% in the first half, with market-driven weakness in construction and revenue phasing in thermal projects, partly offset by strong growth in aerospace.

Reported revenue declined (2.5)%, with a positive contribution from acquisitions (+£12m), offset by a significant negative foreign exchange translation effect.

In Construction, organic revenue declined (5.8)%, impacted by weak market conditions in the US residential construction market. Year-on-year performance was also a reflection of the strength in the prior year comparator which benefited from post-acquisition revenue synergies from flexible ducting products, as well as market consolidation amongst major customers. Second half performance in Construction will largely reflect the pace of market recovery in US housing, the timing for which remains uncertain. Flex-Tek is well positioned to benefit from a construction market recovery as mortgage rates moderate and given the meaningful housing inventory deficit in the USA. The integration of Modular Metal is mostly complete and that of Duc-Pac continues to progress to plan, both of which strengthen our geographical coverage, positioning us well for when the market returns to growth.

Organic revenue in Thermal Solutions declined (7.8)%, following the impact from customer destocking of heat kits, particularly in the second quarter. Revenue was supported by the Wattco acquisition which adds to our portfolio of products for industrial electrification applications, positioning the business well to capitalise from the ongoing electrification trend. The pipeline of projects in Thermal Solutions remains positive, including the provision of electric heaters for ultra-low emission electro-fuel and data-centre safety-power projects. The integration of Wattco is largely complete, and the business is focused on driving growth following its move to a larger facility enabling capacity increases.

As part of the strategic decision to high-grade the Flex-Tek portfolio to focus on higher growth and higher margin market subsegments, Flex-Tek classified certain general industrial businesses as assets held for sale. Further information can be found in note 16.

In March, Smiths announced the acquisition of DRC Heat Transfer, a US-based designer and manufacturer of custom heat transfer and cooling solutions for power generators used in data centre, general industrial, transit, and energy markets. This acquisition extends Flex-Tek Heat's offering into cooling applications, establishing broader thermal solutions capabilities and strengthening its presence in the power generation market offering significant structural growth trends. DRC generated £73m in revenue in calendar year 2025.

In Aerospace, organic revenue grew +10.1%, reflecting continued strong demand with a full and growing order book across commercial and defence aircrafts. The second quarter included a new contract with the Indian Space Research Organisation to provide advanced space-enabled components for high altitude ground test rigs, strengthening a 30-year partnership. A continued strong order book with good visibility, alongside a positive trend in achieving long-term contract renewals, supports a positive outlook for the remainder of FY2026, and beyond.

Operating profit and ROCE

Headline operating profit declined (4.6)% on an organic basis. Organic operating margin declined (60)bps to 20.4% largely as a result of mix impacts, following the completion of higher-margin ultra-high heating project, and higher materials costs, partly offset by good cost management, positive pricing and operational efficiency savings. On a reported basis, headline operating profit declined (4.4)% whilst operating margin declined (40)bps.

The difference between statutory and headline operating profit reflects the amortisation of acquired intangible assets, the provision for Titeflex Corporation subrogation claims and costs in relation to the Acceleration Plan.

ROCE declined (110)bps to 27.3%, reflecting the headline operating profit decline and the impact of acquisitions on the capital base.

RD&E and new product development

Cash RD&E expenditure was 0.8% of sales (HY2025: 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 aerospace markets, construction and new electrification opportunities.

As an example, in HVAC, Flex-Tek continued to extend its Blue Series programme. Here, RD&E focuses on improving both product performance and manufacturing efficiency. Key efforts include ongoing refinement of tooling and molding processes, as well as the introduction of a heat‑tunnel system that enhances quality and reduces cycle times. The business is also conducting research into improved polyurethane foam chemistry aimed at lowering heat input requirements, which would further optimise production. Alongside these initiatives, Flex-Tek's innovation team have reduced packaging to almost half to enable more efficient transportation.

SMITHS DETECTION (Discontinued operations)

Smiths Detection is a global leader in threat detection and screening technologies for aviation, ports and borders, urban security and defence.

Revenue

Smiths Detection delivered strong organic revenue growth at +11.7%, successfully converting its strong order book into revenue, driven by growth in Aviation and Other Detection Systems ('ODS'), across both OE and aftermarket. Reported revenue was up +9.3% reflecting the strong organic growth, partially offset by unfavourable foreign exchange movement.

In Aviation, organic revenue grew +12.6% reflected the continued strong demand for CtiX scanners, with more than 2,000 now sold. ODS sales grew +9.1% organically, with strong growth in Ports & Borders and Urban Security.

Operating profit and ROCE

Headline operating profit increased +34.4% on an organic basis, reflecting the strong volume growth and favourable mix from higher aftermarket growth in Aviation, as well as efficiency and Acceleration Plan benefits, and despite the impact of US tariffs. Headline operating profit margin increased to 13.8%, +230bps on an organic and +250bps on a reported basis. On a reported basis, headline operating profit increased +33.3%, with the difference between statutory and headline operating profit reflecting amortisation of acquired intangibles and costs in relation to the Acceleration Plan.

ROCE increased +320bps to 13.2%, reflecting the growth in headline operating profit.

RD&E and new product development

Cash RD&E expenditure as a percentage of sales was 5.7% (HY2025: 5.8%), to support investment in next-generation detection capabilities. Spend included £10m in customer funded projects (HY2025: £9m).

SMITHS INTERCONNECT (Discontinued operations)

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.

Revenue

Smiths Interconnect's organic revenue increased +6.3% in the first half, led by continued momentum in the semi-test business with demand from key customers across multiple AI and data-centre programmes.

Reported revenue declined (6.5)%, largely reflecting the sale of Interconnect's US sub-systems business unit, together with negative foreign exchange.

Operating profit and ROCE

Headline operating profit increased +0.8% on a reported basis, resulting in a +140bps rise in reported operating profit margin to 18.6%. The benefit from the sale of its US sub-systems business unit as well as efficiency improvements and Smiths Excellence benefits, were partly offset by negative mix effects and higher materials costs. On a statutory basis, operating profit increased +5.9%.

The difference between statutory and headline operating profit reflects the amortisation of acquired intangibles and disposal-related costs.

ROCE improved +400bps to 17.8%, driven by the lower capital employed following the sale of its US-subsystems business.

RD&E and new product development

Cash RD&E expenditure as a percentage of sales was 6.1% (HY2025: 6.1%). 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.

Smiths Interconnect continues to be a leader in innovation, with its efforts having been externally recognised at the 2025 Instrumentation & Electronics Awards. In semi-test, the business has considerably expanded its customer base within the semiconductor sector through the development of the most advanced and technically complex semi-test products, including the DaVinci product portfolio, and meeting the rapidly evolving technological customer requirements.

PRINCIPAL RISKS AND UNCERTAINTIES

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 long-term performance. The Group's principal risks and uncertainties at 31 July 2025 are detailed on pages 30 to 36 of the 2025 Annual Report. The principal risks and uncertainties affecting the Group for the remaining six months of the financial year continue to be those set out briefly below and more fully in the Annual Report.

• Economy and geopolitics: The challenging and increasingly unpredictable economic and geopolitical landscape in which we operate is subject to external influences including inflationary pressures, regional conflicts, and newly imposed trade restrictions. Such factors may adversely affect demand for our products, increase input costs, and impact profitability. Trade barriers, such as recent US tariffs on international imports and retaliatory measures from other nations, could disrupt supply chains, reduce market access, and undermine our global competitiveness.

• Cyber security: Cyber attacks attempting to compromise the confidentiality, integrity, and availability of IT systems and operational data are a continuing and intensifying risk. We operate in markets and product areas which are known to be of interest to cyber criminals. With increasing digitalisation and reliance on third-party platforms, any breach may cause disruption, data loss, regulatory penalties, and reputational damage.

• Business continuity: Disruption to our global supply chains, manufacturing sites, or customer operations due to geopolitical events, cyber-attacks, or climate-related incidents; may negatively impact our financial performance, customer delivery timelines, and operational resilience.

• Technology: If we fail to maintain our technological differentiation and our innovation pipeline does not meet customers' evolving requirements, we may lose market share to a new or existing competitor. This could impact our financial performance and our ability to attract and retain talent.

• Product quality: Failure of one of our products, including failure due to non-compliance with product regulation, may result in financial loss and reputational damage. In the ordinary course of business, we could be subject to material product liability claims and lawsuits, including potential class actions from customers or third parties.

• Commercial: Failure to adapt our commercial strategies in response to evolving customer expectations, procurement models, and sustainability-linked requirements may reduce market share, impair profitability, and hinder access to growth opportunities.

• People: Failing to attract, develop, and retain the right people with the right skills may affect our ability to achieve our commercial ambitions, particularly in the light of the planned separations of Smiths Interconnect and Smiths Detection and the inherent uncertainty such plans have created regarding some roles and functions.

• Legal and compliance: We have more than 16,000 colleagues in more than 50 countries. Individuals may not all behave in accordance with the Group's Values and in accordance with ethical and legal requirements. We operate within increasingly complex legal regimes, often in highly regulated markets and with governments, customers and suppliers requiring strict adherence to laws. We may fail to deliver contracted products and services or fail in our contractual execution due to delays or breaches by our suppliers or other counterparties.

• Climate change: Failure to identify and act on the significant opportunities arising from the world's transition to a low-carbon economy and/or failure to respond appropriately to climate change risks and regulation.

• Strategic transformation: Execution of strategic transformation, including the sale of Smiths Interconnect and sale of Smiths Detection, carry significant operational, legal, financial, people-related, and reputational risks. Ineffective execution of these transactions could result in operational disruption, stranded costs, loss of key personnel, delays in achieving separation, regulatory hurdles, and diminished shareholder confidence. The ability to reposition the remaining business ('Smiths') as a focused, high-performing industrial engineering company will be key to preserving and enhancing long-term value.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 Reporting as adopted by the United Kingdom and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; and

·   the interim management report includes a fair review of the information required by:

a)    DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)    DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the Board of directors:

19 March 2026