Spectris plc Capital Markets Day · 2020. 5. 25. · Agenda 13:00 Welcome and Introduction John...
Transcript of Spectris plc Capital Markets Day · 2020. 5. 25. · Agenda 13:00 Welcome and Introduction John...
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Spectris plc ©
Enhancing Productivity
Spectris plcCapital Markets Day
27 April 2015
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
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Agenda
■ 13:00 Welcome and Introduction John O’Higgins■ 13:10 In-line Instrumentation & Industrial Controls Jo Hallas■ 13:50 Servomex Chuck Hurley■ 14:10 Omega Jim Dale■ 14:30 Questions ■ 14:50 Break■ 15:10 Materials Analysis & Test and Measurement Eoghan O’Lionaird■ 15:50 ESG Solutions Ken Arnold■ 16:10 Biopharmaceutical Development Initiative Paul Walker■ 16:30 Summary and Close John O’Higgins■ 16:40 Questions■ 17:00 Drinks■ 18:30 Close
Spectris plc © 2
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Spectris plc ©
Enhancing Productivity
Welcome and IntroductionJohn O’HigginsChief Executive
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
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Key messages
■ Leading market positions, broad end-market exposures
■ Strategy updated, emphasis on growth
■ Strategy implementation set to deliver a return to long-term average growth rates
■ Strong financial position, well positioned to continue to generate shareholder value
Spectris plc © 4
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5Spectris plc ©
Our Mission: Enhancing Productivity
We do this by helping customers to:
■ Design innovative new products
■ Improve product qualityand performance
■ Save time
■ Increase yield
■ Streamline processes
■ Build global operations
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6Spectris plc ©
Structure and Values
Group Portfolio management, M&AFinancial synergiesValues and incentivesBest practice transfer
Operating CompaniesStrong management with P&Lownership and accountabilityCustomer and market focusFast and clear decision making
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7Spectris plc ©
Strategy 2007 - 2014
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8Spectris plc ©
Strategy Update 2015
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
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9Spectris plc ©
Financial Performance
659.9787.1 787.3
901.9
1,106.21,177.2 1,197.8 1,173.7
0
200
400
600
800
1,000
1,200
1,400
2007 2008 2009 2010 2011 2012* 2013 2014
Sales £m
58.1
72.8
45.4
86.6
124.1130.3 132.9
124.4
21.0 23.4 24.228.0
33.6 39.042.75 46.5
0
20
40
60
80
100
120
140
160
2007 2008 2009 2010 2011 2012* 2013 2014
PenceDividend and Adjusted
earnings per share (pence)
103.7 102.1 105.5
159.8179.1
204.8
184.8175.7
0%
20%
40%
60%
80%
100%
120%
140%
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012* 2013 2014
Operating cash flow £m Cash flow conversion (%)
104.3118.3
79.2
142.1
201.5
216.9 214.7198.1
0%2%4%6%8%10%12%14%16%18%20%
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012* 2013 2014
Op Profit £m Return on Sales (%)
Op Profit CAGR 10%
* The 2012 figures have been restated following the adoption of IAS 19 (Revised) ‘Employee Benefits’ – 2012 & 2013 have been adjusted for the disposal of Fusion UV business** Excluding restructuring costs
Sales CAGR: 9%
EPS CAGR: 11%
DPS CAGR: 12%
93.2**
**
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Spectris plc ©
Enhancing Productivity
In-line Instrumentation and Industrial ControlsJo HallasBusiness Group Director
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
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Agenda
■ Introduction
■ In-line Instrumentation
■ Industrial Controls
■ Summary
Spectris plc © 11
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12Spectris plc ©
Laboratory/off-line businesses Process / manufacturing businesses
Materials Analysis(30% of 2014 Group sales)
Applications
Material characterisationContamination monitoringQuality & process control
Industries
Metals/minerals/miningPharma/fine chemicalsAcademic researchSemiconductors
Test and Measurement(29% of 2014 Group sales)
Applications
Product design optimisationManufacturing controlMicroseismic monitoringEnvironmental noise monitoring
Industries
AutomotiveAerospaceElectronicsEnergyAcademic research
In-line Instrumentation(22% of 2014 Group sales)
Applications
On-line process quality controlsCondition monitoringSafety monitoring
Industries
Process industriesPulp, paper & tissueEnergy & utilitiesWeb/converting/packaging
Industrial Controls(19% of 2014 Group sales)
Applications
Product trace, track & controlMachine interfaceIndustrial networkingProcess measurement & control
Industries
ManufacturingProcess industriesEnergyElectronicsHealthcare
Business Segments
Disruptive growth themes
Industrial connectivity
Cloud-based data services
eChannel
Energy
Laboratory / off-line businesses
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13Spectris plc ©
Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
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14Spectris plc ©
In-line InstrumentationIn-line Instrumentation provides process analytical measurement, asset monitoring and online controls aswell as associated consumables and services for bothprimary processing and the converting industries.
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0%
5%
10%
15%
20%
25%
30%
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2007 2008 2009 2010 2011 2012 2013 2014
RoS %£m
Sales Operating profit RoS %
ControleAnalytiqueacquisition
Delta-F acquisition
IRM acquisition
Spectris plc © 15
In-line Instrumentation – Financial Performance
Sales +6%, OP +17% CAGR* Sales +1%, OP -5% CAGR*
Performance impacted by slowdown in pulp & paper
* Sales at constant exchange rates, including acquisitions; OP = adjusted operating profit
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Spectris plc © 16
In-line Instrumentation – Analysis of Sales
35%
28%
14%
23%
2014 Sales % by end-user market
Pulp, paper & tissue
Energy & utilities
Web, converting, packaging
Other
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In-line Instrumentation - Pulp, Paper and Tissue
Spectris plc © 17
Pulp, Paper & Tissue - Process Measurement and Control Solutions#1 position globally – paper & paperboardsurface coating & process control
#1 position globally – tissue creping & process control
#2 position globally - pulp process control
Four other key competitors
Estimated combined market share 90%*
Enhancing productivity:
Application: Our new single point KAPPA analyzerenables customers to improve production yield.
Benefit: A large Asian pulp producer increasedcontribution by c. $2m from an investment of c. $70k.
Enhancing productivity:
Application: Our new tungsten carbide coating bladesprovide more consistent print surface quality and arelonger lasting than competitor blades.
Benefit: A large Chinese customer has seen aproductivity gain of >$500k.
* Spectris plus key competitors
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In-line Instrumentation – Energy and Utilities
© Spectris plc March 2009 19Spectris plc © 18
Machine Condition Monitoring Solutions
#1 position globally in Wind#2 position globally in Hydro #3 position globally in Oil & Gas
Three other key competitors
Est. combined market share 65-70%*
Continuous Gas Analysis Solutions#1 position globally in premium/complex applications#5 position globally in all other hydrocarbon processing applications
Six other key competitors
Est. combined market share 75-80%*
Enhancing productivity:
Application: Our remote machine conditionmonitoring systems provide early warnings aboutdeveloping mechanical problems on wind turbinedrive trains and enable inexpensive up-towerrepairs.
Benefit: Customers avoid costly turbine generatorreplacements ($200k cost + installation) by replacinginexpensive bearings ($24k cost). Downtime isminimized and turbine production optimized.
* Spectris plus key competitors
Enhancing productivity:
Application: Our oxygen analysers are used in thepower combustion process within refineries toincrease burn efficiency.
Benefit: By reducing excess oxygen in the burn by6% a small to mid-sized refinery can generateefficiency savings of at least $500k pa.
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In-line Instrumentation – Food and Packaging
© Spectris plc March 2009 19Spectris plc © 19
Food manufacturing on-line process measurement solutions#1 position globally
Two other key competitors
Est. combined market share 80%*
Packaging film measurementand control solutions#1 position globally
Six other key competitors
Est. combined market share 70-75%*
* Spectris plus key competitors
Enhancing productivity:Application: Our near-infrared gauge measures the thicknessof oxygen and moisture barrier materials in coextrudedpackaging structures.
Benefit: The three largest producers of meat and cheese filmsuse this technology to assure barrier performance is achievedwhile reducing high cost polymer usage, saving $250k pa.
Enhancing productivity:Application: Near infrared measurement of moisture, oil anddegree of brownness in savoury snack foods ensuresconsistent quality, brand loyalty and waste reduction.
Benefit: Multinational snack foods company achieved$12,000/day reduction in waste.
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20Spectris plc ©
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
SERVOMEX MINI LASER
In-line Instrumentation: Delivering the Group’s Strategy
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21Spectris plc ©
In-line Instrumentation: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
EXPANDING PRESENCE IN TISSUE MARKET
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22Spectris plc ©
In-line Instrumentation: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
CREATION OF NDC TECHNOLOGIES
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23Spectris plc ©
Industrial ControlsIndustrial Controls provides products and solutions that measure, monitor, control, inform, track andtrace during the production process.
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RoS %£m
Sales Adjusted operating profit RoS %
Siemens Machine Vision
acquisition
Spectris plc © 24
Industrial Controls – Financial Performance
Sales +35%, OP +40% CAGR * Sales +4%, OP -2% CAGR *
- Investment in Omega expansion
- Integration of N-Tronand Sixnet into Red
Lion Controls
N-Tronacquisition
Omega & SixNet
acquisitions
* Sales at constant exchange rates, including acquisitions; OP = adjusted operating profit
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Spectris plc © 25
Industrial Controls – Analysis of Sales
UPDATE FOR SEGMENT ANALYSIS
UPDATE FOR SEGMENT ANALYSIS
30%
14%
6%5%
45%
2014 Sales % by end-user marketDistributors
Electronics
Pharma & fine chemicals& healthcareEnergy & utilities
Other
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Industrial Controls – Manufacturing
Spectris plc © 26
Factory/Process AutomationSolutions
Three key competitors, many smaller onesMulti-channel route to market
Enhancing productivity
Application: Our operator panelsand connectivity products connect,collect and forward critical machinedata and alarms to operators and toback-end management informationsystems for further analysis.Benefit: By collecting and reportingon causes of downtime, amanufacturer of consumer goodswas able to increase their uptimefrom 85% to 90%, resulting in a dailyrevenue increase of $90,000 perwelding machine.
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Industrial Controls – Aerospace
Spectris plc © 27
Enhancing productivity
Application: Monitoring temperature invarious systems on the Falcon 9 Rocket andthe Dragon Capsules that ferry supplies tothe International Space Station.
Benefit: Used our experience in sensordevelopment and manufacturing torecommend an improved design that wouldavoid the quality and yield issues SpaceXhad experienced and get their programmeback on track. We are now supplyingSpaceX with ready-to-use hardware thatsimplifies their implementation whileimproving product quality.
Process measurement & control
Fragmented market, numerous competitorsMultiple channels to market
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Industrial Controls – Pharmaceutical / Clinical
25Spectris plc ©2828
Track, Trace & Control Systems
Four key competitors
Enhancing productivity
Applications: Automatic identification ofspecimen tubes, tube cassettes, reagents,micro-well plates, vials, etc. Automatedinspection of tube presence/dimensions,cap presence/type/colour, label presence/type/colour etc.
Benefit: Enables automated systems tocorrectly route, validate and track patientspecimens, removing risk of testing errorand speeding up time for results.
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29Spectris plc ©
Industrial Controls: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
MICROSCAN’S CLOUDLINK INTERFACE
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30Spectris plc ©
Industrial Controls: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
EXPANDING PRESENCE IN INDUSTRIAL CONNECTIVITY
MARKET
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31Spectris plc ©
Industrial Controls: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
EXPANDING OMEGA INTO ASIA & LATAM
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Process / Manufacturing – Disruptive Growth Themes
Increased demand for factory automation and industrial networking products as customers seek efficiency improvements
Greater use of cloud-based data services to enhance productivity for customers by automating workflows
eChannel: leveraging Omega platform and capabilities across rest of Group
Growing need for energy efficiency, new sources of energy and energy storage
eChannel
Industrial Connectivity
Cloud-based data services
Energy
Spectris plc ©
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Summary
Spectris plc © 33
■ Strong portfolio of businesses, with leading positions in niche productivity-enhancing technologies and markets
■ Broad customer, end-market and geographic exposures
■ Strategy implementation set to deliver a return to long-term average growth rates
■ Numerous growth opportunities, both in existing and new strategic markets
■ Innovative differentiated customer solutions enable superior margins
■ Acquisition strategy to expand portfolio and reach
■ Drive greater efficiency through operational excellence
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Spectris plc ©
Enhancing Productivity
In-line Instrumentation and Industrial ControlsAppendices
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
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In-line Instrumentation – Global Presence
Spectris plc © 35
400 employees across North America
155 employees across Asia
875 employees across Europe
Operating company head offices
Technical centres/manufacturing sites
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Industrial Controls – Global Presence
Spectris plc © 36
50 employees across Asia
110 employees across Europe
1,200 employees across North America
Operating company head offices
Technical centres/manufacturing sites
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EXPERTS IN GAS ANALYSISChuck Hurley President
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1952
• Servomex Controls founded
1961
• Launched first oxygen analyzer
1999
• Acquired by Spectris
• Expanded geographic footprint
2015
• Sell to 150+ countries
• Strong growth (14% CAGR 2007 ‐ 2014)
A BRIEF HISTORY
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■ Develop sensing technologies that allow the analysis of gases
– From % level to Parts per Trillion (PPT)
■ Deliver a solution approach to providing the technology to customers
WHAT WE ACTUALLY DO
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EXPERT
IP DELIVERED THROUGH A FOCUSED OFFER
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APPLICATIONS
■ A point of clarification: Gas Analysis, not Gas Detection– Gas detection: alarm goes off and you run!– Gas analysis: tells you what you have, when you have it, and how you can use that
information to improve your process control, quality, safety, emissions management or combustion control
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INDUSTRIES
MEDICAL OEMINDUSTRIAL OEM
METALS & MINERALS
■ 75% of the gas analyzer market is utilized within these segments■ Segmentation allows for diversification and minimal dependence on a particular application / industry■ Process Control, Quality, Safety, Emissions & Combustion – High growth potential
HYDROCARBONPROCESSING
INDUSTRIALGASES
POWERGENERATION
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SAMPLE APPLICATION: Ethylene combustion
■ Benefit: Greater control– Better product yield
■ Benefit: Cost reduction– Maximizing process efficiency ‐ fuel savings
■ Benefit: Cleaner emissions – New and strengthening legislation could
lead to significant fines and shut down
■ Benefit: Safer process – Active requirement to ensure minimal risk
of explosion or accident
Different combustion reaction across process
CO reaction almost complete
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■ Population growth – driving demand for energy, pollution control
and advanced healthcare■ In parallel, globalisation of demand
– drives a higher baseline for standards■ Requires better process control
and more measurements– quality, yields, more gases, efficiency, purity
■ Reduction of expert resource in customer organisations
– drives a desire for solutions over single measurements
MARKET GROWTH DRIVERS
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Servomex advantage: Dedicated expert focus compared to generic providers
Servomex advantage: Range of products to cover a process, not just a single measurement
Gas analysis specialist delivering true market solutions
Servomex advantage: Global reach with local pre‐and post‐sales support
MARKET POSITION BY CUSTOMER VALUE
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BARRIERS TO ENTRY
■ Diverse and complex technologies– Highly specialist, expertise required
in sales process and manufacturing
■ Complex operating environment– Diverse and multilayered systems– Multiple applications– Certification and approvals
■ Strong customer relationships– Long‐term relations built on know‐how and service
■ Increasing market demands– Percent is relatively easy, PPT is very hard!
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FILL THE GAPS IN OUR PRODUCT PORTFOLIO
ACCELERATING GROWTH
STRATEGIC APPROACH
ADJACENT MARKETS AND APPLICATIONS
OEM INDUSTRIAL
INDUSTRIAL GASHYDROCARBON PROCESSINGPOWER
OEM MEDICAL
EXPANDED OEM PORTFOLIO
DESIGN FOR MANUFACTURE(Lean / Six Sigma)
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■ Strong operational footprint– Global infrastructure, close to our customers
■ Premium portfolio in a growing, complex sector
– Opportunity rich, value creation– Strong brand and reputation
■ Barriers to entry and demand growing at the same time
– Customers willing to pay for solutions that are harder and harder to achieve
■ Strategy to accelerate market share growth– Expand into adjacent markets and applications, as well as OEM portfolio
SUMMARY
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Jim DalePresident
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• Founded in 1962, now established as iconic brand built on exceptional customer service
• Broad offering of >100k products
• Active customer base of >50k across broad range of end markets
• Acquired by Spectris in 2011• 5% sales CAGR 2007 – 2014
(constant currency)
Overview
Aircraft/Aerospace
Automotive/Transportation
Computers/Communications
Consulting/Engineering
Chemical/Petroleum
Distributors
Electrical/Automation
Federal GovernmentInstruments/Electronics
Metal/Glass Fabricators
Pharmaceutical/Medical
Pumps/Plumbing
Power/Utilities
University/School
Sales by End Market
Confidential 50
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• Great customer value proposition in core North American markets
• Geographic expansion has proven this value proposition translates well, with strong international growth since 2011
• Digital marketing key to growing customer base
• Investments in business infrastructure will continue to drive operational improvements
• Product portfolio expansion will be key future growth driver
Key messages
Confidential 51
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Easy connection to highly technically trained staff through multiple points of contact
Broad high quality product offering
World class technical support
User friendlyeCommerce
Best-in-industrydelivery
User-friendlyeCommerce
Best-in-industrydelivery
World class technical support
Broad high-quality product offering One-stop shop for highly engineered products in process measurement and control
Over 100K items on-line on a robust eCommerce platform with easy product selection and configuration
Rapid delivery – often same day –supported by highly automated and flexible manufacturing processes
Exceptional customer experience
Exceptional customer experience by delivering Customer Value Proposition
Confidential 52
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Customer Experience
“ I need a temperature sensor ” Thermocouple Probe
Signal Conditioner
Meter
Wire
HMI
DAS
Sensors
Results-Centric Product Selection
Flexible & Intelligent Sales Platforms
Anticipating Customer Needs
• Application Based• Specifications• Technical Content Support
• Product Finders• Configurators• Technical Community
• Assertive Recommendations Supported by Wide Breadth of Products
Confidential 53
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From Exposure to ConversionDirect Marketing Model
Customer Acquisition & Activation highly based
on Digital Marketing
Search Marketing Content Marketing DistributionSocial Interaction and AdvertisingBranding and Product Messaging through PR & Offline Advertising
Engagement through self-service and highly qualified
technical support
Conversion process supported by seamless web
experience and support
Highly Optimized for Search User Friendly InterfaceRobust eCommerceValue Added Upselling39% of Orders Taken On-line
Over 1,200 Calls per DayStaff of ~70 People eCommerce ExperienceMulti-Touch Sales CycleTechnical Expertise to Guide Product Selection
54Confidential
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• Exceeded sales target in the first two years
• >4,500 new customers added since inception
• Digital marketing is primary driver of new business
• Product & industry mix becoming similar to USA
2014
2012 2013 2014
China Orders
30%
k
3k
6k
2012 2013 2014
China Active Customers
85%
China Web/Phone Contact Activity
k
8k
16k
k
200k
400k
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42013
Website visits # of calls
Confidential 55
China Progress Update
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FRANCE
CHINA
SPAIN
ITALYMEXICO
SOUTH EAST ASIA
KOREA
BRAZIL
JAPAN
DENMARK
CHILE
MEXICO
AUSTRALIA
INDIAJun-12 Sep-12 Jan-13 Mar-13 Jul-13 Sep-13 Nov-13 Dec-13 Jan-14 Jul-14 Aug-14 Feb-15 Apr-15 May-15
Independent Office Shared Support Center
• >6,000 new customers added in 2014• Product & industry mix becoming more
diverse
• Digital marketing primary driver of new business• Year 1 sales met or exceeded target at all new
sites
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
France Italy Spain Denmark China South Korea SEA Japan Brazil Mexico
New CustomersOrders
Confidential 56
Global Expansion
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Since Spectris acquisition, we have invested in several initiatives to further enhance performance:
• Lean Six Sigma, for speed and quality
• Supply chain, for improved global logistics and rapid delivery
• New ERP system, to provide better tools (e.g. material planning, inventory management, cost analysis)
Operational Excellence
Confidential 57
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New products will be a key growth driver and accomplished through:
Confidential
Product Portfolio Expansion
• Development of new proprietary products
• New Private Label products
• Acquisitions
58
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Key Messages• Great customer value proposition in core North American
markets
• Geographic expansion has proven this value proposition translates well, with strong international growth since 2011
• Digital marketing key to growing customer base
• Investments in business infrastructure will continue to drive operational improvements
• Product portfolio expansion will be key future growth driver
Confidential 59
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6060Spectris plc ©
Enhancing Productivity
Materials Analysis and Test & MeasurementEoghan O’LionairdBusiness Group Director
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
-
Agenda
■ Introduction
■ Materials Analysis
■ Test and Measurement
■ Summary
Spectris plc © 61
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62Spectris plc ©
Laboratory/off-line businesses Process/manufacturing businesses
Materials Analysis(30% of 2014 Group sales)
Applications
Material characterisationContamination monitoringQuality & process control
Industries
Metals/minerals/miningPharma/fine chemicalsAcademic researchSemiconductors
Test and Measurement(29% of 2014 Group sales)
Applications
Product design optimisationManufacturing controlMicroseismic monitoringEnvironmental noise monitoring
Industries
AutomotiveAerospaceElectronicsEnergyAcademic research
In-line Instrumentation(22% of 2014 Group sales)
Applications
On-line process quality controlsMachine condition monitoringMachine safety monitoring
Industries
Process industriesPulp, paper & tissueEnergy & utilitiesWeb/converting/packaging
Industrial Controls(19% of 2014 Group sales)
Applications
Product trace, track & controlMachine interfaceIndustrial networkingProcess measurement & control
Industries
ManufacturingProcess industriesEnergyElectronicsHealthcare
Business Segments
Disruptive growth themes
Life sciences
Engineering software
Industrial connectivity
Energy
Cloud-based data services
eChannel
Advanced materials
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63Spectris plc ©
Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
-
64Spectris plc ©
Materials AnalysisMaterials Analysis provides products and services that enable customers to determine structure, composition, quantity and quality of particles and materials, during their research and product development processes, when assessing materials before production, or during the manufacturing process.
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Materials Analysis – Overview
Spectris plc © 65
DrugDiscovery
Drug Development Formulation
Release Testing / QC
Advanced Materials
Pharmaceutical
StructureAssembly
Directed/SelfMetrology Enviromental
Regulation
Material Relationships: From Concepts to Products
Molecule DrugManufacturing
Nano-material ProductManufacturing
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RoS %£m
Sales Adjusted operating profit RoS %
Spectris plc © 66
Materials Analysis – Financial Performance
Sales +6%, OP +15% CAGR* Sales +4%, OP -4% CAGR*
Investment in life sciences sector:- Organic- NanoSight / Microcal / Affinity
Biosensors acquisitions
Sales impacted by slowdown in:- Metals, minerals & mining- Academic research
* Sales at constant exchange rates, including acquisitions, OP = adjusted operating profit
Omec, Sysmex & Reologica
acquisitionsMicroSafeacquisition
Launched BDI
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Spectris plc © 67
Materials Analysis – Sales Analysis
UPDATE FOR SEGMENT ANALYSIS
UPDATE FOR SEGMENT ANALYSIS
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Materials Analysis – Pharmaceutical & Fine Chemicals
Spectris plc © 68
Pharmaceutical ParticleCharacterisation
#1 position globally
Three other key competitors
Est. combined market share 60-65%*
Fine Chemicals ParticleCharacterisation
#1 position globally
Five other key competitors
Est. combined market share 60-65%*
Life sciences Microcontamination Monitoring
#1 position globally
Three other key competitors
Est. combined market share 65-70%*
* Spectris plus key competitors
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Materials Analysis – Metals, Minerals and Mining
Spectris plc © 69
Metals, Minerals & Mining Particle Characterisation
#1 position globally
Four other key competitors
Estimated combined market share 60-65%*
X-Ray Fluorescence Elemental Analysis
#1 position globally
Four other key competitors
Estimated combinedmarket share 75-80%*
X-Ray Diffraction Elemental Analysis
#1 position globally
Two other key competitors
Estimated combined market share 85-90%*
Significant Aftermarket Sales
X-ray tubes Sample preparation
* Spectris plus key competitors
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Materials Analysis – Semiconductors, Telecoms & Electronics
Spectris plc © 70
Semiconductor / electronics Microcontamination Monitoring#1 position globally
Three other key competitors
Estimated combined market share 85-90%*
* Spectris plus key competitors
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71Spectris plc ©
Materials Analysis: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
PMS’ UDI-20 Liquid Particle Counter
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72Spectris plc ©
Materials Analysis: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
Biopharmaceutical characterisation and
visualisation
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73Spectris plc ©
Materials Analysis: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
Increase presence in key strategic markets
Life sciences
Focus on innovative customer solutions
Sample preparation
Expand business globally
Acquisition of distributorsin South Korea and Taiwan
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Proliferation of composite materials
Sustained high investment in nanomaterials science
Continuing secular growth in semiconductors
Accelerating investment in biopharmaceutical R&D and manufacturing technology
Global focus on pharmaceutical Good Manufacturing Practices (GMP)
Spectris plc © 74
Materials Analysis – Disruptive Growth Themes
Advanced materials
Next generation
-omics
Next generation semiconductors
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75Spectris plc ©
Test and MeasurementTest and Measurement supplies test, measurement and analysis equipment, software and services for product design optimisation, manufacturing control, microseismic monitoring and environmental noise monitoring.
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Test and Measurement – Overview
Spectris plc © 76
Excitation Test & Operation TransductionData
Acquisition AnalysisComputer Aided
EngineeringCorrelation &
Validation
Traditional R&D
Beyond the R&D Lab
Extending beyond the R&D Lab
Excitation Test & Operation TransductionData
Acquisition AnalysisComputer Aided
EngineeringCorrelation &
Validation
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RoS %£m
Sales Adjusted operating profit RoS %
Spectris plc © 77
Test and Measurement – Financial Performance
Sales +7%, OP +20% CAGR * Sales +2%, OP -1% CAGR *
LDS & nCode acquisitions
Lochard acquisition
ESG Solutions & FiberSensing
acquisitions
* Sales at constant exchange rates, including acquisitions, OP = adjusted operating profit
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Spectris plc © 78
Test and Measurement – Sales Analysis
UPDATE FOR SEGMENT ANALYSIS
UPDATE FOR SEGMENT ANALYSIS
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Test and Measurement – Automotive
Spectris plc © 79
Automotive Sound and Vibration Testing, Simulation & Analysis
#1 position globally
Three other key competitors
Est. combined market share 50-55%*
Automotive Stress and Structural Testing, Simulation and Analysis
#1 position globally
Six other key competitors
Est. combined market share 60-65%*
* Spectris plus key competitors
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Test and Measurement – Aerospace
Spectris plc © 80
Aerospace Sound and Vibration Testing, Simulation and Analysis
#1 position globally
Three other key competitors
Est. combined market share 40-45%*
Aerospace Stress and Structural Testing, Simulation and Analysis
#1 position globally
Six other key competitors
Est. combined market share 55-60%*
* Spectris plus key competitors
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Test and Measurement – Electronics, Semiconductor & Telecoms
Spectris plc © 81
Electronics, Semiconductor and TelecomsSound and Vibration Testing, Simulation and Analysis
#1 position globally
Three other key competitors
Estimated combined market share 50-55%*
* Spectris plus key competitors
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82Spectris plc ©
Test and Measurement: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
Bruel & Kjaer’s on-board engine
monitors
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83Spectris plc ©
Test and Measurement: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
HBM’s e-Drive solution
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84Spectris plc ©
Test and Measurement: Delivering the Group’s Strategy
Increase presence
in key strategic markets
Expand Business Globally
Deploy Capital for both
Platform and Bolt-on M&A
Accelerate Operational Excellence
Focus on innovative customer solutions
Increase presence in key strategic markets
Engineering software
Focus on innovative customer solutionsSensors and software
Increase presence in key strategic marketsMicroseismic monitoring
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Spectris plc © 85
Disruptive Growth Theme: Engineering Software
CAE (computer aided engineering) and CAPE (computer aided production engineering) represent a ~$4bn market, focussed on productivity enhancements
Niche simulation applications, including QRD (quality, reliability, durability), are increasingly critical to improving customers’ competitiveness and efficiency
We see future growth opportunities both from successful acquisitions (e.g. nCode and ReliaSoft) as well as analytics platforms we develop with our customers
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Spectris plc © 86
Disruptive Growth Theme: Cloud-based Data Services
Our environmental noise monitoring business, originally serving the airport market, now serves a broader range of end-markets
Going forward, cloud-based data services have the potential to be growth enablers across all of our businesses
Enhance productivity by automating workflows, allowing customers to focus on their core activities
Deliver resilient revenue streams based on subscriptions
Bruel & Kjaer’s environmental noise monitoring solutions
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Ubiquitous computing, driving demand for real-time data acquisition and analysis
Proliferation of composite materials in automotive and aerospace
Growing need for energy efficiency
Advanced analytics – derived from profound application knowhow
Spectris plc © 87
Test and Measurement – Disruptive Growth Themes
Cloud-based data services
Energy
Engineering software
Advanced materials
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Summary
Spectris plc © 88
■ Strong portfolio of businesses, with leading positions in niche productivity-enhancing technologies and markets
■ Broad customer, end-market and geographic exposures
■ Strategy implementation set to deliver a return to long-term average growth rates
■ Numerous growth opportunities, both in existing and new strategic markets
■ Innovative differentiated customer solutions enable superior margins
■ Acquisition strategy to expand portfolio and reach
■ Drive greater efficiency through operational excellence
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8989Spectris plc ©
Enhancing Productivity
Materials Analysis and Test & MeasurementAppendices
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
-
Materials Analysis – Global Presence
Spectris plc © 90
600 employees across Asia
1,155 employees across Europe
615 employees across North America
Operating company head offices
Technical centres/manufacturing sites
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890 employees across Asia
1,650 employees across Europe
375 employees across North America
Test and Measurement – Global Presence
Spectris plc © 91
Operating company head offices
Technical centres/manufacturing sites
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92Strictly private and confidential
ESG SolutionsKen Arnold, President
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93Strictly private and confidential
Overview of ESG
The Company
The Technology:• Oil & Gas:
• Hydraulic Fracture Monitoring (HFM)• Reservoir Monitoring (RESMAP)
• Mining
The Growth Strategy
Agenda
-
94Strictly private and confidential
Key Points
Acceptance of Microseismic
ESG’s Competitive Advantage
Product Expansion Opportunity
High Barriers to Entry
Geographic + M&A Opportunity
Driving Value from Data
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95Strictly private and confidential
Oil & GasHFM
Mining
Business Units
ESG – Company Facts
Oil & GasRESMAP®
Optimizes fracture stimulations.
Strong marketpositioning.
Smaller player in a large market =opportunity for growth in NA and WW.
Monitoring for reservoir integrity and well casing failure.
Insight to optimizeproduction and improve recovery.
Opportunity for international growth.
Mitigate safety risks.
Trend towards deeper mining adds greater seismic risks.
Opportunity for international market growth.
% of Sales 59% 22% 19%
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96Strictly private and confidential
Technological Pioneer and Industry Leader
ESG has achieved multiple industry “firsts”. A focus on research and innovation drives its technological leadership and is a critical source of competitive advantage.
CAGR2007 ‐ 2014
21%
ESG founded, the3 founders continue full‐time
1st HFM project in Cotton Valley consortium
1st ResMapsystems installed for steam injections for PDO, Shell Canada and IOL
Start of HFM wireline data acquisition business
Purchased by Spectris December 2014
1993 2003 20111997 2014
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97Strictly private and confidential
• 100 Frac Monitoring Jobs• 60 Reservoir Monitoring Installations • 120 Mining Installations
Strength in North America, Global Experience
Global Markets
Focused on continued growth in North America. And growth opportunity exists to expand footprint internationally.
2014: 84% of revenue from North America
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98Strictly private and confidential
Value of Microseismic Data
• Optimizing the frac:• Visualize fracture zone• Zone growth• Fracture networks• Stimulated reservoir volume
• Innovative data acquisition
• Reliability & performance
• Advanced analytics
Competitive Advantage
Hydraulic Fracture Monitoring – FRACMAP®
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99Strictly private and confidential
Innovation, Data Accuracy, Microseismic Insights
Growth in FRACMAP®
Strong Positioning and Room to Grow
• N=20.• Independent third party study• Interviewed both customers and
non‐customers
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100Strictly private and confidential
ESG’s advanced analysis gives operators the type of insights required to optimize fracture stimulations and maximize ultimate recovery
FRACMAP® fracture monitoring
SMTI Advanced Analysis
Proppant = $150k/stage @ 15 stages = $2.25m/well completion
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101Strictly private and confidential
ESG’s RESMAP® Equipment• In‐house engineering and assembly
Applications and Deployment• Well casing failure and caprock
integrity
Competitive Advantage
• Reliability & performance
• Advanced analysis
RESMAP = permanent and temporary monitoring systems in unconventional oil reservoirs
Reservoir Monitoring – RESMAP
• Increased use of EOR (enhanced recovery techniques) worldwide
• Induced seismicity monitoring
Trends that Benefit RESMAP
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102Strictly private and confidential
Background: • Cyclic Steam Stimulation (CSS) is a common oil extraction method
used in the oil sands of Alberta, Canada
Challenge:• Caprock subject to severe stresses due to high pressure• Operators are obligated to ensure caprock and well casing
integrity to protect worker safety and the environment
Solution:• A RESMAP® system was installed to monitors CSS operations • Provides an early warning system, giving opportunity to react in
real‐time in the event of a failure or breach
Outcome:• Environmental due diligence, compliance with regulatory
directives. • Improves steam cycle efficiency without putting caprock integrity
at risk
Caprock Integrity: Alberta’s Oil Sands
Caprock
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103Strictly private and confidential
ESG’s Microseismic Components• In‐house engineering and assembly
• Acquisition arrays, digital recorder and software
Deployment
• ESG field crews install and maintain systems
Competitive Advantage
• Reliability & performance: • Rugged components, reliable
performance• Innovation:
• R&D focus – integrating data streams into ESG platform
• Advanced analysis• Identifying geological structures and
understanding of rockmass behaviour
Mine Monitoring
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104Strictly private and confidential
Background: • Australian gold miner (Newcrest Mining) used
a block‐caving method to extract gold‐copper deposits
Challenge:• Continual monitoring of the cave is important
for both safety and production rate• Traditional geotechnical methods for surveying
the cave are limited, inaccurate and risky to implement
Solution:• An ESG microseismic system was installed
($250k investment)
Outcome:• Identified the position of the cave front as the
cave grew in size and main failure mechanisms, ensuring safety and production integrity for $100m+ development investment
Microseismic Analysis for Block Cave Mining Operations
Tracking cave’s upward progress
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105Strictly private and confidential
:
Application Hydraulic Fracture Monitoring (FRACMAP®)Reservoir Monitoring
(RESMAP®) Mining and Geotechnical
Organic Growth –North America
Organic Growth ‐International
M&A
Strategy for Growth
Partnering
Grow domestic sales force
Innovative analytics
New technologies: SuperCable™
New mine expansion
New product / service: blast monitoring
Take advantage of low oil prices to seek M&A opportunities
Bolt‐on acquisition opportunities
Grow in China
Expansion in South America, Australia
Expansion into Middle East, Latin America ‐focus on Enhanced Thermal Recovery
Partner or invest in wireline
Leverage Spectris infrastructure
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106Strictly private and confidential
Summary
Acceptance of Microseismic
ESG’s Competitive Advantage
Product Expansion Opportunity
High Barriers to Entry
Geographic + M&A Opportunity
Driving Value from Data
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An update on our Biosciences Growth Strategy
Paul WalkerManaging Director, Malvern Instruments
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Malvern Instruments: Overview
› Founded in 1967› 1975: launched first particle sizing instrument › 1997: acquired by Spectris, since when:
• Expanded geographic footprint (e.g. direct into China 2005)
• Expanded product portfolio (organically & via acquisitions)
› Now sell into more than 140 countries› Broad range of applications› 11% sales CAGR 2007 – 2014 (constant currency)
Multiple winner of Queen’s Award
108
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► Rheology and viscosity► Particle shape and chemical identification
► Zeta potential & protein charge
► Molecular weight & size
► Particle size ► Molecular structure
Particle properties exert a critical influence over >80% of all industrial products and processes
The Market Malvern Serves
109
Broad range of solutions
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Market Drivers
› Transfer of manufacturing and research to developing economies
› Research into nano-materials
› Characterisation of bio-molecules
› Environmental issues
Carbonnanotubes
Battery Materials
Protein research Bioplastics
110
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Malvern’s Competitive Advantages
› A strong and respected global brand› Unrivalled applications expertise› Strong routes to market› Best-in-class customer support› Relevant and focused product portfolio› Extensive IP protection
111
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Bioscience Development Initiative (BDI) Growth Strategy
-
A Growing Focus on Biopharmaceuticals
89%
11%
2000
72%
28%
2008
Small Molecule BioTx & Vx
50%50%
2014
Source: EvaluatePharma
No longer of academic interest only
› 130 biotherapeutics already in the market, with c.5,000 in development› Market revenues of $287 billion projected by 2020*› 8 of the top 12 drugs are now biopharmaceuticals
* Source: “Biological Drugs Market – Global Industry Analysis, 2014 – 2020”, Transparency Market Research113
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The BDI Strategy
› Initiated 2012 with creation of separate, innovative development team› Extend Malvern’s existing characterisation expertise to specific
biopharmaceutical measurement problems:• Structure-function
• Viscosity
• Protein aggregation
› Focus on post-discovery molecule screening & formulation development
› Develop high-level dialogue with key biopharmaceutical companies, academic researchers and regulatory bodies
› Pursue acquisition opportunities (technologies/products)
Establish Malvern as the supplier of choice for quality assurance/quality control and release testing
114
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An Innovative Approach
Creating a centre of excellence within Malvern
Development
Malvern UKNPI and
Marketing
Contract Engineering
Malvern Biosciences
FeasibilityPrototypes
UniversitiesTechnology start-
ups
Commercial Pharmaceutical Companies
115
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Developing the Product Portfolio
› Growing intellectual property portfolio
› Three product families launched via in-house development (G3-ID, Viscosizer, Helix)
› Three new product platforms via our acquisitions (NanoSight, Affinity Biosensors, MicroCal)
› Recent acquisitions will support continued new product development
Growing reputation of the Malvern biosciences brand116
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Customer Success Story – Novartis Biologics (NB)
› Application: NB needed to screen therapeutic antibody candidates for developability – to ensure only “good” candidates go through to clinical trials for wide-ranging applications, such as cancer therapies and viral diseases
› Challenge: Severely limited sample availability › Solution: The Viscosizer enables accurate measurement
of viscosity in very small sample volumes
› Result: Chart shows results of a two year study by NB on 130 antibody candidates using the Viscosizer – 15% fail new criteria
› Benefit: Substantial cost savings achieved by more effective pre-screening
117
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Summary
› BDI represents Malvern’s single largest growth opportunity› Malvern biosciences is a rapidly emerging global business, with:
• close working relationships established with key customers and partners
• a growing brand presence in the sector, leveraging Malvern’s leading position in pharmaceuticals
• a rapidly growing product portfolio
› Growth will be achieved through continued product development, technology in-licensing and acquisition
118
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Appendix
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Malvern’s Global Footprint
20 dedicated applications laboratories
24 offices in 14 countries
5 manufacturing operations across 3 continents
950 people worldwide120
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121121Spectris plc ©
Enhancing Productivity
Summary and CloseJohn O’HigginsChief Executive
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
-
122Spectris plc ©
Strategy Update 2015
Increase presence
in key strategic markets
Expand business globally
Deploy capital for both
platform and bolt-on M&A
Accelerate operational excellence
Focus on innovative customer solutions
-
Summary
■ Leading market positions, broad end-market exposures
■ Strategy updated, emphasis on growth
■ Strategy implementation set to deliver a return to long-term average growth rates
■ Strong financial position, well positioned to continue to generate shareholder value
Spectris plc © 123
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124124Spectris plc ©
Enhancing Productivity
Spectris plcQ&A
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
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125125Spectris plc ©
Enhancing Productivity
Spectris plcSpeaker Biographies
Improving Quality
Saving Time
Increasing Yield
Streamlining Processes
-
Speaker Biographies
Spectris plc © 126
JOHN O’HIGGINS, CHIEF EXECUTIVEBefore joining Spectris, John worked for Honeywell in a number ofmanagement roles, most recently as president of automation and controlsolutions, Asia Pacific. John began his career as a design engineer atDaimler Benz in Stuttgart. He has engineering degrees from UniversityCollege Dublin and Purdue University and an MBA from INSEAD.
CLIVE WATSON, GROUP FINANCE DIRECTORClive was previously chief financial officer and executive vice president forbusiness support at Borealis. Prior to this, he was group finance director atThorn Lighting Group and before that group finance director Europe withBlack & Decker. Clive is a member of the Institute of Chartered Accountantsin England and Wales and the Chartered Institute of Taxation.
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Speaker Biographies
Spectris plc © 127
EOGHAN O’LIONAIRD, BUSINESS GROUP DIRECTOR
Eoghan has responsibility for the Materials Analysis and Test and Measurementsegments. Before joining Spectris, Eoghan was President of the LeicaMicrosystems Division of Danaher Corporation in Germany. Prior to this, Eoghanspent 11 years in Philips in a number of management roles, latterly as CEO ofthe Respironics Sleep business unit. He started his career with Mitsui Miningand Smelting. Eoghan has engineering degrees in electronics and controls fromUniversity College, Cork and the University of Limerick, and an MBA from IMD inLausanne.
JO HALLAS, BUSINESS GROUP DIRECTORJo has responsibility for the In-line Instrumentation and Industrial Controlssegments. Jo was formerly General Manager Residential Controls at Invensysplc. Prior to this, she was at the Bosch Group where she held managementpositions in both the UK and Germany. She started her career at Procter &Gamble where she served in a number of management roles in Germany, theUSA and Asia. Jo has an MA in Engineering and a Diploma in ComputerScience from the University of Cambridge, as well as an MBA from INSEAD.
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Speaker Biographies
Spectris plc © 128
KEN ARNOLD, PRESIDENT ESG SOLUTIONS
JIM DALE, PRESIDENT OMEGA ENGINEERINGJim is the President of Omega Engineering and joined Spectris in2011. Before joining Spectris Jim was CEO of Brooks Instrument. Prior tothis, Jim spent over 20 years in a number of senior management roles fordifferent Emerson Electric operating companies in the United States andAsia. Jim has a BBA in Accounting from Western Michigan University andMBA from the University of Colorado.
Ken joined ESG Solutions as President in 2010. Prior to ESG Solutions, Kenmanaged several high growth technology companies with business modelsfocused on deriving value from data. He has held senior management andCEO roles in consumer data (Loyalty Management), software/algorithmdevelopment for gene expression (Molecular Mining) and in solar platemanufacturing (EnerWorks). Ken has a BaSC – Chemical Engineering fromthe University of Waterloo, is a Professional Engineer and has an MBA fromthe Schulich School of Business.
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Speaker Biographies
Spectris plc © 129
PAUL WALKER, MANAGING DIRECTOR, MALVERN INSTRUMENTS
CHUCK HURLEY, PRESIDENT SERVOMEXChuck joined Servomex in 2008 as General Manager for the Americas beforemoving to the UK as Global Sales and Marketing Director. He became President ofServomex in 2013. Chuck’s career began with Zellweger Analytics, where heworked in the US, UK and Switzerland. He then became VP of Global Service forHoneywell Analytics in the US, before joining Servomex. Chuck has a Masters inEconomics.
A Chartered Engineer, Paul gained his Bachelors and Masters degrees in MaterialsScience from Bradford University and spent several years in the specialist steelindustry. A move into management consultancy in 1987 provided the opportunity ofworking with a variety of high-technology businesses in the UK and Europe beforejoining Malvern Instruments in 1993. Paul was appointed Technical Director in 1994before taking up his current role in 1995 and was awarded an MBE in 2012 for hisservices to international trade.