Highlights
Headline revenue 2% higher; driven by John Crane, Detection and Flex-Tek
Headline operating profit up 1% - increased investment in growth drivers
Strong headline operating cash conversion at 98% - with free cash-flow of £237m
Company-funded investment in new product development up 5% to £112m
Emerging market revenue up 14%; now representing 16% of Group revenues
Identified another phase of restructuring in all divisions to fund growth/enhance margins
Dividend up 4% to 39.5p and special dividend of 30p; reflecting the balance sheet strength
"We continued to invest to rebalance revenue and profit streams away from government to commercial customers, and also raise our exposure to faster growing markets. This on-going realignment allowed us to grow revenue, despite a difficult trading environment. Underlying revenue growth in Smiths Detection, John Crane and Flex-Tek more than offset declines in Smiths Medical and Smiths Interconnect. Headline margins were affected by the increased investment in future growth drivers across the Group, contract challenges in Smiths Detection, and the introduction of the US medical device tax in Smiths Medical.
"Our priority is to continue to raise our investment in sales, marketing and new product development to generate medium to long-term value for our shareholders through sustainable growth. We are funding this investment by delivering operational improvements and efficiencies with initiatives underway across all divisions. We are also committed to managing Group capital allocation to increase shareholder value.
"The Group's capital structure and its strong and stable cash flows are more than adequate to meet the immediate investment needs of the business. The Board is recommending a return of cash to shareholders of around £118m, in the form of a special dividend of 30 pence per share."
