Spectris plc ©

Spectris plc

2018 Full Year Results

Agenda

▪ FY 2018 Highlights

▪ Financial Performance

▪ Strategy for Profitable Growth

▪ Summary

Spectris plc © 2

2018 Highlights

Spectris plc ©

▪ Sales of £1,604.2 million reflects a 5% LFL sales increase, building on progress in 2017

▪ Adjusted operating profit of £248.3 million, LFL adjusted operating margin up 0.3pp

▪ Adjusted earnings per share up 7%, dividend per share increase of 8%

▪ Strategy for profitable growth:

▪ Profit improvement programme to deliver benefits of more than £30 million, with £15-20 million in 2019

▪ Strategic review initial conclusions presented:

– Group would benefit from becoming a more focused and simplified business

– Assessing which operating companies can drive the greater shareholder value:

▪ Scalable, in attractive high growth markets, with strongest capabilities & greatest performance potential

▪ Identified three platform businesses so far - Malvern Panalytical, HBK, Omega

▪ Greater focus on shareholder value creation - asset optimisation, portfolio management, capital allocation

3

Spectris plc ©

Financial Performance

Clive Watson

Group Finance Director

4

Financial Performance – Adjusted Measures

Spectris plc ©

FY 2018 FY 2017 ChangeLike-for-like

change (2)

Sales (£m) 1,604.2 1,525.6 5% 5%

Adjusted operating profit (£m) (1) 248.3 239.3 4% 7%

Adjusted operating margin (%) (1) 15.5% 15.7% (0.2pp) 0.3pp

Project Uplift costs (£m) (10.8) (15.8) 32%

Adjusted operating profit after Project Uplift costs (£m) (1) 237.5 223.5 6%

Adjusted profit before tax (£m) (1) 241.4 234.2 3%

Adjusted effective tax rate (%) (1) 19.7% 21.3% (1.6pp)

Adjusted EPS (pence) (1) 164.9 154.6 7%

DPS (pence) 61.0 56.5 8%

Adjusted operating cash conversion (%) (1) 59% 77% (18pp)

Notes

(1) These adjusted performance measures represent the statutory results excluding certain items.

(2) At constant exchange rates and including acquisitions and disposals on a comparable basis (‘LFL’).

5

Spectris plc ©

+4.9% (1.5%) +5.2% +5.2%Contribution

to yoy change

Sales

72.1

77.5

1,600

1,460

1,580

20

1,620

0

1,520

1,540

1,500

1,480

1,560

LFLAcquisitions 2018

1,525.6

2017

(22.5)

£m

1,604.2

(48.5)

1,477.1

Disposals Currency2017 organic

£m

USD (17.2)

EUR 6.1

Other (net) (11.4)

Total (22.5)

£m

Pricing 15.7

Volume/Mix 61.8

Total 77.5

(3.2%)

6

45.3

230

240

250

0

260

270

280

(0.1)

Gross

margin

(28.7)

Overheads

248.3

2018 Adjusted

operating profit

£m

Currency2017 Adjusted

operating profit

Disposals net

of acquisitions

239.3

(7.5)

Spectris plc ©

Adjusted Operating Profit

ROS 15.7% ROS 15.5%

£m

Pricing 15.7

Volume/mix 43.6

MLO increase (25.2)

Procurement 11.2

Total 45.3

£m

Employee-related (19.4)

Depreciation (1.6)

Other (7.7)

Total (28.7)

£m

Acquisitions 1.2

Disposals (8.7)

Total (7.5)

7

(50.5)

(297.1)

(100.5)

(114.9)

-300

-250

-200

-150

-100

-50

0

50

100

150

200

250

Net debt

31 Dec 2017

(5.9)

Divis/tax/

int/other

(94.1)

Share

buyback

£m

283.6

Adjusted

EBITDA

(42.8)

Change in

working

capital

Capex

(8.6)

Restructuring

costs

(207.2)

Net debt

31 Dec 2018

Acquisitions

43.8

Disposals Currency

8Spectris plc ©

Cash Flow

Net debt: adjusted EBITDA

Average working capital

1.0x

11.4%

0.2x

11.9%

Adjusted operating cash flow = £146.7m (2017: £184.6m)

2.7x dep’n

£m

Dividends (68.2)

Tax (37.7)

Net interest/other (9.0)

Total (114.9)

£m

Receivables (21.6)

Inventory (17.4)

Payables/Other (3.8)

Total (42.8)

Adjusted operating cash conversion = 59% (2017: 77%)

Sales by Destination

Region/country

LFL change

FY 2018 vs

FY 2017

LFL change

FY 2017 vs

FY 2016

North America +4% +4%

Europe

Germany

UK

+3%

+2%

+7%

+6%

+5%

+13%

Asia

China

Japan

+10%

+16%

+3%

+9%

+11%

+9%

Rest of the world +1% +1%

Group +5% +6%

Spectris plc ©

North America

31%

Europe 34%

Asia 30%

ROW 5%

FY 2018 % of Group sales

9

Spectris plc ©

Summary Segment Performance

Materials

Analysis

Test and

Measurement

In-line

Instrumentation

Industrial

ControlsTotal

FY

2018

FY

2017

FY

2018

FY

2017

FY

2018

FY

2017

FY

2018

FY

2017

FY

2018

FY

2017

Sales (£m) 541.1 464.9 522.6 487.3 312.2 310.9 228.3 262.5 1,604.2 1,525.6

LFL sales change 8% 6% 1% 3% 5%

Adjusted operating profit (£m) (1) 95.4 87.3 67.2 74.2 42.6 36.0 43.1 41.8 248.3 239.3

LFL operating profit change (1) 11% (9%) 17% 19% 7%

Adjusted operating margin (1) 17.6% 18.8% 12.9% 15.2% 13.6% 11.6% 18.9% 15.9% 15.5% 15.7%

LFL adjusted operating margin

change (1)0.4pp (2.0pp) 1.8pp 2.6pp 0.3pp

Project Uplift cost (£m) (3.0) (4.2) (3.3) (5.3) (2.0) (2.8) (2.5) (3.5) (10.8) (15.8)

Adjusted operating profit after

Project Uplift costs (£m)92.4 83.1 63.9 68.9 40.6 33.2 40.6 38.3 237.5 223.5

(1) These adjusted performance measures represent the statutory results excluding certain items. They also exclude restructuring costs relating to

Project Uplift and the Group profit improvement programme. 10

FY

2017

FY

2018Change vs. FY 2017

Reported Organic FX Acq. Reported Reported LFL

Sales (£m) 464.9 39.3 (7.6) 44.5 541.1 +16% +8%

Adjusted operating

profit (£m)87.3 9.5 (0.2) (1.2) 95.4 +9% +11%

Adjusted operating

margin (%)18.8% 17.6% (1.2pp) +0.4pp

Spectris plc ©

Materials Analysis

▪ Sales growth +16%: LFL sales +8%, acquisitions +10%, currency (2%)

▪ Good LFL pharma sales growth; investment in biopharma/generics, increasing regulation

▪ Good growth in minerals/mining impacted by weaker demand in metals

▪ Strong growth in academic research, especially N. America/Asia as funding/win-rate improves

▪ Strong growth in electronics/semiconductor continues for PMS, especially in Asia

▪ Concept Life Sciences below expectations, but remedial action already impacting

11

Spectris plc ©

Test and Measurement

▪ Sales growth +7%: LFL sales +6%, acquisitions (net of disposals) +2%, currency (1%)

▪ Strong LFL sales growth in automotive, from Millbrook capacity expansion and at BKSV

▪ Acquired Revolutionary Engineering and VI-grade to expand automotive offering

▪ Aerospace LFL sales lower year-on-year, but good pipeline of opportunities

▪ From January 2019, BKSV and HBM merging their activities into new company, HBK

FY

2017

FY

2017

FY

2018Change vs. FY 2017

Reported

Reported

excl.

disposal

Organic FX Acq. Reported Reported LFL

Sales (£m) 487.3 471.7 28.6 (3.6) 25.9 522.6 +7% +6%

Adjusted operating

profit (£m)74.2 70.0 (6.2) 0.7 2.7 67.2 (9%) (9%)

Adjusted operating

margin (%)15.2% 14.8% 12.9% (2.3pp) (2.0pp)

12

FY

2017

FY

2018Change vs. FY 2017

Reported Organic FX Acq. Reported Reported LFL

Sales (£m) 310.9 3.6 (4.0) 1.7 312.2 +0.4% +1%

Adjusted operating

profit (£m)36.0 6.2 0.7 (0.3) 42.6 +18% +17%

Adjusted operating

margin (%)11.6% 13.6% +2.0pp +1.8pp

Spectris plc ©

In-line Instrumentation

▪ Sales growth 0.4%: LFL sales +1%, acquisitions +1%, currency (1%)

▪ Sales grew strongly in Asia, especially China, mostly offset by lower sales in EU/N. America

▪ Modest LFL sales growth in pulp/paper; diversifying towards tissue/pulp/packaging markets

▪ Growth in energy despite tough year-on-year comparator for wind business

▪ NDCT sales lower but key development in sensors for lithium-ion battery manufacturing

13

Spectris plc ©

Industrial Controls

▪ Sales decline (13%): LFL sales +3%, disposal of Microscan (13%), currency (3%)

▪ Good LFL sales growth in Asia, especially China and Japan

▪ Operational improvements at Omega deliver higher gross and operating margins

▪ Omega product refresh & new e-commerce platform/digital marketing to drive sales growth

▪ Red Lion’s focus on key vertical markets drives growth in sales and access to new markets

FY

2017

FY

2017

FY

2018Change vs. FY 2017

Reported

Reported

excl.

disposal

Organic FX Reported Reported LFL

Sales (£m) 262.5 229.6 6.0 (7.3) 228.3 (13%) +3%

Adjusted operating

profit (£m)41.8 37.3 7.1 (1.3) 43.1 +3% +19%

Adjusted operating

margin (%)15.9% 16.2% 18.9% +3.0pp +2.6pp

14

Spectris plc ©

2019 FY Guidance

▪ H1:H2 phasing – sales and adjusted operating profit

▪ Acquisitions and disposals

▪ 2018 acquisitions/disposals – sales £10 million, adjusted operating profit £1 million

▪ Profit improvement programme benefits

▪ Underlying effective tax rate – up to 22%

▪ Planned capex of c. £90 million, of which growth capex £45 million, principally Millbrook

▪ Foreign exchange sensitivities

15

Impact of 1 cent change versus GBP

2019 FY sales

£m

2019 FY adjusted operating profit

£m

EUR 4.0 0.6

USD 4.0 0.6

Spectris plc ©

Strategy for Profitable Growth

Andrew Heath

Chief Executive

16

Key Impressions

Spectris plc ©

Strong fundamentals

▪ High-quality businesses and products

▪ Strongly-recognised brands & leading technologies

▪ Domain knowledge and application expertise

▪ Strong market positions

▪ Exposure to growing end markets

▪ Good customer relationships

▪ Talented people

▪ High gross margins

▪ Good cashflow generation

▪ Strong balance sheet

▪ Enhance operational efficiency to drive margin

expansion

▪ Strengthen Lean deployment

▪ Reduce complexity

▪ Focus on attractive end markets where best

placed to drive growth and profitability

▪ Asset optimisation supported by active portfolio

management and synergistic acquisitions

▪ More rigorous capital allocation

Areas for improvement

17

Spectris plc ©

Profit Improvement Programme – Overview

▪ Spectris has strong gross margin businesses…

▪ …but operating margin performance remains

below both historic highs and our peers

▪ Undertaking self-help measures to drive

margin expansion:

▪ Numerous initiatives identified

▪ Programme now being implemented

▪ Driving greater operational gearing in 2019…

▪ …and beyond – continuous improvement

culture being strengthened

▪ Aim to return our operating margin to at least

our previous highs

18

10%

12%

14%

16%

18%

20%

2010 2012 2014 2016 2018

30%

35%

40%

45%

50%

55%

60%

Adjusted operating margin (RHS)

Gross margin

Spectris margins 2010-2018

Spectris plc ©

People

• Simplify organisational structures

• Greater organisational effectiveness

Product

• Rationalise product portfolio

• Exit lower margin products

Property

• Site consolidation

• Shared resources

• Relocation to lower cost sites

Process

• Simplify processes

• Lean initiatives

• Value analysis/value engineering

Annualised benefits of more than £30 million,of which £15-20 million in 2019

Costs to achieve of £35 million

Profit Improvement Programme Initiatives

19

Spectris plc ©

Strategic Review – Overview

▪ Spectris has a diverse portfolio of high-quality businesses

▪ …but will benefit from becoming a more focused and simplified business

▪ Ongoing strategic assessment of every OpCo to consider its value creation potential

▪ Identify platform businesses which are:

▪ Scalable and strongly aligned to attractive markets with GDP+ growth characteristics

▪ High gross margins and asset light

▪ Have the strongest capabilities and greatest value creation potential

▪ Will continue to extend our instrumentation businesses into associated services & software

▪ Greater focus on performance management and capital allocation to deliver:

▪ Sales growth and margin expansion

▪ Operating cash conversion and FCF growth

▪ Shareholder value creation

20

Spectris plc ©

Pharma

Technology-

led

industrials

Electronics

and semi-

conductors

Automotive

Metals,

minerals,

mining

▪ Drug complexity

▪ Reducing development time and cost

▪ More stringent trials

▪ Advanced data analytics

▪ IIoT

▪ Process automation

▪ Additive manufacturing

▪ Processing power and speed

▪ Miniaturisation

▪ 5G

▪ Rate of new product launches

▪ Vehicle electrification - hybrid/EVs

▪ Connected & autonomous vehicles

▪ Rising use of simulation/software

▪ Energy efficiency

▪ Autonomous operations

▪ Predictive analytics

▪ Increasing spend on R&D

▪ Increasing requirements for

instruments & test equipment

▪ Increasing sophistication of

instruments & test equipment

▪ Increasing use of software

▪ Customers seeking greater

insights through software and

advanced analytics

Attractive GDP+ Growth Markets

Opportunities for SpectrisMarket trend

21

Spectris plc ©

Scale of potential Key requirements OpCo classification

Strategic

plan

Targets and

performance

Resources

and risks

Profit

potential

Operating

margin

▪ Sales growth

▪ Return on capital

▪ Cash conversion

Financial

performance

▪ Current operating margin

▪ Expansion potential

Market

growth

▪ Addressable market growth

▪ Strong growth drivers

▪ Headroom/market share

▪ Technology product roadmap

Share

gain

potential

▪ Competitive position

▪ Degree of differentiation

▪ Inorganic adjacent opportunities

Growth

potential

▪ Clear strategic direction

▪ Strategic priorities

▪ Platform potential

▪ Scale of financial targets

▪ Historical performance vs.

plan

▪ Identified profitable

growth initiatives

▪ Required resources and

capabilities

▪ Level of investment/capex

required

▪ Key execution risks

OpCo Assessment Framework

➢ Platform OpCos

➢ Non-platform

OpCos

22

% of 2018 sales

Spectris plc ©

▪ 3 platform businesses identified to date:

▪ Malvern Panalytical

▪ HBK

▪ Omega

▪ Scalable characteristics

▪ Positioned in attractive end markets

▪ High margin and asset light

▪ Attractive growth and profit potential

▪ Top priority for investment

Platform OpCos

Platform OpCos

% of 2018 adjusted operating profit

Platform

OpCosPlatform

potential

Run for

value

Platform

OpCosPlatform

potential

Run for

value

23

MalPan

HBKOmega

MalPan

HBKOmega

Spectris plc ©

▪ Portfolio still being fully evaluated

▪ Platform potential:

▪ Attractive growth and profit potential

▪ Targeted investments

▪ Manage for full potential

▪ Possible future platforms

▪ Run for value:

▪ Focus on performance enhancement

▪ Manage for value

▪ Potential divestment candidates

Non-platform OpCos

Non-platform OpCos

24

% of 2018 sales

% of 2018 adjusted operating profit

Platform

OpCosPlatform

potential

Run for

value

Platform

OpCosPlatform

potential

Run for

value

MalPan

HBKOmega

MalPan

HBKOmega

Spectris plc ©

▪ Highly complementary portfolio of instruments for materials analysis

▪ Serving a broad range of industries: pharma/advanced materials/minerals & mining

▪ Strong reputation for quality of instruments and customer support

▪ Served addressable market of c.£3bn, growing at 4-5% pa

▪ Concept Life Sciences to become part of the Malvern Panalytical platform

▪ Growth potential:

▪ Existing markets through additional products and instruments

▪ Extension into insight-creating software and solutions

▪ Adjacent markets, leveraging and replicating its domain expertise

▪ Scalable go-to-market approach:

▪ Significant market headroom and increased value-based selling

▪ Opportunities for bolt-on M&A

Platform – Malvern Panalytical

25

Spectris plc ©

▪ Highly complementary portfolio of testing and measurement products

▪ Leading player in technically advanced segments of mechanical & noise,

vibration, harshness testing

▪ Diversified end-market presence: automotive, aerospace, telecoms, industrials

▪ Recognised by customers for leading technology & application expertise

▪ Large addressable market worth £3bn+ globally, growing at 4-6% pa

▪ VI-grade to become part of the HBK platform

▪ Broad range of growth opportunities:

▪ Increasing share in core markets

▪ Technology adjacencies plus new and emerging applications

▪ Expanding offering in application analytics

▪ Merger presents additional value-enhancing opportunities:

▪ Greater customer intimacy and joint product/solutions design

▪ Broader ‘product physics’ offer

▪ Common data handling capabilities

Platform – HBK

26

Spectris plc ©

▪ Specialist distributor of temperature, pressure, flow sensors & instrumentation

▪ Differentiated business model, a leader in North America & overseas presence

▪ Provides domain and application expertise via technical product support

▪ Highly diversified customer base of engineers across numerous end markets

▪ c.£2bn addressable market, growing at 4-5% pa

▪ Financially efficient and highly scalable business model

▪ Benefits from long-term purchasing trend towards remote & online ordering

▪ Significant value-creation opportunities:

▪ Further expansion through product extension and enhanced online platform

▪ Targeted international expansion

▪ Evaluating curated market-place for third-party products

Platform – Omega

27

Spectris plc ©

▪ Focusing on high-end instrumentation plus associated software and services

▪ Improving productivity and operational efficiency

▪ Simplifying the portfolio with fewer platform businesses and a focused end-market strategy

▪ Actively managing the portfolio to prioritise and optimise

▪ More disciplined and targeted capital allocation

▪ Improving financial performance:

▪ Sustainable organic revenue growth and enhanced margins

▪ Stronger free cashflow generation

▪ Higher returns on capital employed

Enhancing shareholder value

Strategy for Profitable Growth

28

Spectris plc ©

Appendix

Spectris plc

29

Spectris plc ©

Automotive 14%

Pharma & fine chemicals

15%

Semicon, telecoms, electronics

10%

Energy & utilities 9%

Metals, minerals & mining

9%

Machine building 7%

Pulp, tissue & paper

7%

Academic research

7%

Aerospace & defence

4%

Other18%

Sales by End-user Market

End-user market

LFL change

FY 2018

LFL change

FY 2017

Pharma & fine chemicals +7% +7%

Automotive +11% +15%

Semicon, telecoms &

electronics+7% +14%

Metals, minerals & mining +2% +15%

Energy & utilities +6% +8%

Machine building +5% (3%)

Pulp, tissue & paper +3% +2%

Academic research +13% (8%)

Aerospace & defence (5%) +9%

FY 2018 % of Group sales

30

Spectris plc ©

Laboratory/off-line businesses Process/manufacturing businesses

Materials Analysis

Metals/minerals/mining

Pharma/fine chemicals

Academic research

Semiconductors

Automotive

Aerospace

Electronics

Energy

Academic research

In-line Instrumentation

Process industries

Pulp, paper & tissue

Energy & utilities

Web/converting

Industrial Controls

Manufacturing

Process industries

Energy

Electronics

Healthcare

Business Segments

% Group Sales FY 2018:

34% 33% 19% 14%

Test and Measurement

31

39%

20%

9%

7%

6%

6%

13%

Automotive

Machine building

Aerospace & defence

Semicon, telecoms & electronics

Academic research

Energy & utilities

Other

37%

21%

13%

12%

17%

Pharma & fine chemicals

Metals, minerals & mining

Semicon, telecoms & electronics

Academic research

Other

37%

27%

11%

25%

Pulp, paper & tissue

Energy & utilities

Converting, extrusion & packaging

Other

22%

32%

39%

7%

North America Europe Asia ROW

Spectris plc ©

2018 Segmental Sales

Materials Analysis Test and Measurement In-line Instrumentation Industrial Controls

2018 sales by end-user market

2018 sales by destination

22%

50%

25%

3%

North America Europe Asia ROW

31%

28%

35%

6%

North America Europe Asia ROW

74%

11%

14%1%

North America Europe Asia ROW

36%

21%

43%

Distribution

Semicon, telecoms & electronics

Other

32

Spectris plc ©

Disclaimer

This presentation is for distribution only to authorised persons within the meaning of the Financial Services and Markets Act 2000 (as amended by the

Financial Services Act 2012) and any relevant statutory instrument thereunder or to whom it would otherwise be lawful to distribute it. The information

contained herein is not for publication, distribution or reproduction, in whole or in part, to persons in any jurisdiction in which such publication or

distribution is unlawful.

The information contained in this presentation is provided purely for information purposes regarding Spectris plc. Any reliance upon the information

presented is at your own risk. This announcement includes “forward-looking statements”. All statements other than statements of historical fact

included in this announcement, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives

of management for future operations (including development plans and objectives relating to the Company’s products), are forward-looking

statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual

results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the

environment in which the Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as

at the date of this announcement. The Company assumes no responsibility to update any of the forward-looking statements contained herein.

Neither Spectris, its directors, employees, agents, nor its affiliated companies, makes any warranty nor assumes legal responsibility for the reliability,

accuracy or completeness, or fitness for purpose of any of the information.

The information shall not constitute or be deemed to constitute any offer or invitation to invest or otherwise deal in shares or other securities of Spectris

plc. Recipients of this presentation are not to construe its contents, or any prior or subsequent information as investment, legal or tax advice.

All information in the presentation is the property of Spectris plc.

Spectris makes no representations and disclaims all warranties (whether express or implied) and shall not be liable for any direct, indirect, special,

punitive or consequential damages or loss (including but not limited to lost profits or revenues) whether arising in statute, contract, tort, equity or

otherwise to the fullest extent permitted by law.

These terms and conditions shall be governed by and construed in accordance with English Law and the exclusive jurisdiction of the English courts.

33