Spectris plc Capital Markets Day · 2020. 5. 25. · Agenda 13:00 Welcome and Introduction John O’Higgins 13:10 In-line Instrumentation & Industrial Controls Jo Hallas 13:50 Servomex

Spectris plc ©

Enhancing Productivity

Spectris plcCapital Markets Day

27 April 2015

Improving Quality

Saving Time

Increasing Yield

Streamlining Processes

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

Spectris plc ©


Welcome and IntroductionJohn O’HigginsChief Executive

Improving Quality

Saving Time

Increasing Yield


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

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

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

7Spectris plc ©

Strategy 2007 - 2014

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

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**

**

Spectris plc ©


In-line Instrumentation and Industrial ControlsJo HallasBusiness Group Director

Improving Quality

Saving Time

Increasing Yield


Agenda

■ Introduction

■ In-line Instrumentation

■ Industrial Controls

■ Summary

Spectris plc © 11

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

13Spectris plc ©

Delivering the Group’s Strategy

Increase presence







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.

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

300

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

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

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.


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

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



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.



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.

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




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.

20Spectris plc ©

Increase presence







SERVOMEX MINI LASER

In-line Instrumentation: Delivering the Group’s Strategy

21Spectris plc ©


Increase presence







EXPANDING PRESENCE IN TISSUE MARKET

22Spectris plc ©


Increase presence







CREATION OF NDC TECHNOLOGIES

23Spectris plc ©

Industrial ControlsIndustrial Controls provides products and solutions that measure, monitor, control, inform, track andtrace during the production process.

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013 2014

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

Spectris plc © 25

Industrial Controls – Analysis of Sales

UPDATE FOR SEGMENT ANALYSIS


30%

14%

6%5%

45%

2014 Sales % by end-user marketDistributors

Electronics

Pharma & fine chemicals& healthcareEnergy & utilities

Other

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.

Industrial Controls – Aerospace

Spectris plc © 27


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

Industrial Controls – Pharmaceutical / Clinical

25Spectris plc ©2828

Track, Trace & Control Systems

Four key competitors


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.

29Spectris plc ©

Industrial Controls: Delivering the Group’s Strategy

Increase presence







MICROSCAN’S CLOUDLINK INTERFACE

30Spectris plc ©


Increase presence







EXPANDING PRESENCE IN INDUSTRIAL CONNECTIVITY

MARKET

31Spectris plc ©


Increase presence







EXPANDING OMEGA INTO ASIA & LATAM

32

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


Energy

Spectris plc ©

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


■ 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

Spectris plc ©


In-line Instrumentation and Industrial ControlsAppendices

Improving Quality

Saving Time

Increasing Yield


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

Industrial Controls – Global Presence

Spectris plc © 36


110 employees across Europe

1,200 employees across North America



EXPERTS IN GAS ANALYSISChuck Hurley President

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

■ 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

EXPERT

IP DELIVERED THROUGH A FOCUSED OFFER

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

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

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

■ 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

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

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!

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)

■ 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

Jim DalePresident

• 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

• 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

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

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

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

• 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

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

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

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

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

6060Spectris plc ©


Materials Analysis and Test & MeasurementEoghan O’LionairdBusiness Group Director

Improving Quality

Saving Time

Increasing Yield


Agenda

■ Introduction

■ Materials Analysis

■ Test and Measurement

■ Summary

Spectris plc © 61

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


eChannel

Advanced materials

63Spectris plc ©

Delivering the Group’s Strategy

Increase presence







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.

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

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

300

350

400

2007 2008 2009 2010 2011 2012 2013 2014

RoS %£m


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

Spectris plc © 67

Materials Analysis – Sales Analysis



Materials Analysis – Pharmaceutical & Fine Chemicals

Spectris plc © 68

Pharmaceutical ParticleCharacterisation

#1 position globally



Fine Chemicals ParticleCharacterisation


Five other key competitors


Life sciences Microcontamination Monitoring





Materials Analysis – Metals, Minerals and Mining

Spectris plc © 69

Metals, Minerals & Mining Particle Characterisation



Estimated combined market share 60-65%*

X-Ray Fluorescence Elemental Analysis



Estimated combinedmarket share 75-80%*

X-Ray Diffraction Elemental Analysis


Two other key competitors


Significant Aftermarket Sales

X-ray tubes Sample preparation


Materials Analysis – Semiconductors, Telecoms & Electronics

Spectris plc © 70

Semiconductor / electronics Microcontamination Monitoring#1 position globally




71Spectris plc ©

Materials Analysis: Delivering the Group’s Strategy

Increase presence


Expand Business Globally

Deploy Capital for both

Platform and Bolt-on M&A

Accelerate Operational Excellence


PMS’ UDI-20 Liquid Particle Counter

72Spectris plc ©


Increase presence







Biopharmaceutical characterisation and

visualisation

73Spectris plc ©


Increase presence







Increase presence in key strategic markets

Life sciences


Sample preparation


Acquisition of distributorsin South Korea and Taiwan

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

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.

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

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

300

350

400

2007 2008 2009 2010 2011 2012 2013 2014

RoS %£m


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

Spectris plc © 78

Test and Measurement – Sales Analysis



Test and Measurement – Automotive

Spectris plc © 79

Automotive Sound and Vibration Testing, Simulation & Analysis




Automotive Stress and Structural Testing, Simulation and Analysis





Test and Measurement – Aerospace

Spectris plc © 80

Aerospace Sound and Vibration Testing, Simulation and Analysis




Aerospace Stress and Structural Testing, Simulation and Analysis





Test and Measurement – Electronics, Semiconductor & Telecoms

Spectris plc © 81

Electronics, Semiconductor and TelecomsSound and Vibration Testing, Simulation and Analysis





82Spectris plc ©

Test and Measurement: Delivering the Group’s Strategy

Increase presence







Bruel & Kjaer’s on-board engine

monitors

83Spectris plc ©


Increase presence







HBM’s e-Drive solution

84Spectris plc ©


Increase presence







Increase presence in key strategic markets


Focus on innovative customer solutionsSensors and software

Increase presence in key strategic marketsMicroseismic monitoring

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

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

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


Energy


Advanced materials

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


■ 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

8989Spectris plc ©


Materials Analysis and Test & MeasurementAppendices

Improving Quality

Saving Time

Increasing Yield


Materials Analysis – Global Presence

Spectris plc © 90


1,155 employees across Europe




92Strictly private and confidential

ESG SolutionsKen Arnold, President


Overview of ESG

The Company

The Technology:• Oil & Gas:

• Hydraulic Fracture Monitoring (HFM)• Reservoir Monitoring (RESMAP)

• Mining

The Growth Strategy

Agenda


Key Points

Acceptance of Microseismic

ESG’s Competitive Advantage

Product Expansion Opportunity

High Barriers to Entry

Geographic + M&A Opportunity

Driving Value from Data


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%


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


• 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


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®


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


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


ESG’s RESMAP® Equipment• In‐house engineering and assembly

Applications and Deployment• Well casing failure and caprock

integrity


• 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


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


ESG’s Microseismic Components• In‐house engineering and assembly

• Acquisition arrays, digital recorder and software

Deployment

• ESG field crews install and maintain systems


• 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


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


:

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


Summary

Acceptance of Microseismic

ESG’s Competitive Advantage

Product Expansion Opportunity

High Barriers to Entry

Geographic + M&A Opportunity

Driving Value from Data

An update on our Biosciences Growth Strategy

Paul WalkerManaging Director, Malvern Instruments

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

► 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

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

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

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

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

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

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

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

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

Appendix

Malvern’s Global Footprint

20 dedicated applications laboratories

24 offices in 14 countries

5 manufacturing operations across 3 continents

950 people worldwide120

Summary

■ Leading market positions, broad end-market exposures

■ Strategy updated, emphasis on growth


■ Strong financial position, well positioned to continue to generate shareholder value

Spectris plc © 123



Spectris plcQ&A

Improving Quality

Saving Time

Increasing Yield




Spectris plcSpeaker Biographies

Improving Quality

Saving Time

Increasing Yield


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.

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.

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.

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.

Documents

Spectris plc Capital Markets Day · 2020. 5. 25. · Agenda 13:00 Welcome and Introduction John O’Higgins 13:10 In-line Instrumentation & Industrial Controls Jo Hallas 13:50 Servomex