Spirax Group Annual Report 2023
Engineering
ourfuture
Spirax-Sarco Engineering plc
Engineering our
future through
continuity and
progression
The decisions we have taken
over the course of our history
enable our sustainable growth,
influence the value we create
and have a lasting impact for our
stakeholders in the future.
Our colleagues
Empowering future
leaders
Our environment
The future of
sustainable steam
Our shareholders
Engineering our
future, together
Our suppliers
Embedding
sustainability into
our future
Our customers
Developing
solutions for future
customer needs
Our communities
Enabling future
generations
It balances our history and where we have
come from with who we are today, and is a
natural evolution for our Company.
Spirax Group is different but also familiar. Its simplicity aims
to create clarity, by representing everyone and everything
that we do and eliminating the confusion between the name
of our Group and the Spirax Sarco Division that provides
steam thermal solutions to customers. As Spirax Group,
we are staying true to our heritage while also reflecting our
evolution to a much larger and stronger organisation.
We are inviting our shareholders to support our legal name
change to Spirax Group plc at our AGM in May.
Read about our brand story overleaf
2014
Acquired
BioPure
2016
Acquired
Aflex Hose
2017
Launched our
Global Graduate
Programme
2019
Acquired
Thermocoax
Events of the last ten years have significantly contributed
to the growth and evolution of our Company and are
reflected in our decision to refresh our Brand. 2024 marks
the culmination of an important era in our Group’s history
and lays strong foundations for our future as Spirax Group.
2015
Acquired Asepco
and Flowsmart
2017
Acquired Gestra
and Chromalox
2018
Joined the
FTSE 100
Our refreshed brand signifies our evolution across
the last decade to a much larger and more capable
organisation, while staying true to our heritage of
more than 135 years.
Across the Group, we have united behind our shared
Purpose to create value for all our stakeholders by
engineering a more efficient, safer and sustainable
future. I am so proud of our collective achievements,
grateful for all the support received and most
importantly, I’m extremely confident in the future
and sustainable success of Spirax Group.”
Nicholas Anderson
Group Chief Executive
A progressive decade...
2021
Launched our
One Planet:
Engineering
with Purpose
Sustainability
Strategy
2022
Launched
new-to-world
decarbonisation
solutions
2023
Investment
in Kyoto
Group
2022
Acquired
Vulcanic and
Durex Industries
2022
Launched the
Spirax Group
Education Fund
and Everyone is
Included
2024
Spirax-Sarco Engineering
becomes
Our Group has been built on strong foundations over
decades, creating an enviable culture based on our
Values. We are a caring, respectful and authentic
organisation with a shared Purpose that we
demonstrate every day through the way we work
together to make our difference.
We look forward to welcoming shareholders to our
AGM in May when we will share more information on
our brand refresh and ask for shareholder support to
change our legal name to Spirax Group plc.”
Nimesh Patel
Group Chief Executive Officer
...supports our bright future
As a Company established during
the second industrial revolution,
anticipating and investing in our
future needs has become a core
part of our DNA.
There were lots of examples of this
during the last decade as we evolved
the scale and composition of our
Group by focusing on opportunities
to create significant value for all our
stakeholders and address the
imperative of climate change.
Engineering
our future
for over
135 years
As Spirax Group we can help everyone better
understand who we are and how we work together
across our Businesses to help customers meet their
operational, sustainability and decarbonisation goals.
Throughout this report we share some of the ways
in which important decisions taken during the last
decade will continue to shape our long-term,
sustainable future.
Strategic Report
Summary
The industries we serve
Introducing Spirax Group
Chair’s Statement
Letter from the former Chief Executive
Case study: Empowering future
leaders
Business model and approach
Investment case
Chief Executive Officer’s Review
Stakeholder engagement
Key performance indicators
Financial Review
Ten-year financial summary
Operating Review
Solutions
Case study: Developing solutions for
future customer needs
Sustainability Report
generations
sustainable steam
information statement
sustainability into our future
Risk Management
Governance Report
Our Governance
Board leadership and Company
together
evaluation
Report
Audit, risk and internal control
Remuneration
Directors’ remuneration
Regulatory disclosures
Statement of Directors’
Responsibilities
Financial Statements
Independent Auditor’s Report
Consolidated Statement of Financial
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Changes
in Equity
Consolidated Statement of Cash
Flows
Statements
Appendix: Alternative performance
measures
Company Statement of Financial
Company Statement of Changes in
Equity
Statements
Corporate Information
Our Global Operations
Officers and Advisers
Summary
Financial, operational and
sustainability highlights
Financial
•
Revenues up 4% reflecting full-year
contribution from acquisitions; down
•
Early restructuring actions and cost
containment partially mitigated
•
Adjusted operating profit margin
reflects adverse mix impact of lower
volumes in higher margin businesses
•
Statutory operating profit and
margin reflect impact of
restructuring and impairment costs
•
track record
•
Return to organic sales growth and
adjusted operating profit margin
Operational
•
Organic revenue growth in STS and
•
Integrations of acquisitions
progressing well
•
future growth:
•
First installations of TargetZero
solutions
•
Increased digital connections
enhancing our customer
propositions
•
Expansion of Chromalox Ogden
manufacturing facility underway
•
Investment in Kyoto
adds to energy storage solutions
•
Digital innovations in Watson-
Marlow support customers with
preventative maintenance
Sustainability
•
•
Group energy use 8% lower
•
•
•
volunteering
•
Recent appointments improving
gender balance of Executive Team
Our financial results in 2023 were impacted by a
more challenging trading environment than we
had anticipated at the start of the year, with a
number of external headwinds to our highest
margin businesses. An early focus on restructuring
to right-size capacity, together with cost
containment actions, supported our adjusted
operating profit margin. We are well positioned
to return to revenue and profit growth in 2024.”
Group Chief Executive Officer
+ ‘Sales’ is used interchangeably with ‘revenue’ when describing the financial performance of the business
* Organic measures are at constant currency and exclude contributions from acquisitions and disposals (with our Russian operating companies
4
Strategic Report
£ KPI
£1,682.6m
^ KPI
1.55
£m
£284.4m
p
249.5p
£m KPI
£349.1m
p KPI
312.4p
Organic
Change %
Margin % Margin %
1,682.6
1.55
284.4
249.5
349.1
312.4
1,242.4
3.44
245.0
226.2
282.7
265.7
1,193.4
2.62
249.0
235.5
270.4
256.6
1,344.5
2.22
320.9
318.3
340.3
338.9
1,610.6
1.75
318.8
305.1
380.2
377.2
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
16.9
19.8
23.9
20.9
19.7
20.7
23.6
25.3
22.7
22.8
2023 20232023
2022 20222022
54% 59%66%54% 51%55%
23%
16%
8%
30%
39%
10%
43%
2%
23%
26% 25%
Steam Thermal Solutions Electric Thermal Solutions Watson-Marlow Fluid Technology Solutions
Appendix to the Financial Statements
The Group’s three operating segments, as defined by IFRS 8, are Steam Thermal Solutions, Electric Thermal Solutions and Watson-Marlow Fluid
Technology Solutions
16%
5
Strategic Report
Oil & Gas Chemicals Power Generation
6% of Group revenue
Electrical heating products reduce fluid
viscosity, deliver freeze protection and
provide efficiency in the processing of
natural gas, crude oil and water. Our steam
products enable optimum steam system
performance and reduce energy use during
oil and gas production.
6% of Group revenue
Steam and electricity are widely used as an
energy source in chemical production and
product processing, while our pumps are
used to safely and accurately transfer and
dose critical chemical components.
6% of Group revenue
Electrical heating technologies are widely
used to optimise power generation. Steam
turbines transfer chemical energy in fuel
into electrical energy and steam is used to
distribute and reuse waste heat formed
during the power generation process.
Food & Beverage
Pharmaceutical
& Biotechnology
OEM Machinery
18% of Group revenue
Our peristaltic pumps, valves and single-use
components enable precise flow control and
fluid isolation. Clean steam reduces the risk
of product and process contamination.
Electrical heating is used in a wide range of
process heating applications.
20% of Group revenue
Steam is used for blanching, cooking,
baking, brewing, distilling, packaging,
cleaning and sterilising. Electric heating
elements are used in commercial food
transfer ingredients, deliver food to process
lines and handle process waste.
12% of Group revenue
are companies that build and supply
machines for use in industry. Our activities
with OEMs vary from simple product supply
to advising on machine performance
improvements and process plant design.
The industries we serve
Solutions for a diverse
range of industries
We apply our products, solutions and expertise across a diverse range of industrial
sectors, helping our customers to increase their efficiency, safety and sustainability.
14% of Group revenues to ‘other’ industries including Pulp & Paper, Aerospace & Defence and Textiles.
6
Strategic Report
Mining & Precious
Metal Processing
Semiconductor Transport
3% of Group revenue
chemical use and increase productivity
while moving and processing abrasive ores
and slurries. Electrical heating is used for
temperature maintenance and space
heating for workers.
3% of Group revenue
Electrical products are used in water
manufacturing and printing production
processes to ensure thermal uniformity
which is critical during chip manufacturing
process; clean and pure steam generators
supply the humidification system to ensure
the air is not too dry or wet.
2% of Group revenue
Electrical heating components provide
freeze protection and defrost for engines,
rotating equipment, mechanical systems and
fluid delivery. Lined hoses are used for
braking, cooling, transmission and steering
systems. Our steam heat exchange and
recovery solutions are used on cruise ships.
Healthcare
Water & Wastewater
Buildings
4% of Group revenue
Steam is used in hospitals and clinics for
space heating, hot water production,
and associated equipment are used in
the manufacture of products for the
Healthcare industry.
3% of Group revenue
chemicals during water treatment
processes and to transfer viscous and
abrasive slurries. Electrical heating
solutions provide freeze protection,
temperature maintenance and space
heating in water treatment plants.
3% of Group revenue
Steam is used to provide space heating,
humidification and hot water in public and
private buildings, while our electrical
products are used for hot water and heat
generation, snow-melting, gutter and roof
de-icing and frost-heave prevention.
Our sector diversity supports our resilience
7
Strategic Report
Introducing Spirax Group
Who we are
We are a leading thermal energy and
fluidtechnology solutions Group
Our expertise, products and solutions sit behind the production of
many consumables that people across the world rely on every day,
from food and drink to medicines.
Our Purpose
To create sustainable value for all our stakeholders as we engineer a more efficient,
safer and sustainable world.
Our culture
An inclusive, equitable and wellbeing-focused culture makes us stronger as individuals,
as teams and as Spirax Group. It is central to the promises we make to our colleagues
and critical to achieving our Purpose.
A proud heritage and a bright future
We are 10,000 colleagues in every corner of the globe working
together in pursuit of our shared Purpose, united by and guided
by our core Values.
Our Values
Collaboration
We are most
successful when
we trust each
other and work
together.
Integrity
Success only
matters when
achieved fairly.
We believe that
winning with
integrity leads to
sustainable
results.
Customer focus
Through our
expertise,
passion and
insight we
achieve
extraordinary
results for
customers.
Respect
Everyone
matters, both
inside and
outside our
Company. We
respect everyone
we work with, as
well as the
natural
environment and
our local
communities.
Excellence
We approach
challenges with
passion, aiming
for excellence in
all we do, for a
sustainable
future.
Safety
We care about
people, helping
them stay safe
and look after
their own
wellbeing.
8
Strategic Report
10,000
Colleagues
2,100
Sales and service engineers
66
Countries with a resident
direct sales presence
37
Manufacturing sites
1,700+
Core product lines
110,000
Direct buying customers
1
How we deliver
At a glance
Solving customers’ problems is at the heart of our ‘total solutions’ approach.
Our thermal energy and fluid technology solutions improve operating
efficiency and safety in our customers’ critical industrial processes.
We deliver our solutions through three strong and aligned Businesses and their Divisions, that include
global and regional product brands.
9
Strategic Report
Introducing Spirax Group continued
Operating sustainably and supporting our customers’ sustainability goals is at the
heart of our approach and enshrined in our One Planet Sustainability Strategy,
which is how how we aim to create value for people and our planet. We hold
ourselves to the highest standards and work with organisations that are aligned
with our ambition.
For people and planet
Strategic Report
Spirax Group Annual Report 202310
Chair’s Statement
A stronger, more balanced and
more sustainable Group that is
well positioned for the future
Decisions taken over the
last years have built strong
foundations, enabling Spirax
Group to serve and create
value for all its stakeholders.”
Chair
2023 has been a transitional year for the
business on a number of fronts. With respect
to trading, we have seen the transition to a
post-pandemic macroeconomic environment
impacting our business through customer
destocking in the Pharmaceutical & Biotechnology
and Semiconductor sectors, as well as a
challenging geopolitical landscape resulting in
higher inflation and low industrial production
growth. With respect to leadership, we have
successfully and smoothly made the transition
to a new Group Chief Executive Officer.
11
Strategic Report
Against these transitions, there have also been many
constants, such as the fundamental strengths of our Group.
The quality of our products, criticality of our solutions and
the industry drivers towards more efficient, safer and more
sustainable production, are still the same. That is why the
Board’s confidence in Spirax Group’s long-term structural
growth opportunities, as well as in its people and culture,
are stronger than ever.
headwinds, our focus has been on ensuring that we are
managing the business appropriately to position ourselves
forefront of our minds, the Board has remained committed
to ensuring the decisions we make create value for all our
stakeholders and the way in which we have engaged with
and taken stakeholder needs into account is outlined on
Board and leadership changes
would be standing down as Group Chief Executive and he
Company.
appointment as Group Chief Executive Officer follows a
rigorous succession process, more details of which can be
Louisa is a highly experienced CFO having led finance
functions in several large companies including UK-listed
Croda, Meggitt and Victrex. She currently serves as a
Group plc.
Group Finance, became Interim Chief Financial Officer on
she joins the Group later this year.
strategic and non-executive experience.
Biographies of the Board members can be found on pages
This is my final year as Chair of Spirax Group, following ten
engaged in the search and appointment of my successor
and I will stand for re-election at the Company’s AGM in May
in order to support the management team, and to provide an
appropriate handover to the incoming Chair. I expect to have
stepped down from the Board before I take up the position
It has been an honour and a privilege to be part of this
Group’s journey over the last decade. The decisions taken
over the last years have built strong foundations, enabling
Spirax Group to serve and create value for all its
stakeholders. I have no doubt the Group will continue to
Our commitment to inclusion, equity and diversity
Our Board is diverse ethnically, culturally and in terms of
gender, bringing value to our Group.
Women Leaders Review target for female representation
and with two members of the Board coming from a minority
of at least one individual.
Board highlights
proportion of our time on talent reviews and leadership
succession, including managing the Group Chief Executive
succession process which led to another key succession
process for the CFO role.
In what was a challenging year, the Board supported
management in its decision-making around necessary
restructuring activities, which were executed in line with our
core Values and having first given due consideration to the
impacts of the decision-making outcomes on all stakeholders.
During the year we also reviewed and approved major
investments to support the Group’s growth, including the
decision to invest US$58 million in expanding Chromalox’s
fundamental to the supply of Medium Voltage heating
solutions that are critical to our decarbonisation products
and solutions.
We have continued to focus on ESG activity, including
Colleague Engagement activities both through the
Colleague Engagement Survey and the work of the
Colleague Engagement Committee. In addition to reviewing
the , we received
regular updates to monitor progress against targets and
reviewed the Group’s TCFD disclosures.
The Board travelled and visited operations in France
our colleagues across sales, manufacturing and in
supporting functional roles.
During the year we have closely monitored the proposed
changes to the UK Corporate Governance Code, particularly
those which have been clarified in the FRC guidance
We have worked closely with management to support the
to systematically improve and standardise controls across
the Group using a risk-based framework. This workstream
has been supported with additional investment into our
Governance teams and supporting infrastructure.
The Board has overseen additional investment into the
Group’s IT infrastructure with a particular focus on
assessing and improving our Cyber Security preparedness.
This has included evaluating the key learnings from a
ransomware simulation exercise undertaken by
management.
Chair’s Statement continued
12
Strategic Report
Board highlights continued
As part of the review of the Group IT and systems
infrastructure, the Board approved the decision to redesign
had expanded substantially to include a wider range of
business applications. In parallel, the external technology
market has continued to evolve, and the Board supported
three Businesses. Within STS, this will enhance future
capability, in addition to leveraging the scale of the broader
Group.
The Group’s IT infrastructure is an important foundation for
our Digital evolution. The Board engaged regularly
understand how the Businesses are advancing projects
which aim to deliver connected insights to our customers,
further enhancing our solutions.
You can read more about the Board’s decision making in
Board effectiveness
Following the external and independently facilitated Board
evaluation process and outcomes can be found in
Dividends
The Directors are proposing the payment of a final dividend
approval of the final dividend by shareholders at the Annual
per share for the prior year.
p
160.0p
160.0
110.0
118.0
136.0
152.0
2023
2022
2021
2020
2019
Chair
on behalf of the Board of Directors
Section 172 Statement
In accordance with the Companies
Directors have prepared a statement describing
how they have had regard to the matters set out
promote the success of the Company. This can
Leading with Purpose
Nick leaves behind a larger, more
complex, more capable and sustainable
Company which has grown to become
home to three strong and aligned
solutions-focused Businesses.
Under Nick’s tenure, the Company has
evolved, through investment,
acquisitions and by aligning as One
Group - now Spirax Group - with a
common Purpose, business model and
shared core Values that underpin our
differentiated culture.
Nick leaves the Group well positioned
and in safe hands, with the appointment
of Nimesh as a strong successor from
within the Group, supported by a very
capable leadership team.
On behalf of the Board, I thank Nick
for everything he has done and wish
him well in the next phase of his
Non-Executive career.
13
Strategic Report
Letter from former Chief Executive Nicholas Anderson
A final word from
NicholasAnderson
Our journey over the last ten years
has been thrilling and inspiring.”
Dear Shareholders
taking up the mantle of Group Chief Executive of Spirax-
Sarco Engineering, now Spirax Group.
pride on what we have achieved collectively. I am also full of
gratitude for the support and encouragement I have always
received from all stakeholders throughout this journey.
Spirax Group is today a larger and stronger Group
comprised of three aligned, solution-focused Businesses
and represents everything that has been made possible
by the evolution of Spirax-Sarco Engineering over the past
decade. This was achieved through our investments in
growth and infrastructure: expanding our direct sales
capabilities and addressable markets, increasing our
geographic and manufacturing footprint, developing new
technologies, focusing on sustainability and enhancing our
organisation, while constantly investing in the growth and
wellbeing of colleagues all around the world.
with a long and proud history, full of capable people doing
brilliant things to transform the efficiency, safety and
sustainability of industrial customers’ mission-critical
processes. I made it my mission then to be a respectful
custodian of the legacy entrusted to me and to make sure
that my leadership decisions would ultimately leave the
Company in an even better standing.
successful history, leaving behind a Group with more than
double the number of even more capable people and with
three great solution-focused Businesses that have even
more opportunities to grow and prosper. We have also
focused on fulfilling our commitments to sustainability,
inclusion, community engagement, innovation, operational
excellence and, importantly, preserving a very special
culture based on our Values.
final step in a long-planned and carefully managed
Group Executive Committee, supported by our worldwide
colleagues, will take Spirax Group to even greater heights
and I wish them every success in this endeavour.
From my perspective, our journey together over the last ten
years has been thrilling and inspiring. It has been an honour
to lead the organisation to this point and I will watch with
pride and keen interest, as the Group continues on the next
phase of its journey.
There is no doubt in my mind that Spirax Group has a very
bright future ahead.
Thank you for your support.
Group Chief Executive
14
Strategic Report
15
Strategic Report
Developing our talent
for the future
Empowering
futureleaders
Our colleagues
Every leader will remember when they
embarked on their careers how those
early experiences and learning shaped
the skills they would go on to acquire for
their future career. The world of work
today is very different to how it was ten
years ago, and so one way that we
continue to engineer our future is by
helping to develop the next generation of
leaders, equipping them with the skills
and experiences to lead effectively in the
decades to come.
Our two-year Global Graduate Development
Programme was launched in 2017 and
became the Global Graduate Leadership
Development Programme in 2023. The
programme built upon its early UK
foundations to focus on developing future
leaders from across Spirax Group in
commercial, manufacturing and supply roles.
Each graduate follows a consistent and
structured development programme
through a combination of online and
Group learning activities. The programme
is tailored to the graduate’s interests and
future career goals through the
undertaking of three placement rotations,
each with a common set of objectives but
giving insights into different parts of the
Group and its operations, including an
overseas placement.
This allows them to see another part
of the world, immerse themselves in a
different culture and collaborate with
colleagues from across the globe. In this
way, our Global Graduate Leadership
Development Programme supports
our Inclusion Commitments, as we believe
that having a diversity of skills,
experience and perspectives in our Group
is important today and for the future.
Global Graduate Leadership
Development Programme
Number of graduate alumni since
2017
84
Gender split since 2017
50:50
Representation from minority
ethnic backgrounds in UK and USA
in 2023
33%
16
Strategic Report
Kiranjit’s graduate journey
Kiranjit Dharni joined Steam Thermal Solutions,
a Spirax Group Business, on the Global Graduate
project placements in Supply, Business
Development, Group Finance and our Spirax
Sarco operating company in Sweden. Kiranjit
then took the role of Business Development
she was involved in implementing many areas of
the
2
including Digital
pilots and steam system audit capability.
Manager for Gestra, supporting the implementation
of our
2
by driving and
executing key initiatives for Gestra globally.
I really felt my learning was enhanced
through the graduate programme, from
being able to contribute to solutions
for real world problems through high
profile, challenging projects which often
involved senior leadership exposure, to
learning about my strengths and what
I enjoy doing. It was a privilege to be
a part of.”
Programme Manager,
Gestra, part of Steam Thermal Solutions
17
Strategic Report
Making our difference through our One Group approach
Business model and approach
Purpose
Business
model
Culture
Strategy
Our core activities are those things we
do that enable us to meet the needs of
our customers and achieve our
Company Purpose.
At Spirax Group, our customers’ needs
drive all that we do and to meet their
needs effectively, we leverage our
culture, strategic framework and
business model to inform the way we
work and deliver our Purpose.
Innovate and design
Through innovative research and
across our Group, we develop and
enhance our already broad range of
products, pre-fabricated packages
and site services, ensuring that we
meet customers’ changing needs.
Manufacture
We manufacture industrial and
commercial steam system products,
electrical process heating and
temperature management products
and peristaltic and niche pumps and
associated fluid path technologies.
Sell
With a resident direct sales presence
direct sales or distributors in a further
Monitor and measure
We offer a comprehensive range of
site audits, maintenance services
and digital monitoring solutions, to
keep our customers’ systems
operating efficiently.
Apply and solve
We combine our specialist knowledge
and digital capabilities with our
industry-leading products and
services to deliver value-adding
engineered solutions to customers,
who increasingly rely on our service,
solutions and expertise.
Educate
We help our customers to identify
in-house engineering knowledge
skill gaps and offer a wide range of
training courses.
1,700+
core product lines
37
manufacturing
sites
66
countries with
direct sales
presence
45%
revenue from
maintenance
activities
2,100
sales and service
engineers
61
training centres
Our
colleagues
Our
customers
Our
communities
Our
shareholders
Our
environment
Our
suppliers
Our Purpose is to create sustainable value for all
our stakeholders as we engineer a more efficient,
safer and sustainable world.
culture, a common strategic framework with six
strategic priorities, and a consistent business model
which enables us to create outcomes with lasting
impact for all our stakeholders across a breadth of
geographies and diverse end market sectors.
Read more about how the Group has engaged with
Read more about how the Board has engaged with
Our culture
An inclusive, equitable and wellbeing-focused culture
makes us stronger as individuals, as teams and as
Spirax Group. It is central to the promises we make to
18
Strategic Report
Our One Group approach What we do
At the heart of our
value creation is our
deep engagement with
and understanding of
our customers and their
processes.
Our direct sales approach plays an important role in all routes to market –
whether direct or indirect – as our engineers engage with end users to
demonstrate the benefits of our products, solutions and services.
Wide
Range
Read more about the industries
Maintenance and repair sales
Typical invoice value £1.5k
Small project sales
Large project sales
19
Strategic Report
Our customer focus Our routes to market
How we generate revenue
Customer closeness
Through sectorisation and
building deep, long-term, direct
relationships with our customers
we help them address their
unrecognised needs.
Applied engineering
through the application of our
extensive knowledge of systems
design, operations and
maintenance.
Wide product range
The breadth of our product
offering is unmatched by our
competitors and we are
Regional manufacturing
Strategically located
manufacturing plants provide
local availability of a wide range
of products whilst meeting
applicable regional design codes.
78%
Direct sales channels
Indirect sales
channels
22%
22%
End users
Contractors
and
consultants
Distributors
and
resellers
Original
Equipment
Manufacturers
42% 26%
10%
End users of our products and services
Industrial and commercial steam, electrical process heating and peristaltic and niche pump
users, across a wide range of markets, purchasing from us directly, specifying our
products, or buying from distributors.
85% of Group revenue is generated from annual maintenance and
Capex
budgets
Opex
budgets
45%
Needs
Investment case
Delivering long-term compounding growth
Critical products supporting customers’ critical processes
Strong financial track record
Organic growth
Unique direct sales
model and strong
customer insight
Leading player in
fragmented niche
markets
Strong cash
generation
Attractive
stable margins
Self-generated
growth with pricing
based on customer
economics
Earnings and
dividend growth
Long-term compounding growth with attractive margins
Resilience driven by
geographic, sector
and customer
diversity
Sales funded from
Opex budgets
with low average
invoice size
Growing addressable
market with
decarbonisation a
key long-term driver
Delivering long-term compounding growth
Engineering sustainable growth
Strategic Report
Our key strengths
Diverse yet balanced end markets
•
Leading positions in large but niche markets
•
Range of high-growth as well as defensive
and resilient end markets
•
Global footprint
Driving further growth
•
Operating leverage enables reinvestment to drive
organic growth
•
and drive further growth
Steam Thermal Solutions market
Electric Thermal Solutions market
Watson-Marlow Fluid Technology Solutions market
Source: Based on internal estimates
market
market
market share
Steam Thermal
Solutions market
market share
equipment
market
market share
market
TAM
£4.6bn
Sales
£0.7bn
TAM
£12.5bn
2023 2013
Sales
£1.7bn
Our strategic priorities
The following six strategic priorities guide our focus to deliver self-generated growth that outperforms our markets.
21
Strategic Report
Sustainable returns
2004 2005 2006 2007 2008
2009
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2020
2021 2022
2023
0.0%
5.0%
10.0%
15.0%
20.0%
Organic growth
Outperforming industrial production growth
Develop the knowledge
and skills of our expert
sales and service teams
Broaden our
global presence
Operate sustainably and
help improve our customers’
sustainability
Optimise our supply
chain effectiveness
Leverage our R&D
investments
Increase direct sales
effectiveness through
market sector focus
Group Adjusted
Operating Profit
Group Adjusted
Operating Profit
Strong profit growth and consistent margin expansion
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0% 400
350
300
250
200
150
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
2022
Chief Executive Officer’s Review
Well positioned to return to
revenue and profit growth
in2024
It is a privilege to lead
Spirax Group, working
alongside outstanding
people to build on our
strengths and support
future growth.”
Group Chief Executive Officer
I took over as Group Chief Executive Officer of
Spirax-Sarco Engineering (now rebranded
Nick Anderson’s retirement. Over the past ten
years, under Nick’s leadership, we have
established strong positions in what are now
three very significant Businesses with exciting
future potential.
I am grateful to Nick for bringing me into the
Group and for laying the strong foundations
that will support our journey in the years to
come. I feel privileged to be leading Spirax
Group and would like to thank the Board for
supporting me and my Group Executive
leadership transition.
22
Strategic Report
Summary of 2023 performance
The macroeconomic environment was materially weaker in
at the beginning of the year with downward revisions to
and China. The Group was also impacted by external
demand challenges in our Biopharm and Semiconductor
customer destocking.
Against this backdrop, the Group’s financial performance in
We saw strong demand during the first half in STS and the
customers of ETS was lower, particularly in Semicon,
impacting Durex Industries and to a lesser extent,
Thermocoax. Demand in Watson-Marlow was also weak,
driven by Biopharm customers destocking post the COVID
In the second half, the macroeconomic backdrop weakened
for STS and the industrial process focused Divisions of ETS,
while Biopharm demand remained subdued and Semicon
demand was lower than in the first half. Group sales
declined organically by 4% in the second half, reflecting
contribution from the Vulcanic and Durex Industries
acquisitions but were also impacted by a currency headwind
margin businesses impacted full year adjusted operating
pricing discipline, which helped to partially mitigate the
impact of lower volumes and adverse sales mix on our
margin, even as cost inflationary pressures eased.
Recognising the challenging trading environment, we took
early action across all three Businesses to appropriately
right-size capacity and overhead support costs as well as
implementing temporary cost containment actions and
reducing variable compensation across the Group. As a
result of these actions, Group adjusted operating profit in
the second half grew by 3% compared to the first half,
despite sales being lower. We protected our ability to
respond to an anticipated recovery in demand by continuing
to invest in a number of strategic initiatives that underpin
the Group’s long-term growth. I am grateful to my
colleagues around the world for their commitment,
expertise and efforts, as well as their continued focus on
delivery for all stakeholders, during these more challenging
times.
our confidence in the Group’s business model, strategy and
medium to long-term prospects extending our track record
Market environment
recovery in demand that we had anticipated in the second
inventory levels than they had originally estimated, with a
Despite the challenges associated with forecasting short-
term demand, the Biopharm end-markets remain robust and
we believe that the underlying growth in demand has
H1 H2 FY H1 H2 FY
Europe
3.4%
South America
Asia ex-China
China
Global
23
Strategic Report
Chief Executive Officer’s Review continued
Market environment continued
was lower than we had anticipated and remained subdued
through the second half, with our customers indicating a
remains an attractive and growing sector. We continue to
anticipate strong demand for our niche solutions for precise
thermal controls that are incorporated by Original
decarbonisation through electrification remains a growing
strategic imperative for customers, reflected in the strong
demand we have seen for our products and solutions in
Chromalox and Vulcanic.
Strategic progress
Health and Safety
#
As a result of our continued focus on Health and Safety
increase is in part attributable to our strengthened focus
on monitoring and reporting. We have also introduced a
Improving safety standards and processes in our most
recent acquisitions, Vulcanic and Durex Industries, remains
a key priority as we integrate these businesses into ETS.
The all-workplace incident rate, LTA and SLTA rates of the
reflect the lower priority that was given to measurement and
Vulcanic and Durex Industries have embraced our strong
programme.
Framework across all three Businesses. The framework aims
to establish consistent oversight, align standards and
reduce risk across all our operating companies globally, as
assessment of all machinery and expanding the compulsory
culture, complete a baseline of statutory inspections and
introduce training to help our colleagues complete root
cause analysis. In addition, as part of our commitment to
continuous improvement, we have also commissioned an
Expanding our addressable market
All three Group Businesses have continued to develop new
solutions, supporting our direct sales engineers to drive
growth in target sectors.
support lithium mining and the related electric vehicle
battery sector, helping to expand our addressable market.
Following commercial launch of the Group’s ‘TargetZero’
solutions, STS has begun to build a pipeline of long-term
opportunities amongst its extensive global customer base.
’ (a retrofit electric
thermal solution to replace gas fired burners in steam
’
(electric boiler solution developed in partnership with our
Beverage customer in Argentina; and several UK
installations of the ‘’ (a storage solution for
steam that can be generated by renewable energy or when
In ETS, Chromalox and Vulcanic have also continued to
develop their decarbonisation project pipelines and drive
penetration of Medium Voltage technology.
Watson-Marlow successfully transformed its operating
model in the mining sector in Australia from a distributor-led
approach to direct sales, helping to build customer
proximity and strengthen its competitive advantage.
Watson-Marlow also launched an important high flowrate
range extension for its Qdos pump, targeting the industrial
liquid/solid separation market which is an attractive new
area of growth.
We also continued to make progress in implementing our
digital strategy with an acceleration in the number of STS
operating locations and customers that are digitally
connected through the Cotopaxi platform, to support
solution generation. Watson-Marlow has developed a
number of machine-learning protocols aimed at delivering
preventative maintenance benefits which will shortly be
piloted in a number of sites within the mining sector.
Optimising supply chain effectiveness
Across the Group, we measure customer service levels
using a number of metrics including on-time-to-request
Watson-Marlow established a five-step process to drive
operational excellence and efficiencies across its supply
sites by delivering ongoing improvements in safety,
productivity and procurement practices.
In October, ETS began construction of an expansion to
which will be dedicated to Medium Voltage heating
solutions. The US$58 million project is expected to be
# We recognise the need to improve safety performance in our recent acquisitions. Therefore, Group data excludes acquisitions data,
which is reported separately
24
Strategic Report
Operating sustainably
sustainability footprint. Energy usage was down by 8%
Group’s electricity usage and made further progress in
decarbonise the STS manufacturing facility in Cheltenham
Water consumption has also reduced across the Group,
where we recognise the need to make additional progress is
reducing the Group’s total waste sent to landfill, which
elements of our and
Our Sustainability Strategy is being deployed within
Vulcanic and Durex Industries.
Acquisitions and Disposals
During the year we continued to focus on the onboarding of
Vulcanic and Durex Industries into ETS and the wider Group.
Our acquisition strategy is built around developing our suite
of products and solutions with new and enhanced
capabilities together with broadening our global presence.
industrial process heat with Kyoto’s proprietary ‘Heatcube’,
a molten salt thermal energy storage solution. Through
provide the electric immersion heater and power control
systems of ‘Heatcube’. Our investment and partnership will
support the commercial and technological development of
electrical heaters for existing and future generations of
‘H eatcube’ and help drive market adoption.
distributor in Malaysia, with whom they have worked closely
in the past, to enhance our local presence and engineering
capability to develop tailored solutions for the local
customer base.
Further details of the operational progress made by each
Business are set out in the Operating Review.
Group Executive Committee membership
Businesses, as well as key functional leaders across
we expanded GEC with the appointment of Maria Wilson,
Céline Barroche who takes over as Group General Counsel
and Company Secretary, succeeding Andy Robson who is
retiring from the Group later this year. I’m delighted to have
such a strong, capable and diverse leadership team.
Signed by:
Group Chief Executive Officer
on behalf of the Board of Directors
25
Strategic Report
Stakeholder engagement
Engineering our future
forallstakeholders
Spirax Group Annual Report 202326
Strategic ReportStrategic Report
Our colleagues
Find out more about how the Board
has engaged with colleagues
Our customers
Find out more about how our
technologies such as artificial
Our shareholders
Read about how we are creating
long-term value for all our
financial controls for a more resilient
Our environment
Learn about the changes we are
deliver environmental
Discover how our new-to-world
‘TargetZero’
us to decarbonise our
Our suppliers
Find out how we are are working with
Learn about how our three
Our communities
Learn more about how we are
access to education in our local
communities around the world through
aims to deliver long-term sustainable value for
and then take decisions in line with our Values
This section forms part of our Section 172 statement.
Spirax Group Annual Report 2023 27
Strategic Report
Stakeholder engagement continued
Why they are important
The knowledge and expertise of our colleagues, aligned
to our Purpose, Values-based culture and business model,
is core to how we work at Spirax Group. Colleagues often do
their best work when they feel valued and included.
Diversity in our global teams brings a wide variety of
perspectives and leads to stronger and better decision
making. Therefore, our ability to attract and retain diverse
talent is important for sustainable growth and success.
What matters to them
Colleagues want to work in a culture where they can be
themselves, feel they belong, are supported to be at their
best and encouraged to make a difference for others as well
as our planet. They want to achieve better balance in their
work and personal lives, while pursuing opportunities for
development and to be fairly rewarded and recognised for
their contributions.
How we engaged
•
Colleague engagement survey which received
90% participation*
•
Colleague engagement forums, including with the Board
•
Senior Leader Webinars
•
Business and topic specific town hall meetings
What we learnt
•
Our inclusion metrics improved on 2021 by five percent*
globally as a result of launching our Group Inclusion plan,
Everyone is Included in 2022
•
The survey told us that colleagues feel positive about
being supported to help their local communities (up ten
Education Fund
•
And colleagues are also positive about being supported to
through our One Planet Sustainability Strategy
Outcomes
•
Brought forward pay review from March to January 2023
and applied market-leading pay increases globally in
response to significant inflationary pressures
•
Held our first Spirit Awards Ceremony, recognising
colleagues for living our Values
•
Launched One Place (colleague engagement platform
and SPARK
Ouardia Djaroun
•
Global Wellbeing Day – an additional day of paid leave for
all colleagues in 2023
•
Rolled out our Group Inclusions Commitments to
colleagues joining us from Vulcanic and Durex Industries
•
Invested further in our Colleague Engagement and
Communications capability
Our colleagues
* Excluding results from our colleagues in businesses acquired in 2022
Spirax Group Annual Report 202328
Strategic Report
Why they are important
Spirax Group has three strong and aligned Businesses that
provide mission critical solutions to our customers across
their thermal energy and fluid path technology processes.
To provide more efficient, safer and sustainable outcomes
for our customers through solving their operational
challenges, we must first understand their unique and
evolving needs.
What matters to them
Customers want trusted product quality combined with
local knowledge, insights, expertise and speed of response.
Solving what was previously an unrecognised need can
often be fundamental to the efficiency, safety and
sustainability of our customers’ operations. This reinforces
the importance of our direct sales business model to
customers with our engineers able to ‘walk their plants’ or
increasingly through the advent of digital connectivity, ‘walk
their plants’ data’, converting insights into solutions.
How we engaged
•
2,100 direct sales and service engineers maintaining close
relationships
•
new products
•
Digital connectivity, insights and solutions
•
Engagement with customers in Pharmaceutical &
Biotechnology and Semiconductor sectors to assist with
demand planning
•
Three customers shared perspectives of working with
Spirax Group at our 2023 Leadership Conference
What we learnt
•
Learnings from installations of our TargetZero solutions
at customer sites
•
How well positioned we are to address customer
concerns about how to transfer heat into their industrial
processes while still meeting their net zero goals
•
The acceleration of demand from customers for
electrification solutions
•
Increasing commonality of shared customers across our
three Businesses
•
There is high focus on shortening product development
times in the Semiconductor sector
Outcomes
•
Commercialisation of TargetZero, our solutions for the
decarbonisation of steam generation
•
Investment in Project ClearSky, to decarbonise our UK
Steam Thermal Solutions manufacturing solutions using
all our TargetZero solutions
•
production of electrification and decarbonisation
solutions
•
Investment in Kyoto Group to accelerate the
decarbonisation of industrial process heat with Kyoto’s
Heatcube, a molten salt thermal energy storage solution
•
Establishment of a Semiconductor New Product
Development Group in response to shortened customer
product development times in the sector
the five areas that we focus on
Dariusz Koziarkiewicz
Our customers
Spirax Group Annual Report 2023 29
Strategic Report
Stakeholder engagement continued
Why they are important
Many of our colleagues are also members of our local
communities. It’s where they and their families live. A
thriving community is good for business too. By looking
after our communities, we create a real sense of community
spirit and we help to protect the most vulnerable people in
society. Through a sustainable approach to investment in
education, we can also help secure our pipeline of future
talent.
What matters to them
Local communities want to be engaged and feel supported
by businesses operating on their doorsteps. They
understand that business and communities can create
mutual benefit and that current and future generations
flourish when those relationships are working well.
How we engaged
•
Encouraged our colleagues to nominate their local
education projects to receive funding from the Spirax
Group Education Fund
•
Proactively identified local needs and responded to
requests for support through local operating companies
•
Responded to requests for support due to
natural disasters
•
Representatives from two funded projects met and
presented to leaders at the Group leadership conference
on the impact made from funding received
What we learnt
•
Issues of diversity, gender inequality, poverty and access
to quality education are closely intertwined, with poverty
a primary barrier to education
•
That providing longer term support to causes enables
them to show funding stability and to access further
funding from other avenues
•
The challenges of financing charitable operations in a
high-inflationary environments
Outcomes
•
Supported our communities with over 25,000 volunteering
hours delivered by colleagues in 2023
•
Donated over £75,000 to funds to support those affected
by earthquakes in Turkey, Syria and Morocco
•
Increased our financial commitment to the Spirax Group
Education Fund pledging £15 million by 2030
working together we built bridges of
Shaimaa Tantawy
Our communities
Spirax Group Annual Report 202330
Strategic Report
Why it is important
The Earth’s temperature is rising. This rise in global
temperature is already having a devastating impact on the
environment. We need to take action now for our future
because we only have One Planet. That’s why we actively
promote local biodiversity initiatives to support the habitats
in the locations where our colleagues work.
What matters to it
Across the globe, Governments, Environmental Agencies,
businesses and industry, as well as the wider population,
are becoming increasingly concerned about the future of
our planet and are taking more actions to limit the global
temperature rise, to increase sustainable practices and
protect the Earth’s precious resources and biodiversity.
How we engaged
•
Implemented local biodiversity initiatives on or close to
our sites
•
Assessed and developed landscaping planting schemes
to improve the biodiversity as part of major construction
projects
•
Focused on our top five internal consumers of water and
waste in in each Business by engaging colleagues to
make improvements
What we learnt
•
Identified areas where we needed to preserve and
encourage biodiversity at our sites
•
Understood where we could make the biggest
improvements in water and waste
Outcomes
•
Reduced greenhouse gas emissions from our own
operations
•
Undertaken biodiversity initiatives and worked towards
delivering a 10% net gain on new sites
•
Decreased our water consumption by improving efficiency
at our sites and increasing colleague engagement
•
Funded the protection of a further 572 acres of land on
the Somuncurá Plateau in Argentinian Patagonia,
equivalent to our operating footprint (including
Tracey Butler
Our environment
Spirax Group Annual Report 2023 31
Strategic Report
Stakeholder engagement continued
Why they are important
As we progress towards our ambition of becoming a leader
in industrial sustainability, we recognise the importance of
achieving sustainable supply chains. By working closely
with our direct suppliers we aim to achieve a sustainable
supply chain and reach our 2050 net zero targets which
have been approved by the SBTi Net-Zero Standard.
What matters to them
Many of our suppliers care about the impact they have on
the planet and want to form mutually beneficial, long-term
partnerships that help them fulfil their potential, as well as
their sustainability goals as they continue on their journey.
How we engaged
•
Supplier sustainability surveys on ten different topics
•
Supplier Sustainability Portal training and One Planet
introduction webinars
•
What we learnt
•
An understanding of where our supply chain is today on
its sustainability journey so we can establish strategies for
the future
•
Understanding of where there are sustainability risks in
our supply chain so we can explore further
•
Identified a need to upskill our teams so they can have
better conversations with our suppliers about
sustainability
Outcomes
•
Supplier Sustainability Code at the end of 2023
•
Development and delivery of webinars to support
suppliers with completing sustainability surveys
•
equipping them to proactively engage with suppliers on
sustainability topics
Our One Planet Sustainability
Strategy set out the minimum
meet these minimum standards is
Sarah Peers
Our suppliers
Spirax Group Annual Report 202332
Strategic Report
Why they are important
When our shareholders understand, believe in and benefit
from what we do, they continue to support us both now and
into the future.
What matters to them
Accurate, transparent and reliable communications and a
return on their investments in both the short and long term.
How we engaged
•
Presentations of our Full and Half Year Results
•
Annual General Meeting
•
Steam Thermal Solutions Investor Seminar
•
Investor roadshows and sell-side conferences
•
Investor meetings and site tours
What we learnt
•
Key areas of concern and interest for shareholders
•
Market perception of macro and micro events and how
that might influence their approach to investing in Spirax
Group
Outcomes
•
Continue holding a mixture of virtual and in-person events
•
Constant review of information presented to the market to
ensure it continues to be valuable and insightful
our investor engagement during
2023 and look forward to
maintaining a constructive dialogue
Mal Patel
Our shareholders
Spirax Group Annual Report 2023 33
Strategic Report
1. Organic revenue growth
†
2. Adjusted operating
profit*
3. Adjusted operating
profit margin*
4. Adjusted earnings
5. Cash generation* 6. All-workplace
Injury rate^
#
7. Group GHG emissions
tonnes
CO
2
1. Economic and political
instability
2. Significant exchange rate
movement
3. Cybersecurity
4. Failure to realise acquisition
objectives
5. Loss of manufacturing output
at any Group factory
6. Inability to identify and
respond to changes in
customer needs: Digital/
Non-Digital
7. Loss of critical supplier
Breach of legal and
regulatory requirements
Direct link
No link
† Organic growth is at constant
currency and excludes
contributions from acquisitions
and disposals, see the Appendix
to the Financial Statements.
* Based on adjusted operating
profit. Adjusted operating profit
excludes certain items as set
out and explained in the Financial
Review and in the Appendix to
the Financial Statements.
# Per 100,000 hours worked
Increase direct sales
effectiveness through
market sector focus.
Develop the knowledge
and skills of our expert
sales and service teams.
Broaden our
global presence.
Leverage our
R&D investments.
Optimise our supply
chain effectiveness.
Operate sustainably and
help improve our
customers’ sustainability.
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
7
8
Link to Principal Risk
4
6
8
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Definition
Organic revenue growth
measures the change in revenue
in the current year compared with
the prior year from continuing
Group operations. The effects of
currency movements, acquisitions
and disposals have been
removed.
Definition
Adjusted operating profit is the
profit earned from our business
operations before interest, taxes,
the share of profit of associate
companies and certain other
items.
Definition
Adjusted operating profit margin
is defined as adjusted operating
profit expressed as a percentage
of revenue.
Definition
Earnings per share is a measure
of the profit performance of
the Group, taking into account the
equity structure. EPS is defined as
the adjusted after-tax profit
attributable to equity
shareholders divided by the
weighted average number of
shares in issue.
Definition
Cash generation is adjusted
operating profit after adding back
depreciation and amortisation,
less cash payments to pension
schemes in excess of the charge
to operating profit, equity settled
share plans, net capital
expenditure excluding acquired
intangibles, working capital
changes and repayment of
principal under lease liabilities.
Definition
The number of workplace injuries
per 100,000 hours worked. The
workplace is any location in which
an employee is present as a
requirement of employment.
Employees include all permanent
and temporary staff and
contractors. All injuries that occur
in workplaces, regardless of
cause, are included, as are road
traffic accidents.
Definition
emissions arise directly from
company-owned or company-
controlled sources, such as
company vehicles or fuel
combustion. Scope 2 GHG
emissions are indirect emissions,
primarily from the generation of
purchased electricity. Market-
based emissions take into
account contractual and
supplier-specific GHG emissions
factors.
Progress in 2023
in Steam Thermal Solutions and
by 2% organically in Electric
Thermal Solutions, but decreased
by 19% organically in Watson-
Marlow.
in our three Businesses
Progress in 2023
Adjusted operating profit
organic decrease of 12%,
alongside a decrease of 2% due
to exchange rates and a 6%
increase from the full year impact
of acquisitions.
in our three Businesses
Progress in 2023
Decreased by 290 bps to 20.7%.
On an organic basis, the adjusted
operating profit margin decreased
by 270 bps.
in our three Businesses
Progress in 2023
Decreased by 17% to 312.4
pence, in line with the decrease in
adjusted profit before tax.
in our three Businesses
Progress in 2023
Cash conversion improved to
of a number of larger capital
projects and lower working capital
outflows.
in our three Businesses
Progress in 2023
Our all-workplace injury rate
decreased during 2023, falling
from 1.75 per 100,000 hours in
2022, to 1.55 per 100,000 hours in
2023, which is an early indication
of our wider risk reduction
strategy making an impact.
Progress in 2023
by 6% compared to 2022 and by
45% against our 2019 baseline
due to decarbonisation initiatives,
an increase in operational
efficiency and transition to
renewable electricity supply.
Link to remuneration
Revenue growth is a key driver of
profit generation and a central
element in the annual planning
process. Bonus targets are driven
off annual plans and therefore
revenue growth drives a key
measure of variable remuneration.
Link to remuneration
A significant proportion of
Executive Directors’ bonuses are
based on the achievement of
adjusted operating profit targets.
Link to remuneration
Executive Directors’ variable
remuneration is based on a
number of financial components
of which adjusted operating profit
margin is a key driver.
Link to remuneration
EPS growth over a three-year
period is a key measure within the
Group’s Performance Share Plan.
Link to remuneration
Cash generation is one of two
financial measures on which
Executive Directors’ variable
remuneration is based.
Link to remuneration
The safety of our colleagues is
central to the sustainability of our
business and has an impact on
the financial success and
profitability of the Group.
Improving the health, safety and
sustainability of our Group is one
of the personal strategic
objectives of each Executive
Director, creating a direct link with
remuneration.
Link to remuneration
GHG emission reductions over
three-year periods accounts for
20% of the Performance Share
Plan opportunity.
Key performance indicators
Our key performance indicators are used to measure
the successful implementation of our strategy.
-1%
17
14
2023
2022
2021
2020
2019
£349.1m
349.1
2023
2022
2021
2020
2019
20.7%
20.7
2023
2022
2021
2020
2019
312.4p
312.4
2023
2022
2021
2020
2019
Spirax Group Annual Report 202334
Strategic Report
1. Organic revenue growth
†
2. Adjusted operating
profit*
3. Adjusted operating
profit margin*
4. Adjusted earnings
5. Cash generation* 6. All-workplace
Injury rate^
#
7. Group GHG emissions
tonnes
CO
2
1. Economic and political
instability
2. Significant exchange rate
movement
3. Cybersecurity
4. Failure to realise acquisition
objectives
5. Loss of manufacturing output
at any Group factory
6. Inability to identify and
respond to changes in
customer needs: Digital/
Non-Digital
7. Loss of critical supplier
Breach of legal and
regulatory requirements
Direct link
No link
† Organic growth is at constant
currency and excludes
contributions from acquisitions
and disposals, see the Appendix
to the Financial Statements.
* Based on adjusted operating
profit. Adjusted operating profit
excludes certain items as set
out and explained in the Financial
Review and in the Appendix to
the Financial Statements.
# Per 100,000 hours worked
Increase direct sales
effectiveness through
market sector focus.
Develop the knowledge
and skills of our expert
sales and service teams.
Broaden our
global presence.
Leverage our
R&D investments.
Optimise our supply
chain effectiveness.
Operate sustainably and
help improve our
customers’ sustainability.
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
6
8
Link to Principal Risk
4
7
8
Link to Principal Risk
4
6
8
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Link to Strategy
Definition
Organic revenue growth
measures the change in revenue
in the current year compared with
the prior year from continuing
Group operations. The effects of
currency movements, acquisitions
and disposals have been
removed.
Definition
Adjusted operating profit is the
profit earned from our business
operations before interest, taxes,
the share of profit of associate
companies and certain other
items.
Definition
Adjusted operating profit margin
is defined as adjusted operating
profit expressed as a percentage
of revenue.
Definition
Earnings per share is a measure
of the profit performance of
the Group, taking into account the
equity structure. EPS is defined as
the adjusted after-tax profit
attributable to equity
shareholders divided by the
weighted average number of
shares in issue.
Definition
Cash generation is adjusted
operating profit after adding back
depreciation and amortisation,
less cash payments to pension
schemes in excess of the charge
to operating profit, equity settled
share plans, net capital
expenditure excluding acquired
intangibles, working capital
changes and repayment of
principal under lease liabilities.
Definition
The number of workplace injuries
per 100,000 hours worked. The
workplace is any location in which
an employee is present as a
requirement of employment.
Employees include all permanent
and temporary staff and
contractors. All injuries that occur
in workplaces, regardless of
cause, are included, as are road
traffic accidents.
Definition
emissions arise directly from
company-owned or company-
controlled sources, such as
company vehicles or fuel
combustion. Scope 2 GHG
emissions are indirect emissions,
primarily from the generation of
purchased electricity. Market-
based emissions take into
account contractual and
supplier-specific GHG emissions
factors.
Progress in 2023
in Steam Thermal Solutions and
by 2% organically in Electric
Thermal Solutions, but decreased
by 19% organically in Watson-
Marlow.
in our three Businesses
Progress in 2023
Adjusted operating profit
organic decrease of 12%,
alongside a decrease of 2% due
to exchange rates and a 6%
increase from the full year impact
of acquisitions.
in our three Businesses
Progress in 2023
Decreased by 290 bps to 20.7%.
On an organic basis, the adjusted
operating profit margin decreased
by 270 bps.
in our three Businesses
Progress in 2023
Decreased by 17% to 312.4
pence, in line with the decrease in
adjusted profit before tax.
in our three Businesses
Progress in 2023
Cash conversion improved to
of a number of larger capital
projects and lower working capital
outflows.
in our three Businesses
Progress in 2023
Our all-workplace injury rate
decreased during 2023, falling
from 1.75 per 100,000 hours in
2022, to 1.55 per 100,000 hours in
2023, which is an early indication
of our wider risk reduction
strategy making an impact.
Progress in 2023
by 6% compared to 2022 and by
45% against our 2019 baseline
due to decarbonisation initiatives,
an increase in operational
efficiency and transition to
renewable electricity supply.
Link to remuneration
Revenue growth is a key driver of
profit generation and a central
element in the annual planning
process. Bonus targets are driven
off annual plans and therefore
revenue growth drives a key
measure of variable remuneration.
Link to remuneration
A significant proportion of
Executive Directors’ bonuses are
based on the achievement of
adjusted operating profit targets.
Link to remuneration
Executive Directors’ variable
remuneration is based on a
number of financial components
of which adjusted operating profit
margin is a key driver.
Link to remuneration
EPS growth over a three-year
period is a key measure within the
Group’s Performance Share Plan.
Link to remuneration
Cash generation is one of two
financial measures on which
Executive Directors’ variable
remuneration is based.
Link to remuneration
The safety of our colleagues is
central to the sustainability of our
business and has an impact on
the financial success and
profitability of the Group.
Improving the health, safety and
sustainability of our Group is one
of the personal strategic
objectives of each Executive
Director, creating a direct link with
remuneration.
Link to remuneration
GHG emission reductions over
three-year periods accounts for
20% of the Performance Share
Plan opportunity.
£281.7m
281.7
2023
2022
2021
2020
2019
1.55
1.55
2023
2022
2021
2020
2019
25,310 tonnes
25,310
2023
2022
2021
2020
2019
Spirax Group Annual Report 2023
Strategic Report
Financial Review
Early actions taken in response
to challenging trading
environment
£1,682.6m
£349.1m
The Group has balanced
continuing strategic investment
alongside restructuring and cost
containment as we have navigated
2023. Our business model
positions us well to deliver
future growth.”
Phil Scott
Strategic Report
Spirax Group Annual Report 202336
To aid comparability with the prior year we refer to both organic and
proforma performance measures in the commentary below. Organic
performance measures include the contribution of Vulcanic and
Durex Industries only for the like-for-like periods of ownership.
Proforma comparisons include contribution from Vulcanic and
Durex Industries, as if they had been fully owned by the Group
throughout 2022.
Sales
Group sales grew by 4%, with full year contributions from Vulcanic
disposal of our Russian operations, which had a small adverse
impact. Group sales were 1% lower organically, compared to 2022,
being 2% higher in the first half and 4% lower in the second half.
albeit with strong first half growth of 15% moderating to 2% in the
second half. Second half trading was characterised by weakening
macroeconomic conditions, especially in China and Germany. Large
project orders were higher, compared to 2022, with growth
significantly weighted to the first half of the year, reflecting
customers’ weakening confidence in the economic outlook and
reduction in capital investment through the course of the year.
industrial process heating customers in Chromalox. Thermocoax
sales were flat, compared to 2022, due to lower demand from
Semicon customers. Chromalox’s manufacturing facility in Ogden,
aimed at increasing throughput, but sales lagged the even stronger
growth in demand for bespoke solutions that deliver
decarbonisation benefits. We remain focused on delivering higher
sales from Ogden while also completing the facility expansion.
On a proforma basis, Vulcanic sales were higher, also supported by
demand from industrial process heating customers. However, this
growth was more than offset by significantly lower sales in Durex
Industries due to lower demand from Semicon customers
(accounting for approximately 55% of Durex Industries sales in
Watson-Marlow sales were down by 19% organically, driven by
ongoing destocking by Biopharm customers, which began in the
second half of 2022. During 2023, the organic decline in Biopharm
sales was greater in the first half than in the second half as a result
of the more challenging comparator. Biopharm sales remained
broadly flat in the second half compared to the first half. Sales to
Process Industries customers, which are more directly correlated to
IP, were broadly flat in the first half, compared to 2022. In the
second half of 2023, Process Industries demand was impacted by
the weakening macroeconomic outlook, with sales broadly similar
to the first half.
Adjusted operating profit
Strong organic growth in adjusted operating profit in STS of 15%,
driven by higher sales and cost containment initiatives, was offset
a one-off charge in respect of excess Biopharm inventories in the
second half.
Corporate expenses, which are included in adjusted operating
increase reflects ongoing investment to support key strategic
initiatives, partially offset by cost containment measures and
reduced variable compensation. We expect corporate expenses in
2024 to increase at more than twice the rate of Group organic sales
growth due to: increased investment in strategic initiatives; the
reversal of cost containment measures in the first half; and an
increase in variable compensation, subject to performance targets
being achieved.
Adjusted operating profit margin
Group adjusted operating profit margin of 20.7% was down 270 bps
organically, reflecting the impact of lower sales from our higher
margin businesses, partially mitigated by strong price discipline
even as cost inflationary pressures eased and the benefits of early
restructuring and cost containment actions.
STS adjusted operating profit margin of 24.6% saw strong organic
initiatives and strong pricing discipline. Sequentially, the second
half margin was slightly higher than the first half margin. However,
the second half margin was impacted by weakening IP in China and
Germany as well as a slowdown in large projects sales, resulting in
a smaller organic increase than in the first half, compared to 2022.
The increase in the STS adjusted operating profit margin was offset
The organic decline in the ETS adjusted operating profit margin
primarily reflects the impact of lower sales to customers in the
higher margin Semicon sector, but also investments in onboarding
costs for Vulcanic and Durex Industries and ongoing operational
improvement initiatives in Chromalox’s Ogden facility. On a
lower, compared to 2022.
Chromalox and Thermocoax combined adjusted operating profit
margin in the second half of 2023 was above both the first half of
the year and the second half of 2022. Excluding onboarding costs,
Vulcanic adjusted operating profit margin in 2023 was also higher,
compared to 2022. Durex Industries suffered a significant decline in
adjusted operating profit margin as a result of lower Semicon
demand despite cost actions.
1,030 bps organically. Although sales were broadly similar across
the first half and second half, the second half adjusted operating
profit margin benefited from restructuring actions taken during the
first half, offset by a one-off charge in respect of excess Biopharm
inventories.
£m 2022 Exchange Organic
Acquisitions
2023 Organic Reported
Revenue 1,610.6 115.2 1,682.6
Adjusted operating profit 21.9 349.1
Adjusted operating profit margin 23.6% 20.7%
Statutory operating profit 284.4
Statutory operating profit margin 16.9%
* Results include the impact of the acquisition of Vulcanic and Durex Industries and the treatment of our Russian operating companies as disposals
from the date at which the Group suspended all trading with and within Russia
Spirax Group Annual Report 2023 37
Strategic Report
Financial Review continued
Statutory operating profit and margin
and statutory operating profit margin are impacted by the same
drivers as explained in the adjusted operating profit sections above,
as well as the reconciling items as follows:
• Charges of £5.7 million relating to the acquisitions of Vulcanic
and Gestra Malaysia. Included within this amount is a charge of
£4.9 million which represents the fair value movement in deferred
consideration payable by Vulcanic in relation to the acquisition of
EML Manufacturing LLC in 2021
•
amortisation of acquisition-related intangible assets. The
year-on-year increase was driven by a full year of amortisation of
the intangible assets relating to Vulcanic and Durex Industries
which were acquired in late 2022
• A charge of £1.3 million from the reversal of fair value
adjustments to inventory on the acquisition of Vulcanic
•
associate investment
• A restructuring charge of £7.5 million in Watson-Marlow to
appropriately right-size manufacturing capacity and reduce
overhead support costs in order to offset the adverse impact of
impairment of non-current assets in Watson-Marlow
• A credit of £2.3 million relating to the release of the provision
held in Chromalox for the restructuring of its manufacturing
• A one-off impairment charge of £13.9 million relating to a global
ERP programme implementation within STS (further details are
Net financing expense
net debt following the acquisitions of Vulcanic and Durex Industries
at the end of 2022, together with the refinancing of maturing fixed
rate debt at higher interest coupons due to increases in market
interest rates.
Profit before tax
profit and additional net financing expense. Statutory profit before
reconciling items between adjusted profit before tax and statutory
profit before tax are shown above and in the Appendix to the
Financial Statements.
Taxation
The Group tax rate reflects the blended average of rates in tax
jurisdictions around the world in which the Group operates. As
expected, the Group adjusted effective tax rate increased by 50
Group adjusted effective tax rate was driven by changes in the
Group’s profit mix by tax jurisdiction, including the impact of a full
year of ownership of Vulcanic and Durex Industries, together with
the impact of increased withholding tax on intra-Group dividend
payments when combined with lower adjusted profit.
The Group is subject to a local tax adjustment in Argentina that
seeks to offset the impact of inflation on taxable profits. Given the
current level of inflation in Argentina, this has a meaningful impact
on the effective tax rate. While we include the expected impact of
this adjustment in our guidance for the effective tax rate, this is
difficult to accurately forecast given the current volatility of
Argentinian inflation.
The Group monitors income tax developments in the countries in
which it operates, including the OECD Base Erosion and Profit
the Group is in Argentina as the impact of the inflation adjustment
may result in a local tax rate that falls below 15%. As noted above,
given the volatility of Argentinian inflation it is difficult to accurately
forecast its impact on the Group’s tax charge. The Group is
continuing to monitor the impact of the Pillar Two income taxes
legislation on its future financial performance.
published its decision on the appeals for annulment made against
of the UK’s Controlled Foreign Company regime constituted State
Aid, finding in favour of the EC. The UK Government has appealed
the decision of the EU General Court. Whilst the EU General Court
ruling was in favour of the EC, our assessment is that there are
grounds for successful appeal. As a result, we have continued to
recognise a receivable of £4.9 million in the Consolidated
Statement of Financial Position. This relates to the full amount paid
to HM Revenue & Customs for Charging Notices received in 2021.
We have not recognised a receivable for any repayment interest on
the £4.9 million. The Group has not received a Charging Notice for
either the benefit received prior to 2017, which is estimated to be
£2.9 million, or the benefit received during 2019 of £1.1 million. No
provisions have currently been recognised relating to these
amounts and therefore they remain a contingent liability at 31st
December 2023.
For 2024, we currently anticipate that the Group adjusted effective
tax rate will increase by up to 100 bps, compared to 2023, to
approximately 26.5% based on a forecast mix of profits and level of
inflation in Argentina.
Earnings per share
Adjusted basic earnings per share decreased by 17% to 312.4 pence
operating profit and increased net financing costs. Statutory basic
statutory fully diluted earnings per share were not materially
different to the statutory basic earnings per share in either year.
Dividends
The Group has a progressive dividend policy, the aim of which is to
provide sustainable, affordable dividend growth. The Group has a
55-year track record of dividend progress with a compound annual
increase of 11% over that period.
The Board is proposing a final dividend of 114.0 pence per share for
shareholders on the register at 26th April 2024. Together with the
total dividend for the year is 160.0 pence per share, an increase of
5% on the total dividend of 152.0 pence per share in 2022. Dividend
cover in 2023 will reduce to 2.0x, the lower end of the Group’s
target range of 2.0x to 2.5x, improving over the medium-term as a
recovery in demand drives earnings growth.
The total amount paid in dividends during the year was £114.9
million, 11% above the £103.6 million paid in 2022.
Currency movements
The Group’s Income Statement and Statement of Financial Position
are exposed to movements in a wide range of different currencies.
This stems from our direct sales business model, with a large
number of local operating companies. These currency exposures
and risks are managed through a rigorously applied Treasury Policy,
typically using centrally managed and approved simple forward
contracts to mitigate exposures to forecast future cash flows and
avoiding the use of complex derivative transactions. The largest
individual currency exposures are to the euro, US dollar, Chinese
renminbi and Korean won. Whilst the size of the Group’s businesses
in Argentina is immaterial to the consolidated financial results, the
level of volatility in the Argentinian peso has had a negative
translational impact on Group reported financial performance. While
currency effects can be significant, the structure of the Group
Spirax Group Annual Report 202338
Strategic Report
provides some mitigation through our regional manufacturing
presence, diverse spread of geographic locations and through the
natural hedge of having a high proportion of our overhead costs in
the local currencies of our operating companies.
Currency movements negatively impacted adjusted operating profit
by 2% with a transactional benefit of £5.9 million being offset by a
translational downside of £13.0 million. The translation downside
reflects the impact of the strengthening of sterling in 2023 against
the currencies in which the Group generated its adjusted operating
profit. The main transactional exposure flow affecting the Group is
the export of products from our factories in the UK, invoiced in
sterling, less the import of goods from overseas Group factories
and third parties priced predominately in euros and US dollars. The
net exposure to transactional currency movements is approximately
£120 million.
If exchange rates at the end of February were to prevail for the
remainder of 2024, there would be a headwind impact of
approximately 3% on 2023 sales, or approximately 2% excluding the
significant devaluation of the Argentine peso in December 2023. On
the same basis, the headwind impact on 2023 adjusted operating
profit would be approximately 5%, or approximately 2% excluding
the Argentine peso devaluation.
Capital employed
31st December 2023. Tangible fixed assets (property, plant &
£513.5 million, principally as a result of the completion of the new
manufacturing facility for Watson-Marlow in Devens,
construction project to expand the Chromalox facility in Ogden,
decarbonisation solutions.
lower than anticipated as a result of changes in the phasing of
payments on a number of large capital projects. In 2024, we expect
the ratio of capital expenditure to sales to increase to 7% reflecting
the impact of phasing delays from 2023 together with the ongoing
expansion of the Ogden facility.
The capital intensity of our business is low with historic capital
expenditure typically amounting to between 4% and 6% of sales.
Excluding our investment in new construction projects, capital
expenditure, as a percentage of sales, would be at the low end of
our typical range.
Total working capital increased by £9.3 million and the ratio of
will remain at a consistent level in 2024.
Capital employed
2023
£m
2022
£m
Property, plant and equipment
Right-of-use assets 98.4 67.2
Software & development costs 42.3 44.5
Non-current prepayments 1.9 2.0
Inventories 290.0
Trade receivables 299.8 341.1
Other current assets 71.4 79.6
Tax recoverable 13.6 19.0
Trade, other payables and current provisions
Current tax payable
Capital employed 938.7
Acquired intangibles including goodwill 1,087.0 1,159.1
Investment in Associate 3.0 —
Post-retirement benefits
Net deferred tax
Non-current provisions and long-term payables
Lease liabilities
Net debt
Net assets
Adjusted operating profit 349.1
317.7 369.9
Average capital employed 775.9
772.4 677.5
Return on capital employed 38.1% 49.0%
Return on capital employed (excluding acquisitions, disposals and leases) 41.1% 54.6%
Spirax Group Annual Report 2023 39
Strategic Report
Financial Review continued
Capital employed continued
impacts of acquisitions, disposals and leases, ROCE decreased by
well as the impact of the challenging trading environment on
adjusted operating profit. ROCE is defined in the Appendix to the
Financial Statements, see page 243.
impacts of acquisitions, disposals and leases, ROIC decreased by
operating profit after tax. ROIC is defined in the Appendix to the
Financial Statements, see page 243.
Adjusted cash flow
Adjusted cash from operations is a measure of the cash flow
generated from our operating companies. A reconciliation with
statutory operating cash flow can be found in the Appendix to the
Financial Statements.
conversion was driven by lower than anticipated capital expenditure
which offset the fall in adjusted operating profit.
remained relatively consistent year-on-year. Adjusted free cash
driven by improved adjusted cash from operations but negatively
impacted by increased net interest payments in the period.
including payments to minority shareholders, and reflect the final
dividend for 2022, as well as the interim dividend for 2023.
Share purchases, net of new shares issued for the Group’s various
Performance Share Plan.
Gestra of a local Malaysian distributor and the acquisition of a 15%
stake in Kyoto Group.
sizing of capacity and overhead support costs undertaken in
Watson-Marlow.
The £31.5 million increase in lease liabilities was largely driven by
the lease commitment for the Watson-Marlow manufacturing
Adjusted Cash flow
2023
£m
2022
£m
Adjusted operating profit 349.1
44.2 36.0
Depreciation of leased assets 16.2 13.4
Cash payments to pension schemes more than the charge to adjusted operating profit
Equity settled share plans 6.1
Working capital changes
Repayments of principal under lease liabilities
Capital disposals — 4.0
Adjusted cash from operations 281.7 214.9
Net interest
Income taxes paid
Adjusted free cash flow 116.1
Net dividends paid
Purchase of employee benefit trust shares/Proceeds from issue of shares
Restructuring costs
Cash flow for the year 11.8
Exchange movements 11.9
Opening net debt
Net debt at 31st December
Lease liability
Net debt and lease liability at 31st December
Spirax Group Annual Report 202340
Strategic Report
Financing and Liquidity
As at the 31st December 2023, total committed and undrawn debt
facilities amounted to £294.5 million alongside a net cash balance
1.05% fixed coupon notes that matured in September 2023. The
average tenor of our debt is over four years with the next
contractual repayment maturity in October 2025. In February 2024,
the Group successfully exercised an option to extend the maturity
of our £400 million committed, revolving credit facility by an
additional year to April 2029.
Fundamentals of financial resilience
The macroenvironment was challenging in 2023 with global
IP was also materially lower than had been forecast at the
growth particularly marked in North America and China.
Additionally, the Group was impacted by two specific external
Semiconductor sectors, due to customer destocking which led to
weaker sales in Watson-Marlow and ETS respectively. Despite this
challenging backdrop the financial results delivered reflect the
relative resilience of our business model. We have continued to
focus on organic growth opportunities led by our direct sales model
delivering engineering solutions for our diversified customer base.
We took early action across all three Businesses to appropriately
right-size capacity and support overhead costs whilst also
protecting our ability to respond to future growth in demand whilst
continuing to invest in key strategic initiatives that will drive future
growth including supporting our decarbonisation solutions and
building additional digital capability. The Group’s longstanding track
record of increasing returns to shareholders has continued with a
proposed year-on-year increase of 5% in ordinary dividends.
The Group’s products and solutions continue to support critical
industrial processes across a broad range of industries and
geographical markets. As in previous years, our business model
supported our outperformance against global IP due to our ability
significant base business in maintenance and repair sales
customers’ operating budgets. The remaining 15% of sales are
related to large projects, funded from customers’ capital
expenditure budgets, which are more heavily influenced by
economic cycles. Approximately 60% of our sales are to defensive,
less cyclical sectors and no single customer accounts for more than
1% of Group sales.
Resilience over the short, medium and long term
The Group’s business model and the investments we have
continued to make to support future growth, combined with our
strong cash conversion, position us well to adapt to economic
cycles. Our Going Concern and Viability analysis provides
confidence in the robust nature of our business and our capital
structure, even when analysed under a number of potential
downside scenarios.
We have undertaken scenario-based modelling of the key risks we
have identified that could impact our business, the results of which
underpin our confidence in our short and medium-term resilience.
The continued implementation of our strategy supports our
longer-term resilience, and we continue to closely monitor and
respond to the changing external economic, environmental and
social factors that will impact the markets in which we operate in
the future.
Going Concern statement
The Group’s principal objective when managing liquidity is to
safeguard the ability to continue as a going concern for at least 12
months from the date of signing the 2023 Annual Report. The Group
retains sufficient resources to remain in compliance with all the
required terms and conditions within its borrowing facilities with
material headroom and no material uncertainties have been
identified.
The Group continues to conduct ongoing risk assessments on its
business operations and liquidity. Consideration has also been
given to reverse stress tests, which seek to identify factors that
might cause the Group to require additional liquidity and form a
view as to the probability of these occurring.
The Group’s financial position remains robust, with the next
maturity of our committed debt facilities being US$150 million of
Bank Term loan which matures in October 2025 and which are
accounted for within the cash flow forecast model. The Group’s
debt facilities contain a leverage covenant of up to 3.5x. Certain
debt facilities also contain an interest cover covenant of a minimum
of 3.0x. The Group regularly monitors its financial position to ensure
that it remains within the terms of these debt covenants. At 31st
December 2023 leverage (defined as net debt excluding lease
liabilities divided by adjusted earnings before interest, tax,
(defined as adjusted earnings before interest, tax, depreciation and
Reverse ‘stress testing’ was also performed to assess the level of
business under-performance would be required for a breach of the
financial covenants to occur, the results of which evidenced that no
reasonably possible change in future forecast cash flows would
cause a breach of these covenants. In addition, the reverse stress
test cash flow modelling does not take into account any mitigating
actions which the Group would implement in the event of a severe
and extended revenue and profitability decline. Such actions would
serve to further increase covenant headroom.
Having assessed the relevant business risks as discussed in our
potential impact of any climate change related risks as outlined
within the Task Force on Climate-related Financial Disclosures
covenant headroom available under several alternative scenarios as
set out in the viability assessment below, the Directors consider it
appropriate to continue to adopt the going concern basis in
preparing the Financial Statements.
Spirax Group Annual Report 2023 41
Strategic Report
Financial Review continued
Assessment of Viability
account the Group’s current financial position, business strategy, the Board’s risk appetite and the potential impacts of the Group’s Principal
Risks. The eight Principal Risks that have been identified are listed on page 101.
The Board has adopted a five-year viability assessment, which it believes to be appropriate as this timeframe is covered by the Group’s
forecasts; takes into account the nature of the Group’s Principal Risks, a number of which are external and have the potential to impact over
short time periods; and is in alignment with the Group’s principal committed financing facility duration. While the Board has no reason to
believe that the Group will not be viable over a longer period, given the inherent uncertainty involved, the Board believes that a five-year
period provides a reasonable degree of confidence while still providing a longer-term perspective.
In making their assessment, the Board completed a robust assessment, supported by detailed cash flow modelling, of the Principal Risks
facing the Group, including those that would threaten its business model, future performance, solvency, or liquidity. In addition to
completing an impact assessment of the Principal Risks, the Board considered the probability of the occurrence of the risks, the Company’s
ability to safeguard against them and the effectiveness of mitigating actions. In every modelled scenario the Group is able to demonstrate
that it continues to remain viable. The scenarios modelled that support this process are as follows.
Scenarios modelled Links to Principal Risks
We considered a combination of scenarios in which future sales were adversely impacted in all years of the
assessment period. The reductions reflected the combined impact of economic political instability on global
Industrial Production output, material foreign exchange rate fluctuations and a loss of output at a significant
Group manufacturing site.
We assumed a reduction of 17% in sales with a margin drop through that is consistent with our base case
scenario and assumed no mitigating actions were taken by the Group. Despite these impacts the Group
continued to trade profitably and always remained comfortably within the financial covenants in the external
financing facilities.
Economic and political
instability
Significant exchange
rate movement
Loss of manufacturing
output at any Group
factory
Inability to identify or
respond to changes in
customer needs
Loss of critical supplier
We considered the impact of a potential large, one-off expense as could be required in the case of a legal or
regulatory fine or a compensation payment. An expense equivalent to 10% of the 2023 Adjusted Group
Operating Profit was assumed alongside a negative impact of 10% on Revenue resulting from the associated
reputational damage. The Revenue fall of 10% occurs in 2024 and recovers over the 5 year period modelled.
Despite these impacts the Group continued to trade profitably and always remained comfortably within the
financial covenants in the external financing facilities.
Breach of legal and
regulatory
requirements
We considered the occurrence of a cyber-attack that succeeds in severely impacting Group systems. We
assumed an immediate disruption to trading followed by a fall in sales in subsequent years resulting from the
associated negative reputational impact, the combined effect being a loss of 5% of sales in each year over the
5 year period. A significant initial cost of around 7% of the 2023 Adjusted Group Operating Profit was also
included to rectify the immediate impact of the attack followed by increased investment in all subsequent years
to strengthen our cyber-security.
Despite these impacts the Group continued to trade profitably and always remained comfortably within the
financial covenants in the external financing facilities.
Cybersecurity
targets contained within the acquisition business case. We assumed a 20% shortfall in sales in the acquired
business and that they were disposed of for a lower cash consideration than the original consideration.
Despite these impacts the Group continued to trade profitably and remained comfortably within the financial
covenants in the external financing facilities.
Failure to realise
acquisition objectives
A further scenario was modelled to ascertain what level of revenue or adjusted profit margin reduction would be required to cause a breach
of the Group’s debt covenants. The reductions in revenue and adjusted profit margin required to breach Group’s debt covenants were in
excess of 17% within a 12 month period, significantly higher than those modelled in the above scenarios and greater than the impact
experienced during the severe global economic downturn in 2009. This scenario assumed no mitigating actions were taken. Mitigating
actions available could include reductions in operating and capital expenditure and shareholder dividends.
Spirax Group Annual Report 202342
Strategic Report
During the year the Group worked alongside a third-party specialist
to undertake detailed financial modelling in order to determine the
potential financial impact of increasing global temperatures on our
business operations. The analysis concluded that the potential level
of financial risk to the Group was lower than the impacts modelled
in the Revenue Fall scenario included. As a result, no specific
climate change impact scenario has been included.
Whilst linked to the Group’s Principal Risks, the scenarios modelled
are hypothetical and designed to test the ability of the Group to
withstand such severe outcomes. In practice, the Group has an
established series of risk control measures in place that are
designed to both prevent and mitigate the impact of such risks.
The results of the stress testing undertaken illustrate that the Group
would be able to absorb the impact of the scenarios considered
should they occur within the assessment time period. In all the
scenarios considered the Group was not required to implement
any potential mitigating actions in order to remain within its debt
covenants.
Viability statement
Based on the outcomes of the scenarios and considering the
Group’s financial position, strategic plans and Principal Risks, the
Directors have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over
the period of their assessment. The Directors’ statement regarding
the adoption of the going concern basis for the preparation of the
Financial Statements can be found on page 41.
Long-term resilience
The Group has a long track record, over 135 years, of consistently
adapting to changing macroeconomic, environmental and social
factors supported by our business model. While our strategy and
business model lessen any material impact from our Principal Risk
factors, we nevertheless continuously review our markets, listen to
our customers and adapt our solutions, while working responsibly
and in line with our Values to build long-term sustainability.
The Group has a highly resilient business and strategy that will
remain relevant across different climate related scenarios.
We recognise the need to anticipate and mitigate the impact of
climate-related change. In 2021 we launched our One Planet:
Engineering with Purpose Sustainability Strategy covered in
more detail on pages 60 to 97. Although not classed as a Principal
the anticipated impact of climate-change related change on the
Group’s longer-term resilience.
The increasing commitments to net zero targets will have a
profound effect on industrial activity over the coming decades and
is an additional source of growth for our Group over at least the
next 30 years. To address the opportunities arising from the
decarbonisation of industrial processes, we have invested
significantly in the development of sustainable products and
solutions that help customers meet their own sustainability goals.
Outlook and 2024 guidance
CHR Economics’ forecast for 2024 IP has reduced materially from
the 2.6% expected in October 2023 to 1.7% currently, with growth
backdrop of geopolitical unrest and continuing macroeconomic
uncertainty, we remain cautious about the outlook for IP in 2024,
particularly the forecast improvement in the second half.
If exchange rates at the end of February were to prevail for the
remainder of the year, there would be a headwind impact of
approximately 3% to 2023 sales and approximately 5% to 2023
adjusted operating profit.
In 2024, we anticipate mid to high-single-digit organic growth in
Group revenues and low double-digit organic growth in Group
adjusted operating profit, supported by our proven ability to grow
ahead of IP and increased Biopharm and Semicon demand in the
latter part of the year.
After absorbing the exchange rate headwinds outlined above, we
expect modest progress in the Group adjusted operating profit
margin compared to the 20.7% achieved in 2023. Adjusted
operating profit in 2024 will be more second half weighted than
usual, reflecting: exchange rate headwinds; the reversal of cost
containment measures in the first half; and strong demand growth
in the second half.
We anticipate adjusted cash conversion of approximately 75% in
2024 with capital expenditure as a proportion of sales of
approximately 7%.
Medium-long term
Over the last decade we have evolved to become a highly
differentiated specialist engineering Group of three complementary
Businesses with strong capabilities in high value niche markets. Our
products and solutions are critical to the operating efficiency and
safety of our customers’ industrial processes and increasingly, their
sustainability goals. Our business model and strategy have
delivered a track record of growing organically ahead of IP and
industry-leading margins. Leveraging this uniquely differentiated
business model to take advantage of the significant opportunities
we have in long-term growth markets such as thermal efficiency,
fluid path technology and decarbonisation, will enable us to
continue delivering sustainable compounding growth at attractive
margins over the coming years.
Phil Scott
6th March 2024
Spirax Group Annual Report 2023 43
Strategic Report
Ten-year financial summary
2014
£m
2015
£m
2016
£m
2017
£m
£m
2019
£m
2020
£m
2021
£m
2022
£m
2023
£m
Revenue 667.2 757.4 1,153.3 1,242.4 1,193.4 1,344.5 1,610.6 1,682.6
Operating profit 174.1 299.1 245.0 249.0 320.9 284.4
Adjusted operating profit* 153.0 152.4 235.5 264.9 270.4 340.3 349.1
Adjusted operating profit margin* 22.5% 23.6% 23.0% 22.7% 25.3% 23.6% 20.7%
Profit before taxation 139.7 171.4 192.5 240.1 314.5
Adjusted profit before taxation* 151.1 151.1 1 77.9 229.1 254.6 274.5 261.5 333.9 370.6 309.2
Profit after taxation 100.6 96.7 121.3 157.9 223.4 167.0 173.9 234.9 225.0 184.0
Adjusted cash from operations 131.5 146.2 242.9 279.0 214.9 281.7
Cash conversion 95.9% 102.4% 91.7% 102.0% 56.5% 80.7%
Capital expenditure to sales
††
5.0% 5.0% 5.7% 5.0% 4.2% 7.3% 6.3%
Basic earnings per share 129.9p 165.0p 214.4p 303.1p 226.2p 235.5p 305.1p
Adjusted earnings per share* 140.4p 142.6p 171.5p 220.5p 250.0p 265.7p 256.6p 377.2p 312.4p
Dividends in respect of the year 139.9 50.6 64.4 73.6 100.2 112.0 117.8
Dividends in respect of the year
64.5p 69.0p 76.0p 100.0p 110.0p 136.0p 152.0p 160.0p
120.0p — — — — — — — — —
Net assets 441.9 524.4 609.5 766.9 1,010.0
Return on capital employed
†
41.4% 41.1% 51.6% 52.5% 59.3% 53.3% 41.6%
Return on invested capital
†
27.4% 27.1% 22.6% 19.3% 19.0% 22.9% 19.0% 14.0%
* All adjusted profit measures exclude certain items as set out and explained in the Financial Review and in the Appendix to the Financial Statements
** 2020 has been restated following the IFRS Interpretations Committee agenda decision on configuration and customisation costs in cloud
† The results for 2019 to 2023 exclude the impacts of IFRS 16, which was adopted in 2019
†† Capital expenditure excludes IFRS 16 Lease repayments
Our financial performance demonstrates a strong
trajectory of growth and shareholder value creation.
Spirax Group Annual Report 202344
Strategic Report
%
Profit margin %
p/share
30
28
26
24
22
20
18
16
14
12
10
60
50
40
30
20
10
400
320
240
160
80
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Sales Adjusted operating profit margin
ROCE ROIC
DPS EPS Special dividend
* All adjusted profit measures exclude certain items as set out and explained in the Financial Review and in the Appendix to the Financial Statements
** 2020 has been restated following the IFRS Interpretations Committee agenda decision on configuration and customisation costs in cloud
† The results for 2019 to 2023 exclude the impacts of IFRS 16, which was adopted in 2019
†† Capital expenditure excludes lease repayments
£m/%
Profit margin %
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Spirax Group Annual Report 2023
Strategic Report
Steam Thermal Solutions
2022 Exchange Organic
Acquisitions &
*
2023 Organic Reported
Revenue 866.0 910.1
Adjusted operating profit 224.0
Adjusted operating profit margin 24.6%
Statutory operating profit 205.2
Statutory operating profit margin 22.5%
We have continued to expand our
addressable market through the
development of new solutions,
targeting high growth sectors.”
Maurizio Preziosa
Managing Director, Steam Thermal Solutions
Operating Review
Steam Thermal Solutions at a glance
(at year end)
61
operating units
+
65
countries with a resident
direct sales presence
5,200+
colleagues
Strategic Report
Spirax Group 46
910.1
2022
866.0
2020
Revenue
£910.1m
Reported Organic
+5% +8%
Adjusted operating profit
margin
24.6%
Reported Organic
+ 80 bps + 140 bps
224.0
205.2
2022
2022
2020
2020
Adjusted operating profit
£224.0m
Statutory operating profit
£205.2m
Reported Organic
+9% +15%
Reported
+5%
Key Industries
Food & Beverage
OEM Machinery
Pharmaceutical & Biotechnology
Chemicals
2023 Group
Revenue
54%
which was significantly ahead of IP across all
regions, despite a challenging macroeconomic
outlook that weakened progressively through
the year and particularly during the second
China and Germany, together with a slowdown
in large orders compared to the first half.
Operating highlights
TargetZero
ElectroFit
Statutory operating profit
margin
22.5%
Spirax Group 47
Strategic Report
Operating Review
2024 outlook
Spirax Group 48
Strategic Report
Steam Thermal Solutions
Finding the right
‘whey’ for cheese
producer
As part of our Customer first
2
strategy,
our engineers focus on direct
relationships as well as a deep
understanding of our customers’ needs
to create value-adding solutions.
‘Walking the Plant’ is one of the most important
ways in which our direct sales engineers can add
from direct sales engineer Travis Berry helped
improvements, which have led to annual savings of
around US$700,000.
At its dairy plant in California, Saputo has three
clean-in-place kitchen areas each producing
condensate from heat exchangers which was going
designed a solution to recover and return the
The new condensate recovery system has delivered
quantified energy, water and CO
2
savings since its
installation, as well as reducing safety risks and the
tons of CO
2
each year.
Due to the success of the project, the solution will
across the USA and Canada.
3,150 tons
of CO
2
saved per year
33
Olympic-sized swimming pools of water saved each
year
US$700k
annual running cost savings
Strategic Report
49Spirax Group
Electric Thermal Solutions
2022 Exchange Organic
Acquisitions &
*
2023 Organic Reported
Revenue 378.5
Adjusted operating profit 22.0 59.2
Adjusted operating profit margin 15.6%
Statutory operating profit 25.8
Statutory operating profit margin 6.8%
Electric Thermal Solutions at a glance
(at year end)
36
operating units
+
20
countries with a resident
direct sales presence
2,610+
colleagues
We have continued to see strong
customer demand for our
decarbonisation solutions leading
to record order books within ETS.”
Armando R Pazos
President, Electric Thermal Solutions
Operating Review
Strategic Report
Spirax Group 50
378.5
2022
2020
Revenue
£378.5m
Reported Organic
+48% +2%
Adjusted operating profit
margin
15.6%
59.2
25.8
2022
2022
2020
2020
7.9
Adjusted operating profit
£59.2m
Statutory operating profit
£25.8m
Reported Organic
+48% -4%
Reported
+253%
2023 Group
Revenue
23%
Key Industries
Power Generation
Semiconductor
Oil & Gas
Food & Beverage
While IP remains a key underlying driver of
growth in ETS, secular trends in the
important additional drivers. As expected,
Industries and to a lesser extent Thermocoax
(that focus on industrial equipment heating
demand.
Operating highlights
Reported Organic
+0 bps -90 bps
Statutory operating profit
margin
6.8%
Spirax Group 51
Strategic Report
2024 outlook
Operating Review
Spirax Group 52
Strategic Report
Strategic Report
Electric Thermal Solutions
Powering battery
production from
sustainable steam
alongside Vulcanic, part of Electric
Thermal Solutions, to help it achieve
20
MW total electrical power capacity from low voltage
heating solution for steam generation
24
GWh of low carbon EV batteries produced from
decarbonised steam generation
by 2030
Spirax Group 53
Operating Review
2022 Exchange Organic
Acquisitions &
*
2023 Organic Reported
Revenue 394.0
Adjusted operating profit — 93.7
Adjusted operating profit margin 23.8%
Statutory operating profit 81.2
Statutory operating profit margin 20.6%
Watson-Marlow Fluid Technology
Solutions at a glance
(at year end)
47
operating units
+
42
countries with a resident
direct sales presence
1,960+
colleagues
Watson-Marlow
FluidTechnology Solutions
While destocking in the Biopharm
sector impacted 2023 trading,
underlying demand remains strong
and we are well positioned for a
return to growth.”
Andrew Mines
Managing Director, Watson-Marlow Fluid Technology Solutions
Strategic Report
Spirax Group 54
394.0
2022
2020
Revenue
£394.0m
Reported Organic
-19% -19%
Adjusted operating profit
margin
23.8%
Statutory operating profit
margin
20.6%
93.7
81.2
2022
2022
2020
2020
82.7
Adjusted operating profit
£93.7m
Statutory operating profit
£81.2m
Reported Organic
-41% -43%
Reported
-47%
2023 Group
Revenue
23%
Key Industries
Pharmaceutical & Biotechnology
Food & Beverage
Water & Wastewater
Healthcare
the Biopharm sector throughout the year.
Underlying demand remains strong, with
Biopharm end-markets continuing to grow at
the COVID pandemic. In Watson-Marlow this
has resulted in Biopharm monthly sales
Operating highlights
Reported Organic
-900 bps -1,030 bps
Spirax Group 55
Strategic Report
Operating Review
2024 outlook
Spirax Group 56
Strategic Report
Strategic Report
Watson-Marlow
Fluid Technology Solutions
Peristaltic technology
keeps hearts pumping
and the pump must provide saline solution
essential and was
a fundamental requirement
in our decision-
making process.
The Watson-Marlow pump is easy to operate
with a very small diameter (lumen) in the
rate precisely at any time so that the exact volume
flow required for each treatment step is achieved.
The peristaltic pump is one of the central
components in the system and must provide
than five years, with several hundred devices
complaints due to wear of a pump. All are still
working smoothly.”
Michael Schirmeier
Managing Director at livetec
Reduced
risk of human error
100%
reliability of continuous flow of saline solution.
Zero pump failures
after five years and hundreds of pumps installed
Spirax Group 57
Developing solutions for
future customer needs
Across Spirax Group we are developing digital
solutions that augment our physical customer
closeness through ‘walk the plant’ activities,
with digital connections that generate real-time,
the data’ adding value to our customers
through anticipating and detecting critical
equipment failures.
Digital specialists at our Fluid Technology
Solutions Business, Watson-Marlow, are using
machine learning techniques to identify potential
in what normal operation looks like and then
feeding it data points common with pump and
Meanwhile in Germany, Steam Thermal Solutions
specialist Gestra has developed a wireless
steam trap monitoring solution utilising the
to replace steam traps in an expedient manner,
saving energy and improving efficiency.
Our aim is to support current
predictive maintenance
processes with AI to get the
our customers the insights they
need to plan maintenance and
only replace parts that need
replacing, rather than replacing
them due to length of operation.”
Matthew Thomas
Head of Digital, Watson-Marlow Fluid
Technology Solutions
We are working with a fertiliser
chemical company in Spain to
help improve the operational
efficiency of its steam trap
population. Once the project is
complete, we estimate that we
of CO
2
. That’s the equivalent
average annual energy
consumption of more than 2,000
people and over 200,000 mature
2
.”
Jayesh Chavda
Business Development Manager –
Connected Services, Gestra, part of
Steam Thermal Solutions
Our customers
Strengthening customer bonding
through connected environments
Strategic Report
Spirax Group 58
Strategic Report
Spirax Group 59
Sustainability Report
One Planet is the mechanism
through which our Group
delivers sustainable
improvements that
supportpeople
andplanet
Our six strategic initiatives are
helping us deliver climate and
environmental action, customer
sustainability, resilient supply
chains and stronger communities.
Read more about our
responsible business
Read more about how we
delivered on our strategic
Spirax Group Annual Report 202360
Strategic Report
1. Achieve net zero greenhouse gas emissions
2. Deliver biodiversity net gain
3. Implement environmental improvements in
our operations
4. Grow sales of products with quantified
sustainability benefits
5. Embed sustainability criteria in supply chain
management
6. Support the wellbeing of people in our
communities
Our One Planet: Engineering with Purpose Sustainability
Strategy sets out our plans for building a more sustainable
future and our commitment to having a positive impact on
people and planet. Now in its third year, the strategy is well
embedded across the Group and we are making good
progress towards achieving our goals for sustainable
business operations.
Science-Based Targets initiative
A key achievement in 2023 was the validation of our net
This is a collaboration between the United Nations Global
credible climate targets that are based on the best available
science and the needs of the planet.
2021, as part of our wider commitment to take action on
2022, we submitted our near-term and long-term
decarbonisation targets to the SBTi for validation and they
were approved in November 2023. This acknowledges the
credibility of our decarbonisation plans both in our
operations and in our value chain.
As disclosed in our 2022 Annual Report, the majority of our
total emissions are scope 3 emissions and are associated
with the energy in use of our Electric Thermal Solutions
fossil-fuel systems and therefore aid decarbonisation for
our customers when supplied with green electricity. To
reduce the calculated emissions associated with these
products and to meet our own decarbonisation goals, we
are reliant on the electricity grids in the countries where we
have customers transitioning to green electricity. Read
Responsible business foundations
Our responsible business foundations underpin the way in
which we operate, providing the basis for our Group’s ethics
and social reponsibility to integrate with sustainability and
shape our business practices. These are:
2023 was a year of good progress as we further
improved the environmental performance of the
Group and delivered value to our communities.”
Sarah Peers
Group Director of Sustainability
Our Strategy
Our One Planet Sustainability Strategy is implemented by
each of our three Businesses, with central oversight from
our Group Executive Committee.
The strategy is delivered through six strategic initiatives,
which are:
Additionally, the Sustainability Strategy is supported by a
strategic project to improve the availability and quality of
sustainability data. A previous strategic project to develop
our colleagues’ sustainability knowledge achieved the
formally retired as a strategic project in 2023 as
sustainability knowledge is now embedded within standard
operations across the Group.
Double materiality assessment
To support our ongoing monitoring of sustainability and to
prepare for future regulatory reporting requirements, we
This process involved assessing the impact of sustainability
topics on the Group and also assessing the impact that the
Group can have on people and planet in regard to these
range of internal and external stakeholders, including senior
leadership, colleagues, customers, suppliers, community
stakeholders and investors, to complete this DMA.
Ethical business
Inclusion and diversity
People and wellbeing
Health and safety
Spirax Group Annual Report 2023 61
Strategic Report
2.24
0.10
Spirax Group we encourage all colleagues to play a vital role with a
collective responsibility to do the right thing, even when no one is
our Group is empowered and supported to speak up if things are
updated in 2023 and further refreshed at the start of 2024, our
commitments include:
•
•
journey
•
adopted by all operating companies and Group functions
•
subject to a formal review, at least annually
conflict with, local standards we will operate to the higher set of
standards. All Serious Lost Time Accidents, will be reported to the
GEC by the responsible GEC member, once the initial facts are
known and within 48 hours. Our operating companies and Group
organisation, responsibilities, governance and arrangements. These
will be sufficiently resourced, subject to continual improvement and
at least an annual review.
philosophy to achieve significant enhancements to our Culture;
Assurance; Risk; and Engagement (C.A.R.E.
established external systems certification across the Group. At the
Progress
are pleased that in 2023, 99.9% of our Group, excluding the recently
respectively and across Spirax Group, all Divisions met the targets
set. The foundation level will continue to be subject to further
ongoing validation in 2024, including on site.
Other highlights during the year included revitalising our
behavioural-based safety programme to create our own bespoke
pathway which includes an evolving suite of learning videos using
actors to recreate previous incidents to promote engagement and
learning. Other examples from the framework included: a full
machinery inventory, validation of use and risk assessment; a major
focus on pedestrian and vehicle interaction risk reduction; and a
range of risk control assurance requirements. Cross-Group learning
and sharing of best practice continued to be at the heart of our
approach throughout the year, with a wide range of engagement
initiatives being well-attended across all three Businesses. This
regular cadence and engagement has been invaluable as we have
matured and advanced our approach to team collaboration.
improve our understanding of risk and to build our culture. Examples
include the successful pilots of a machine-learning data analysis
additional context and clarity of relative risk in incident reporting,
These include, but are not limited to: any accident that results in
admittance to hospital, or injuries leading to a permanent impairment.
There were no work-related fatalities among colleagues or contractors
and whilst our overall lost-time accidents have increased this year,
there is no discernible trend. This is considered indicative of our
good reporting culture, which is being fully embraced by our
acquisitions and is a good sign of our cultural alignment. Our
all-workplace incident rate, without our acquisitions, has reduced
by 11% in this reporting period. Having undertaken an analysis of
Focus for 2024
•
•
•
•
•
Health and Safety
Sustainability Report: Responsible business foundations
Completion of Group H&S Excellence
%
0.05
0.08
0.04
0.04
2023
2022
2021
2020
Vulcanic
Legacy
sites
Durex
Industries
* Per 100,000 hours worked
* Per 100,000 hours worked
* Excluding 2022 acquisitions
1.55 99.9
3.44
2.62
2.22 64
1.75 58
2023
2022
2021
2020
2019
Legacy sites Total Group (including
Legacy sites Total Group (including
Spirax Group Annual Report 2023
Strategic Report
People and wellbeing
Focus for 2024
•
• Refresh and embed our Colleague Promises
• Continue to embed One Place and launch an app to improve
access for desk-free colleagues
•
• Ongoing focus on inclusion, wellbeing and mental health
Progress
engagement score remained static at 72%, we saw some significant
improvements across the Group in the following areas:
i.The launch of our Group
, in 2022 has had a
tangible impact on our inclusion metrics in the engagement
where there was an eight percent increase. More
significantly, our colleagues said that our Group values and
promotes diversity, with this score increasing nine percent
since 2021 to 78% positive.
ii.This theme saw the
greatest improvement of all colleague engagement survey
colleagues to be environmentally responsible’ also scored
highly at 83% favourable. This reflects the progress we have
made embedding our One Planet Sustainability Strategy
and our focus on fulfilling our Purpose, with one of our
recognised stakeholders being the communities in which we
work.
iii.
Colleague wellbeing saw improvement across the Group (up
focus we place on mental health, wider wellbeing and
supporting a balance between work life and personal life.
supported this with a range of events throughout the year
covering topics such as psychological safety, the
across the Group.
Group-wide, Values-based recognition programme, the Spirit
announced alongside a Group Chief Executive Award and a
People’s Choice recipient which was the result of a global colleague
vote.
Nominations have been received for our second Spirit Awards and
18 finalists have been selected from just over 300 applications. The
finalists will be invited to attend the Awards Ceremony in 2024
when the winner in each Value category will be announced.
and development portal, SPARK. This gives our colleagues access
to learning academies on topics such as Personal Development,
and a range of content that can be tailored to individual development
goals, helping our colleagues to ignite their potential. Together with
One Place, our new internal colleague platform that was launched
in March 2023, this is helping to empower the creation of more
inclusive workplaces where wellbeing and mental health are
prioritised building a sense of belonging across our Group.
around the world an additional day of paid annual leave to focus on
their wellbeing and self-care. Having seen the impact of providing
that extra time for colleagues to refresh and invest in their positive
been made permanent for all colleagues from 2024 onwards.
We are a global business united by our Purpose and
where the safety and wellbeing of our colleagues are
paramount. Wherever we work, we are guided by our
Values of Safety, Collaboration, Customer Focus,
Excellence, Respect and Integrity. They are part of an
inclusive culture that empowers strong relationships
and supportive teams, where everyone can contribute
and learn from each other and where meaningful work
helps create the sustainable future we all aspire to
have. They are supported through our HR policies and
systems that help protect the rights of our colleagues
and ensure their equitable treatment around the world.
Spirax Group Annual Report 2023
Strategic Report
We want every day to be exceptional for
all our colleagues. That’s why we enable
them, through our Purpose,
Values, business model and Group
Inclusion Commitments, providing the
framework to help them achieve their
potential.
Sustainability Report continued
A progressive, supportive
and inclusive culture
Spirax Group endeavours to offer a consistently exceptional
colleague experience. Colleagues have regular
opportunities to give feedback and offer suggestions for
improvement such as our biennial Colleague Engagement
colleague promises that define what it means to work as
part of Spirax Group.
Our promises are designed to encapsulate our Purpose,
1.
An inclusive culture
based on Values
As a leading global business,
we are committed to creating a
more inclusive and equitable
world for our colleagues at
work, at home and in the
community. Our shared Values
of Safety, Collaboration,
our behaviours and underpin
our sustainable approach to the
way we do business and work
together every day.
Values and brought to life
through ,
Commitments designed to
support colleagues through all
of life’s key moments.
2.
Meaningful work creating
a sustainable future for
all
Group there is the opportunity
to be part of something bigger.
meaningful work that enables
them to use their unique
capabilities and innovate to
engineer a more efficient, safer
and sustainable world.
3.
Development every day to
fulfil your potential
colleagues have the
opportunity to drive their
careers, problem solve and
develop new capabilities whilst
recognising and building on
their strengths. Our dedicated
learning platform, SPARK, as
’ festivals are just
some of the ways in which we
bring this promise to life.
4.
Belonging to supportive
teams and strong
relationships
Our colleagues are part of
friendly, supportive and
innovative teams and connect
with dedicated, inspiring and
diverse global colleagues.
Colleagues are supported and
encouraged to be themselves
and champion an inclusive
culture.
Representing the views of our colleagues
•
make sure we hear from colleagues about what matters to
them, including focus groups and a biennial Colleague
Engagement Survey. Many of our colleagues consistently
highlight four strengths, which they value highly:
•
strong observation from colleagues who have recently
joined our Group
•
share examples of living our Values in the real world,
which deliver better customer service, grow the business
and improve colleague experience
•
where they have a sense of being involved, listened to
and permission to be entrepreneurial
•
The introduction of inclusive policies, such as gender-
neutral policies for parental leave and carers’ leave, is
seen as being best-in-class
•
Colleagues also appreciate being part of a resilient and
strong Company and felt supported through the cost-of-
living challenges of 2023
Spirax Group Annual Report 202364
Strategic Report
What our colleagues have to say
Connecting personally with Company Purpose
It’s good to talk and that happens much more naturally when you feel part of a strong
and supportive team.
That’s why, when 40 colleagues came together to celebrate the 50th anniversary of
the founding of Spirax Sarco (part of Steam Thermal Solutions) in Japan, the operating
company’s General Manager, Shinichi Oyama saw an opportunity.
“It was a celebration but the event was also the perfect platform through which to
strengthen trust and to create unity in the team. So we asked colleagues to share their
own personal purpose or ‘ikigai’.
“Across two days, working in small groups, we participated in several workshops
including ‘Leading with Purpose’, the ‘Story of Your Life’ and ‘Every day is Still Day
One’, and played games to break the ice and keep the conversations going.
“The feedback has been overwhelmingly positive. In developing their own personal
purpose, colleagues were able to better relate to our Company Purpose and through
personal storytelling have built much stronger relationships with each other.”
Building stronger teams through an inclusive approach
We are all unique, we all have a story and the diversity of our lived experiences and
perspectives is what makes us strong as a team. When Ilysia Carlberg joined
Chromalox, part of Electric Thermal Solutions, to take up an inclusion-focused role,
she set out to broaden the diversity of colleagues in the team and to help everyone
feel more included.
Recognising the challenge of personal bias in the recruitment process, Ilysia
introduced a linguistic gender bias decoder, an online tool to help hiring managers to
identify subtle bias in job descriptions and adverts. To support the more inclusive
process, she also created a set of standard interview questions and made sure to
include a debrief step.
“The blueprint for inclusivity and equity lies in a structured interview process, where
every candidate is afforded the same opportunity to shine. By fostering clear
guidelines and standardised criteria, we dismantle biases and pave the way for diverse
talents to thrive, ensuring that merit, not circumstance, defines success in our working
environment.” Ilysia Carlberg, Talent and Inclusion Programs Manager, Chromalox
Helping everyone feel included
The UK operations of our Watson-Marlow Fluid Technology Solutions Business, in
Falmouth, has been actively fostering positive change within the community,
questioning) inclusion. The Business has developed a mutually advantageous
partnership with Cornwall Pride. As part of this, it gifts some of its allocated stand
spaces at community Pride events to local charities who might not have otherwise been
able to attend. This has helped charities such as ShelterBox and St Petrocs raise their
profile with 40,000 people who attend Cornwall Pride each year.
Watson-Marlow has signed the Cornwall Pride Pledge, reinforcing our Group’s position
ongoing partnership in Cornwall we want to emphasise the strength of our support for
Cornwall Pride for the next decade, colleague training and educational workshops.
“Our colleagues have really got behind the partnership. From volunteering to
supporting the events and participating in activities in the workplace, it’s been great to
see colleagues celebrating inclusion. A highlight of 2023 was when the team hosted
the UK’s largest Progress Pride flag at our Cornwall operations.” Rehan Afzal, Head of
HR, EMEA, Watson-Marlow Fluid Technology Solutions
Spirax Group Annual Report 2023 65
Strategic Report
Sustainability Report continued
A progressive, supportive and
inclusive culture continued
What our colleagues have to say continued
Bringing us together as Spirax Group
For three years we’ve been evolving how we communicate with
and unify colleagues across the Group.
To deliver these improvements, our Communications teams
have been ‘developing every day’, navigating complex
challenges to put in place channels that reach all colleagues,
wherever they are and whatever they do. The resulting impact
of our digital signage network and a new colleague
engagement platform mean that colleagues feel more informed
and engaged.
The are now in their second year and the impact
we have seen from giving colleagues a platform from which to
be recognised and celebrate the difference they make has
been tangible.
These initiatives help colleagues feel part of One Group and
know they are part of something bigger. To help cement this
thinking and make it more visible outside the Company, we
turned our attention to our external channels and to our brand.
In February 2024, we launched the new Spirax Group brand
alongside a new website. Spirax Group is the complete
representation of our Group’s growth and evolution and stands
for everyone and everything that we do.
Hazel Meldrum is the Group’s Head of Communications:
As a low-cost, internally led and timebound change
programme, this was perhaps the team’s biggest challenge
yet. We set out to take my idea on a post-it note and make it
reality in less than a year with the clock ticking ahead of the
announcement of the Group’s Full Year Results, our first as
Spirax Group.
“Our new brand is a significant milestone, but all of these
initiatives demonstrate how, over the last three years, we have
been able to develop our communications capability at the
centre, as well as in our Businesses. I’m proud that we’ve
provided our teams with growth, as well as a sense of
achievement and fulfilment. They can see the meaningful
difference they are making, by helping colleagues feel more
informed, connected and engaged, as well as through enabling
our wider stakeholders to better understand who we are, what
we do and what matters to us.”
Together as One Group. Together, as Spirax Group
Spirax Group Annual Report 202366
Strategic Report
Inclusion and diversity
colleagues are able to be their authentic selves and achieve
their potential. A culture that empowers and embeds this is
brings a diversity of individuals, experiences and thought to
our Group, helping us become a better and higher
performing business. This fuels our continued growth,
creating more opportunities for our colleagues and other
stakeholders. Across Spirax Group, we see difference as our
strength and aspire for everyone to feel included.
Progress
co-Chaired by our Group CEO, Nimesh Patel, noted that we
continue to meet its target of 40% women on the Board.
to achieving a minimum of 40% women in our senior
leadership by December 2025.
2023
40%
40%
60%
60%
2022
Non-binary and other
2023 2023
30% 26%
32% 26%
68% 74%
70% 74%
2022 2022
Non-binary and other
Non-binary and other
* At 31st December 2023
Spirax Sarco and Gestra Italia – celebrating our
gender equity milestone
In Spirax Sarco and Gestra Italia, our teams are working
hard to create an inclusive and equitable workplace
where everyone feels respected and treated fairly and is
comfortable to be themselves. In recognition of this, we
Equality Certification. This is given to organisations that
demonstrate commitment to promoting gender equality
and inclusivity within the workplace. The certificate
recognises that we have adopted specific practices and
cultural changes aimed at creating a more gender-equal
workplace.
Sustainability Report: Responsible business foundations continued
confirmed that we continue to meet its goal of having at
least one ethnically diverse Director on our Board.
Recognising the strategic significance of digital strategy,
December 2023, we announced the appointment of Louisa
announced the appointment of Céline Barroche as Group
General Counsel and Company Secretary to the Board, as
well as a member of the GEC, following the upcoming
retirement of Andy Robson.
information is based on internal HR records for our
individual permission to share this data on an annual basis.
ask for Directors to self-describe this.
Spirax Group Annual Report 2023 67
Strategic Report
Progress continued
support women and allies across the Group. This included
activity covering wide-ranging topics such as
Focus for 2024
• Embed Diversity goals across the Group
• Achieve a broader and deeper focus on race equity
•
Inclusion and diversity continued
Sustainability Report: Responsible business foundations continued
Diversity goals
By the end of 2025, our ambition is to achieve:
•
20% women in commercial leadership roles
•
reports from under-represented ethnic groups
•
30% women in our global workforce
•
40% women in senior leadership (including each of
our Board, GEC and GEC direct reports
We will also seek to:
•
•
Officer
And annually, we aim to achieve:
•
50% women joining the Global Graduate
Development Programme
•
30% of UK and US graduate intake from under-
represented ethnic groups
Commitments in 2022, we formally launched our Group
Diversity goals at our Global Leadership Conference in
March 2023. These goals widen our focus on gender and
introduce new aspirations to increase the ethnic diversity of
our colleagues, so that we better reflect the diversity of the
communities we are part of.
by December 2027.
roundtables with our Black and African American colleagues
in the USA and related action planning with colleagues,
two global race equity webinars to explore the context for
racism in different cultures, share colleague experiences
and help colleagues to consider how they can move from
Change the Race Ratio campaign, marked UK Black History
Month in October with a resource pack for colleagues and
launched a new Multicultural Global Network.
activities, by attending and supporting four UK Pride events
our US operations supported South Carolina Black Pride and
the Trevor Project, a leading suicide prevention and crisis
This year, we continued to embed inclusion, equity, diversity
example, we added a wide range of content in to our new
Group education platform, SPARK,
embedded inclusion, wellbeing and mental health into our
12.5%
82.4%
50%
66.7%
87.5%
17.6%
50%
33.3%
Direct reports to GEC
Under-represented ethnic
Under-represented ethnic
Spirax Group Annual Report 202368
Strategic Report
Ethical business
Our strong Company Values and robust Group policies instil a
culture of ethical behaviour and provide a framework within which
operations meet these high standards.
Progress
All colleagues with a Company email address are required to
complete our Group Essentials training programme when joining the
Group Essentials training modules to a new software environment,
gave each course a design refresh to ensure that they remain
current and engaging for our colleagues.
Our Group Essentials training covers topics including Anti-Bribery
cycle, the Group Essentials content for our desk-free colleagues will
be rolled out to our Group manufacturing sites in 2024.
new Environmental and Energy Policy, we created training for senior
leaders to introduce these and increase knowledge of all Group
sustainability-related policies. This training highlights key points
and principles colleagues should be aware of in each policy and
released an animation internally to all colleagues to raise awareness
of the new Sustainability Policy. By the end of the year, 221 senior
leaders had completed this voluntary training.
training to our newer colleagues in Cotopaxi, Vulcanic and Durex
Whistle-blowing
Any colleague with a concern about potentially unethical behaviour
can raise it confidentially through a local, independent third-party
were raised globally via this service.
All reports were investigated by senior management and action
taken if necessary, with summaries of reports and related actions
reviewed by the Audit Committee.
Governance
The One Planet Sustainability Strategy has central oversight and
Chief Executive Officer is the overall Executive sponsor for the
strategy. The day-to-day oversight is undertaken by the Group
detailed in our sustainability organisation chart. The GSMC meets
regularly to discuss strategic progress.
Focus for 2024
• Complete deployment of Group Essentials training to desk-free colleagues
Group Chief
Executive
Officer
Business Heads of
Sustainability
Divisional Directors,
Regional and General
Managers
Board of Directors
Group Executive Committee
Sustainability Strategy project leaders and teams
Colleagues and organised colleague groups
One Planet Steering Committee
During 2023, Committee members included: Group Chief
and Strategic Project Executive Sponsors.
Group Director of Sustainability
Group Sustainability Management Committee
During 2023, Committee members included: Group Director of
Sustainability; Business Heads of Sustainability; One Planet
Sustainability Reporting Manager; Group Head of Diversity,
This feeds into updates at most GEC meetings as well as at
quarterly updates to the One Planet Steering Committee
throughout the year. This combination of Board and Executive
oversight ensures that the One Planet Sustainability Strategy is a
key focus area for the Group.
Responsibility for implementing the strategy sits at a Business level,
with the strategy embedded into the core Business strategies of
Marlow. Each Business and operating company is responsible for
implementing the One Planet Sustainability Strategy through its
own Business strategy; ensuring that all colleagues have the
opportunity to get involved; meeting and, where possible,
exceeding minimum expectations; delivering timely and accurate
data; and collaborating to share learning across the Group.
Sustainability organisation chart
Spirax Group Annual Report 2023 69
Strategic Report
Sustainability Report continued
One Planet at a glance
2023*
2023*
2023
2023
25,310
144,885
163,778
83
2022*
2022*
2022
2022
26,938
157,424
203,796
52
2021*
2021*
2021
2021
38,981
164,390
168,742
2020*
2020*
2020
40,255
150,726
163,280
2019*
2019*
2019
46,206
169,412
182,746
Group GHG emissions
tonnes CO
2
e (market-based)
(excluding acquisitions)
Group energy consumption
MWh (excluding
acquisitions)
Total water use
m
3
(excluding acquisitions)
25,310 tonnes 144,885 MWh 163,778 m
3
Description
emissions arise directly from
company-owned or -controlled
sources, such as company
vehicles or fuel combustion.
Scope 2 GHG emissions are
indirect emissions, primarily
from the generation of purchased
electricity. Market-based
emissions take into account
contractual and supplier-
specific GHG emissions factors.
Description
Energy consumed directly at all
sites across the Group,
including fuel combustion,
company vehicles and
electricity use.
Operating companies that
cumulative %
(excluding acquisitions)
83%
Description
Percentage of operating
companies that have completed
a biodiversity initiative since
the strategy launch in 2021
Description
across the Group.
Strategic initiatives:
Net zero carbon
Sustainable products
Biodiversity net gain
Sustainable supply chain
Environment improvements
Supporting our communities
12
We have been making strong progress against our key strategic targets as part
of our One Planet Sustainability Strategy.
All data here excludes 2022 acquisitions, Vulcanic and Durex Industries, to
accurately reflect the progress achieved on a like-for-like basis since the
strategy was launched in 2021.
Link to strategic initiatives Link to strategic initiatives Link to strategic initiatives Link to strategic initiatives
* Historic data restated in line with
our methodology statement
* Historic data restated in line with
our methodology statement
Spirax Group Annual Report 202370
Strategic Report
2023 2023 2023 2023
6,116 10.1% 335.5 24,973
2022 2022 2022 2022
6,888 10.2% 349.6 22,140
2021 2021 2021 2021
6,327 13.0% 335.6 11,057
2020 2020 2020 2020
5,974 15.9% 197.7 3,154
2019 2019 2019 2019
6,572 18.7% 188.5 5,311
Total waste generation
tonnes (excluding
acquisitions)
% (excluding acquisitions)
Volunteering
(hours) (excluding
acquisitions)
Operating company cash/
£’000
(excluding acquisitions)
6,116 tonnes 10.1% £335.5 24,973* hours
Description
of at our sites across the Group.
Description
Proportion of waste that is sent
to landfill versus waste that was
reused, recycled or used to
generate electricity.
Description
Cash and in-kind donations
made to charitable causes from
our Group operating companies.
Description
Hours spent volunteering by our
colleagues across the Group.
Link to strategic initiatives Link to strategic initiatives Link to strategic initiatives Link to strategic initiatives
Spirax Group Annual Report 2023 71
Strategic Report
action in the private sector by enabling organisations to set
emissions reduction targets in line with the latest climate
approval received from the SBTi for our targets provides a
clearly defined pathway for Spirax Group to reduce
Key strategic targets
•
Net zero scope 1 and 2 emissions by 2030, with an interim
•
20% reduction in Group energy use from plant, equipment
Approved SBTi targets
•
emissions by 50.4% by 2032 compared to 2021 baseline
•
Net zero GHG emissions across the value chain by 2050
Our progress in 2023*
6%
Decrease in scope 1 and 2 emissions (market-based)
since 2022
52%
Electricity from renewable sources in 2023
8%
Reduction in Group energy use since 2022
Energy saving initiative
At our Steam Thermal Solutions
steam to test equipment and
carry out heating processes. By
using our metering service to
analyse energy consumption
against the operating schedules
of each process, we were able to
identify inefficiencies. We
reduced boiler pressure and
closed valves that feed the
equipment when not in use, We
expect these improvements to
reduce natural gas usage by
44% and save 322 tonnes CO
2
e
per year.
In 2023 we continued to make good progress against our carbon reduction
commitments and succeeded in having our ambitious net zero targets validated by
Net zero GHG emissions
Sustainability Report: Strategic initiatives
Progress
in our operations, with additional solar arrays now operational on
sources, 52% including recent acquisitions. As part of our
responsible green energy sourcing strategy, we are putting power
secures renewable electricity for our needs for the medium term at
this site, while also ensuring we are investing in infrastructure
required to increase renewable capacity in this area.
company vehicles, unless electric charging infrastructure is
insufficient. Exemptions to this EV first policy are monitored and
assessing countries where infrastructure limitations can affect the
take-up of this transition and prioritising those where the
infrastructure better supports the transition.
Alignment with UN SDGs
Spirax Group Annual Report 2023
Strategic Report
The installation of digital metering and monitoring at 20 of our
manufacturing sites has meant that we have started to monitor
identify areas of improvement to reduce our energy consumption
our energy management to reduce boiler losses there, contributing
to a reduction in energy consumption at this site by over 20% in
2023 compared to 2022.
completion of their first full year as part of Spirax Group, we are now
including their data and are restating our emissions and energy
consumption back to our 2019 baseline, in line with the GHG Protocol.
These Divisions of ETS will be aligning with our One Planet Sustainability
Strategy and our net zero commitments, but the focus to 2025 will
primarily be our legacy operating companies, while these new Divisions
further integrate into the Group and work to meet our standards.
This verification did not include 2022 acquisitions, as this was the
first year of those Divisions collecting data and integrating into
verification was received as follows:
“Acting as an independent Certification Body TÜV NORD CERT
GmbH has verified the carbon footprint, scope 1 and scope 2
2
e.”
Group CO
2
e emissions fell six percent to 25,310 tonnes, compared
to 2022 and were 45% lower than 2019. At 15.0 tonnes per million
pounds of reported revenue, on an intensity basis, our Group
emissions fell by ten percent compared with the prior year and were
Some of the reasons for these reductions include the effect of 2022
Project ClearSky, the impact of renewable electricity sourcing and
emission reduction initiatives across the Group.
On a market basis excluding 2022 acquisitions, the UK accounted
for 14% of our GHG emissions in 2023, with 4,382 tonnes being
generated in total and an intensity of 38.3 tonnes per million
pounds of reported revenue. These emissions are comprised of
4,333 tonnes of scope 1 and 37 tonnes of scope 2 calculated using
market-based emission factors. Our emissions in the UK decreased
by 23% compared to 2023, largely due to energy efficiency
improvements due to Project ClearSky and the resulting change
For progress against our
Activities in direct operations
•
TargetZero
consuming building assets to low carbon alternatives and
climate-friendly refrigerants
•
Source energy using onsite renewables, PPAs and green tariffs
•
Transition vehicle fleet and travel practices to low carbon alternatives
•
energy intensive facilities, supported by an internal absolute
energy reduction target
•
Engage with partners in a long-term carbon credit investment plan
across scope 1, 2 and 3, making provision by 2030 for our One
Planet Sustainability Strategy using credits for any remaining
Activities across our value chain
•
Continue to track the progress of grid-greening in reducing
emissions are derived from electricity consumption by our
products in-use
•
Optimise third-party logistics and transfer the shipping of
products to low carbon suppliers, implement a long-term low
emission logistics network across all modes of transport
•
chains, or seek alternative innovative low carbon products
•
Using life cycle analysis, address carbon intensive hot spots in
our products and minimise life cycle emissions. Develop
additional products supporting our customers’ net zero journey
* Agreed SBTi target provides an allowance to reduce this to 33.3% in the near-term, with a requirement to catch up in the long-term
commitment, given the reliance on grid greening, which may be weighted in the longer-term
2050 net zero roadmap
5
10
15
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2035 2040 2045 2050
Net zero Baseline 2021
Million metric tonnes CO
2
e
One Planet interim target
One Planet strategy target
Net zero near term target
Net zero long term target
Spirax Group Annual Report 2023
Strategic Report
2,947
3,908
3,923
Net zero GHG emissions continued
performance continued
historic greenhouse gas and energy data in order
to include data consistent with the change in
company structure. As accurate data is not
available for historic years for Vulcanic and Durex
historic years in line with their annual revenues.
statement on page 75 and at spiraxgroup.com/
sustainability-downloads.
scope 1 and 2, market-based emissions were
since 2019.
Scope 3 emissions
As part of our ongoing work to assess and
improve the accuracy of our scope 3 emissions,
we worked in 2023 to quantify our 2022
our external partners we have improved accuracy
of our assumptions and estimations, for example
changing to weight data for some purchased
goods and services, rather than relying purely on
assumptions based on spend. During this
process, we discovered that an error had been
made in the original baseline calculations.
Correction of this error means that we are now
restating our 2021 scope 3 emissions to be 13.3m
tonnes and are also disclosing 2022 to be 12.9m
emissions to include 2022 acquisitions, Vulcanic
we can influence reduction in our scope 3
emissions, including logistics in our value chain
and purchased goods and services, but scope 3
emission reductions will largely be dependent on
grid-greening.
Emission reduction initiatives
our Chromalox manufacturing site in Ogden, Utah
upgrade and optimise its air compressor system,
reducing energy consumption and emissions,
while ensuring less downtime and maintenance
and increased production throughput and quality.
This has led to a 55% improvement in operating
efficiency and a saving of approximately three
percent of GHG emissions annually at this site as
well as future-proofing for factory growth.
19.0 5,712
Group GHG intensity
tonnes CO
2
e per £m reported
tonnes CO
2
17.3 tonnes/£m 4,382 tonnes
30.6 7,860
34.7 7,442
37.7 7,973
17.3 4,337
33,715
46,745
46,559
52,672
13,121
12,81620,899
22,406
24,264
26,644
tonnes CO
2
31,659 tonnes
24,339
22,295
26,029
18,537
Scope 1 Scope 2
40,510
42,337
5,73624
46
46,515
10,807
43,247
11,350
49,282
11,896
21,973
21,43720,899
22,176
20,952
23,253
tonnes CO
2
40,510 tonnes
24,339
22,295
26,029
18,537
Scope 1 Scope 2
Scope 1 Scope 2
20232023
2023 2023
20222022
2022
2022
20212021
2021
9,933
Group GHG emissions
tonnes CO
2
e (well-to-tank and
9,924 tonnes
13,279,392
9,924
2023
2022
12,864,926
Group GHG emissions
tonnes CO
2
e
2022
2021
2021
20202020
2020 2020
20192019
2019 2019
47.6
tonnes CO
2
e per £m reported
38.3 tonnes/£m
103.0
117.3
111.6
38.3
2023
2022
2021
2020
2019
continued
Sustainability Report: Strategic initiatives continued
Spirax Group Annual Report 202374
Strategic Report
Methodology statement
We employ an ‘operational control’ definition to outline
our carbon footprint boundary. Included within that
boundary are manufacturing facilities, administrative
and sales offices where we have authority to
implement our operating policies. For all entities we
have measured and reported on our relevant scope 1,
scope 2 and partial scope 3 emissions for 2023.
We have used the GHG Protocol Corporate Accounting
and Reporting Standard and emission factors from the
UK Government’s GHG Conversion Factors for
regionally specific Environmental Reporting Guidelines
to calculate our total CO
2
e emissions figures on a
location-basis.
To report under the market-based method we have
used the GHG Protocol data hierarchy, striving for the
highest precision possible. For sites with green energy
contracts, we have obtained emissions factors for the
relevant tariff and/or supplier in the first instance,
using the residual mix where supplier-specific
without green energy contracts, we follow the data
hierarchy and apply location-based factors only where
SSEFs or residual mix are not available. When entering
new green contracts, we apply SSEFs (where available)
from the start of the year and do not restate prior years
with SSEFs. No certified green energy contracts are
included in our market-based figures for 2019 or 2020.
For more information please see our methodology statement
Focus for 2024
•
proportion of our UK electricity consumption
•
Progress electrification of our Spirax Sarco site at Runnings
•
Embed access to data via our digital monitoring system and
install digital meters at 2022 acquisition sites
•
•
Resubmit targets to the SBTi to include recent acquisitions
2023202320232023
2022202220222022
428.6101.8
180,345 51,673
2021202120212021
2020202020202020
2019201920192019
Group energy intensity
Group energy consumption
366.0 MWh/£m90.7 MWh/£m
166,356 MWh 41,891 MWh
526.3124.7
190,650 55,200
504.3128.1
172,049 48,807
475.2137.0
191,282 50,663
366.090.7
166,356 41,891
Energy performance
Energy use in the UK accounted for 25% of the Group’s total usage
On an intensity basis, UK energy use decreased 15% year-on-year,
intensity for the UK is high compared to that of the Group as a
whole, as we manufacture in the UK for sales overseas into global
markets.
Energy management
An example of an energy management project undertaken in 2023
assessing our energy consumption using data from our digital
monitoring system, we were able to identify that air compressors at
this site were losing compressed air at the weekends, despite none
of the systems running at the weekend requiring compressed air.
This knowledge allowed us to identify leaks in the system that we
were able to fix and fit timers to automatically shut down these
per annum of electricity at this site.
Spirax Group Annual Report 2023 75
Strategic Report
Sustainability Report: Strategic initiatives continued
Biodiversity net gain
Key strategic targets
•
Deliver a biodiversity offset equivalent to five times our
global operational footprint by 2025
•
manufacturing sites and facilities
•
Deliver at least one biodiversity initiative per operating
company, on site or in the local community by 2025
* Quantification of net gain will be focused on large development
projects, where locally specific net gain methodologies will be
Our progress since 2021 (cumulative)*
1,656 acres
Land protected in Argentina
76%
Operating companies have delivered at least one
biodiversity initiative since the launch of the One Planet
Sustainability Strategy in 2021
Focus for 2024
•
Progress biodiversity net gain for all major
construction projects
•
•
Continue to make progress against our target for all legacy
operating companies to complete a biodiversity initiative
by 2025
Biodiversity initiative
In cooperation with LandCare and
Creating Canopies, five colleagues
from Spirax Sarco Australia
attended our third planting day at
Carnarvon Golf Course. On this day
they were able to plant 200 native
trees to grow the golf course
canopy and also maintain plants
that were planted the previous year.
Volunteering work at this site has
contributed to the return of bird life
to this space, with Birding Australia
recording 34 wild bird species at
this site, including Pacific Black
Ducks and a pair of Tawny
Frogmouths.
Biodiversity is our ally in the battle to counter the effects of climate
change. Healthy ecosystems can help to limit global temperature rises.
change on our environment and its inhabitants, we are also conscious of
the effects our business activities have and the complex network of
interactions between plants, animals and micro-organisms. Protecting
this delicate balance is an important objective for our One Planet
Sustainability Strategy and one that helps us to engage our colleagues,
our communities and our value chain.
Alignment with UN SDGs
Progress
Trust, funding the protection of a further 572 acres of land on the
Somuncurá Plateau in Argentinian Patagonia, equivalent to our operating
footprint, including that of our recent acquisitions, Cotopaxi, Vulcanic
helping to protect this unique environment and the species that thrive
there.
As part of our commitment to biodiversity net gain, we are developing
landscaping planting schemes to improve the biodiversity as part of all
major construction projects. At our newly rebuilt Spirax Group
approved by the local authority and will implement this in 2024 to deliver
a biodiversity net gain of more than 10%. External assessment of
deliver over 10% net gain in biodiversity and will start in spring 2024.
operating companies to complete at least one biodiversity initiative on
site or in the local community by 2025, with 83% of legacy operating
biodiversity initiative to date. An example of an initiative delivered in
2023 is our Gestra manufacturing site contributing to reforestation of an
affected by damage due to a bark beetle infestation. Another example is
different species at Tulapur village in Pune.
Spirax Group Annual Report 202376
Strategic Report
Environmental improvements
Key strategic targets
•
•
Achieve zero waste to landfill
•
Reduce waste generated by our sites by 10% (compared
•
Eliminate the use of solvent-based paint on our sites by
the end of 2025*
•
equivalent by the end of 2025
* Unless mandated by customer requirements and with Group
Executive Committee approval
Our progress in 2023*
13%
Reduction in water consumption since 2022
2%
Decrease in waste production since 2022
14%
Waste to landfill in 2023
Waste reduction initiative
Wooden pallets and boxes from
incoming shipments which are in
good condition are reused wherever
possible at our Spirax Sarco site in
Wuhan, China. However, we
identified that, as a proportion of
total waste, wood had increased
sharply from 10% in 2019 to 30% in
2022, due to increased production
output. In an effort to reduce wood
waste at this site, we began
reconditioning used pallets instead
of recycling them. Slightly damaged
pallets are now repaired and severely
damaged pallets are dismantled to
be used as materials for the repairs
of others. Since starting this project
in March 2023, wood waste fell by
37% in the first half of 2023
compared with 2022, indirectly
saving approximately 1,170kg of CO
2
e
per year.
The way we manage resources in our own operations is one of the
most direct ways through which we can lessen our impact on the
environment. By ensuring that we are operating efficiently we can
preserve resources, reduce our carbon footprint and minimise
pollution of the natural world.
Our focus on water efficiency, waste reduction and elimination of
solvent-based paints ensures that we are controlling how we use
resources and dispose of waste responsibly to protect the
environments where we live and work.
Alignment with UN SDGs
Progress
in 2022 and the resulting reduction plans, we have begun to see the
positive impact of the work we have completed since launching our
One Planet Sustainability Strategy in 2021. This has been aided by
the implementation of monitoring and metering at all but one of our
Group legacy manufacturing sites in 2023, excluding 2022 acquisitions.
During 2023 we focused on our top five consumers of water and
producers of waste internally in each Business, ensuring that we
are improving practices and efficiency at these sites to have the
from these locations to disseminate across the rest of the Group as
part of internal best-practice sharing.
14001 certification and we have plans in place for 2024 and 2025 for
the remaining outstanding locations. None of the 11 new manufacturing
certification at these sites will be a priority in 2024 onwards, but is not
expected to be completed by 2025.
Spirax Group Annual Report 2023 77
Strategic Report
Environmental improvements continued
Sustainability Report: Strategic initiatives continued
2023
Total waste
generation
m
3
6,781 m
6,116
2023
Total water use
m
3
177,469 m
163,788
2023
Water intensity
m
3
of water per £m of
reported revenue
96.8 m/£m
96.8
2023
Waste intensity
m
3
of waste per £m of
reported revenue
3.7 m/£m
3.7
2023
%
14%
2021
6,327
2021
168,742
2021
125.5
2021
4.7
2021
13%
2020
5,974
2020
163,280
2020
136.8
2020
5.0
2020
16%
2019
6,572
2019
182,746
2019
147.1
2019
5.3
2019
19%
* 2022 acquisitions,
Cotopaxi, Vulcanic
included from 2023
* 2022 acquisitions,
Cotopaxi, Vulcanic
included from 2023
* Total Group (including
2022 acquisitions,
Vulcanic and Durex
2022
6,888
2022
203,796
2022
126.5
2022
4.3
2022
10%
13,681* 665*
Water
The Group water usage was verified by TÜV NORD CERT GmbH in
3000 Assurance Engagements Other than Audits or Review of
correctness and completeness. This audit did not include 2022
acquisitions, as this was their first year of collecting data and
integrating into Group standards, but a thorough internal review
assurance was received as follows:
Acting as an independent Certification Body TÜV NORD CERT
GmbH has verified the water usage of the organisation, for the
3
. This has been
due to the cumulative effects of the work we have been doing since
2021 to improve efficiencies in our processes and on sites. The
installation of monitoring and metering has meant that we have
been able to find and fix leaks that would otherwise have gone
for a 37% reduction in this site’s water use compared to 2022.
Against our 2019 baseline, absolute water use excluding
acquisitions decreased by ten percent. On an intensity basis,
water use decreased by 23% compared with 2022, with an overall
reduction in intensity of 34% compared to our 2019 baseline.
For progress against our
3
3
reduced 13% since 2022 and 3% since 2019.
Waste
from the previous year. On an intensity basis, we saw a 15% decrease
Focus for 2024
•
•
recently acquired sites, as well as sub-metering and finding
improvements from this data
•
Complete end-to-end sustainability reviews of Vulcanic sites
•
Strengthen internal community of practice, empowering,
educating and developing leaders within the sustainability space
As part of our data quality and continual improvement processes,
we have made adjustments to reported waste since 2019, ensuring
that we are capturing all waste streams at all sites possible. This
means we are restating our historic waste data, in line with our
restatement threshold of two percent, but are not rebaselining to
include proportional waste for 2022 acquisition companies.
The proportion of waste that is diverted from landfill globally in our
legacy sites has remained static, with 90% of our waste recovered,
and has increased 3% since 2019.
Solvent-based paint
Our internal cross-Business working group continues to evolve and
has recently developed transition roadmaps for each Business that
details our working plans to transition away from solvent-based
paints. This group has also started to develop an internal standard
which defines the allowable percentage of volatile organic
The roadmaps are periodically reviewed by senior leadership to
ensure full alignment and proper planning. Each of the Businesses
has partnered with its primary paint suppliers for additional
technical support in this journey and to ensure we are updated on
the most current technology.
An exercise has been started to understand which of our recently
acquired sites are using solvent-based paints and the associated
volumes. Roadmaps will be developed to drive the elimination of
these paints and a successful transition to aqueous-based paints,
although this is not expected to be started before 2025 for these
new businesses.
10%
14%
Spirax Group Annual Report 202378
Strategic Report
Sustainable products
Key strategic targets
• Quantify the sustainability benefits and whole life cycle
carbon footprint of some existing product groups and all
new products
•
Grow sales of products with quantifiable sustainability
benefits to customers
•
packaging by 2025, unless specified by customer
requirements such as sterile applications
Customer environment benefits
Annual estimated customer
CO
2
energy and water savings
from a select range of 20
product categories sold in 2023.
16.6m
tonnes of CO
2
per year
675m
mature trees
absorbing CO
2
To put these savings into
context, that is the
equivalent of:
226m
2.08m
people’s annual
average energy
87.1m
m
3
per year of water
34,900m
Olympic-sized
swimming pools
of water
Our progress in 2023
8
Life cycle assessments completed
Focus for 2024
•
Develop and implement a purpose-built eco-design tool that
will standardise environmental assessment across the Group
•
our product families highlighting materials, due diligence,
responsible production, efficient design, circularity and
responsible packaging
implementing systems to embed eco-design improvements into our
processes. Our goal is to design new products and, where
appropriate, refresh existing products, in order to reduce our own
environmental impacts as well as that of our customers and
suppliers.
Alignment with UN SDGs
Progress
products to provide clarity for our customers. The passports will be
adapted to adopt new metrics in line with
customer questions
highlighted in our Voice of the Customer programmes.
Across the Group, we conducted eight life cycle assessments
our engineers key metrics to set targets for improvements. A recent
LCA conducted on one of our soon-to-be-released BioPure
products has proven to show significant reductions. The
assessment, covering all stages of the life cycle, revealed an
estimated 22% reduction in CO
2
e emissions, with expected
significant reductions in manufacturing and upstream emissions,
benchmarked against a previous LCA conducted in 2021.
Our digital monitoring capabilities are helping customers to
optimise industrial processes and energy use worldwide, reducing
and Spirax Sarco worked with a multinational food company in 2023
to deliver real time analysis of water, air, gas, energy and steam
and heat losses and then implemented a heat recovery system.
Spirax Sarco, part of STS, has introduced the Customer
of customers’ steam systems measured against energy, CO
2
e, water
and financial savings. These can then be managed via a new digital
recovery of energy from the surface blowdown in the steam system
3
tonnes CO
2
e per year.
Decarbonising our customers’ industrial processes is a major part of
Chromalox’s DirectConnect Medium Voltage electric steam generators
were installed to replace gas powered heating and distribution
systems. The steam generators are highly efficient and have low
installation costs and quick response times compared to traditional
low voltage steam generators.
Spirax Group Annual Report 2023 79
Strategic Report
Sustainability Report: Strategic initiatives continued
Sustainable supply chains
Focus for 2024
•
Sustainability Portal
•
to assess results
Our progress in 2023 (cumulative)
931
Suppliers in the Supplier
Sustainability Portal
76%
Suppliers signed the
Supplier Sustainability Code
Key strategic target
•
80% of strategic and high risk suppliers assessed and
meeting or exceeding our sustainability standards by 2025
Castings project
As part of our scope 3
quantification, we identified that
metal castings are the single largest
commodity for greenhouse gas
chain. In 2023, we launched a
project to work with casting suppliers
and investigate opportunities to
reduce GHG emissions from these
products, including recycled
materials, circular economy
opportunities and investment in
induction furnaces. The
partnerships from this project will
mean stronger working relationships
as we collaborate to reduce our
impact on the environment.
As a responsible manufacturer, we understand the importance of
our supply chain in meeting our sustainability goals for people and
further raise standards and build long-term partnerships that are
mutually beneficial.
By encouraging our suppliers to reduce their environmental
footprint, as well as requiring them to meet our expectations
relating to human rights, we are ensuring that we meet both our
own high standards and the growing expectations of our
stakeholders. This increased monitoring combined with continuous
improvement methodologies will deliver a robust, high performing
supply chain capable of meeting our future needs, which also
delivers for the needs of the planet.
suppliers, in line with our rollout plan. These strategic or higher risk
suppliers have been providing qualitative and quantitative data and
evidence regarding a wide range of sustainability topics, including
we are seeing a month-on-month improvement in response rates
against all topics, with response rates up to 59% of respondees for
2024. As the newer suppliers continue to engage and phase one
suppliers, who were part of the initial rollout, further embed, we
meet our 80% target by 2025. Suppliers of our 2022 acquisitions
are not included in these targets yet.
As well as direct monitoring of these strategic and higher risk
suppliers, the Portal also allows for indirect monitoring of a larger
range of suppliers, such as monitoring alerts on potential compliance
issues or areas of concern in news articles, media outlets and other
suppliers indirectly in this way, with all potential flags being reviewed
however, many of these are duplicates or related to historic issues.
None of these flags have required immediate intervention. Reviewing
these flags is being incorporated into our supplier management
risk-assessment process.
Signing the Code
we transitioned to a new system of the Code being signed through
the Portal. By the end of 2023, this percentage had increased to
with the new process. Our in-house monitoring systems are
enabling us to focus on and effectively target unsigned Codes.
particularly those who were unwilling to sign the Code or where
standards fell short of those required, as part of this larger review
across the Group.
Alignment with UN SDGs
Spirax Group Annual Report 202380
Strategic Report
Our progress in 2023*
25,697
Volunteering hours
delivered
£1,158,284
Donated by the Spirax Group
Education Fund
Supporting our communities
Key strategic targets
•
volunteering globally by 2025
•
our Group Companies by 2025
•
million by 2030
As a Group, we have committed to increasing the wellbeing of
people in our communities, while addressing global sustainability
challenges such as access to education, climate change and
biodiversity loss.
life better for the people in our communities. Through charitable
donations and colleague volunteering we share our resources and
expertise to meet local needs, improve access to education and
support longer-term economic wellbeing so that our communities
are stronger and more resilient now as well as in the future.
Alignment with UN SDGs
Progress
Spirax Group Education Fund
identified by our operating companies in the communities in which
approved a total of 100 projects in 38 countries, paying out over £2
million to date. Some of the projects approved across the Group in
2023 include the funding of educational resources for hospitalised
underprivileged young people in children’s homes and young
people with disabilities in Taiwan; and funding university tuition
fees for five students from an orphanage in Vietnam.
school in Egypt with further funds donated in 2023. This school was
completed and opened in October 2023, providing initial places for
their local area and either had to walk long distances to school or
did not attend.
Group charitable donations
charitable causes. Some of these donations include: £8,000 to
Young Lives vs Cancer, £30,000 to National Star College and
with 58,894 hours cumulatively since 2021. Our operating
companies donated £340,200 to charitable causes, in cash or
objective, 27 activities were reported by 19 operating companies,
delivering 382 volunteering hours.
Matched-giving
A number of earthquakes with devastating effects occurred in
over £100,000 donated by colleagues and the Spirax Group
donation to support the British Red Cross Morocco Earthquake Appeal.
Focus for 2024
•
Charity in September
•
Continue to develop and refine impact measurements for
•
Embed community engagement culture in recently
acquired companies
•
Ensure we continue to have a diverse range of applicants for
and operating company spread
£’000
Volunteering hours
hours
£’000
20232023 2023
20222022 2022
572.0 22,140 349.6
20212021 2021
20202020 2020
20192019 2019
345.1 11,057 335.6
265.8 197.7
280.3 5,311 188.5
402.9 25,697 340.2
£402,900 25,697 hours £340,200
3,154
Spirax Group Annual Report 2023 81
Strategic Report
The Spirax Group Education Fund (the Fund) is
our commitment to supporting the future of
engineering at a grass roots level. It was established
at the end of 2021 to improve access to education,
tackle poverty through education, remove
barriers and inequality, and improve diversity in
engineering. The Spirax Group Education Fund is
a central source of funding that our operating
companies can apply to, to request money to
meet a locally identified educational need and
build a brighter future together.
By the end of 2023 the Fund has paid out more
than £2 million to over 100 projects, with a
further £600,000 committed for payment in
future years. What’s special about the Fund is
that each project supported has been nominated
by a colleague to improve the lives of people in
their local communities. Each grant awarded is
managed by a local operating company which
means that right across our Group, we’re
working together to provide help where it is
needed most in our local communities.
We are also particularly proud of projects that can
become self-sustaining as a result of our support,
such as the creation of a digital learning hub at
an elementary school serving a remote and
under-privileged community, in Quezon, Philippines.
Joel Flores is Process Industries Leader for
Watson-Marlow based in Southeast Asia. He
explains why he applied for a grant from the
Spirax Group Education Fund.
The impact of this investment in the early
education and digital skills of future
generations of engineers will be seen in
years to come, as they embark on their
careers.
By equipping and inspiring
young
people in the province of Quezon, we are
enabling them to find their role in
delivering a more efficient, safer and
sustainable world in the future.”
Joel Flores
Process Industries Leader,
Watson-Marlow Fluid Technology Solutions
Enabling future
generations
Our communities
Building the foundations for a brighter future
Number of projects supported by the Spirax Group
Education Fund so far
100+
Total amount paid or committed since launch
£2.8 million
Funds to be donated by 2030
£15 million
Strategic Report
Spirax Group Annual Report 2023
Dunong Cacawayan Elementary School is
an under-
privileged area in the province of Quezon,
people. The school is several miles from the
town, via challenging roads, and despite being
established in 1972 only recently secured an
electricity supply. As the school just has two
functional classrooms, the Rotary Club
constructing a Learning Hub for the students.
for £12,500 to cover the construction costs
out my application had been successful,” said
The Learning Hub features a mini library and
students and spark an interest in engineering,
but it also gives them access to online
information and digital educational resources
they wouldn’t have had previously, to help
learning skills.
Digital technology and skills have
revolutionised nearly every part of our daily
lives, and will continue to have a major role to
play in our future, so giving this community
the skills they will need to be a part of this
future is vital.
Longer term, the initiative, along with the
wider curriculum of the school, aims to
provide free access to education regardless
of background, helping to tackle poverty in
the community and improve access to
education now and for years to come.
After receiving the funds in August 2023,
clearing of the site began in September and
construction of the 30m
3
Dunong Cacawayan
complete by the end of March. The local
government will provide ongoing funding to
the facility and it will be monitored by a
community representative from the
Department of Education and the Rotary Club
Digital skills powering
sustainable futures
Spirax Group Annual Report 2023
Strategic Report
Task Force on Climate-related
Financial Disclosures (TCFD)
recommendations and partially aligned with one, which is:
the related risks. Throughout 2022, we used a third-party
carbon accounting specialist to help us establish our scope
our scope 3 emissions for the 2022 financial year and
improved our methodology to increase accuracy of these data.
Scope 3 emissions for 2021 and 2022 can be found on page
74. Scope 3 is highly complex and requires significant levels
of estimations where data are not available. As we are still
developing our data collection processes for scope 3, reliant
on external support, it was not possible to calculate full
scope 3 emissions for 2023 ahead of the reporting deadline.
increase the speed of these calculations, with a view to
publishing a full scope 3 analysis in the coming years.
Governance
Describe the Board’s oversight of climate-related risks
and opportunities
The Board is responsible for the overall stewardship of
strategic risk management and internal control. The Audit
Committee is also directly involved in the detailed review
of risks, including those detailed in these disclosures, and
reports back to the Board on its findings. During 2023, the
Audit Committee received four risk management updates
from the Risk Management Committee’s Chair, and also
reviewed the Principal Risks, as well as the position of
climate change on the Group Risk Register.
Our One Planet: Engineering with Purpose Sustainability
Strategy is an important mechanism by which we seek to
mitigate climate-related risks and maximise climate-related
opportunities. The Board received six updates and the Audit
Committee received two updates from Group Director of
Sustainability during 2023. This included updates on the
Group’s progress against One Planet Sustainability Strategy
requirements and information about scope 3 data calculations.
Supporting customers on their decarbonisation journey is
an important element of both our Steam Thermal Solutions
The Board also provides strategic oversight of these Business
strategies, ensuring that we are mitigating any market-based
risks that could arise as a result of climate change.
investments, is part of a large Capex proposal, these
investments are directly approved by the Board. Climate
impact is considered as one of the factors when making
Capex decisions and in mergers, acquisitions and other
business plans.
Describe management’s role in assessing and
managing climate-related risks and opportunities
The Risk Management Committee has responsibility for
managing climate-related risks. Sarah Peers, Group Director
of Sustainability, had specific delegated responsibility for
overseeing climate-related risks and mitigation activities in
2023. Through her role as a member of the Group Executive
Committee she ensures that climate-related risks and
opportunities are appropriately considered in management’s
day-to-day operational practices.
During 2023, we reviewed the Group’s exposure to risk
using a bottom-up approach, where the Committee sought
views of the Group operating companies on the risks that
they considered may affect their activities to ensure new or
Committee reviewed and confirmed the robustness of the
countermeasures that Group operating companies have in
place to mitigate the Principal Risks in the Group Risk Register.
During 2023, management of the Group’s climate change
mitigation activities was overseen by the Board, the Group
Executive Committee and the Group Sustainability
Group Director of Sustainability, the Business Heads of
Leads and other relevant individuals. Governance structures
for risk management can be found on page 100.
Management oversight of climate-related risks and
opportunities is embedded within the One Planet
Sustainability Strategy and within our core Business
strategies. Through those strategies, the Group Executive
Committee and Business Executive Committees consider
climate-related risks, opportunities, strategic
implementation and progress against targets.
contains disclosures consistent with the Task Force on Climate-related
Financial Disclosures’ recommendations and recommended disclosures.
Spirax Group Annual Report 202384
Strategic Report
Acute physical risks
Acute physical risks are event driven, specific episodes that have the potential to inflict significant physical damage
Risk/opportunity Description
How we manage
financial impact
targets
Flooding
– river and
flash flooding
from
precipitation
17% of the Group’s operations by
locations, are currently exposed to
risk of river flooding, with 28 sites
likelihood of river flooding in a year.
to 19% by 2030, and then remain
stable at 19% to 2050 under a high
has some exposure to heavy rainfall
and potential flash floods with 43%
exposed to high levels of precipitation
,
which is forecast to increase
slightly to 44% by 2050 under a
high warming scenario. The Steam
Thermal Solutions site in Shanghai,
China, is the highest value asset at
the highest level of risk.
Although a number of sites have
exposure to this flooding, the risk
and potential impact are still
insignificant, with likelihood of
flooding tending towards a
1-in-100-year-type event under
high-warming scenario, RCP8.5
Under RCP 8.5, it is predicted that
by 2050, 5% of the operations have
a 10% likelihood of flooding in a
given decade.
These risks are managed through
our Principal Risks 5 (loss of
manufacturing output at any Group
risk assessments are conducted by
our insurance partner and we have
appropriate insurance cover.
Business continuity planning and
capacity planning are in place to
ensure we have spare capacity at
alternative sites and stock is held
commodities, where possible, we
seek to maintain dual sourcing to
negate the risk from the loss of a
critical supplier.
assessment will be circulated,
particularly with manufacturing
facilities, so that adequate mitigation
measures can be considered and
embedded in their business
continuity plans at a site level.
Low carbon
economy
impact
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Management
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
Windstorm
in regions exposed to strong winds
1% annual chance of having severe
wind gusts of over 121km/h, with
4 sites having a risk of winds of
asset currently at risk from
windstorms is expected to remain
stable to 2050 under a high
warming scenario, but the
frequency of windstorms is likely
to increase over time.
Even under a hothouse world
scenario, the average annual
modelled impact may increase
slightly; however, it would still be
in the insignificant range as per
the Group Enterprise Risk
This risk is managed through our
Principal Risks 5 (loss of
manufacturing
output at any Group
assessments are conducted by our
insurance partner and we have
appropriate insurance cover.
Business continuity planning and
capacity planning are in place to
ensure we have spare capacity at
alternative sites and stock is held
commodities, where possible, we
seek to maintain dual sourcing to
negate the risk from the loss of a
critical supplier.
assessment will be circulated,
particularly with manufacturing
facilities, so that adequate
mitigation measures can be
considered and embedded in
business continuity plans at a
site level.
Low carbon
economy
impact
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Management
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
5 Very High
4 High
Medium
Low
1 Very Low
5
4
1
Spirax Group Annual Report 2023 85
Strategic Report
TCFD and CFD continued
Risk/opportunity Description
How we manage
financial impact
targets
Fire
exposed to at least 20 days per
year of fire weather, with Chromalox’s
value asset with some level of risk,
and Chromalox’s Nuevo Laredo,
Mexico, site having the highest
As global temperatures increase,
the likelihood of fire risk is
expected to increase with 19%
high-warming scenario.
This risk is managed through our
principal risks 5 (loss of
manufacturing output at any Group
risk assessments are conducted by
our insurance partner and we have
also conduct occasional
inspections by local fire officers.
Business continuity planning and
capacity planning are in place to
ensure we have spare capacity at
alternative sites and stock is held
commodities, where possible, we
seek to maintain dual sourcing to
negate the risk from the loss of a
critical supplier.
Low carbon
economy
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Management
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
Under current conditions, the likelihood of an acute physical risk impacting the Group’s direct operations in a given year is
To mitigate risk, annual risk assessments are conducted by our insurance partner and we have appropriate insurance cover.
Business continuity planning and capacity planning are in place to ensure we have spare capacity at alternative sites and
the risk from the loss of a critical supplier.
mitigation measures can be considered and embedded in their business continuity plans at a site level.
Chronic physical risks
Chronic risks arise from longer-term changes in climate pattern, notably drought, heat stress and sea level rise.
Risk/opportunity Description
How we manage
financial impact
targets
Heat stress
is exposed to heat stress, seeing
in a given year with temperatures in
heat stress by 2050, under a high
warming scenario. Examples of
heat stress include Chromalox
Nuevo Laredo, Mexico; Steam
Thermal Solutions Mexico; and
from heat stress include increased
costs of running HVAC equipment
and potential decrease in
productivity of employees.
Many of the operations currently
exposed to heat stress are in
locations where this environment
is expected and well adapted for.
Changing weather location patterns
mean that more sites may move
into areas of heat stress that are
not currently and these sites may
be less prepared.
Operations of Electric Thermal
Solutions, Steam Thermal Solutions
This trend could mean that increased
cooling of buildings and machinery
might be required to reduce the
risk of operational disruption and
also to improve working conditions
for colleagues.
As part of continual asset
management, energy audit and
facilities update processes,
systems will be assessed and
upgraded where necessary.
Low carbon
economy
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
Acute physical risks continued
Spirax Group Annual Report 202386
Strategic Report
Risk/opportunity Description
How we manage
financial impact
targets
Drought
is exposed to drought stress with
three or more drought months per
year. This is expected to increase
under a high warming scenario,
reaching 31% by 2050. An example
of a high value asset with a high
exposure to drought risk today is
Chromalox Nuevo Laredo, Mexico.
Drought may impact the availability
and quality of water, which could
impact manufacturing processes
including product testing.
Drought has the potential to impact
the supply of raw materials where
inland waterways are used for
transportation, impact electricity
availability in locations with a
higher reliance on hydropower
and increase the risk of wildfires.
The operations of the Group are
not generally considered water
intensive and therefore the
potential impacts may be
addressed through adaptation
and risk management.
Supply of raw materials and
electricity are managed through
Principal Risk 7, loss of a critical
supplier. Mitigation activities under
this risk include dual sourcing,
managing stock levels for high-risk
commodities and in-sourcing
production where appropriate.
Low carbon
economy
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
Sea level rise
Risk of exposure from sea level rise
is 10% of assets by value, with no
change expected to 2050. The
Steam Thermal Solutions site in
Shanghai, China, is the highest
value asset at risk.
Our exposure under this risk is
no expected to change under a
hothouse world scenario. This risk
is managed under Principal Risk 5,
loss if a manufacturing output at
any Group facility.
To mitigate risk, annual risk
assessments are conducted by our
insurance partner and we have
appropriate insurance cover.
risk assessment will be circulated,
particularly with manufacturing
facilities, so that adequate mitigation
measures can be considered and
embedded in their business
continuity plans at a site level.
Low carbon
economy
Hothouse world
Minor residual risk
impact means that
the we have not
identified this as a
risk that requires a
specific metric or
target. The Risk
Committee reviews
risks on an annual
basis so a future
change in the
residual risk impact
could lead to the
implementation of
a specific metric
or target.
The impacts of chronic risks are likely to differ by location, with some countries already experiencing and managing high
drought or heat stress, the impacts could potentially be more disruptive. However, as we are not a highly intensive user of
5 Very High
4 High
Medium
Low
1 Very Low
5
4
1
Spirax Group Annual Report 2023 87
Strategic Report
Transition risks/opportunities
Transition risks arise from changes required to facilitate a low carbon economy.
Risk/opportunity Description
How we manage
financial impact
Link to metrics
Market
transition
energy could enable electric heating
solutions to replace fossil fuel-
derived steam generation where
carbon emission concerns override
cost differences in the medium to
opportunities across all geographical
regions and most customer sectors
for our Electric Thermal Solutions and
Steam Thermal Solutions Businesses
as these Businesses combine to
electrify the generation of steam.
and raw materials provides some risk,
as the introduction of carbon taxes
could be passed on in raw material
spend.
As market leaders in the provision of
thermal energy solutions, mitigating
this risk and maximising the
opportunity is deeply embedded in
the core business strategies of both
our Steam Thermal Solutions and
Electric Thermal Solutions
Businesses. This risk is mitigated
identify and respond to changes in
regular voice of customer research
and research and development/new
product innovation to lead the way in
providing innovative solutions to
about the management of this
Principal Risk, see page 104.
Risk
Opportunity
Net zero
carbon
Sustainable
products
Technology
transition
Costs of upgrading and installing
infrastructure to support an electric
vehicle fleet, or costs to transition
away from fossil fuel dependent
production equipment.
The transition to low carbon
technology across our operations is
embedded in our net zero roadmaps
developed by all manufacturing sites
dependent systems and processes
have been identified and investment
plans developed, through annual and
medium-term financial planning
cycles, to phase the cost of
decarbonisation activities over time,
reducing risk.
Risk
Opportunity
N/A
N/A
Net zero
carbon
Environment
improvements
Reputation
Risk of reputational loss of
Spirax Group as a top performing,
environmentally sustainable business
due to association with fossil
fuel-reliant systems over the medium
This very low risk is mitigated by our
strong reputation, our innovative
product developments, the
introduction of our Natural
Technology marketing strategy,
which correctly positions steam as a
sustainable technology and our own
leading net zero commitments and
progress against them.
Risk
Opportunity
Net zero
carbon
Sustainable
products
TCFD and CFD continued
5
4
1
Spirax Group Annual Report 202388
Strategic Report
Risk/opportunity Description
How we manage
financial impact
Link to metrics
Policy and
legal
transition
borders, could lead to increased
EU’s Carbon Border Adjustment
in October 2023, with a two-year
transition period now in operation
before carbon taxation commences
on high carbon imports (such as
Building code regulations: Policy
makers may promote a switch to low
carbon buildings, for new builds or
retrofitting old buildings, which could
lead to increased costs, such as
implementing Minimum Energy
Efficiency Standards.
Climate change litigation: Risk arising
from the increasing activism of
shareholders or the public against
companies for failure to adapt to
climate change, greenwashing by
overstating positive environmental
impacts, or understating risks or
insufficient disclosure around
Driven by an aim to increase
circularity of the economy, new
regulations could impact how we
manage waste on our own sites and,
potentially, impact end of life
treatment of products we sell.
This risk is mitigated through our One
Planet Sustainability Strategy,
which includes net zero targets,
energy reduction commitments,
major decarbonisation projects and
conversion to an electric vehicle fleet.
upcoming legislation from a range of
sources to ensure that we are able to
pro-actively respond to upcoming
legislating risks.
Climate change litigation risk is
mitigated by our innovative product
developments, the introduction of our
Natural Technology marketing strategy,
which correctly positions steam as a
sustainable technology and our own
leading net zero commitments and
progress against them.
Risk
Opportunity
N/A
N/A
Net zero
carbon
Environment
improvements
Sustainable
products
Sustainable
supply chain
5
4
1
Spirax Group Annual Report 2023 89
Strategic Report
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning
Growing awareness of climate change and customer
sustainability targets will continue to provide an impetus
for business growth as we provide products, services and
solutions that increase efficiency and reduce customers’
energy use and carbon emissions. To mitigate the risks
outlined above, our One Planet Sustainability Strategy
underpins our Business strategies, which in conjugation
with the voice of the customer and understanding customer
needs, allows us to develop products and services that help
our customers achieve their own carbon reduction targets.
This, in turn, helps us to manage reputational risk by
ensuring we’re driving down our own emissions, in line with
our commitments to the Science Based Targets initiative
Each of our three Businesses incorporate sustainability
in their Business strategy, Customer first
2
, Engineering
Premium Solutions and Strategy25. This has resulted in the
of steam, which was a collaboration between Steam
Thermal Solutions and Electric Thermal Solutions.
As part of our financial planning process, we have an
sustainability investments, we prioritise initiatives that
deliver the best value of £/tCO
2
developed and commenced implementation of net zero
information about our net zero roadmap, see page 73.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
efficient heat transfer medium for a wide range of
applications, with multiple onsite uses from the production
of foods, beverages and medicines, to the generation of
power. Our Steam Thermal Solutions are complemented by
our Electric Thermal Solutions product and service offering.
relevant across different climate-related scenarios.
As part of our annual viability assessment, we annually
undertake scenario risk modelling focusing on stress testing
determine the resulting impact on the Group’s debt
covenants and liquidity headroom, to ascertain the potential
revenue or adjusted operating profit impacts that could
arise from one, or a combination, of the Group’s Principal
Risks. The key risks associated with climate change would
be mitigated by management processes for three of our
our viability assessment suggests that our Principal Risks do
not pose a significant threat to the viability of our Group;
therefore, management believes that this also applies to
and 154.
As well as these ongoing risk management and Principal
Risk Management processes, during 2023 we worked with
assessed under current conditions and projected impact
timeframes align with our One Planet Sustainability
Strategy targets and SBTi approved net zero targets.
respectively. The two extreme scenarios were chosen in
maximum physical risk impact and maximum transition risk
impact. RCP 4.5 was assessed as a middle scenario.
diagnostic’ analysis for 239 operating locations (comprising
risks were derived from a number of data sources including
Diagnostic tools, data from Munich Re hazard databases
were then validated in workshops.
Transition risks were identified and assessed through
multiple workshops, drawing on relevant expertise from
as it is under these conditions that transition risks would be
most relevant. Transition risk exposure was assessed on a
short-term horizon of 2025 and a medium-term time horizon
of 2030 with impacts being assessed as an annualised
amount. Transition risks were not quantified in the longer
term due to the difficulty in building assumptions around the
direction of policy out to 2050 or beyond; physical risks are
anticipated to be more relevant on those timeframes.
completed for 45 of the Group’s suppliers (selected on the
basis of spend, strategic importance, geographic location
Risk management
Describe the organisation’s processes for identifying
and assessing climate-related risks
The Risk Management Committee holds annual top-down or
bottom-up reviews that provide information and evaluations
that the Committee uses alongside our risk impact, likelihood,
appetite and velocity ratings to create an effective system
for assessing materiality, monitoring, planning and developing
our Group-wide approach and culture regarding risk.
The Risk Management Committee performs a scoring
exercise each year against all our documented risks,
assessing impact, likelihood, control, velocity and appetite
for each risk. Each member of the Committee scores each
risk and the scores are reviewed, discussed and assessed
compared to the other risks. This process is used to assign
the Principal Risks and position of each risk on the Register.
Existing and emerging regulatory requirements related to
climate change are considered as part of this review.
TCFD and CFD continued
Spirax Group Annual Report 202390
Strategic Report
Risk velocity was deliberated and approved as a further
measure in our Group risk management framework in 2022.
Risk velocity ratings were assigned and validated for all
Principal Risks in 2023, as set out on pages 101 to 105, and
other risks on the Risk Register, including climate change.
Describe the organisation’s processes for managing
climate-related risks
Materiality for climate change risks is based on the
enterprise risk management scales used to determine
materiality across all of our risk management processes.
Climate change-related risks are currently deemed to
be low for the Group (based on assessment of likelihood,
identified as a Principal Risk on the Group’s Risk Register.
However, a number of the key risks associated with climate
related event on our direct operations, specifically the loss
transition risks, such as failure to meet changing market
needs, are already managed through other Principal Risks
risk management processes are adequate and appropriate
for the level of risk as applicable to our Group.
Describe how processes for identifying, assessing
and managing climate-related risks are integrated into
the organisation’s overall risk management
During 2023, we reviewed the Group’s exposure to risk
using a bottom-up approach, where the Committee sought
views of the Group operating companies on the risks that
they considered may affect their activities to ensure new or
Committee reviewed and confirmed the robustness of the
countermeasures that Group operating companies have in
place to mitigate the Principal Risks in the Group Risk Register.
Climate change is a risk factor that influences other risks, so
control of climate risk is embedded in and managed through
other Principal Risks, particularly risk 5 (loss of manufacturing
Climate change has risen in position in the Risk Register
serious, emerging risk though not currently one of the
Group’s Principal Risks.
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in line
with its strategy and risk management process
manage our climate-related risks and opportunities.
Managing our GHG emissions to meet our net zero targets
and helping our customers to do the same mitigates climate
risk by working towards realising a low carbon future.
•
•
•
•
•
•
measure successful progress against our strategy. See
strong engagement with, and investments in, net zero
initiatives across the Group, an internal carbon price is not
opportunity
metrics, for example the customer decarbonisation
opportunities
pipeline in the Electric Thermal Solutions
Business and metrics related to the launch of our
TargetZero solutions. These metrics are not disclosed
externally as they are commercially sensitive.
our near-term and long-term targets, and net zero target for
Disclose scope 1, scope 2 and, if appropriate, scope 3
During 2022, we used a third-party to help us quantify a full
scope 3 baseline figure for 2021. This figure was calculated
using GHG Protocol-aligned scope 3 methodologies, but is
further calculated our scope 3 emissions for the 2022
financial year and improved our methodology to increase
accuracy of this data, restating 2021 as data availability and
accuracy improved.
For more information about the methodology we use to calculate our
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
Reflecting the central importance of the Group-wide One
Planet Sustainability Strategy to all of our forward-looking
plans, the measures for the 2022 Performance Share Plan
accounting for 20% of the PSP opportunity, dependent on
Spirax Group Annual Report 2023 91
Strategic Report
The decarbonisation of steam generation
is one of the main challenges facing all
industries. Our customers are looking for
solutions to maintain their critical steam
systems while still achieving their stated
sustainability goals. That’s why we are
excited about the potential of our
TargetZero solutions, which decarbonise
the use of steam through electrification
of the heating source, removing the need
to burn fossil fuels.
As a Group, we are committed to
eliminating our scope 1 and 2 greenhouse
2050 as part of our One Planet
Sustainability Strategy.
‘Project ClearSky’ is our initiative to
decarbonise the generation of steam
through the elimination of fossil fuels at
our UK manufacturing facility for Spirax
Sarco, part of Spirax Group’s Steam
Thermal Solutions Business. The
60,000sqm facility consumes around
the decarbonisation project is complete,
the annual GHGs emitted from the raising
of steam at this facility will reduce from
2
(reducing Spirax
Our environment
The future
of sustainable
steam
How our TargetZero
solutions will play an
essential role in enabling
industrial decarbonisation
for the raising of steam.
Zero
GHG emissions from the raising
of steam at the site upon
completion
Emissions saved at the site
equivalent to driving an average
internal combustion engine car
138 million
miles
15%+
Reduction in Spirax Group’s
CO
2
e
Strategic Report
Spirax Group Annual Report 2023
Our goal is to quite literally ‘clear the skies’
of the emissions associated with steam
generation and other industrial heat
applications creating a better world for
future generations by facilitating the
switch to a greener technology.”
Allison Lappe
Associate Manager, Research & Development Engineering,
Chromalox, Electric Thermal Solutions
Project ClearSky is a transformational
project that marks a step change in how
we understand our customers’
decarbonisation challenges and support
them in future proofing their operations.”
Head of Strategic Projects, Spirax Sarco,
Steam Thermal Solutions
There are many processes and operations
across industry which rely on steam. To
demonstrate how customers can maintain
their steam systems and meet their net zero
goals, the technology implemented at our
demonstrates what is possible in the
decarbonisation of steam generation.
The practical insights gained throughout this
project put us in a unique position to not only
understand the challenges our customers
face as they strive for net zero emissions, but
also present them with a robust, tried and
tested solution so they can understand how
this technology will help future proof their
own sites.
This project is also a good example of
of the products that make up this solution are
our own innovations, developed from
proprietary technologies we have in the
Group. Secondly, the delivery of the project
has meant synchronising with numerous
functions including Health and Safety, Supply
Chain and Legal.
decommissioning our Combined Heat and
Power unit, halving the site’s GHG emissions.
electrical substation and associated
infrastructure. This will power the Medium
which forms the basis of our TargetZero
portfolio of solutions for decarbonising the
raising of steam and sits at the heart of the
site’s new steam generation capabilities.
The first of our three TargetZero solutions to
be powered up will be the , a
thermal energy storage system capable of
generating steam from renewable or off-peak
SteamVolt a first-fit boiler solution that uses
electric heat and control technology, will go
decarbonised the generation of steam at our
site. However, we will also be deploying our
third solution, ElectroFit, a retrofit boiler
solution that converts fossil fuel fired boilers
to electric. This solution will become our back
up boiler.
This holistic approach means we are able to
achieve the emissions reduction fundamental
to our targets as outlined by our One Planet
Sustainability Strategy and demonstrate the
impact of our solutions for customers.
Project ClearSky
Spirax Group Annual Report 2023
Strategic Report
Non-financial and sustainability information statement 2023
Reporting requirement
• Group Sustainability Policy
• Group Environmental and Energy Policy
• Group Management Code
• Supplier Sustainability Code
Employees
•
• Group Management Code
• Group Human Rights Policy
• Group Sustainability Policy
•
Social matters
• Group Human Rights Policy
• Group Charitable Donations Policy
• Group Employee Volunteering Policy
• Supplier Sustainability Code
• Group Sustainability Policy
Respect for human rights
• Group Human Rights Policy
• Modern Slavery Statement
• Supplier Sustainability Code
matters
• Group Anti-Bribery and Corruption
Policy
• Group Gifts, Entertainment and
Hospitality Policy
• Group Competition Law Compliance
Policy
•
• Supplier Sustainability Code
Description of the Principal Risks in relation to the above matters,
including business relationships, products and services likely to affect those
areas of risk, and how the Company manages the risks
* The policies listed above can be found on our website: spiraxgroup.com/governance-documents. Compliance with our policies is monitored
spiraxgroup.com/sustainability-downloads.
This Annual Report and in particular the Sustainability Report, contains the
information required to comply with the Companies, Partnerships and
Groups (and Non-Financial Reporting) Regulations 2016, as contained in
Sections 414CA and 414CB of the Companies Act 2006. The table below
provides key references to information that, in conjunction with the
Sustainability Report, comprises the Non-Financial and Sustainability
Information Statement for 2023.*
Spirax Group Annual Report 202394
Strategic Report
Our policies
Group Governance Policies
This Code sets out the Group’s policy on the operation of its Businesses and the procedures,
controls and senior manager certification that provide the means to achieve compliance
with the Code throughout the Group and to achieve continuous improvement in the
Group’s performance.
not enter into contractual relationships with third parties that are known to engage in corrupt
practices and will not engage in the giving or receiving of bribes or favours that create a
conflict of interest. Anti-bribery and corruption training forms part of our Group Essentials
Training and must be completed by all new employees and annually thereafter.
Group Whistle-blowing Policy
colleagues to maintain high standards in accordance with our Group Management Code and
our core Values. A culture of openness and accountability is essential to prevent any situations
occurring and to address them when they do occur. This policy aims to encourage colleagues
to report suspected wrongdoing as soon as possible, in the knowledge that their concerns
will be taken seriously and investigated as appropriate and that their confidentiality will
be respected.
Competition Law Compliance Policy
countries in which we operate. This policy outlines standards of conduct and integrity we
expect from all colleagues and the potential consequences of breaching competition laws.
Entertainment Policy
This policy sets out the Group’s position on the giving and receiving of gifts, hospitality
and entertainment, and our colleagues’ responsibilities under this policy.
Charitable Donations Policy This policy sets out the principles to be adopted in relation to charitable donations, both cash
and in-kind, and applies to all charitable donations and community engagement activities
across the Group.
Environmental Policies
Group Sustainability Policy This policy outlines the standards and commitments by which we guide operations at our
operations, we also encourage suppliers and partners to abide by the standards outlined in
this Policy.
This policy underlines the commitments made in our One Planet: Engineering with Purpose
Sustainability Strategy with regard to protection of the environment, climate change and the
efficient use of resources, including water, waste management and biodiversity enhancement.
The Code represents the minimum standards that we ask our suppliers and their sub-tier
relating to human rights, health and safety, quality management, environmental sustainability
and ethics.
Colleague and Human Rights Policies
Employee Volunteering Policy All Group colleagues are entitled to up to three days of volunteering leave per year. This policy
is intended to help and support colleagues wishing to volunteer and provides a framework for
good practice.
Statement of Intent
companies must adhere to, in order to ensure that Health and Safety remains a core Value and
our first consideration.
Spirax Group Annual Report 2023 95
Strategic Report
1,841
direct suppliers signed the Supplier Sustainability Code
We only work with suppliers who align with our
Values and agree to comply with our Supplier
Sustainability Code (the Code). This ensures we
are always working with suppliers who want to
go beyond our minimum standards, doing all that
we can together to ensure our supply chain
operates ethically and upholds the standards we
believe in.
In 2022, as part of a wider initiative to use digital
enhancement to deliver resilient business
operations, we launched our Supplier
Sustainability Portal (the Portal). This has several
key benefits:
• It enables us to assess supplier sustainability
performance and risk
• It provides direct suppliers with a platform
through which they can sign and commit to the
Code
• It is an online resource centre designed to help
develop their knowledge around sustainability
Overall, we plan to onboard 1,600 direct
suppliers into the Portal, through a strategic
phased approach, and we have achieved over
50% of that target to date.
Suppliers are required to complete a series of
surveys including climate impact, human rights,
human trafficking and slavery and a Spirax
Group bespoke survey covering biodiversity,
community engagement and inclusion, as well as
diversity in the supply chain. In addition, the
data gathered through the climate impacts
survey in particular helps us develop a clearer
picture of our scope 3 greenhouse gas
emissions and understand where our suppliers
are on their sustainability journey to identify
improvements.
Through the Portal, suppliers have quick access
to definitions of terms in eight languages, as well
as links to more information should they need it.
They can participate in training modules and
tutorials through the Portal’s virtual library and
live webinars on how to use the Portal, the
surveys and regulatory updates.
It is not just our suppliers who have access to
training materials in our Portal. Our buyers also
have access to over 40 training modules to
enable them to develop a better understanding
of where sustainability improvements can be
made within our supply chain. Educating our
purchasing teams not only helps them to make
more sustainable decisions but also equips them
to advise and guide our suppliers when they
need it.
Our commitment to make a positive contribution
for a better world is enshrined in our One Planet
Sustainability Strategy and our supply chain
collaboration is one of the key ways in which we
can unite across industry to leave a lasting
legacy for future generations.
Our suppliers
Embedding
sustainability
into our future
Working together to achieve
a more sustainable future
Strategic Report
Spirax Group Annual Report 202396
Strategic Report
Spirax Group Annual Report 2023 97
Risk Management
Effective risk management remains
fundamental to the resilience of our Group.”
Nimesh Patel
Group Chief Executive Officer
Our approach and appetite for risk
During 2023, the Risk Management Committee was chaired
by Nick Anderson, prior to his retirement. The Risk
Management Committee monitors our operational risks, in
particular those identified as Principal Risks, on an ongoing
basis, while the Board is responsible for the overall
stewardship of strategic risk management and internal
control. The Audit Committee is also involved in the detailed
review of risks reporting to the Board on its findings.
top-down or bottom-up, that provide information and
evaluations that the Committee uses alongside the Risk
Appetite and Risk Velocity ratings for our Principal Risks to
create an effective system for monitoring, planning and
developing our Group-wide approach and culture regarding
risk.
The senior managers of our operating companies are
involved in the risk assessment process. The evaluations
of the Committee, including setting the appropriate levels
of risk, are then communicated to all Group operating
companies.
This ongoing monitoring and engagement contribute to
the Group’s Risk Register and the way we manage our risks.
As they are dynamic and fluid, both our Risk Register and
Principal Risks reflect the current conditions across the
Group, together with the external macroeconomic
environment, and guide our ongoing monitoring and
mitigation activities.
Key risk management actions
The following key actions were undertaken by the Group
during 2023 in addition to the regular monitoring of risks:
•
Bottom-up risk review: the Committee received input from
its Group operating companies resulting in the
•
Risk Register: the bottom-up risk review informed the
annual review, validation and update of the Risk Register
•
Digital Services: the risk of failing to respond to changes
in our customer’s Digital requirements was identified as
requiring dedicated focus and our Principal Risks were
realigned accordingly with the inclusion of a new sub-risk:
•
forces impacting a number of countries in which the
Group operates, the Group has considered and adapted
its strategies in response to evolving risks
•
Enterprise Risk Management: the recommendations of our
Enterprise Risk Management review undertaken in 2022
were agreed and a blueprint created for implementation
•
Risk Appetite Statement: the Risk Management
Committee confirmed the statement, which can be found
Further reading
Spirax Group Annual Report 202398
Strategic Report
Governance and Compliance
Recognising the growing geopolitical tensions and
corresponding effects on world trade, continued
acceleration for demand of digitalised products and
solutions together with relatively high levels of inflation and
increases in cost of living, we decided in 2023 to reinforce
our focus on governance and compliance which sits at the
heart of our risk management framework. This focus has
culminated in a number of key steps taken in 2023, including
a refresh of our Group Sanctions Policy, the creation of a
new position with the Group Head of Product Compliance
and a refresh of our Treasury and Tax policies (including the
also embedded stronger internal governance and controls in
the robustness of our governance and compliance
programmes and controls in the context of prevailing
economic, political and social forces and respond in the
manner which enables our Group to mitigate the challenges
presented by such dynamic risks.
Risk Register review
Risks and the responses from the bottom-up risk review, as
Principal Risks on recommendation of the risk owners.
Subsequently, Loss of Manufacturing Output at any Group
introduced as a new risk in the Risk Register, although not a
Principal Risk.
The year-on-year trend for each Principal Risk was
assessed and updated; Risk Appetite and Risk Velocity
ratings were also validated for each of the Principal Risks.
Risk Appetite rating given its addition to the Risk Register in
2023.
Climate Change
Climate Change risk is broken down into two categories:
physical risks (such as increased frequency and severity of
and climatic changes on the Group’s operations (including
Climate change is accelerating. The most recently published
likely impact of extreme weather events on our Group
operating companies. The results of the assessment
revealed that, under current conditions, the residual impact
of such risks for our Group is insignificant.
However, Climate Change continues to be an emerging risk
that we will closely monitor in light of national and global
developments and features as a risk on our Risk Register.
Our climate risk is managed holistically by the Committee
with regular updates to the Group Executive Committee and
Sustainability Report.
Emerging risks
The Risk Management Committee and the Board are
actively involved in assessing emerging and over-the-
was highlighted in the Group’s decision to purchase a 15%
stake in the Norwegian thermal battery company, Kyoto
Group. The transaction enables the Group to work closely
with Kyoto and enter into agreements to accelerate the
decarbonisation of industrial process heat using the
technology in Kyoto’s Heatcube, a molten salt thermal
energy storage solution. This is an example of our appetite
for new-to-world decarbonisation solutions to serve our
customers’ evolving industrial needs.
Spirax Group Annual Report 2023 99
Strategic Report
Risk Management continued
Further reading
Managing risks
Bottom-up review
Group-wide Risk Register
Maintained and reviewed by the Risk Management Committee
Risk assurance
Risk review (external/internal)
Carried out at regular intervals
Top down review
Risk Management Committee
Group operating companies
Reports to
Board
Audit Committee
Spirax Group Annual Report 2023100
Strategic Report
Principal Risks
1. Economic and political instability
Significant exchange rate movement
Cybersecurity
4.
5. Loss of manufacturing output at any
Group factory
6.
changes in customer needs: Digital/
Non-Digital
7. Loss of critical supplier
8. Breach of legal and regulatory
Strategic priorities
through market sector focus.
Develop the knowledge and skills of
our expert sales and service teams.
Broaden our
global presence.
Leverage our
Optimise our supply
chain effectiveness.
Operate sustainably and help
improve our customers’ sustainability.
Principal Risks
The following pages set out the Group’s Principal Risks, as validated by the Risk Management
Committee and describes the links to strategy, the mitigation measures, the velocity of each risk
and the appetite for each risk. The risk trend shown is the risk before mitigation measures have
been implemented. The risk appetite and risk velocity ratings are after mitigation has been
taken into account.
Risk appetite ratings defined:
Velocity Description
Very low
strategic route available.
Low Seeking to integrate sufficient control and mitigation methods in order to
accommodate a low level of risk, though this will also limit reward potential.
Balanced An approach which brings a high chance for success, considering the risks,
along with reasonable rewards, economic and otherwise.
High
for increased business payoffs.
Very high Pursuing high-risk, sometimes unproven options that carry with them the
potential for high-level rewards.
Risk velocity ratings defined:
Velocity Description Timeframe
Very low Very slow impact, response time adequate to mitigate effects
12 months
Low Slow impact, robust response to strategy may mitigate effects
12 months
Medium Moderate time to impact, swift and robust response may
mitigate effects
High
a month
Very high Very rapid impact with little or no warning. Limited time to
respond and mitigate effects
a week
Risk likelihood, control and impact
E
c
o
n
o
m
i
c
O
p
e
r
a
t
i
o
n
a
l
P
e
o
p
l
e
8
3
7
5
1
2
4
V
e
r
y
l
o
w
Very
high
Control
High Medium Low
Ranking
Increase
from FY2022
No
change
Decrease
from FY2022
Impact
LowMediumHigh
LowMediumHigh
Spirax Group Annual Report 2023 101
Strategic Report
Risk
Key mitigation, sponsor
Risk
appetite
rating Rationale for rating
The Group operates
worldwide and maintains
operations in territories
that have historically
experienced economic or
political instability,
including regime
the potential impact on
our local operations, this
instability also increases
credit, liquidity and
currency risks.
Very high
High
Medium
Low
Very low
•
Strong internal controls, including internal
audit and appropriate insurance
•
Operating in line with the Group Treasury
Policy, including currency exchange
hedging and cash pooling arrangements
•
Externally-facilitated scenario
planning exercises
•
Resilient business model, strengthened
by regular strategic business reviews
•
and sector
•
on Group debt facilities
Group Chief Executive Officer
Change:
No change.
Very high
High
Balanced
Low
Very low
and local insight to
successfully
manage unique
challenges
in economically and
politically volatile
willing to accept these
challenges where
opportunities for
growth exceed the
impact of this risk.
Link to strategic priority:
The Group reports its
results and pays
dividends in sterling.
Sales and manufacturing
companies trade in local
presence in markets
across the globe, the
nature of our business
necessarily results in
exposure to exchange
rate volatility.
Very high
High
Medium
Low
Very low
•
Maintain the spread of manufacturing
across currency areas
•
Consideration of exchange rate exposures
in the manufacturing strategy
•
with the Group Treasury Policy on hedging
currency exchange movements
•
including sourcing materials from cheaper
markets, and purchasing in the UK in
foreign currency
•
Deployment of price management tools
Change:
This risk has increased to reflect the increasing
volatility of foreign exchange rates across both
developed and developing economies that we
have witnessed over the past year.
Very high
High
Low
Very low
of this risk which arises
as a direct result of our
global presence, but our
geographic spread means
we are not wholly
dependent on any
one currency.
Link to strategic priority:
Link to strategic priorities
through market sector focus.
Develop the knowledge and skills of our
expert sales and service teams.
Broaden our global presence.
Optimise supply chain effectiveness.
Operate sustainably and help improve our
customers’ sustainability.
Trend
Risk increased.
No change to risk.
Risk decreased.
Direct link
Risk Management continued
Principal Risks continued
Spirax Group Annual Report 2023
Strategic Report
Risk
Key mitigation, sponsor
Risk
appetite
rating Rationale for rating
Cybersecurity risks
include theft of
information, malware,
ransomware and
compliance with evolving
statutory and legislative
requirements. Risks may
manifest through a direct
attack on our business or
through our supply chain.
Very high
High
Medium
Low
Very low
•
against UK cyber essentials framework and
prioritising actions for improvement
•
Deploying security tools to limit the impact
and spread of ransomware
•
System access rights regularly reviewed
•
centrally-managed systems for heightened
protection and consistency
•
Mandatory cyber awareness training is
delivered to all staff electronically each year
Change:
No change.
Very high
High
Balanced
Low
Very low
Concerns of potential
impact on the business,
in addition to the
important considerations
surrounding protection of
personal data, reinforce
our commitment to
implement and maintain
robust security measures
across the Group.
Link to strategic priority:
The Group mitigates
this risk in various ways,
including through
comprehensive due
diligence, professional
advisers, contractual
protections and
comprehensive
integration planning.
However, there are some
variables that are difficult
to control, such as
adverse economic
conditions, or the loss of
key employees, which
could impact acquisition
objectives.
Very high
High
Medium
Low
Very low
•
Regular review of acquisition criteria in line
with strategic plan
•
Board approval of integration plans for
major acquisitions
•
Scrutiny of targets and implementation plans
by external advisers and internal key players
•
Use of retainer/escrow to provide protection
against warranty claims
•
Use of insurance as protection against seller
breach and non-disclosure
•
Ensuring valuation models show a healthy
return on investment
•
Regular monitoring of performance by the
Board against the approved investment case
Group Chief Executive Officer
Change:
The risk has increased due to the combined
size of the two acquisitions undertaken in 2022
the impact should the Group fail to realise its
acquisition objectives.
Very high
High
Balanced
Low
Very low
Thorough planning and
proper due diligence can
mitigate many of the
potentially risky aspects
of an acquisition.
must be well-developed
and carefully pursued to
achieve the full strategic
and financial benefits.
Link to strategic priority:
Spirax Group Annual Report 2023
Strategic Report
Risk
Key mitigation, sponsor
Risk
appetite
rating Rationale for rating
5. Loss of manufacturing output at any group factory
The risk includes loss
of output as a result
of natural disasters,
industrial action,
accidents or other
causes. Loss of
manufacturing output
from our larger plants
risks serious disruption
to Group sales.
Very high
High
Medium
Low
Very low
•
Technology Solutions in North America
•
Expansion of capacity planned for
•
Capacity planning and holding stock in
sales companies
•
Conducting audits/inspections
•
Annual risk assessments and business
continuity planning
•
Reviewing and maintaining appropriate
insurance cover
•
Continuing commitment to employee
policies, ensuring satisfactory benefits and
regular communication with all employees
•
Comprehensive manufacturing footprint
project undertaken
•
lines of supply
Managing Directors of Steam Thermal
Solutions, Electric Thermal Solutions and
Change:
This risk has decreased as the risk is lower
than in the Covid Pandemic. Risk of labour and
materials shortage is also lower than the
previous year.
Very high
High
Balanced
Low
Very low
this risk through a
geographic spread of
factories, calculated
replication of capacity
and management of
stock, we have a low
appetite for this risk due
to the potential negative
consequences to the
Group and its customers.
Link to strategic priority:
This risk could lead to
a reduction in demand
from a failure to respond
to changes in the needs
of customers or
technology shifts.
Very high
High
Medium
Low
Very low
•
Stronger presence of sales engineers,
compared with competitors, in the
marketplace
•
Vulcanic Group to better position the Group
in meeting customer demand in the
transition to more sustainable industries
•
New product ideas generated by market
development managers from close alignment
with sales engineers and customers
•
Sales and competitor analyses undertaken
to identify any trends or technology shifts
•
Digital strategies for each Business are
either underway or under preparation with
longer term implications on investment,
resource levels, new skills and need to
develop external partnerships
•
A Group Digital Director leading the Group
Digital Strategy
•
Acquisition of Cotopaxi to further accelerate
the Group digital learning curve
Managing Director, Steam Thermal Solutions
and Group Digital Director
Change:
No change.
Very high
High
Low
Very low
The Group continues
to focus on its market
awareness, invests in
technical and sales
knowledge via the Spirax
Sarco Academy and,
through Customer first
sectorisation, seeks to
be more closely attuned
to its customers. There is
a good level of control
effectiveness, but a low
appetite for this risk.
Link to strategic priority:
Risk Management continued
Principal Risks continued
Spirax Group Annual Report 2023104
Strategic Report
Risk
Key mitigation, sponsor
Risk
appetite
rating Rationale for rating
7. Loss of critical supplier
This risk relates to the
loss of a critical supplier
that could result in
manufacturing
constraints and delayed
deliveries to customers.
Very high
High
Low
Very low
•
actions to create supply chain alternatives
•
Supplier selection processes have been
improved with increased importance placed
on product quality, product delivery,
financial stability and supplier sustainability
•
Supplier development and supplier
management resources have been
strengthened
•
As part of our procurement strategy, we are
securing more robust sources of supply
•
Dual sourcing strategies for critical suppliers
and critical parts give us greater flexibility in
our supply chain
•
Continued with global market assessment
exercises to establish correct price points
and mitigate
•
Price increases
Business Supply Heads
Change:
This risk has decreased as turbulence in our
upstream supply chain has abated as markets
have grown to accept a new normal which
includes a greater level of turbulence than in
historical times and inflation on commodities
has eased.
Very high
High
Balanced
Low
Very low
Our expenditure with
suppliers is not heavily
concentrated in any
one supplier or group
of suppliers.
Link to strategic priority:
must ensure compliance
with laws and regulations
wherever we do business.
As we grow into new
markets and territories
we continually review
and update our operating
procedures and ensure
our colleagues are fully
informed and educated
in all applicable legal
requirements, such as
with respect to anti-
bribery and corruption
Breaching any of these
laws or regulations
could have serious
consequences for
the Group.
Very high
High
Low
Very low
•
Ongoing global monitoring of commercial
arrangements and agreements, with
appropriate professional advice
•
Established procedures to maintain
accreditations
•
Annual Group-wide ABC training improved
with a new programme
•
Multi-lingual, multi-national secure
whistle-blowing hotline
•
Group Litigation Report and ongoing
monitoring of cases
•
Regular updates on Corporate Governance
and Stock Exchange rules
•
General Data Protection Regulation
compliance plan in place
•
Conducting supplier audits
•
Engaging suppliers to commit to compliance
with the principles of the Supplier
Sustainability Code
Group General Counsel
Change:
No change.
Very high
High
Balanced
Low
Very low
rules and regulations of
the jurisdictions in which
we operate and given the
serious consequences
for breaching these laws,
rules and regulations, we
have a very low appetite
for this risk.
Link to strategic priority:
Spirax Group Annual Report 2023 105
Strategic Report
In this section
Board leadership and Company Purpose
Chair’s introduction
Governance at a glance
Board of Directors
Our Group Executive Committee
The Board at a glance
Case study: Engineering our future, together
Board activities
Leading with purpose
Section 172 Statement
Division of responsibilities
Governance framework
Board composition, succession and evaluation
Committee Reports
Colleague Engagement Committee Report
Nomination Committee Report
Audit Committee Report
Risk Management Committee Report
Remuneration Committee Report
At a glance summary: Executive Directors’
remuneration
Annual Report on Remuneration
Summary Remuneration Policy
Regulatory disclosures
Statement of Directors’ Responsibilities
Welcome to our 2023 Governance Report. In this Report you can see the
composition of our Board and our Group Executive Committee and find out how
our governance framework for planning, implementation and monitoring of Spirax
Group’s performance ensures we are well placed to respond and adapt to the
changing environment.
include in its Directors’ Report a governance statement containing certain
information. However, as allowed by DTR 7.2.9, we have chosen to set out the
information in this governance section of the Annual Report. The Group’s risk
management and internal control framework and the Principal Risks and
uncertainties, described on pages 98 to 105, the Directors’ Report on pages 179
to 182 and the various Committee Reports on pages 128 to 160 also contained
Our Governance
Leading effective governance to ensure the successful
management of the Group across its diverse Businesses
Annual Report 2023106
We continue to be directly involved with ESG
as it is at the heart of our Group’s core activities
and given its importance to shareholders and
wider stakeholders.”
Chair
Board leadership and Company Purpose
Chair’s introduction
Our Purpose
Our Purpose, to create sustainable value for all our
stakeholders as we engineer a more efficient, safer and
sustainable future, helps our Group Businesses to stay
relevant in a fast-changing world. It drives our direction and
priorities and connects us with the communities of which
we are part. Our Purpose also provides our colleagues with
part of Spirax Group.
Board Composition
would be standing down as Group Chief Executive after ten
years in the position. Nick has led the Group with distinction
and meaningfully improved on the Group’s long record
growth was organic, with the balance coming from
and enhanced the
Steam Thermal Solutions and Watson-Marlow
Fluid Technology
Solutions Businesses, as well as establishing our Electric
Thermal Solutions Business. Nick also leaves our Group with
firmly embedded sustainability strategies, inclusion and
talent development programmes that contributed to the
selection of a strong internal successor.
In August, we were delighted to announce Nimesh Patel’s
appointment as Group Chief Executive Officer and he took
up the position on 16th January 2024. Nimesh joined the
Group in 2020 as Chief Financial Officer and his appointment
as Group Chief Executive Officer follows a rigorous succession
process, more details of which can be found in the Nomination
Committee Report on pages 134 and 135. As announced in
December 2023, Louisa Burdett will join the Group in July
2024 as the Chief Financial Officer. Louisa is a highly
experienced CFO having led finance functions in several
large companies including UK-listed Croda, Meggitt and
Victrex. She currently serves as a Non-Executive Director
and Audit Committee Chair of RS Group plc. The recruitment
of Louisa as successor in the role of CFO followed our usual
rigorous succession process. Director of Group Finance, Phil
Scott, will act as Interim Chief Financial Officer until that
point, although will not be a statutory director of the Company.
We also indicated last year I would be stepping down in
2024 following my reappointment for a further three years
in 2021. The Board considered that the reappointment
would be compliant with Provision 19 of the UK Corporate
extension beyond nine years’ service as, although I have
been a Non-Executive Director since 2014, I was only
appointed as Chair five years ago, in 2018. The Nomination
Committee is currently engaged in the search and
appointment for the Chair succession and further
information on this can be found in the Nomination
Committee and Directors Reports on pages 132 and 179.
Following the resignation of Olivia Qiu in January 2023 the
Nomination Committee began the process of finding a new
Non-Executive Director. We announced the appointment of
Constance Baroudel on 2nd August 2023. Constance brings
to the Group strong sustainability, financial, strategic and
non-executive experience as well as her knowledge of
large, global organisations, to support the ongoing
sustainable growth and success of our Group.
As illustrated in the Board biographies on pages 112 and 113
page 115, we continue to ensure that our Board is diverse
ethnically, culturally and in terms of gender. In order to
create more transparency around this matter, the Financial
effective for accounting periods starting on or after 1st April
2022 (which we have disclosed voluntarily in previous
179.
Annual Report 2023 107
Governance Report
Embedding Environmental, Social and Governance
The Board is directly responsible for ESG matters and is
responsible for the overall stewardship of strategic risk
management and internal control. The Board as a whole
continues to have direct and comprehensive oversight of
ESG matters, which are essential to the execution of our
Group and Business Strategies. The Board received six
updates from Sarah Peers, Group Director of Sustainability,
during 2023. This included updates on progress against
metrics and targets and enabled the Board to be directly
involved in ESG matters. More information on the Group’s
approach to Sustainability can be found in the Sustainability
Report on pages 60 to 97.
The Audit Committee is also directly involved in the detailed
review of risks, which includes climate-related risks, and it
reports back to the Board on its findings. The Risk Management
Committee has responsibility for managing climate-related
risks. Sarah Peers has specific delegated responsibility for
overseeing climate-related risks and mitigation activities, as
well as for ensuring that climate-related risks and opportunities
are appropriately considered in management’s day-to-day
operational practices. This is carried out through the Group
comprises the Group Director of Sustainability, Heads of
Sustainability from each respective Business, Strategic
Initiative and Strategic Project leads and other key
Sustainability and Health and Safety updates are always the
first two operational matters addressed by the GEC and
Board at each meeting.
by the Executive Sponsors of
, the strategic initiative/strategic project leads and
the Group Sustainability Reporting Manager. These
meetings consist of updates on current strategic initiatives
and projects, and other general
updates and decisions.
During 2023, there were three meetings of the Colleague
to ensure that the voice of the workforce is considered in all
aspects of the Board’s thinking and to understand and
support colleague engagement activities across the Group.
The CEC also has a clear programme and agenda for meeting
self-selected groups across the business, without management
present, in order to understand better their roles and gain
their feedback and their experience working for the
Company. Full information of the CEC’s activities in this
regard can be found in the CEC Report on pages 128 to 131.
Board Performance
The Chair confirms that, following a formal performance
evaluation, each Director’s performance continues to be
effective and each Director demonstrates commitment to
the role. The Senior Independent Director conducted a
Code and the review concluded that the Chair’s performance
was good. More information on the Board Effectiveness
review for 2023 can be found in the Nomination Committee
Report on pages 132 to 137.
Section 172 Statement
The long-term success of our business is dependent on
the way we work with all our stakeholders and continues
practices and recognition of stakeholder views in order to
create and sustain value for all.
a statement describing how they have had regard to the
matters set out in Section 172 when performing their duty to
promote the success of the Company. This can be found on
pages 121 to 123.
Outcome of 2023
The Board and Management were vigilant in staying
informed of current events impacting the business. We
continue to deal with uncertainty in the Pharmaceutical &
Biotechnology and Semiconductor sectors, due to customer
destocking. Against this backdrop, the Group’s financial
performance in 2023 was in line with the expectations we
set out in our November 2023 trading update. More
information on the 2023 Group performance can be found in
the Strategic Report on pages 4 to 105.
Fair, balanced and understandable
In accordance with the Code, the Directors confirm that
they consider the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s financial position, performance, business model and
strategy.
The UK Corporate Governance Code 2018 applied to the
Group for the financial year ended 31st December 2023, a
copy of which can be found on the FRC website, www.frc.org.
uk.
With effect from 1st January 2023 the Board considers that it
has complied, in full, with the principles and provisions of the
Code, following the final step change bringing the previous
Group Chief Executive’s pension contributions in line with
the wider UK colleague maximum contributions of 10%. The
current Group CEO’s pension contributions were already at
10% when he joined as Chief Financial Officer. We detail our
compliance, on a Code provision-by-provision basis, in the
Corporate Governance section on our website, spiraxgroup.
com/governance-documents.
Board leadership and Company Purpose continued
Chair’s introduction continued
Annual Report 2023108
Governance Report
Proxy advisory firms
The Company engages with a number of proxy advisory
firms ahead of publication of its Notice of AGM and
publication of their proxy reports in order to, where
possible, align proposed resolutions with investor
expectations.
Annual General Meeting
place on Wednesday, 15th May 2024 and an explanation of
the resolutions sought, is set out in the Circular posted on
our website and sent to shareholders in the format selected
each Director’s appointment or reappointment will be
accompanied by information on why their contribution is,
and continues to be, important to the Company’s long-term
sustainable success.
In 2024, we will be proposing a number of resolutions in
addition to the regular business. The first of which is the
proposal to change the Company name from Spirax-Sarco
Engineering plc to Spirax Group plc. This is in support of
our decision to refresh the branding of the Group to help
stakeholders better understand our evolution to a larger
Group that now includes three strong and aligned
Businesses. The brand refresh is also an exercise in
simplification: we are often referred to as ‘Spirax’ and our
stock market ticker is ‘SPX’, therefore, in this way we are
moving more intentionally into a space we already occupy.
It is also an exercise in impact with ‘Spirax Group’ replacing
the longer Spirax-Sarco Engineering. One of the main aims
of the brand refresh and Company name change is to
eliminate the confusion that exists in differentiating the
Group from the Spirax Sarco Division of Steam Thermal
mistaken for the Spirax Sarco Division and, therefore,
external stakeholders sometimes see us purely as a ‘steam
engineering company’. In supporting our change to Spirax
Group plc, shareholders are enabling full alignment to our
brand refresh, giving more visibility to all three Businesses
and removing the confusion with Spirax Sarco. This is
important in helping Spirax Group clearly communicate our
full capabilities, including our ability to support our
customers to achieve their operating, sustainability and
decarbonisation goals.
Also, and in line with our commitment to our shareholders,
retail and investment, we are proposing a minor
administrative amendment to our Articles of Association in
order to better identify and manage ‘lost’ shareholders in
order to reunite or reclaim assets.
This year we are delighted to invite you to the AGM at our
Cheltenham, UK, see page 76 for details on the work done
to transform the building into a modern and sustainable
working space that will serve the Group for decades to
come.
I look forward to meeting shareholders at the AGM on
Wednesday, 15th May 2024.
Chair
6th March 2024
Board focus for 2024
•
Continue to support the Group Executive Committee
and the three Businesses with their growth plans
through the implementation of their medium term plans
•
Key management presentations and discussions are
planned in 2024 across all of our Businesses
•
Consolidate our position through both organic and
inorganic growth
•
Focus on ESG and climate change
•
Board Chair succession planning
Further reading
The Notice of Annual General Meeting and all governance-related
Annual Report 2023 109
Governance Report
Board leadership and Company Purpose continued
Governance at a glance
At year end 2023
Highlights from 2023
Understanding our business
Board
GEC members
Athis-Val de Rouvre,
France
Boston,
USA
Sao Paulo,
Brazil
WFMTS
Taiwan, China
Stockholm,
Sweden
Barcelona,
Spain
Shanghai, China
Saltlake City,
USA
Listening to colleagues
90%
Colleague engagement
with ‘pulse survey’
10
The Colleague Engagement Committee
held 10 in person forums directly with
colleagues
100+
Colleague voices were
heard during the sessions
The Board and GEC regularly visit our sites all over the world, connecting with colleagues and the Businesses
first hand in order to better understand the operating environment and challenges they face.
Annual Report 2023110
Governance Report
Major board decisions
February
• 2023 strategic and
financial plan approved
May
• Adoption of Audit related
policies
• Agreement of Group
Branding refresh
• Authorisation of 2023
ESOP invitation
August
• Approval of 2023 Interim Results announcement
• Approval of the interim dividend of 46.0
pence per share
• Appointment of new Non-Executive Director,
Constance Baroudel
• Announcement of the successor to the role
of Group Chief Executive
• Review and Approval of the
2024 Group Plan
• Initiation of the Group
Strategic Framework
• Approval of the final dividend of
114.0 pence per share
• Authorisation of further investment
of the Chromalox Ogden plant
June
• Approval of the
investment in Kyoto
Heatcube (see page
UK Corporate Governance Code
compliance
100%
We have complied in full with the principles and
provisions of the UK Corporate Governance Code
2018.
Average length
of service
5years 4 months
Board tenure
How the Board spent its time
30%
Operations & Risk
30%
Strategy
10%
Sustainability
10%
Finance
10%
Governance
10%
People
30%
30%
40%
Annual Report 2023 111
Governance Report
Board leadership and Company Purpose continued
Board of Directors
Jamie Pike MBA, MA, MIMechE
Chair
Appointed to the Board
May 2014, Chair from 2018.
Areas of experience
Engineering, international business,
senior management, M&A, strategy.
Background
Jamie Pike joined Burmah Castrol in 1991
and was Chief Executive of Burmah Castrol
Chemicals before leading the Foseco buyout
Prior to joining Burmah, he was a partner at
Bain & Company. Jamie was educated at
Oxford, holds an MBA from INSEAD and is a
Member of the Institute of Mechanical Engineers.
External appointments
Chair and Non-Executive Director of
XP Power Limited.
Chair of IMI plc with effect from 1st January
2025.
BSc
Group Chief Executive Officer
Appointed to the Board
September 2020, Group Chief Executive
Officer from January 2024 (having previously
Areas of experience
International business, senior management,
M&A, finance and accounting, industrial,
pensions, tax and treasury.
Background
Before joining the Group in 2020, Nimesh Patel
was Chief Financial Officer of the De Beers
Group. Prior to that he was Group Head of
Corporate Finance at Anglo American plc,
leading a team based in London and
Johannesburg. Previously, Nimesh spent 14
years in investment banking at both JP Morgan
and as a Managing Director at UBS.
External appointments
Co-Chair of the FTSE Women Leaders Review
and Trustee of Barts Charity.
MSc SE, BSc CEng
Independent Non-Executive Director
Appointed to the Board
December 2020.
Areas of experience
Engineering, operational, strategy,
international, M&A, manufacturing,
senior management.
Background
Angela Archon held various senior executive,
global positions in Business Development,
Engineering, Operations, and Strategy,
throughout her 30-year career at IBM
Corporation. She also represented IBM for
eight years as Board Liaison for the National
Action Council for Minorities in Engineering.
Angela is a member of the Engineering Honour
Society and earned a Professional Engineer’s
license. Until December 2022, she was a
non-executive director of Switch Inc., listed on
the New York Stock Exchange.
External appointments
Non-Executive Director of DT Midstream Inc.,
Trustee at CommonSpirit Health.
Constance Baroudel Msc, BA
Independent Non-Executive Director
Appointed to the Board
August 2023.
Areas of experience
Strategy, sustainability, operational, international
business, R&D, international relations.
Background
Constance is Sector Chief Executive,
Environmental & Analysis and Chief
Sustainability Officer at Halma plc, having
previously held a range of executive positions
within Halma plc, as well as with First Group
plc, De La Rue and Strategic Decisions Group
International. With more than 20 years’
experience, Constance has significant
knowledge of working in large, global
organisations. Constance previously served as
Non-Executive Director for both Kier Group
and Synergy Health plc.
External appointments
Sector Chief Executive, Environmental &
Analysis and Chief Sustainability Officer at
Halma plc.
Peter France
Independent Non-Executive Director
Appointed to the Board
March 2018.
Areas of experience
Engineering, international, senior
management, M&A, operational, strategy,
sales and marketing, industrial, manufacturing.
Background
Peter France was Chief Executive Officer of
Rotork plc from 2008 to 2017. He also gained
wide experience in a number of key roles at
Rotork plc from 1989 to 2008 including acting
as Chief Operating Officer and Director of
Rotork South East Asia based in Singapore.
Peter is a Chartered Director of the Institute of
Directors.
External appointments
Chief Executive Officer of TT Electronics.
A
N
N
R
N
BA, ACMA, FCT
Interim Chief Financial Officer
Attends Board meetings
January 2024.
Not appointed as a statutory director.
Areas of experience
International business, senior management,
M&A, finance and accounting, pensions, tax
and treasury.
Background
Before joining the Group in 2021 as Director of
Group Finance, Phil led a number of the Group
Finance functions at Ferguson plc. Prior to that
Phil spent 15 years at Vodafone Group plc.
Phil is a member of the Chartered Institute
of Management Accountants and Fellow of
the Association of Corporate Treasurers.
External appointments
Director of Wolseley Pension Trustees Limited
which provides trustee services to the
Wolseley Group defined benefit pension
scheme.
RK RK
N
Annual Report 2023112
Governance Report
MA
Independent Non-Executive Director
and Senior Independent Director
Appointed to the Board
March 2021.
Areas of experience
International business, investment, finance
and non-executive experience.
Background
Until December 2022, Richard Gillingwater
was Chair of Janus Henderson Group plc. He
has also held a range of executive positions
within global investment banks including
Kleinwort Benson, Credit Suisse and Barclays
de Zoete Wedd. Richard holds an MBA from
the International Institute for Management
Development, a BA Law from Oxford University
External appointments
Senior Independent Director of Whitbread plc
and Governor of the Wellcome Trust.
BA, CA
Independent Non-Executive Director
Appointed to the Board
March 2019.
Areas of experience
International, M&A, finance, people.
Background
Caroline Johnstone has 40 years’ experience
working with large global organisations on
cost optimisation. She was a partner in
UK Assurance Board as people partner.
Caroline is a member of the Institute of
Chartered Accountants of Scotland.
External appointments
Chair of Synthomer plc, Non-Executive
Director, Senior Independent Director and
Audit Committee Chair of Shepherd Group Ltd,
a private company which owns Portakabin
Limited and sits on the Governing Board of the
University of Manchester.
BSc, FCA
Independent Non-Executive Director
Appointed to the Board
May 2019.
Areas of experience
Engineering, international, senior
management, M&A, strategy, finance,
pensions, tax and treasury.
Background
Kevin Thompson was Group Finance Director
of Halma plc from 1998 to 2018, having joined
Halma as Group Financial Controller in 1987.
Fellow of the Institute of Chartered
Accountants in England and Wales.
External appointments
Deputy Chair and Trustee of the Great Ormond
Street Hospital Children’s Charity.
Andy Robson LLB Law Barrister
Group General Counsel and
Company Secretary
Appointed as Group General Counsel
and Company Secretary
June 2012.
Areas of experience
International law, corporate governance,
international business development including
M&A, business restructuring, information
technology, contract negotiation.
Background
Before joining the Group in 2012, Andy Robson
was General Counsel and Company Secretary
of RM plc, a role he held for 14 years. Prior to
this, Andy was European General Counsel with
Baltimore, USA and worked in the USA for
Blackstone Trust. He was also Deputy General
Counsel at BAE Systems plc.
A
N
N
R
A
N
R
Key
A
Audit Committee
N
Nomination Committee
Colleague Engagement
Committee
R
Remuneration Committee
RK
Risk Management Committee
Denotes Committee Chair
Executive
Non-Executive
Group Executive Committee
Company Secretary
A
N
R
Jane Kingston BA
Independent Non-Executive Director
Appointed to the Board
September 2016.
Areas of experience
Engineering, international business, senior
management, operational, people,
remuneration.
Background
From 2006 until her retirement in December
2015, Jane Kingston served as Group Human
Resources Director for Compass Group PLC.
Prior to this, she served as Group Human
Resources Director for BPB plc. Jane has
worked in a variety of sectors, including roles
with Blue Circle Industries plc, Enodis plc and
Coats Viyella plc and has significant
international experience.
External appointments
Non-Executive Director and Remuneration
Committee Chair of Inchcape plc (until 9th
Further reading
Annual Report 2023 113
Governance Report
Armando R. Pazos
President,
Electric Thermal Solutions
Appointed to the Group
Executive Committee
December 2021.
Background
Armando joined the Group in March 2020 as
the Vice President of Global Sales and joined
the GEC in December 2021 following his
promotion to President and Managing Director
of the Electric Thermal Solutions Business.
Prior to this, Armando was at Ingersoll Rand,
an industrial global manufacturer of tools,
pumps, and air compressors, for 24 years.
Managing Director, Watson-Marlow
Fluid Technology Solutions
Appointed to the Group
Executive Committee
November 2019.
Background
Prior to joining the Group, Andrew held the
position of Executive Vice President, Global
Construction Products of Illinois Tool Works
Executive Leadership Team. Andrew had a
23-year career with ITW comprising engineering,
sales, manufacturing and senior roles in global
Automotive and Construction sectors.
Maurizio Preziosa
Managing Director,
Steam Thermal Solutions
Appointed to the Group
Executive Committee
January 2021.
Background
Maurizio joined Spirax Group in 2011 as
Managing Director of Spirax Sarco Italy and
developed his career in the Group by assuming
the role of Regional General Manager Southern
Europe, Global Divisional Director Gestra, up to
the appointment at Group Managing Director
Steam Thermal Solutions in 2021. Prior to
joining Spirax Group Maurizio worked in ABB
Group with different sales management and
general management roles.
Group HR Director
Appointed to the Group Executive
Committee
February 2016.
Background
Before joining the Group in 2016, Jim was
Group HR Director at Chemring plc and prior to
that held a range of senior HR roles at Centrica
plc, Ford Motor Company and BAE systems.
Group Director of Sustainability
Appointed to the Group Executive
Committee
October 2022.
Background
Sarah joined the Group in 2013 as Group Head
of Corporate Communications and was appointed
Group Head of Sustainability in July 2020 and
is now Group Director of Sustainability. Prior to
teacher. Sarah holds a Doctorate in Historical
Geography (specialising in early industrial
Maria Wilson
Group Digital Director
Appointed to the Group Executive
Committee
September 2023.
Background
Prior to joining Spirax in early 2023, Maria was
the Global Leader for Data Driven Advantage
with Howden, leading the vision definition and
execution of a global digital program focused
on delivering business growth enabled by
digital technologies. She has also completed a
PhD in Fluid Mechanics from the University of
Erlangen-Nuremberg, Germany.
BSc
Group Chief Executive Officer
See Biography on Board of
BA, ACMA, FCT
Interim Chief Financial Officer
See Biography on Board of
Andy Robson LLB Law Barrister
Group General Counsel and
Company Secretary
See Biography on Board of
Board leadership and Company Purpose continued
Our Group Executive Committee
Annual Report 2023114
Governance Report
Expertise and experience
Core expertise
Length of service
Board tenure
Board and Committee attendance
Board Audit Remuneration Nomination
Colleague
Engagement
Risk
Management
1
Jamie Pike 7/7 4/4
Nicholas Anderson 7/7 4/4
Nimesh Patel 7/7 3/4
Angela Archon 7/7 5/5 4/5 3/3
Constance Baroudel 3/3 3/3
Peter France 7/7 5/5 5/5 3/3
Richard Gillingwater 7/7 5/5 5/5 5/5
Caroline Johnstone 7/7 5/5 4/5 3/3
Jane Kingston 7/7 5/5 5/5 3/3
Kevin Thompson 7/7 5/5 5/5 5/5
individuals, full details can be found on page 150
Average length of service
5 years 4 months
Board makeup
Nationality
British
French
10%
70%
10%
10%
Female
Male
60%
40%
Black
White
10%
80%
10%
The Board at a glance
At year end 2023
Executive Director Group Chief Executive
Non-Executive Director Chair
International business
Industrial
People
Pensions
Tax & treasury
Sales & marketing
Manufacturing
Sustainability
Investment
Non-Executive
experience
R&D
Remuneration
Senior management
M&A
Engineering
Strategy
Operational
Finance & accounting
Board changes
•
Olivia Qiu stepped down as an Independent
Non-Executive Director on 31st January 2023
•
Constance Baroudel joined as an Independent
Non-Executive Director on 2nd August 2023
•
Nicholas Anderson retired as Group Chief Executive
on 16th January 2024
•
Nimesh Patel was appointed as Group Chief Executive
Officer on 16th January 2024
0
12
108642
J.S. Kingston
A. Archon
P. France
C. Baroudel
C.A. Johnstone
K.J. Thompson
R. Gillingwater
N.B. Patel
Years
N.J Anderson
J. Pike
Annual Report 2023 115
Governance Report
5,000+
controls across our Group since 2022
Today, companies like ours are operating in
increasingly complex environments and the
regulatory landscape for governance is
changing, with significant legislation changes
under debate by governments around the world.
Good governance is good for business and by
implementing consistent and robust financial
controls across the Group, we’re setting
ourselves up for a more resilient future.
Launching our Group Governance Guidelines
are to strengthen our financial resilience through
working collaboratively and in partnership to
build a stronger Spirax Group that is focused on
achieving excellence in line with our Values.
G3 is a risk-based approach to improving
financial controls. By supporting teams across
our Group to adopt the right approach to
processes and controls for each individual
operating company, we help protect against
risks such as fraud, financial misstatement and
other forms of financial misconduct, as well as
ensuring compliance with our own internal
policy requirements.
To ensure a consistent approach, the Group
and expected controls centrally, it then partners
with our Businesses to implement and embed
the G3 programme locally. The G3 programme
is supported by a library of training materials
and a global online platform to track and monitor
progress and milestones across the Group.
A strong control and governance framework is
critical because it safeguards the integrity of our
reporting, supports the prevention of fraud and
enables our Businesses to operate more
effectively through having enhanced data
and a better understanding of the drivers of
our success.
Engineering our future,
together
Our shareholders
Our finance teams have been
implementing and assessing
controls in line with our G3
financial control timetable and
as a result we have now
across our Group!”
Spirax Group
team is intentionally spread
geographically across the Group,
to be closer to our operating
companies, from Asia Pacific to
the Americas, and supporting all
the Businesses. The team is
readily on hand to guide the
implementation, and partner
with the local Finance teams,
supporting implementation
needs, monitoring for ongoing
compliance and championing
wider opportunities to improve
the effectiveness and efficiency
of our control environment.”
Spirax Group
Consistent controls for a more resilient future
Governance Report
Annual Report 2023116
for reducing financial and fraud risks as well
as ensuring compliance, but it also improves
our operational efficiency through the
adoption of more standardised and streamlined
processes, freeing up our finance teams to
work on other value-add tasks.”
Financial Controller,
Governance Report
Annual Report 2023 117
Ordinarily the Board meets seven times a year and then on
December 2023, there were seven scheduled meetings of
the Board. Attendance at scheduled Board and Committee
meetings is set out in the table on page 115. Other senior
Executives and Non-Executive Directors (where they are
All Directors are expected to attend all Board meetings and
relevant Committee meetings unless prevented by prior
commitments, illness or a conflict of interest. Directors
unable to attend specific Board or Committee meetings are
sent the relevant papers and asked to provide comments in
advance of the meeting to the Chair of the Board or Committee.
In addition, all Board and Committee members receive the
minutes of meetings as a matter of course.
Board activities
The Board is collectively responsible for the long-term
success of the Company, its strategy, governance and
internal controls and is accountable for its activities. The
Board ensures good governance practices are embedded
throughout the Group as they are an integral part of running
a successful business. This specifically includes a focus on
there is not a separate Board Committee for this.
To support this, the Board considers reports on the key
activities of the Group and reports from the Chairs of the
Audit, Nomination, Remuneration and Colleague Engagement
Committees as appropriate at each scheduled Board meeting.
It also receives information on important forthcoming events,
reports on environmental, sustainability and health and
safety matters, on strategy, investor relations and legal affairs.
The Chair, with assistance from the Group General Counsel
and Company Secretary, is responsible for the governance
arrangements. This includes meeting agendas, timely
information flows and facilitating dialogue between Executive
and Non-Executive Directors, to encourage an open and
supportive culture.
Board agendas are carefully planned to ensure focus on the
Group’s strategic priorities and key monitoring activities, as
well as reviews of significant issues.
The General Counsel and Company Secretary is responsible
for maintaining forward agendas for the Board and its
Committees, ensuring that items are evenly distributed and
scheduled at the appropriate times of the year for timely
consideration. Agenda timings are proactively managed to
enable sufficient time for consideration of items.
The Board regularly receives papers and presentations from
senior management, giving the Board the opportunity to
meet colleagues below GEC level. This helps to embed a
positive attitude to good governance in the Company’s
culture and ensures that processes and procedures are
adhered to by demonstrating the Board’s desire to ensure
they have robust information on which to make sound
decisions and carry out their statutory duties.
As per best practice, our Non-Executive Directors meet with
Directors after every Board or Committee meeting they
attend. The Board confirms that neither it, nor any of its
Directors, have any connection with Korn Ferry or Deloitte.
The Colleague Engagement Committee meets with groups
of colleagues separately from management. More information
about these meetings can be found on pages 128 to 131.
Annually the Board combines a scheduled Board meeting
with further meetings focusing on strategic development
and to review the Group’s longer term outlook. At this
meeting members of the Group Executive Committee
present strategy papers for their business areas including
financial, technology, organic and inorganic growth and
stakeholder engagement. On ESG matters, the Group
Director of Sustainability presents updates on progress
with the implementation of the
at every Board meeting and the Group Head of
Health and Safety attends Board meetings periodically. In
addition, the Board has been actively involved in the setting
of goals and targets relating to ESG matters and their
translation into performance-related metrics.
The Group’s Whistle-blowing Policy and independently
facilitated whistle-blowing platform enable colleagues to
report any concerns related to unethical or illegal conduct
within the business, anonymously if preferred. The Board
receives reports from the Group General Counsel if any
concerns have been raised via the Policy.
Culture and Values
To achieve our Purpose, we rely on our widely understood
and established business model and most importantly, a
strong and supportive culture. Our culture comes from
decision making and the ways in which they make their
difference for our Group and our stakeholders.
Our Values also guide Board decision-making. We prioritise
and, through our engagement with each other and
our Group colleagues, we help improve and
. We support and
through an ongoing programme of investment, our
decision-making is supported by site visits and
management presentations. We promote and support
through our transparent approach, as well as
ensuring the Group has appropriate processes and controls
which underpin strong corporate governance.
The Board was pleased to approve and oversee the
implementation of the Group’s Inclusion Plan in 2022, noting
the impact it is already having across the Group. To further
greater diversity in our Group, we approved a set of
refreshed Diversity goals at our December 2023 meeting,
which can be found on page 68.
More information on specific Colleague Engagement,
including topics raised by Colleagues and how we have
responded can be found in the Colleague Engagement
Committee Report on pages 128 to 131.
Board leadership and Company Purpose continued
Board activities
Annual Report 2023118
Governance Report
Strategy
•
Group Strategy Framework.
•
Reviewed and assessed medium- term plans for all
three Businesses
•
Reviewed Corporate Strategy
•
Reviewed
•
Two-day Strategy presentations
•
Group China Strategy
Audit and risk
•
Annual Risk Review
•
Reviewed external financing facilities
•
Mandatory Contract Practices
•
Deep-dive on Principal Risks ‘Loss of Critical Supplier’,
Loss of Manufacturing Output and Breach of Legal
Performance
•
as appropriate*
•
Company share performance and shareholder/
analyst feedback*
•
Business reviews and senior management presentations
•
performance and management review by Board during
visits to operations
Culture and People
•
Rising Talent presentations
•
Group Talent update
•
Full organisational and succession review across all
•
Colleague focus groups facilitated by Colleague
Engagement Committee, which includes a number
of NEDs
•
Reviewed and approved the 2023 Diversity and
inclusion goals including setting a new ethnicity goal
•
•
Health and safety and sustainability strategy updates*
•
Setting goals and targets for forthcoming year
•
Reviewed and supervised the full year results for
sustainability KPIs and progress against targets
•
Received a sustainability recruitment update
•
Received an update and reviewed the Group’s TCFD
disclosures
•
Approved introduction of new Electric Company
Vehicle Scheme
•
Governance
•
Received updates by Committee Chairs*
•
Received updates on all material legal and
Governance matters*
•
Compliance programmes update*
•
Reviewed Bid Defence process
•
Refreshed Sanctions Policy
•
Reviewed Whistle-blowing cases
* Standing items at every scheduled Board meeting
Key Board activities
The Board monitors and assesses culture using the following mechanisms:
understand what is happening locally as drivers to improve engagement and colleague
experience. This enables discussion and visibility of how our Values are being lived through
organisation and how aligned local culture is to the current and future strategic objectives.
Gives global insight into colleague engagement and enablement that informs where focus/
action needs to be placed to support the organisation’s culture and the Group’s strategic goals.
Monthly touchpoints with groups of colleagues from different business areas globally to
listen to the colleague voice, open dialogue and gain feedback on what it’s like to work at the
Group and build assurance that the desired culture is being embedded within the
organisation. This involves presenting key themes to the management teams to support any
Colleague Focus Group took place with feedback presented to management and the CEC.
Information from the internal audit team on the impact of policies and processes.
Review and supervision of Diversity goals on gender and ethnicity.
Whistle-blowing cases, grievance as well as ‘speak-up’ data, health and safety data
Annual Report 2023 119
Governance Report
Board leadership and Company Purpose continued
Leading with purpose
Good governance adds value. It is well-ordered, transparent
and ethical, and is focused on tackling operational
challenges in ways that complement the Group Strategic
Priorities. Good governance enables us to build a better and
more sustainable future for all.
It’s the duty of Board members to remain focused on broad,
strategic goals while tackling day-to-day issues and
meeting their responsibilities, so it is incumbent on them to
work with certain governance ideals in mind.
In order to do this the Board has developed and approved
various policies to enable and empower our colleagues to
achieve our goals. We have a comprehensive Code of
Conduct and supporting policies, including Whistle-blowing,
Anti-Bribery and Corruption, and Human Rights Policies,
which set standards for ensuring that our business activities
are conducted in a responsible manner for the benefit of our
shareholders, customers, colleagues and suppliers. Spirax
Group has zero tolerance to any form of bribery and
corruption, both within our Group and in any dealings with
our customers, suppliers and other third parties.
All colleagues and Board members are expected to
demonstrate and promote high standards of ethical
business conduct and to know and follow our Code of
Conduct with pride.
Our Whistle-Blowing Policy and secure whistle-blowing
facility, enable colleagues to make reports if they suspect or
experience any misconduct or wrongdoing in our business.
The facility, hosted by Safecall, an independent provider,
enables colleagues to report concerns via a web portal or
by telephone, anonymously if preferred.
We have a number of Group policies which are designed to
help our colleagues balance their work and personal lives
effectively, including flexible working.
Further reading
Our Anti-Bribery and Corruption Policy and Modern Slavery
Annual Report 2023120
Governance Report
The long-term success of our Group is
dependent on the way we work with all our
stakeholders and continues to require
recognition of all stakeholder views,
constructive working practices and, when
appropriate, effective engagement in order to
create and sustain value for all.
This section, from pages 121 to 123, forms our Section 172
statement. It describes how the Directors have performed
their duty, in good faith, to promote the success of the
Company, for the benefit of our shareholders, including how
they have considered and engaged with wider stakeholders,
and how they have taken account of the matters set out in
Considering these broad interests is an important part of
the way the Board makes decisions and, at times, the Board
has to balance the competing interests of different
stakeholders and other factors in delivering the Company’s
Strategy. The Board has delegated responsibility for the day
to day running of the Businesses to the GEC and, as a result,
many of the decisions and activities undertaken have
approval from the Board by virtue of these delegated
responsibilities. An overview of the guiding principles for
these delegated responsibilities is set out on page 123. The
Board receives regular updates on key initiatives undertaken
by the Group that affect stakeholders so that they can
understand and challenge, where necessary, decisions
made by management.
Some examples of key Section 172 decisions that the Board
has taken in 2023, and how it has taken into account the
views and needs of wider stakeholders in making those
decisions, are described in the following pages.
investment in the expansion of the Chromalox Ogden
This will deliver a state-of-the-art manufacturing unit by
electric heating systems. Since Chromalox became a part
of Spirax Group in 2017, we have been investing in plant
processes, aimed at improving throughout, as well as
improving colleague working environments through the
installation of a zero-emission air conditioning solution,
which is also in line with our sustainability commitments.
The investment in the new facility will accelerate our
ability meet the high levels of demand for bespoke
solutions that deliver decarbonisation benefits, as well as
make a major contribution to employment in the local
vicinity.
Chromalox’s mission is to provide highly efficient,
modular, and scalable electric heating solutions for
the decarbonisation of process heating, hot water and
steam generation systems. Chromalox’s reputation in
electric heating combined with its focus and commitment
to sustainability, means it is well positioned, as part of
ETS, to help customers to reach carbon footprint
reduction goals without sacrificing performance or
reliability.
excellence for industrial heaters and systems since 1976.
In 2010, Ogden developed the technology and became
the global centre of expertise for our patented Medium
Voltage heating solutions, which are now the leading
driver of sales growth for ETS supporting
decarbonisation of industrial processes.
demonstrates our commitment to
investment and innovation; improves supply continuity;
reduces lead times and improves service levels; and
supports our customers in their decarbonisation efforts.
leads commitment to health, safety, and
wellbeing; creates career opportunities; and builds strong
colleague engagement, regionally and globally.
creates employment
opportunities for the local community; increases
engagement with local authorities and community
groups; helps our transition towards net zero greenhouse
gas emissions with a sustainable building and site and
showcases our commitment to sustainability by
supports growth as we accelerate our
capacity expansion to meet demand; improves business
continuity on critical high growth products; reinforces
Spirax Group’s sustainability objectives through design,
construction, and operation.
in addition to unlocking future growth
from the high demand we see for decarbonisation
solutions, this project will utilise the latest technology
Expansion to Chromalox’s Ogden Manufacturing plant
Section 172 Statement
Annual Report 2023 121
Governance Report
January
•
Conference 2023
• Investor site visit to Cheltenham
• Peel Hunt Industrials Dinner
• Full Year Results Announcement and
shareholder roadshow meetings
• Investor site visits to Cheltenham
May
• Trading Update
• Investor site visit to Cheltenham
June
• JP Morgan European Capital
Goods Conference
• Steam Thermal Solutions Investor
Seminar
August
• Half Year Results Announcement and
shareholder roadshow meetings
September
• Investor site visit to Cheltenham
• Morgan Stanley Industrial CEOs
• Unplugged 2023 Conference
• UBS Quo Vadis Industrials Tour
•
October
• Investor site visit to Cheltenham
• Numis Private Clients Fireside chat
November
• Trading Update
• Baird Global Industrials Conference
•
• Numis Industrials CEO Dinner
• WHEB Annual Investor Conference
• Investor site visit and dinner
• Bank of America CFO Fireside chat
Board leadership and Company Purpose continued
Section 172 Statement continued
In June 2023, the Board approved a partnership agreement with the Kyoto Group
the Group in a significant growth market. Supporting the decarbonisation of
critical industrial processes is central to our Group’s Purpose to engineer a more
efficient, safer and sustainable world. We have been actively investing in new-to-
world decarbonisation solutions through product development since 2020. As
we already provide some of the technology that sits behind through
Vulcanic in ETS, getting actively involved in supporting Kyoto through direct
investment and partnering is a natural extension of our activity in this area.
company founded in 2016 on the same principles as the Spirax Group: to
maximise efficient and productive use of industrial process heating. Spirax Group
is focused on the application of thermal energy, steam and electric heating,
directly in our customer processes. Kyoto focuses on the storage and
management of energy as heat upstream of those processes.
Kyoto’s solution to the market’s need is the technology, a modular
molten salt thermal energy storage system designed for both utilities and
industry. enables the disassociation of energy production and energy
usage to provide a profitable mechanism for energy producers and users to
leverage increasing energy market fluctuations and excess power from wind and
solar. The offers reliable and efficient storage of energy, and a
seamless delivery of heat to industrial customers, when it is needed. There are
several core components that are critical to . The most critical is the
electric process heating system, which Vulcanic provides. Without our
technology, Kyoto’s could not convert excess and low-cost electricity
from the grid into stored, usable thermal energy.
one of the focus areas of the Sustainable Energy Sector and our
energy storage. This investment will provide guaranteed access to this thermal
energy storage market giving customers further options for heat storage whilst
introducing Kyoto customers to our products such as the Steam Battery (for the
.
the EU power market is rapidly evolving into solar surplus. Without
a synchronous expansion in storage and flexibility capacities, solar deployment
will stall, meaning that the reliance on fossil fuels will continue. The EU’s
of harvesting and refining solar and wind energy surpluses.
systems, leveraging our technology, will produce
significant revenue and profit for Vulcanic within ETS.
strategy we are targeting an increase in our revenue in Energy Storage. This
investment will assist in achieving this target.
Annual Report 2023122
Governance Report
d
the impact of Spirax Group’s
operations on the community
and the environment
e
the desirability of maintaining a
reputation for high standards of
business conduct
f
the need to act fairly as between
our shareholders
Through the
steering
committee, which the CEO and CFO
are both members of, the impact of the
Group’s operations is monitored,
mitigated and initiatives approved.
our Sustainability Report
We have a comprehensive
Management Code of Conduct, which
in 2023 has been refreshed and
supporting policies, including
Whistleblowing, Anti-Bribery and
Corruption, and Human Rights Policies,
which set standards for ensuring that
our business activities are conducted
in a responsible manner for the benefit
of our shareholders, customers,
colleagues and suppliers. The Spirax
Group has zero tolerance to any form
of bribery and corruption, both within
our Group and in any dealings with our
customers, suppliers and other third
parties we may deal with.
All colleagues and Board members are
expected to demonstrate and promote
high standards of ethical business
conduct and to know and follow our
Management Code of Conduct with
pride. We provide a whistleblowing
facility, which is underpinned by our
Whistleblowing Policy, enabling
colleagues to make reports if they
suspect anything inappropriate or
experience any serious misconduct or
wrongdoing in our business. For more
information see page 69 in our
Sustainability Report.
The Board recognises our
shareholders and investors as
an important stakeholder group.
Through monthly calls with
shareholders and analysts, and by
providing regular forums for meeting
and communicating with shareholders,
their advisers and the investment
community, we ensure that we
understand the views and opinions of
our investors and are kept informed of
any concerns that may arise. We are
also able to give updates on our results
and developments within our
Businesses.
We undertook 242 investor meetings
during the year, the calendar on page
122 shows shareholder events
attended throughout 2023.
The AGM is an opportunity for
shareholders and investors to meet
the Board. The Company proactively
encourages its shareholders to vote,
by way of a poll, at general meetings
by providing electronic proxy voting for
those who wish to vote online, and
personalised proxy cards to those
electing to receive them.
a
the likely consequences
of any decision in the long-term
b
the interests of our colleagues
c
the need to foster business
relationships with suppliers,
customers and others
The Board always strives to act in the
long-term interests of its key
stakeholders to achieve our Purpose of
creating sustainable value for all of our
stakeholders by engineering a more
efficient, safer and sustainable world.
Our strategy is designed to help us do
better what we already do. The
individual Business strategies drive the
organic growth of the Group, whilst our
corporate strategy drives inorganic
revenue growth. Our
, drives
our Environmental, social and
governance performance.
Through the Colleague Engagement
feedback from colleagues about
various topics, which the Board refers
to when making strategic and business
decisions.
More information can be found in our CEC
The Board understands the importance
of fostering business relationships with
our suppliers and customers. Both of
these stakeholders are considered in
all our decisions especially around
investing in our Group to serve
customers better and solve their
problems, as well as working with
suppliers as partners in those
solutions, and helping them develop as
part of a sustainable supply
ecosystem.
Annual Report 2023 123
Governance Report
The governance structure of the Group ensures the Board,
together with the Board Committees and Group Executive
Committee, has sufficient controls and oversight of the
business, with a balanced approach to risk that is aligned
with the Spirax Group’s culture. The structure assists the
Board in fulfilling its responsibilities and is designed to
ensure that the Board focuses on strategy, monitoring the
performance of the Group and governance, as well as risk
and control issues.
The Board is responsible for the stewardship of the Group’s
strategic risk management and internal control environment.
The Board is supported by the work of both the Audit
Committee and the Risk Committee in this area. The Board
remains satisfied with the identification and monitoring of
overall risk management and internal controls around the
Group and is supportive of the continuous improvement in
these areas.
An overview of the division of responsibilities, as set out in
the Code, is provided in the diagram opposite and we
comply with all the relevant Principles and Provisions. The
responsibilities of the Chair, Group Chief Executive Officer,
Senior Independent Director, Board and Committees are set
out in writing and agreed by the Board. A clear division is
made between the leadership of the Board and Executive
leadership.
The Board is collectively responsible for the long-term
success of the Company. The business of the Company is
managed by the Board who may exercise all the powers of
the Company. The Board has a formal schedule of matters
reserved for the Board’s decision-making which is available
on the Group’s website. Although the Board retains overall
responsibility, it delegates certain matters to the Board
Committees and the detailed implementation of matters
approved by the Board and the day-to-day operational
aspects of the business to the Group Executive Committee
Board Committees
Board Committees provide an opportunity for Directors to
focus on specific areas of the Group. This allows for greater
scrutiny in key areas such as Remuneration, Audit and Risk
Management, Colleague Engagement and Board succession
planning and Talent development. The Board Committees
consist of Non-Executive Directors and each Committee
Chair reports to the Board on matters discussed at
Committee meetings and highlights any significant issues that
Board Committee are reviewed annually and are available
on the Group website. The annual Reports by each Board
Committee Chair are given in this Annual Report.
Group General Counsel and Company Secretary
The Group General Counsel and Company Secretary,
together with the Group Legal team including the Group
Assistant Company Secretary, support the Chair and the
for informed decision-making and that they appropriately
allocate their time to subjects. All Directors have access to
the advice of the Group General Counsel and Company
Secretary as well as the Group Legal team, who are
responsible for advising the Board on all governance
matters. Both the appointment and removal of the Group
General Counsel and Company Secretary is a matter for
the whole Board.
Group Executive Committee
There is a clear division of responsibilities between the
leadership of the Board and our Executive leadership. The
Board relies on the GEC to run the business, holding them
accountable against targets and standards, while always
embracing the values of collaboration, integrity and respect
to achieve our goals. The GEC, led by our Group Chief
Executive Officer, is responsible for the management of the
Group’s short, medium and long-term performance;
stewardship of capital, technical and human resources;
corporate and business strategy; internal risk management
controls and organisational structure.
An internal Delegated Authority matrix is operated ensuring
that decisions are taken at the right level within the Group
by those best placed to take them, whilst simultaneously
allowing the business to function efficiently. The matrix is
reviewed annually to accommodate any adjustments
Board leadership and Company Purpose continued
Division of responsibilities
The Board has a collective responsibility for providing leadership, preserving
long-term value by anticipating business risks, monitoring performance and
promoting the Company’s culture and Values.
Annual Report 2023124
Governance Report
• Responsible for setting the Group’s strategy and ensuring
strategic objectives are met
• Direct involvement in all ESG matters.
• Assesses culture and promotes the long-term success of
the Company
• Approves the Company’s financial statements and
performance expectations
• Responsible for overall Risk Management
• Ensures maintenance of a framework of prudent and
effective controls
• Ensures effective engagement with shareholders and all
our stakeholders, including the workforce
• Approves matters relating to the composition of the Board
and Committees
Group Executive Committee
The Board relies on the Group Executive Committee to
implement the strategy and run the business by empowering our
colleagues to do their part in the strategy execution. The
emphasis is on growth and on an entrepreneurial approach with
a strong governance culture. The Board holds this team
accountable against targets and standards and ensures that it
has strong and effective leadership in place to execute the
strategic plan.
• Chair of the Colleague Engagement
Committee
• Responsible for colleague engagement
• Facilitating two-way dialogue between
the Board and its Committees and the
Workforce, flagging issues and feedback
to the Board
• Provide constructive challenge, strategic
guidance and offer specialist advice
• Hold a prime role in appointing and
removing Executive Directors
• Scrutinise and hold to account the
performance of management and
individual Executive Directors against
agreed performance objectives
• Advises the Board on all governance matters
• Supports the Board to ensure that it has
the policies, processes, information, time
and resources it needs for the Board to
function effectively and efficiently
• Advises the Board on important legal
and regulatory matters
• Responsible for the
leadership and effectiveness
of the Board
• Promotes a culture of
openness and debate
• Facilitates constructive
Board relations
• Holds meetings with
Non-Executive Directors,
without Executive
Directors present
• Ensures that the Board
listens to the views of
shareholders, the workforce,
customers and other key
stakeholders
• Responsible for all
Environmental, Sustainability
and Governance matters
• Responsible for ensuring
that the Board considers all
Strategic Risks
• Provides a sounding board
to the Chair
• Serves as an intermediary
for the other Directors and
shareholders
• Leads an annual meeting of
Non-Executive Directors to
appraise the Chair’s
performance
• Responsible for the
day-to-day running of the
Group’s business and
performance and the
implementation of strategy
• Leads the Group Executive
Committee
• Represents management
on the Board
The overall purpose of this
Committee is one of oversight
and monitoring of the entire
financial reporting and control
process, to ensure the integrity
of the Group’s Financial
Statements and assurance over
them.
The main role of
this Committee is to
recommend changes to the
Board and consider succession
planning for the future.
This Committee determines the
philosophy, principles and
policy of Executive Director
and senior manager
remuneration having regard to
the latest legislation, corporate
governance, best practices and
the FCA Listing Rules.
Risk Management Committee
This Committee oversees the management and control of
significant operational risks affecting the Group. The Committee
ensures that the Group has risk management policies and
procedures, including those covering project governance,
sanctions and embargoes, crisis management, human rights,
business continuity and business management.
The principal remit of this
Committee is to ensure that the
voice of the workforce is
considered in all aspects of the
Board’s thinking.
Governance framework
Chair
Designated workforce
engagement NED
Non-Executive Directors Group General Counsel and
Company Secretary
Senior Independent
Director
Group Chief Executive
Officer
Audit Committee Nomination Committee Remuneration Committee Colleague Engagement
Committee
Annual Report 2023 125
Governance Report
Board leadership and Company Purpose continued
Board composition, succession and evaluation
We make sure that the Board is actively involved
in all important Group matters and it is effective
in fulfilling its role as a balanced Board.
During 2023, in compliance with the Code, the number of
Non-Executive Directors was always more than the number
publication, our Board comprises one Executive Director, a
Non-Executive Chair and a further seven Non-Executive
Directors. Ordinarily there are two Executive Directors,
however Phil Scott has not been appointed as a statutory
director. When Louisa Burdett joins in July 2024 she will be
appointed as a statutory director bringing the total back up
to two. This ensures that no one person or group of
individuals dominates the Board’s decision-making. All our
Non-Executive Directors, including the Chair, are
considered independent.
Board succession and tenure
The Nomination Committee continuously reviews succession
diversity. For more information on succession planning
please see the Nomination Committee Report on pages 132
to 137.
With regard to the appointment and replacement of
Directors, the Company is governed by its Articles of
legislation. The Articles themselves may be amended by
special resolution of the shareholders. The Articles provide
that Directors may be appointed by an ordinary resolution of
the Company’s members or by a resolution of the Directors.
With the exception of Nick Anderson who stood down in
January 2024, all other Directors including the Chair who
by the Code, will stand for election or re-election as
concerning appointment or reappointment are contained in
the Nomination Committee Report on page 132.
The Executive Directors have service contracts that can be
terminated on twelve months’ notice. The appointments of
the Non-Executive Directors can be terminated on one
months’ notice. The Chair’s appointment can be terminated
on three months’ notice. Details of the Directors’ service
contracts can be found in the Directors’ Remuneration
Report on page 162.
External listed company appointments
The Board believes that Directors should be able to accept
other appointments where no significant actual or potential
conflicts of interest arise and provided that the Director is
able to maintain sufficient time available to discharge their
duties effectively. These other appointments enable Directors
to develop further skills and experience from which the
Company benefits, provided that such commitments do not
impinge on their duties to the Company.
Existing commitments of Directors are carefully reviewed
prior to appointment and on an ongoing basis to ensure they
can continue to deal appropriately with the affairs of the
Group. If a Board member wishes to accept an additional
position this must be reviewed and approved by the Chair.
Significant changes in a Director’s outside commitments are
discussed with the Chair prior to a Director accepting
further appointments.
At each Board meeting and also on an annual basis, each
Director confirms their external appointments and commitments
to the Board as part of the conflicts of interest check. Nick
Anderson was also a non-executive director of BAE Systems
plc, a FTSE 100 company, which is acceptable under the Code.
The number of external appointments held by our
Non-Executive Directors and full-time Executive Directors,
as at 31st December 2023, are provided in the table below,
details can be found in the Director’s biographies on pages
112 and 113. Only positions in listed companies or
with the provisions of the guidelines published by Institutional
Shareholder Services and other proxy advisers.
No. of
other
Non-
Executive/
Chair
roles
No. of
other
Executive
roles
Total no. of
mandates (in
accordance
with ISS
including the
Spirax Group
1 — 3
Angela Archon 1 — 2
Peter France — 1 4
Richard Gillingwater 1 — 2
Caroline Johnstone 1 — 3
Jane Kingston 1 — 2
Nicholas Anderson 1 — 4
Annual Report 2023126
Governance Report
Register of conflicts
The Board formally considers any potential conflicts
between a Director and the Company. Any situational
conflicts must be notified to the Board for authorisation as
and when they arise, notwithstanding a Director’s general
duty to avoid such conflicts. Transactional conflicts must be
notified to the Board in person or in writing at the next
meeting, where the Board can decide, in the absence of
the Director concerned, whether or not to authorise such
conflict and how to manage the conflict if authorised.
New Directors receive formal induction training, including,
when possible, site visits and meetings with the Company’s
advisers, brokers, auditor and where appropriate, major
shareholders. Ongoing training is encouraged and provided
for each Director and varies depending upon their skills,
experience and background. Governance training is undertaken
annually by the Board and the Audit Committee also
arranges ESG, financial and related training each year.
Directors also receive regular updates on changes and
developments in the business, legislative and regulatory
environments. A copy of the Directors’ statutory duties is
available at every Board meeting. Directors are encouraged
which they feel are needed. This is included in the
discussions held during the annual performance evaluation.
Good information flows between the Board and
management are essential for effective governance.
The Board, together with senior management, ensures:
•
the agendas are appropriate for the business and are
forward looking as well as providing historical and current
results data
•
papers are of an appropriate length and content for the
Non-Executive Directors to be able to understand and review
•
sufficient time is given for Directors to read and review
the papers prior to meetings
Board diversity policy
Spirax Group is diverse in many ways. We encourage
differences in ethnicity, gender, language, age, sexual
orientation, religion, socio-economic status, physical and
mental ability, thinking styles, experience and education.
We believe that the wide array of perspectives that results
from such diversity promotes innovation and business
success. Managing diversity makes us more creative, flexible,
productive and competitive. Information on Diversity and
Inclusion in the wider Group can be found on pages 67
to 68 of the Sustainability Report and on our website
spiraxgroup.com/inclusion.
The purpose of our Board Diversity Policy is to ensure an
inclusive and diverse membership of the Board of Directors
resulting in optimal decision-making and assisting in the
development and execution of a strategy which promotes
the success of Spirax Group for the benefit of its
shareholders as a whole, having regard to the interests of
other stakeholders. This policy applies to the Board of
Directors, Board Committees and the Group Executive
Committee and a copy of the Policy can be found on our
website spiraxgroup.com/governance-documents.
Further information on Board and Committee diversity and
Board Effectiveness and Evaluation Process
annually with an independent external evaluation conducted
at least every three years. In the intervening years the Board
conducts a self-evaluation. In addition to this, each Non-
Executive Director, the Group Chief Executive and the Chief
Financial Officer met with the Chair individually to discuss
their personal performance. The Directors provided input to
of the Chair. On the basis of that feedback the SID reviews
the performance of the Chair, including leadership of the
Board and ensuring effectiveness.
Following the external and independently facilitated Board
evaluation by Egon Zehnder in 2021, the Board conducted,
with administrative assistance from Egon Zehnder, an
internal Board evaluation in 2022 and again in 2023.
Full details of the evaluation process and outcomes can be found in
Annual Report 2023 127
Governance Report
Board leadership and Company Purpose continued
Colleague Engagement Committee Report
2023 was a more challenging backdrop than
recent years, with a weaker macroeconomic
environment and customer destocking in the
Semicond and Biopharm sectors, so having a well
established form of direct engagement with
colleagues across the Group was invaluable.”
Chair of Colleague Engagement Committee
Angela Archon
Constance Baroudel*
Peter France
Jane Kingston
Jamie Pike
* Appointed to the Committee 1st January 2024
Committee role and responsibilities
its fifth year as a standing Committee of the Board, meeting
Provision 5 of the UK Corporate Governance Code 2018
and working to ensure our Colleagues’ voice is heard and fully
considered in decisions of the Board. Each year, the Committee
across the Group worldwide, in order to receive feedback and
insights from all levels of the Company, provide oversight and
make recommendations to the Board on all aspects of
colleague engagement. Our annual programme of activities are
prioritised based on feedback from Colleague Engagement
Surveys, recent initiatives in the business, or other activities
that the Board may want to better understand. We believe this
tailored approach allows the Committee to keep our
engagement mechanisms relevant and effective, in line with the
The Committee’s activities create both a formal and regular,
two-way, direct dialogue between the Board and colleagues,
as well as an opportunity for informal, one-on-one interactions.
The Committee Chair reports back to the full Board after each
Committee meeting with key findings and actions arising. The
main duties of the Committee include:
•
A programme of engagement activities to enable the Board
dialogue with colleagues
•
Overseeing the approach to, the results and the action-plans
of each biennial global colleague engagement survey, more
details of which can be found on page 130
•
Regular engagement with senior management across the
Group to understand ongoing and developing engagement
practices
•
Supporting the Audit Committee and the Board in ensuring
that procedures are in place for colleagues to raise concerns
anonymously and in confidence, are accessible and
well-publicised
%
Direct colleague engagement follow-up
Committee remit, planning and approach to engagement
Business updates on colleague engagement
Current engagement practices and survey results
Formal items
31% 11%
24%
19% 15%
Annual Report 2023128
Governance Report
The Board continues to review its mechanism for workforce
established a separate Committee of the Board to focus on
matters of workforce engagement and Caroline Johnstone
was appointed as Chair of the Committee and the
designated Non-Executive Director for colleague
engagement, based on her previous people leadership roles
in PwC and other businesses.
The Board concluded that the Committee and the colleague
engagement programme adds significant value and insight
both to the Board and to executive management, and the
Board regularly reflects on colleague views during Board
deliberations. The Board continues to believe that a
Board-level Committee with responsibility for colleague
engagement is appropriate given the size, scale and
business model of the Group. It affords dedicated time to
colleague engagement and culture generally across the
Group. We have also had feedback that colleagues feel the
direct engagement with a Board member promotes open
and inclusive discussions and valuable feedback.
Committee meetings and operation
The Committee held three meetings in 2023 (details of
Committee Members, our Group Chief Executive Officer and
Chief Financial Officer also attend some part of all
Committee meetings – they bring further insight to
colleague engagement across the Group but are also keen
to understand and reflect on colleague feedback. Other
Non-Executive Directors also regularly join these meetings
and participate in many of the engagement activities
throughout the year.
In February, the Committee amended its name, replacing
“Employee” with “Colleague” to bring the Committee in line
with the language used across Spirax Group. This name
change was also reflected in an amendment to our Terms of
Reference, which can be found on our website, spiraxgroup.
com/governance-documents.
Amanda Janulis, Group Divisional Counsel, is the secretary
to the Committee. During 2023, the Committee has
continued to work with Amanda and Jim Devine, Group HR
Director. Sarah Petherick, Group Head of Colleague
Experience, joined the team in 2023, bringing fresh
perspective and insights to the work of the Committee, as
we continue to develop and implement a very rich
programme.
In 2023, with a weaker macroeconomic environment and
customer destocking in the Semiconductor and Biopharm
sectors, it was a more challenging backdrop than recent
years, so having a well-established form of direct
engagement with colleagues across the Group was
invaluable. We were able to hear the views of colleagues in
all parts of the Group, and there are common themes
colleague survey. The discussion and feedback meetings
continue to allow us to test our understanding of the Group
culture and add value to the Board discussions. For more
discussion on the Group’s culture and Values, see page 8,
as well as the Sustainability Report on page 60. As Chair, I
am always struck by the open nature of the discussions and
opportunities to recognise both the strengths of the
organisation and also the opportunities for continuous
improvement.
• Business unit presentations at Colleague engagement
committee meetings
• Management reporting updates post focus groups
• Global Leadership conference – attended by
approximate 80 colleagues from all parts of the Group
• Overseeing the Group response and approach to the
Race Equity initiative in the US
• Engaging with Graduates during their annual
conference
• Ten structured focus groups involving over 100
colleagues from different areas of the Group
• NED virtual ‘coffee talks’ with randomly selected
colleague, run quarterly
• Biennial colleague engagement survey – quantitative
data with demographic filters and approximately
13,000 verbatim comments
Q
u
a
l
i
t
a
t
i
v
e
i
n
s
i
g
t
s
Census
data
T
a
r
g
e
t
e
d
c
o
l
l
e
a
g
u
e
e
n
g
a
g
e
m
e
n
t
S
e
n
i
o
r
l
e
a
d
e
r
s
i
p
Annual Report 2023 129
Governance Report
The majority of the time in the discussion group is spent
asking colleagues for their views on a handful of topics. In
2023, our typical areas included understanding colleagues
perception of and engagement in our business,
sustainability and inclusion strategies and a particular focus
was around the challenging economic environment and the
cost-of-living challenges across our many different
locations. We have also continued to explore how well we
plenty of space to hear what’s on our colleagues’ minds.
Over the course of our 2023 discussion and feedback group
sessions, we have identified some common themes with
respect to what makes the Group a great place to work and
what we could do better. These themes align well with the
results of the colleague engagement survey and we get
additional rich feedback on these areas from the discussion
groups.
Many of our colleagues consistently highlight four strengths,
which they value highly:
•
A safety mindset ’first and foremost’ – this is particularly
reinforced by colleagues new to the Group
•
A strong Values-based culture – colleagues regularly
share examples of living our Values in the real world,
which deliver better customer service, grow the business
and improve colleague experience
•
A sense of belonging within supportive teams – most
colleagues we speak to feel part of a ’local’ business,
where they have a sense of being involved, listened to
and permission to be entrepreneurial
•
The introduction of inclusive policies, such as gender-
neutral policies for parental leave and carers leave, is
seen as being best-in-class
The feedback on these strengths and the survey results
show significant shifts in positively shaping culture. The
Committee particularly noted the best-in-class response
rate to the engagement survey.
We also heard consistently that colleagues appreciate both
being part of a resilient and strong Company and the
Group’s approach to supporting them through the cost-of-
living challenges of 2023.
There are also consistent themes as to where the Group
might be able to improve, in essence they suggest that we
could make doing business easier for our people:
•
Making collaboration easier: our highly successful
business model provides a focus for our operating
companies and there is more to be done to make it easier
to collaborate between sales, supply and business
development teams
•
Making our systems more efficient: the Group is making
significant investment in our systems but this isn’t yet felt
in many areas of the Company
•
Enhancing and streamlining our internal communication:
colleagues (particularly those in our smallest operating
responding to the reporting needs of a global, publicly
listed Company as well as numerous initiatives that the
Group is investing in. There is huge positivity about the
initiatives (including sustainability, digitisation and
streamlined and focused communications and a way to
prioritise demands
•
2023 has presented different challenges for colleagues.
Some colleagues have felt more pressures this year, as
the economic environment deteriorated throughout 2023.
Some have asked for more thought and engagement
around target setting in these difficult times
year, supported and overseen by the Committee. Driven by
the desire to more deeply understand 2021 Colleague
Engagement Survey scores in the USA, this work started by
and run roundtables for Black and African American
colleagues as well as a roundtable for colleagues who
expressed an interest in taking part as allies.
Four common themes emerged from the round tables,
including that colleagues feel disempowered in career
development, held to higher work standards and lack
support. They also shared that they had low expectations
that anything would change following the sessions.
A member of the Committee, Angela Archon, attended some
of the roundtables and follow up discussions and has
provided valuable insight and challenge from her own
considerable experience.
Action planning based on these discussions is now
complemented this, including global anti-racism webinars
and launching a new Multicultural Global Network for
focus for management and the Board going forward. The
Committee noted progress achieved when other aspects
of diversity had seen management focus, although
members recognise that it will take time to truly embed
change that is meaningful and permanent. Plans (at local,
the feedback which will be reviewed by the Committee in
early 2024. It is also intended to run similar roundtables for
colleagues in other geographies.
Board leadership and Company Purpose continued
Colleague Engagement Committee Report continued
Annual Report 2023130
Governance Report
Management actions arising from our colleague
engagement
We share and discuss the general themes from each
meeting with local and divisional management and we ask
them to share with the Committee any actions that arise
from the feedback. This has proved to be very effective and
we set out just a few examples of action taken:
greater autonomy to
support customers
with faults or
replacement parts and
Local managers met with Divisional
Sales Managers to understand their
concerns. As part of the Group
Finance G3 governance project, the
updated to empower within the
context of G3 and to ensure clarity for
managers on the approval process.
Challenges in
understanding and
implementing the
business strategy in
day-to-day roles. We
heard the message:
“show me the strategy,
don’t tell me; I want to
understand my role in
these strategies.”
One of our Businesses created ’stand
up’ meetings in supply sites; these
were shorter learning sessions on
topics such as the strategy goals and
implementation. ‘Purpose workshops’
were developed for managers to focus
on personal contribution to Company
strategy.
greater clarity on pay
structure/progression
and rewards.
The Company took a series of steps,
including setting up a working group,
making use of an app for colleagues to
communicate directly with the payroll
team and introducing HR surgeries/
clinics for colleagues to drop in with
Remote roles such as
Sales and Service
Engineers are working
more independently
than before, and
there is limited
downtime and no
opportunity to speak
whilst driving etc.
The Group refreshed and
reinvigorated its focus on National
Sales Manager monthly ‘check ins’
with all field-based Sales Teams as
among Service the teams.
While this year’s activities
focused more heavily on the Colleague Engagement Survey
and the Group-specific feedback and discussion meetings,
we again invited leaders to present to the Committee, in
order to share their approach to colleague engagement, as
well as their engagement successes and challenges. This
year, the Committee heard from leaders representing the
Steam Thermal Solutions Supply site in the UK. Colleague
engagement is also part of Board updates from each
Business during the year.
The Committee takes the opportunity to
connect with colleagues and local management when Board
meetings are held at various manufacturing sites across the
globe. In 2023, this included the Thermocoax facility in
Board members heard directly from colleagues about the
day-to-day workings of their site, the challenges they face
and the upcoming initiatives for their Businesses.
All Non-Executive Directors
participate in ‘coffee talks’, an informal arrangement where
colleagues are randomly paired with another for a virtual
coffee. This gives the Directors an opportunity to speak to
colleagues at all levels of the Group one-on-one, to both
understand their role and gain their feedback on the
organisation and their experience working within it. Board
members also attended sessions at both the Global
Leadership Team annual business meeting and the
Graduate annual development programme where they were
able to talk in depth to a wide cross section of colleagues
from across the Group.
Each year, the Committee undertakes an
evaluation of its effectiveness and at least one benchmarking
activity to ensure our activities reflect best practices and
use this as an opportunity to review what other opportunities
for colleague engagement might be feasible and effective
for our Group. This year, the Committee reviewed the colleague
engagement approaches implemented by a selection of
peer businesses within the FTSE 100 and considered
whether some of those approaches might be beneficial for
our own Committee agenda. In general, the Committee
believes that it is working well and that it is adding value to
the Board and this is supported by feedback from the
Board, the executive and the wider organisation. Committee
members are keen to interact with even more colleagues
when undertaking site visits in 2024.
We set out below our three key priorities as a Committee for
2024. Committee members will participate in areas of our
discussions in local language, where practical. For instance,
our new member, Constance Baroudel will hold discussions
with our growing number of French speaking colleagues.
Finally, I want to say my personal thanks to Nick Anderson.
He has been a true advocate of colleague engagement, was
instrumental in establishing the Committee and then
encouraging and supporting the development of the
Committee’s work.
on our Committee activities, at our Annual General Meeting
in May or at any time.
Chair of Colleague Engagement Committee
6th March 2024
Committee focus for 2024
•
Overseeing response to the 2023 Group-wide
engagement survey and the feedback themes
•
Colleague discussion and feedback meetings,
including with colleagues in businesses recently
•
Overseeing actions to address the feedback from our
Black and African American colleagues across our US
other areas of the Group
Annual Report 2023 131
Governance Report
Angela Archon
Constance Baroudel
Peter France
Richard Gillingwater
Caroline Johnstone
Jane Kingston
Kevin Thompson
Committee role and responsibilities
The main role of the Nomination Committee is to optimise
Board performance, consider succession planning and
recommend changes to the Board to match the skills,
knowledge and expertise of individuals to those needed to
The Committee’s responsibilities include:
•
Making appropriate recommendations to the Board for the
appointment, reappointment or replacement of Directors
•
Reviewing the structure and composition of the Board with
regard to the overall balance of skills, knowledge and
experience against current and perceived future
•
Considering succession planning arrangements for the
Executive Directors and more generally, senior executives
•
Overseeing the annual evaluation of the Board and individual
Directors, taking into account its composition, diversity and
effectiveness
Key activities undertaken
The Nomination Committee met five times in 2023, details of
attendance can be found on page 115. The Group Chief
Executive and Group Chief Financial Officer were invited to
meetings where appropriate. A summary of the Committee’s
activities throughout the year is set out on the following page.
Our focus during the year was on the appointment of a new
Group Chief Executive Officer and Chief Financial Officer.
We also started the process for the appointment of a new Chair
and completed the appointment of Constance Baroudel as a
Non-Executive Director.
%
CEO succession planning
Chair succession planning
CFO succession planning
Composition, succession and evaluation
Nomination Committee Report
40% 35% 25%
We have implemented our succession policy with the
appointment of Nimesh Patel as our Group Chief Executive
until her arrival. Constance Baroudel is making a valuable
contribution as a Non-Executive Director.”
Chair of Nomination Committee
Annual Report 2023132
Governance Report
Board and Group Executive Committee composition
On 16th January 2024 Nick Anderson, the Group Chief
in the role. The Committee, in conjunction with Nick, had
been developing the Group’s leadership and talent
development programmes with a view to ensuring the
internal succession pipeline was strong. In 2023, the
Committee began its formal search for a successor to Nick,
considering both internal and external candidates from a
diverse range of backgrounds with the assistance of Egon
Zehnder, recruitment consultants, resulting in the internal
appointment of Nimesh Patel to the role with effect from
16th January 2024. Details of the appointment process
undertaken can be found page 135.
The appointment of Nimesh Patel, who was Chief Financial
Officer from July 2020, was unanimously determined by the
Committee. Nimesh’s appointment as Group Chief Executive
Officer marks the completion of the Board’s long-term
planning for Nick’s succession. During his three-year tenure
as CFO and a member of the Board, Nimesh has played a
significant role in shaping our strategy, working with
model to fulfil our Purpose. The Board has observed
Nimesh’s natural leadership style and proven ability to
engage at all levels throughout the organisation and with
external stakeholders. His strategic approach and deep
understanding of our Businesses, together with his global
and financial experience all underpin the Board’s confidence
in the future leadership of our Group. The Board believes
Nimesh provides both continuity as well as progression in our
journey towards creating sustainable value for our all our
stakeholders and is already working closely with Nimesh,
supporting him on this journey.
We announced in December 2023 that Louisa Burdett will
Louisa is a highly experienced CFO having led finance
functions in several large companies including UK-listed
Croda, Meggitt and Victrex. She currently serves as a
Non-Executive Director and Audit Committee Chair of RS
Group plc. The recruitment of Louisa Burdett as successor
in the role of CFO followed our usual rigorous succession
process. Director of Group Finance, Phil Scott, will act as
Interim CFO until after Louisa joins and a smooth handover
has been completed. The rigorous recruitment process
drew on candidates identified by Spirax Group’s internal
leadership and talent programmes, as well as external
candidates with the assistance of Egon Zehnder.
In January 2023, Olivia Qiu stepped down from the Board of
Directors for personal reasons. A search for a new Non-Executive
Director was initiated and the Board was delighted to announce
the appointment of Constance Baroudel in August 2023.
Constance has related board experience, currently serving
as Sector Chief Executive, Environmental & Analysis and
Chief Sustainability Officer at Halma plc. Previously she has
held non-executive director positions at both Kier Group
and Synergy Health and has a broad range of knowledge
& Finance from the London School of Economics, an MSc in
Corporate Finance & Strategy and a BA in International
financial, strategic and non-executive experience with her
knowledge of large, global organisations, to support the
ongoing sustainable growth and success of Spirax Group.
The appointments of Nimesh Patel as Group Chief Executive
Officer, Constance Baroudel as a Non-Executive Director
and Louisa Burdett as CFO, followed Code-compliant,
rigorous and independent procedures in making these
appointments, supported by our external advisers.
We also spent time looking at the composition of the Group
to enhance our business model and ensure we deliver value
to our customers by building digital connections with products
and services, as well as improving our internal efficiencies
across our operational, innovation and people management
processes. Maria Wilson, who joined the business in March
2023, has joined the GEC to lead and accelerate the
delivery of the digital strategy across the Group.
Jane Kingston’s tenure as a Non-Executive Director will be
drawing to a close in 2025 and during 2024 the Committee
will begin succession planning for the position of
Remuneration Chair to ensure an orderly handover.
Details of the respective skills and experience of all Board and GEC
June
• Start of the formal process
for the appointment of a
new Group Chief Executive
Officer
• Executive succession
planning for all senior
management levels
• Group Executive Committee
development
August
• Appointment of
Constance Baroudel as a
Non-Executive Director
• Conclusion of succession
planning for the
appointment of a new
Group Chief Executive
Officer and planning for
the appointment of a new
Chief Financial Officer
October
• Chair
succession
process
initiated
• Continuation of Chair
succession planning
• Reappointment of Angela
Archon for a further
three-year tenure
•
planning
November
• Conclusion of
succession
planning for
the
appointment
of a new Chief
Financial
Officer
Annual Report 2023 133
Governance Report
As reported last year, Jamie Pike was reappointed as Chair
of the Company with effect from May 2021 for a further
three years despite this taking him beyond nine years since
appointed to the Board. The Committee considered that the
reappointment would be compliant with Provision 19 of the
allows for an extension beyond nine years’ service, as
although Jamie Pike has been a Non-Executive Director since
2014, he was only appointed as Chair five years ago, in 2018.
In order to ensure a successful handover of Group CEO
responsibilities from Nick Anderson to Nimesh Patel, the Board
agreed that Jamie will serve as Chair until no later than the end
of 2024, and, therefore, Jamie will stand for re-election as a
Non-Executive Director at the AGM in May 2024. This will
allow Jamie to provide valuable mentorship to Nimesh in his
new role of Group CEO and an appropriate hand over period
to a new incoming Chair. Jamie continues to provide strong
and effective leadership of the Board. The Committee
implemented the process for the Chair succession and
further information on this can be on page 135.
Succession planning and attracting talent
Egon Zehnder acts as external advisers to the Nomination
Committee, helping the Committee and the Board to make
sure we are well positioned and have proper succession in
place for all senior level appointments across the Group.
This ongoing search for the best people includes both
internal and external candidates, in line with our Diversity
and Inclusion Policy, to ensure that we attract and retain
the best talent. The Board confirms that neither it, nor any
of its Directors, have any connection with Egon Zehnder.
The search for a new Chair, which commenced in Q4 of
2023, is being led by the Nomination Committee, which is
made up entirely of independent Non-Executive Directors
and chaired by the Senior Independent Non-Executive
Director, Richard Gillingwater. The current Chair, Jamie Pike,
and any candidate who is a current member of the Board
have been, and will remain, excluded from the process in
accordance with the Code. The Committee, working with
Egon Zehnder, has developed a job specification, which
candidates will be evaluated against, and a shortlist has
been developed. The appointment will be approved by the
full Board following interviews with all Directors.
As previously indicated, the Committee confirms that
Jamie will stand down as Chair and Non-Executive Director
in 2024 allowing also for a handover period with the
incoming Chair, who will be announced following their
appointment. In accordance with our Board succession
plans, we will follow a Code-compliant, rigorous and
independent procedure to determine Jamie’s successor,
supported by our external advisers.
Further information on how appointments to the Board are made
Composition, succession and evaluation continued
Nomination Committee Report continued
Board and Committee evaluation
In 2022, we followed up on the prior year recommendations
of Egon Zehnder and the Board carried out an internal
additional evaluation of the performance of the Board and
the Board Committees, in accordance with the provisions of
the Code.
The 2022 review emphasised the following strengths:
•
Strong sense of team identity and collaboration with high
levels of engagement. Trusted and respectful relationships
•
The Board felt guided by a clearly defined vision and
strategy for the Company
•
The Board fulfils its role in keeping sustainability objectives
top of mind for the Company
•
The Committees are clearly defined and serve a
distinct purpose
The 2022 review helped the Committee to consider the
following areas for improvement and these continued to be
•
Sufficient time for keeping abreast of industry trends,
competitor activity and where future threats may emerge
•
An opportunity to allow for more strategic discussion
and debate
For 2023, the Chair supervised and Egon Zehnder facilitated
each of the Board members. They were asked to respond to
review considered the strengths of the Board, the Colleague
Engagement Committee, the Remuneration Committee, the
Audit Committee and the Nomination Committee by looking
at individual capabilities and contributions, what the Board
does and the way in which the Board members work
together. By comparing the results between 2022 and 2023,
we were then able to evaluate areas where the Board has
issues related to the effective running of the Board and the
functioning of the Committees. The responses were
consolidated and anonymised, with common themes
identified for the Board to determine key actions and next
steps for improving Board and Committee effectiveness and
performance. We were pleased to see that the conclusions
of the 2023 review were positive, suggesting an overall
improvement from the prior year across all the
key dimensions.
Annual Report 2023134
Governance Report
The talent pipeline for all senior roles is prepared,
meet current business needs. This includes
consideration of whether a role can be filled internally,
Succession planning
The candidates in the pipeline are mentored by
members of the Committee. In particular, those
identified for medium or longer-term plans are provided
with training and support to aid the Company’s ability to
promote internal candidates, in line with the Board
Diversity Policy.
Identify and develop
was agreed that Nimesh Patel would be recommended
for appointment to the Board as Group CEO.
Appoint
Through retaining Nick Anderson within the Group until
the end of March 2024, the Board has ensured that
appropriate time for an orderly handover of the
business to the new Group CEO has been allowed for.
Transition and Handover
Review
Review of the succession plans for the most senior
roles takes place periodically. Immediately following
notification of an incumbent director’s upcoming
departure, plans are considered and scrutinised
in-depth by the Committee and an executive search
firm, taking into account the prospective Group CEO’s
expertise, leadership style, and the current composition
of the Board. This includes both an assessment of
interpersonal dynamics of internal and external
candidates and a skills matrix. In this case it was
decided that there was no need to continue a search
externally as the internal candidates were all strong.
The shortlisted candidates presented their proposed
future plans for the Group to the Board.
1
2
3
4
5
October 2023
Search criteria was developed
for Jamie Pike’s successor,
which included:
• Recent and relevant chief
executive and chair
experience
• Additional knowledge in
areas including data and
digital
• Executive search firm
December 2023
Committee received a long list
of candidates who were
contacted to establish their
interest in the role.
January-February 2024
Interviews and meetings.
March-April 2024
Committee meeting will
discuss the proposal to
appoint preferred candidate,
recommendation to the Board
and approval of their
appointment.
March 2024 onwards
Once a new Chair has been
appointed a full induction
programme will be initiated.
This will include visits to key
sites, meetings with senior
management to bring them
closer to decision makers and
those tasked with running the
day-to-day management of the
business.
Search Criteria
The SID, working with the Board
the Group Human Resources
Director, the Group General
Counsel and Company Secretary,
determines the search criteria
using a skills matrix considering
the long-term strategic priorities of
the Group. This is provided to an
executive search firm, who is
asked to ensure the search
includes a diverse range of
candidates from various
backgrounds and industries.
Review and Identify
The executive search firms
review the specification and
produce a long list of candidates
for the Committee to review.
The
SID identifies a shortlist of
candidates,
following feedback
from the Non-Executive
Directors. These candidates are
contacted to establish interest.
Assess
Candidates are interviewed by
the SID and assessed in line with
the candidate specification.
Informal meetings with other
Board members and the Group
CEO are also conducted with
preferred candidates to determine
chemistry and interpersonal
dynamics and assess whether
their skills and experience would
be additive to the Board as a
whole.
Appoint
The Committee reconvenes to
consider and discuss feedback
received. Once a decision has
been made, the successful
candidate is recommended for
appointment to the Board and
the Group General Counsel and
Company Secretary is tasked
with the formalities.
Induction
The final step is to provide our
new Chair with a robust
induction, tailored to suit their
individual needs. This is an
invaluable step to not only
support directors in meeting
their statutory duties, but also
give them a comprehensive
introduction to the business and
its strategic priorities.
Board succession planning
In light of the Committee’s most recent activities, we have taken the opportunity to provide an insight into our approach
to succession and induction of our new Group CEO and the timeline for the recruitment of our new Chair. All processes
are designed to ensure the appointment of our directors is strategic, orderly and comprehensive and are conducted with
the assistance of Egon Zehnder, our Executive Search consultants.
CEO succession process
As a result of the process Nimesh Patel, the serving
CFO, was selected resulting in a second search
being initiated to identify his replacement which
followed a similar process. Louisa Burdett has since
been appointed and will start with the Group in July
2024. Since Nimesh has been a part of the business
for a number of years, his induction is primarily
focused on providing a robust understanding of his
new responsibilities. Nick Anderson will remain as a
colleague until the end of March 2024 to assist with
the transition and handover.
Annual Report 2023 135
Governance Report
Board and Committee evaluation continued
In respect of 2022 areas of improvement, the 2023 review
indicated that both areas had improved, with the management
discussions around competitor activity, industry trends and
horizon scanning. The Board acknowledge that there is
always room for improvement but that there is a balance to
be struck between key short-term priorities and strategic
discussion and debate.
It also emphasised the following strengths:
•
Strong sense of clarity on the Vision, Values and Strategy
for the Group which creates an aligned and collaborative
culture across the Board
•
Continues to improve its effectiveness as it adopts and
implements previous review recommendations
•
Good balance of support and challenge to executive
management
The review helped us to consider the following areas for
improvement and these will continue to be addressed in the
coming year:
•
Consistent timely distribution of information to allow for
improved discussion and debate
•
External input on specific topics such as horizon scanning
to inspire debate
In 2024 a full, externally managed, Board evaluation will be
undertaken in compliance with the Code.
The Board has concluded that the performance of each of
the Directors standing for re-election continues to be effective
and that these Directors demonstrate commitment to their
role, including commitment of time for the Board and
Committee meetings and any other duties. Constance
Baroudel will stand for election following her appointment
during the year. With the exception of Nick Anderson who
stood down in January 2024, all other Directors including
the Chair who will, in any event, be stepping down during
stand for re-election at the 2024 Annual General Meeting
and the explanation of how they contribute to the success
of the Company can be found in the Notice of AGM. Louisa
Burdett’s appointment as Chief Financial Officer and
Executive Director takes effect after the 2024 AGM in July
2024. She will therefore stand for election at the first AGM
after her appointment takes effect, namely, May 2025.
We believe that the Board’s perspective and approach is
greatly enhanced by gender, age and cultural diversity and
we consider overall Board balance and diversity when
appointing new Directors. We also undertake reviews each
year of the bench strength of all senior executives and make
sure that diversity is considered in our succession planning
across senior roles.
The Company captures gender and diversity data of colleagues
through voluntary disclosure via the internal HR portal
where possible or direct contact where not. For the Board of
Directors, we seek individual permission to share this data
on an annual basis. We do not prescribe set gender or
ethnicity categories, but ask for directors to self-describe
in the Directors’ report on page 179 and further information
on diversity and inclusion within the Group can be found in
our Sustainability Report on pages 67 to 68.
We have a strong focus on inclusion and are committed to
improving diversity across our Group. As at 31st December
2023, the Company has met or exceeded two of the three
that it has met the 40% female representation target on the
Board and two Board members are from a minority ethnic
background exceeding the target of at least one individual.
target endorsed by the FTSE Women Leaders review that
would like to see a woman in at least one of these roles by
2025. As at 31st December 2023, the Company has not met
this target, however once Louisa joins the Board as the CFO
in July 2024 this target will have been achieved.
We would also like to highlight that two of our Board
Committees, the Remuneration and Colleague Engagement
Committees, are currently chaired by women, namely Jane
Kingston and Caroline Johnstone respectively.
In 2023, following a rigorous recruitment process during
which both male and female candidates were considered,
Constance Baroudel was appointed as a Non-Executive
director to replace Olivia Qiu who resigned in January 2023.
Diversity and inclusion is always a key consideration in the
Board recruitment process and is at the forefront of the
Committee’s mind when making nominations to the Board.
In line with a new Parker review target, in support of our
commitment and in addition to our gender diversity targets,
the Board has set a further target of 25% of senior
leadership, made up of our Group Executive Committee
ethnic groups by December 2027, currently this is 18.3%.
In 2023, Maria Wilson was appointed to our GEC. Our GEC is
to aim for 40% women on the GEC by December 2025 in line
with our Group Diversity Goals. Gender diversity of GEC
direct reports dropped slightly from 35.3% at the end of
2022 to 33.3% at the end of October 2023 (the data point
gender diversity of our senior leadership also dropped
slightly from 34.5% women to 31.7% in October 2023. We
remain committed to achieving a minimum of 40% women in
our senior leadership by December 2025, a goal already
achieved at Board level. Our Global Graduate Development
Programme exceeded its goal of 50% female intake for the
year, achieving 56%. We also achieved some progress on
increasing the number of women in commercial leadership
roles, taking this up to 11% by October 2023 with the
aspiration of reaching 20% by December 2025.
Women’s Executive Mentoring Programme and our partnerships
Composition, succession and evaluation continued
Nomination Committee Report continued
Annual Report 2023136
Governance Report
Network also continued to connect and support women and
allies across the Group. This included marking International
menopause awareness training and activity covering
wide-ranging topics such as endometriosis and menstrual
health, psychological safety and career development, as
well as allyship across genders.
his tenure, Nick Anderson, served as an Ambassador for the
CEOs in the FTSE 100 by 2025. Nimesh Patel, Group Chief
Executive Officer, continues his role as Co-Chair of the
FTSE Women Leaders Review which seeks to increase the
representation of women in senior leadership roles in
the FTSE 350 and top 50 private companies in the UK.
In 2023, we built on the 2022 launch of our global Inclusion
Commitments. This included:
•
Formally launching our Group Diversity goals at our Global
ambitions to continue to build our gender and ethnic diversity
•
Further developing our inclusion maturity framework and
piloting self-assessment against this in our Steam Thermal
•
roundtables with our Black and African American
colleagues and action planning with colleagues, leaders
and HR practitioners
•
global supplier selection and monitoring in collaboration
with Group Sustainability, as well as embedding inclusion
and wellbeing in our new Group Health and Safety
Excellence Framework
•
activity in Steam Thermal Solutions, Brazil, and in the
USA, including support for South Carolina Black Pride and
the Trevor Project
•
our new Group-wide education platform, Spark, including
learning on global anti-racism, menopause, mental health,
•
Continuing to grow our colleague networks with three
and Friends, and a Multicultural network
The Board was delighted to see that the progress made on
inclusion was recognised by colleagues around the world in
the 2023 Colleague Engagement Survey. Group-wide
to 78% and “I feel comfortable to be myself at work” increased
and wellbeing continue to be a Group-wide priority.
Our Board and Committees fully comply with and support
the principles of our Inclusion Plan,
our Group Inclusion Commitments and the Group Diversity
and Inclusion Policy, which was updated in 2023 to better
align with and reflect the Group’s focus on Diversity and
Inclusion. We also approved the Group’s ambitious new
Diversity goals. The Board believes that diverse teams bring
a great variety of thought, skills, experience and
perspectives to our Group. That diversity means we’re more
innovative and more creative and it helps ensure our
continued business success. It means we continue to grow
and it creates more opportunities for everyone – in short, our
difference is our strength.
We firmly believe that we have furthered our strategic plans
through our Succession and Inclusion Policies and our
Diversity goals.
We remain committed to developing a strong and diverse
Board and we have made progress in developing our
internal talent at the executive senior leadership level.
A copy of the Board Diversity Policy and the Group Diversity
and Inclusion Policy can be found on our website
spiraxgroup.com/governance-documents.
Chair of Nomination Committee
6th March 2024
Committee focus for 2024
•
Chair Succession
•
Preparations for Remuneration Committee Chair
succession in 2025
•
Executive succession at all senior levels
•
Implementation of the Group Inclusion Plan within
Vulcanic and Durex Industries
Further reading
Annual Report 2023 137
Governance Report
The Committee continues to support
management in building on the strong
foundations of controls, governance and reporting
which underpin Group operations.”
Chair of Audit Committee
Peter France
Richard Gillingwater
Caroline Johnstone
Committee role and responsibilities
The overall purpose of the Audit Committee is to oversee and
monitor the entire financial reporting and control process, to
ensure the integrity of the Group’s published financial
information and assurance over it.
The Committee’s published Terms of Reference are reviewed
annually and were last amended in October 2023. A full copy
can be found on the Group’s website, spiraxgroup.com/
governance-documents.
Within the Terms of Reference the Committee’s responsibilities
are separated into six main areas:
•
Financial Reporting
•
Internal Controls
•
Whistle-blowing
•
Risk Management
•
Internal Audit
•
External Audit
The Committee meeting agendas are tailored to ensure all the
identified areas are covered, while also allowing for emerging
topics to be included and permitting time for sufficient
discussion and review. A summary of the Committee’s activities
across each area during 2023 is detailed on the following pages.
The Committee is comprised entirely of independent Non-Executive
Directors. Except for Olivia Qiu, who stepped down from the
Committee in January 2023, all other members of the
Committee served throughout 2023. All members of the
Committee have a depth of financial and commercial
experience in various industries, as well as the industrial
engineering sector in which the Group operates. The
Committee expertise, together with their independence,
enables them to provide robust challenge to management, as
well as to the internal and external auditors to ensure their
duties under the Terms of Reference are fulfilled. For the
purposes of the UK Corporate Governance Code 2018 (the
Richard Gillingwater and Caroline Johnstone have recent,
competence in accounting.
Audit, risk and internal control
Audit Committee Report
%
Financial resilience, risk management and internal controls
and whistle-blowing
External audit and auditor effectiveness
Internal audit and fraud risk reviews
Presentations by Business Finance Directors
Results review and reporting
25% 20% 12%25%
10% 8%
Annual Report 2023138
Governance Report
Meetings in 2023
The Committee held five scheduled meetings during 2023.
Outside of formal meetings a number of the Committee
members engaged in working sessions with management
during the year in order to support audit and assurance
activities around the Group.
As with prior years, relevant members of the Group’s senior
management attended Committee meetings, including the
Group Chief Executive, the Chief Financial Officer, the Head
of Internal Audit and the Director of Group Finance.
Continuing the practice started in 2020, each of the Group’s
three Business Finance Directors were invited to attend and
present to the Committee during the year.
During 2023, the Committee received reports from Internal
and External Auditors on the major findings of their work
and the progress of management follow-up by way of
management reports. As a safeguard, the Committee holds
separate meetings with the Internal and External Auditors
without management present to discuss the respective
areas and any issues arising from their audit work.
During the year, tailored update sessions are delivered by
external providers to the Committee members in order to
provide detailed insight into current areas of Committee
focus, and these included a number of updates on proposed
Corporate Governance changes in the UK. A cyber security
focused session, including case studies of cyber-attacks on
public organisations, is already planned for early 2024.
Committee focus for 2024
•
The Group’s G3 internal controls improvement project
•
Our ongoing assurance journey with a particular focus
on sustainability reporting
•
The ongoing, multi-year projects to upgrade the ERP
systems in each Business
•
Progressing the integration of the Vulcanic and Durex
•
Continuing to monitor and prepare for the future
changes to the UK Corporate Governance Code
I am pleased to present the Audit Committee’s report for the
year ended 31st December 2023. The report is intended to
describe how the Committee discharged its core
responsibilities in overseeing and monitoring the Group’s
financial reporting and control processes to ensure the
integrity of the published financial information. I would also
like to highlight a number of important activities which the
Committee has undertaken during the last year in order to
During the year we have closely monitored the proposed
changes to the UK Corporate Governance Code, particularly
those which have been clarified in the FRC guidance
released in January 2024. We have worked closely with
management to support the Group’s internal controls
improvement ‘G3’ Project that aims to systematically
improve and standardise controls across the Group using a
risk-based framework. This workstream has been supported
with additional investment into our Governance teams and
supporting infrastructure, with team members being
geographically located close to the Group’s key operations
in order to partner with the operating businesses to support
implementation and provide best practice guidance. The
Group also undertook a detailed assurance mapping
exercise which was segmented into the key areas of
external reporting and disclosure. Following this exercise,
the Committee engaged with the Group Sustainability team
to conduct a deep dive into the current, upcoming and
develop a risk-based roadmap identifying specific focus
areas and those where increased levels of assurance will be
targeted over time.
the second half of 2022 and during the year the Committee
has continued to monitor and support the integration of
both businesses into the Group. This has involved
engagement with management responsible for the
integration, as well as both the Internal and External Audit
teams, and has covered a wide scope of underlying
activities, including Health and Safety standards, financial
reporting, internal controls and sustainability. All key sites
within both Vulcanic and Durex Industries have been visited
by the Internal and External Audit teams with a series of
action plans agreed for implementation during 2024.
Annual Report 2023 139
Governance Report
continued
Following the 2022 external audit tender and the
external auditor, the Committee has been pleased with the
rigour, level of challenge, clear communication and
understanding of the key drivers of our business have
productive relationship and valuable debate between
management, the Committee and the External Auditor. This
scores received from the Group’s key businesses appraising
the external audit process. As targeted during the audit
tender, the use of data analytics has continued to progress
during the year. Andrew Bond has led the Deloitte audit
relationship with the Group for the past five years and as we
transition to a new lead audit partner the Committee would
like to thank Andrew for the insight, diligence and guidance
he has provided during his tenure. As agreed during the
tender process, Dean Cook will replace Andrew from 2024
onwards. In order to facilitate an effective transition, Dean
has spent time with management and attended a number of
Committee meetings during the year. The Committee is also
pleased with the continuing strengthening of relationships
across the Group with other audit, assurance and
professional services firms, including those outside the ‘Big
Four’. These have facilitated a broader insight and debate
into current market practice, issues and trends.
The Committee continues to work closely with the Group
Internal Audit team and was pleased by the high standards
the team continues to drive and the valuable insight which
their work delivered. During the year, the team successfully
re-introduced their guest auditor programme, which had
been suspended since 2020 due to pandemic-related travel
restrictions. This allows members of the global finance
community to accompany the Internal Audit team on audit
assignments, providing a valuable learning and development
opportunity across the function as well as a varied
perspective across the audits.
In addition to the workstreams detailed above, the
constantly evolving environments in which the Group
operates. Examples of such issues which we have
responded to during the year include the FRC consultation
of proposed UK Corporate Governance Reforms, monitoring
the impact on the Group’s defined benefit pension schemes
in light of the continued market volatility in interest rates
and inflation, and a continued review of cash flow
performance, financial resilience and debt refinancing. The
Committee also remains focused on supporting the journey
to upgrade the ERP systems in each of the three Businesses
challenging the alignment with strategy and progress of
projects. These systems will provide a platform to deliver
operational efficiencies and control automation
opportunities. Against the backdrop of the corporate
criminal liability legislation, the Committee continues to
monitor and assess fraud risk with further progress made
this year implementing the actions from the risk assessment
workshops we held in 2022.
Audit, risk and internal control continued
Audit Committee Report continued
• Reviewed relevant sections of the 2022
Annual Report
•
of Internal Audit
• Reviewed External Auditor
independence and effectiveness
• Update on compliance with UK
Corporate Governance Code and
Anti-Bribery & Corruption and
Sanctions regulations
• Update on whistle-blowing calls made
to the Group’s Safecall service
• Update on the Group’s sustainability
reporting
• Confirmation of External Auditor
reappointment for FY2023
May
• Update on planning for the Half Year review
from External Auditor and management
• Update on the Internal Audit programme
• Annual approval of Auditor Engagement,
Non-Audit Services and Employment of Audit
Staff policies and the Adjusting Items policy
• Assessment of External Auditor Effectiveness,
Component Feedback
• Update from the Group’s Tax and Treasury
Committees
•
• Update on the Finance Vision and Roadmap
• Update on the Audit and Assurance Policy
• Presentation from the Steam Thermal
Solutions Business Finance Director
August
• Reviewed the Half Year results and
external announcement
• Reviewed the interim report of the
External Auditor
• Internal Audit update
• Reviewed Pension risk management
transactions
• Reviewed Group Treasury’s proposals
for Debt Refinancing
• Update on the Audit and Assurance Policy
•
Financial Reporting Council’s Minimum
Standards for Audit Committees
• Completed Committee self-assessment
and performance evaluation
•
critical supplier
• Update on Sanctions and Whistleblowing
Key activities undertaken
Annual Report 2023140
Governance Report
October
• External Audit planning for the Full Year results
• Reviewed schedule and preparations for the drafting of the
2023 Annual Report
• Carried out annual review of the Committee’s Terms
of Reference
• Update on sustainability reporting, including input
from Deloitte on market background and peers
• Update on Group’s Mandatory Contract Practices, including
a case study on Watson-Marlow Fluid Technology Solutions
• Update from Chair of the Group’s Risk Management
Committee
• Reviewed Internal Audit function’s self-assessment on
• Approved the Internal Audit plan for 2024
• Presentation from the Watson-Marlow Fluid Technology
Solutions Business Finance Director
• Update on, and review of management response to,
a Safecall case
• Update from External Auditor
• Update on the G3 internal controls project
• Update on the proposed disclosure changes in the 2023
Annual Report
• Update from Chair of the Group’s Risk Management
Committee
• Update on defined benefit pension schemes
• Cyber security update from the Group IT Director
•
• Presentation from the Electric Thermal Solutions Business
Finance Director
The Committee also spent time during the year assessing
the Group’s cyber security preparedness, including
understanding the key learnings arising from a ransomware
simulation exercise which was delivered by a third-party
specialist to the Group Executive Committee during the
year.
As I look back on the past year, I am pleased with the work
undertaken by the Committee on behalf of all our
stakeholders. The Committee continues to support
management in building on the strong foundations of
controls, governance and reporting which underpin Group
operations. I hope that this report provides appropriate
context and understanding around the work of the
Committee through the year. We remain committed to
responding to the expectations of all our stakeholders and,
as always, we welcome any feedback and look forward to
continued engagement during the coming year.
Annual Report 2023 141
Governance Report
1. Financial Reporting
Monitor the integrity of the
Group’s published financial
information and review and
challenge the significant
financial reporting issues
and judgements made in
connection with its
preparation and presentation.
•
Reviewed all externally published Financial reporting, along with the 2023 Annual Report
and Accounts, prior to recommendation to the Board including fair, balanced and
understandable assessment. Detailed papers prepared by management highlighting key
issues, judgements and estimates contained within reported financials
•
Detailed analysis of managements verification and internal review processes covering the
content of the external reporting releases
•
External Auditor reports and progress updates in relation to Interim results review and full
year Group audit
•
Detailed analysis of Going Concern and Viability reporting and underlying modelling
assumptions, including assessment of suitability of time period covered, the addition of
climate change considerations, and the scenario assumptions against the context of the
Group’s identified Principal Risks
•
Pension accounting and strategy, including assessment of assumptions used to value the
material schemes
•
Ongoing assessments of the appropriateness of the Group’s use of Alternative
Financial reporting matters and accounting judgements
The Committee is responsible for assessing whether suitable accounting policies have been adopted and whether
management has made appropriate judgements and estimates when applying these policies. During 2023, the Committee
considered and addressed the significant matters listed below in relation to the Group’s Financial Statements and disclosures.
In particular, the Committee challenged the reporting of adjusting items within the APMs relating to the Group’s
Consolidated Income Statement and the review of any potential impairment of goodwill. The Committee received regular
reports from management regarding these matters and they were the subject of detailed discussions by the Committee,
management and the External Auditor. The Committee also received reports from the External Auditor covering the work
undertaken and the conclusions reached in relation to each of these areas. As a result, the Committee reached the
conclusion that the proposed accounting treatments and resultant financial reporting were appropriate.
Revenue recognition
In view of the profile of revenue and profit recognition in
companies, a higher proportion of the annual external
need to focus on any new significant contracts and revenue
cut-off for certain Businesses was highlighted to ensure the
appropriate recognition of revenue for the year ended 31st
December 2023.
environment for revenue recognition and this review is
supported by the External Auditor. In particular, the
Committee reviews adherence to the Group’s policy to
recognise revenue when performance obligations have been
fulfilled which, in the majority of cases, is at time of dispatch
or delivery to the customer. After considering the combined
evidence, the Committee was able to conclude that revenue
recognition was appropriate during 2023 and at the year end.
Pensions
The Group operates four main defined benefit pension
assets of the four schemes totalled £328.9 million as at
31st December 2023 while the aggregate liabilities totalled
£363.0 million resulting in a net liability of £34.1 million.
All four schemes are now closed to future accrual.
There are judgements and estimates made in selecting
appropriate assumptions in valuing the Group’s defined
benefit pension obligations, including discount rates,
These variables can have a material impact in calculating
The Committee considered reports by management and
those from independent external specialists used to prepare
pension valuations. Management’s selection of assumptions
was challenged, and key assumptions were examined against
observable external benchmarks and market practices.
The Committee spent time during the year continuing to
closely monitor the impact on the pensions schemes and
the valuation assumptions resulting from the material market
movements in interest rates and inflation.
Based on this review (including reports from the External
the Committee is comfortable that the key assumptions and
accounting treatment are reasonable and appropriate.
Audit, risk and internal control continued
Audit Committee Report continued
Annual Report 2023142
Governance Report
Management override of controls
Internal controls are the
safeguards put in place by the
Group to protect its financial
resources against external and
potential internal fraud
alongside ensuring the
accuracy of reported financial
information. Management is
responsible for ensuring the
internal controls are followed
across the Group. As such,
intervention by management
in the handling of financial
information, especially in
relation to one-off or
judgmental transactions and
making decisions contrary to
the internal control policy is a
significant, if unlikely, risk.
Oversight of the Group’s risk management and internal control environment is provided by
the Group Executive and Risk Management Committees, supported by a number of
leadership and function committee meetings that occur regularly across the year. The
effectiveness of the execution of operational processes and controls by the operating
companies is periodically reviewed by the Group functions, and action plans put in place for
any policy non-compliances identified.
The Committee discussed the mitigation of control risks, with a particular focus on the level
of management reviews taking place within the Businesses, with both management and the
Business Finance Directors in their regular Committee presentations. The Committee also
Regular cycles of internal and external audits by independent parties are in place to review
financial information. The audits are objective reviews on compliance with the Group’s
accounting and internal control policies.
Management has an ongoing, multi-year internal controls improvement programme in order
to further review and enhance the internal financial control environment and the Committee
receives regular updates on progress. To support the programme, the Group continued to
invest in its Internal Controls function during 2023, including the addition of further team
members as well as the launching a groupwide IT system to track control compliance and
document remediation action plans.
In addition to the internal controls improvement programme, the ERP upgrade programmes
provide a further important opportunity to standardise and automate controls and
processes across the Group which will further enhance the overall control environment.
The Committee remains satisfied with the Group’s monitoring of the effectiveness of the
risk management and internal control systems and is supportive of the Group’s continuous
improvement journey in this area.
There is a high level of
judgement surrounding the
valuation of goodwill and the
risk of impairment in respect
As detailed in Note 14 to the
Consolidated Financial
Statements on page 218 the
largest goodwill balance as
at 31st December 2023 relates
to the Electric Thermal
Solutions Business of cash
The Committee received detailed reports from management outlining their evaluation of
goodwill and intangible assets for any potential impairments and the basis for key
assumptions and judgements used within their valuation models. The Committee focused
on the key assumptions and the associated disclosures around the valuation of goodwill
and intangible assets for the Electric Thermal Solutions Business, namely:
•
the move to using a cash flow forecast period of five years when estimating the value in
use of the Electric Thermal Solutions Business, noting that this represents a shorter
forecast period than that used in previous years reporting
•
the forecast operational performance in the business plan, in particular, sales and
generation assumptions
•
the discount rates applied to the cashflows resulting from the business plan, specifically
the determination of the input variables used to calculate the discount rate
•
the modelling outcomes when sensitivities were applied to represent reasonably possible
changes to key assumptions
The Committee concluded it was comfortable that key assumptions and associated
disclosures were reasonable and that the resulting value in use exceeded the reported
were applied.
1. Financial Reporting continued
Annual Report 2023 143
Governance Report
Audit, risk and internal control continued
Audit Committee Report continued
1. Financial Reporting continued
Going Concern, Viability Statement and financial resilience
During 2023 the Committee remained focused on
monitoring the Group’s financial resilience and overall
completed in the second half of 2022. The Committee
approved all the external debt financing activities
undertaken during the year, receives regular updates from
the Treasury Committee and noted that the Group operated
throughout 2023 comfortably within the leverage ratio
covenants contained within its external financing
arrangements.
The Group has continued its Viability Statement reporting in
underlying scenario modelling undertaken to ensure an
explicit link between the scenarios and the Group’s
identified Principal Risks. Additionally, the Group has added
further narrative in 2023 which references the potential
impact on Group assets and operations resulting from a
series of climate change scenarios. This scenario-based
analysis was supported by a specialist, external
consultancy. The Committee reviewed the 2023 Going
Concern and Viability Statements and were satisfied that
these represented accurate assessments of the Company’s
position at the date of the Financial Statements. For further
detail on the Going Concern and Viability Statements and
for additional information on the financial resilience of the
Group, please refer to pages 41 to 43.
Financial disclosures including Alternative Performance
In the year, the Committee reviewed the treatment of
specific adjusting items. These included the treatment and
presentation of costs related to:
•
The right-sizing of operations within the Watson-Marlow
Business
•
The impairment of software assets relating to an ERP
upgrade project in Steam Thermal Solutions
•
movement in the fair value of deferred consideration
Manufacturing LLC in 2021
During 2023, the Group undertook certain transactions
which were significant in nature and which management
proposed be classified as adjusting items to provide all our
stakeholders with additional useful information in order to
assess the period-on-period trading performance of the
Group. In the Group’s 2023 financial reporting, the
Committee supported a change in the presentation of such
adjusting items. Historically the Group included an
adjustments column within the Consolidated Income
Statement together with an Alternative Performance
the adjustments column and note to the accounts have
been removed and replaced with a glossary within the
Annual Report that contains full details and reconciliations
of all adjusting items and APMs. The Committee also
approved an updated Group policy covering such items
during the year.
All adjusting items were closely monitored by the
Committee with considerable time spent to understand,
review and challenge management’s classification. The
Committee also took account of the views of the External
Auditor and arrived at the conclusion that they supported
the disclosures made by management and considered the
classifications to be appropriate in each case.
The Committee continues to focus on the definitions and
usage of APMs noting the ongoing regulatory scrutiny on
such measures.
In addition, the Committee also reviewed the accounting
treatment and disclosures relating to a number of specific
transactions and situations that occurred within the year,
these included:
•
The associate investment Spirax Group has made in the
more information on this investment
•
The treatment and presentation of the financial results of
the Group’s operating companies located in Argentina
Annual Report 2023144
Governance Report
2. Internal controls
The Board has overall responsibility for the effectiveness of the Group’s internal controls and risk management frameworks.
Oversight of the Group’s risk management procedures and the operation of controls is undertaken by the Risk Management
Committee and the Group Executive Committee and further detail on these processes can be found on pages 98 to 105.
The Committee supports the Board and the Risk Management Committee by monitoring and assessing the effectiveness of
the Group’s internal controls processes as follows:
effectiveness of the Group’s
internal financial control
environment.
Receive reports from the Risk
Management Committee on
operational risks.
Review the Group’s Tax and
Treasury policies as well as
debt financing facilities and
the approach to management
of foreign exchange risk.
•
Review of all Internal and External Audit reports
•
Update on Group-wide training programmes (including mandatory courses on Health and
•
Annual reviews of the Group’s Tax and Treasury policies with the Group Head of Tax and
Group Treasurer attending the Committee meeting. Review by the Audit Committee Chair
of the minutes and actions of the Tax and Treasury Committee meetings that took place
during the year
•
Review and approval of all new Group external debt financing facilities entered into during
the year
•
Review of anticipated impacts of the incoming Pillar 2 OECD minimum tax rate legislation
•
Review of annual management papers on how the Group monitors the effectiveness of
the Group’s internal control processes
•
Reports from the functional leaders with responsibility for managing cybersecurity risk
•
Presentations from management detailing the progress achieved on the G3 internal
controls programme
•
In-depth presentations from the Group Sustainability team covering sustainability
•
Detailed reviews with the respective internal risk owner for two of the Group’s identified
Principal Risks
•
The Finance Director of each of the Group’s three Businesses presented to the Committee.
These updates included progress reports on the programmes to upgrade their core
information systems. Progress was compared to a series of identified critical success factors
During the year both management and the Committee continued to closely monitor the ongoing proposals by the UK
the work undertaken during the last two years, the Group has continued to invest significant time and resources in
understanding and preparing the Group for the anticipated impact of the proposals. The Group submitted a response to the
FRC consultation and is supportive of the announcements in late 2023 and January 2024 that refine the scope of the
The Group’s Chief Financial Officer and his finance leadership team have continued the implementation of their Group
financial controls within the Group. To support the Group’s Businesses to successfully embed the G3 programme, the Group
has continued to invest in its internal controls team who partner with the Group’s Businesses and provide a library of training
materials and a global online platform to track and monitor progress across the Group.
The Group currently employs a localised operating model which results in a large number of individual IT systems which
underpin business operations and the financial reporting processes. This strategy results in a disaggregated control
environment which is supported by a series of manual control processes operated locally and additional monitoring
activities at a Business and Group level. Through our control monitoring activities, opportunities to improve the control
environment are identified, these include improving the formality of control operations, including better retention of
evidence of a control’s operation sufficient for testing purposes; and limitations in certain segregation of duty, user access
and change management controls. Actions are put in place to respond to observations, which are reported to and monitored
by the Audit Committee. In addition, the ongoing multi-year internal controls improvement programme together with the ERP
upgrade programmes provide an important opportunity to standardise and automate controls and processes across the
Group which will further enhance the overall control environment by creating a more centralised and standardised operating
model, together with a more consolidated IT system landscape. The internal controls team are working alongside each of
the Group’s Businesses to support the ERP upgrade programmes to ensure that the Group effectively designs the systems
and underlying processes to embed and automate control activities. Following the FRC release of guidance relating to the
internal controls declaration effective for the December 2026 year end, we are evaluating our monitoring activities and also
the timing of the control improvement and ERP roll-out programmes.
Annual Report 2023 145
Governance Report
Audit, risk and internal control continued
Audit Committee Report continued
2. Internal controls continued
The Group has also continued to focus on mapping its current external reporting alongside the level of assurance it currently
obtains over its external disclosures. Following on from the structured risk review of all the Group’s external disclosures,
of different regulatory bodies, alongside the lack of established frameworks, creates challenges for all market participants.
The Committee supports the Group‘s continuing investment in its Group Sustainability reporting team which will focus on
further embedding data reporting processes and delivering the assurance journey to ensure continuing compliance with
More information on our risk management processes and the Key risks can be found in the Risk Management Committee
report on pages 150 to 154 and Risk Management section on pages 98 to 105.
The Group’s Safecall facility, a confidential colleague whistle-blowing platform, continued to be used across the Group
throughout 2023. The facility is actively advertised at all operating companies and allows any colleague to raise concerns,
anonymously if needed, where they feel activity is being undertaken which conflicts with the Group Management Code or
Values. Calls raised are investigated by the Group General Counsel and/or the Group Head of Internal Audit with the
arrangements that the Group has in place for colleagues.
Ensure appropriate processes are in place for the
proportionate and independent investigation of any matters
raised.
Receive reports of non-compliance with the Group’s policies
around fraud, bribery and unethical behaviour.
•
The Committee reviewed summaries of calls to the Group’s
whistle-blowing helpline which have been received and
investigated, or where investigation is in progress
•
Reviewed the outcome of any identified cases where Group
policies have been breached, together with details of the
actions taken by management alongside consideration of any
lessons learned
As a result of the Committee review it was satisfied that all calls received via Safecall were dealt with appropriately by
management. A limited number of breaches of the Group policies were identified during 2023. There was no material
financial loss in any of these instances and the Committee was supportive of the lessons learned during the year and the
follow-up actions taken by management to support and reinforce Group policies.
4. Risk management
Review the Group’s
procedures and controls
relating to:
•
Fraud
•
Bribery and unethical
behaviour
•
Money laundering
•
Compliance with legal and
•
Risk Management
Committee on operational
risk reporting and controls
•
Reviewed current approach to fraud risk management and participated in follow-up to an
internal cross-function workshop
•
Received reports from management detailing any identified cases of fraud and the resulting
actions being taken
•
Received input from the External Auditor and from the Internal Audit function as to their
observations and findings
•
Received updates from the Group Legal team on the training materials used across the Group
to educate colleagues on anti-bribery, money laundering and legal compliance. Additionally, a
deep dive into the identified Group Principal Risk covering a breach of legal and regulatory
•
Received updates from the Group Legal team on the Group’s mandatory contract practices,
communications around sanctions compliance
Annual Report 2023146
Governance Report
5. Internal Audit
Fraud
effectiveness of measures in place to prevent, detect and manage fraud. While it is not possible to completely eliminate
fraud risk from the organisation, the Committee is satisfied that measures currently in place are effective at managing and
reducing fraud risk to an acceptable level.
During the year, the existing top-down fraud risk assessment of the Group was reviewed. Improvements to fraud mitigation
measures such as further strengthening of third-party due diligence processes were undertaken.
A bottom-up fraud risk assessment exercise has commenced whereby the fraud risks and controls within 25 of the Group’s
largest operating units will be assessed, and further enhancements implemented as needed. In addition, a cross-functional
team has been established to refresh the Group’s Code of Conduct for rollout to all employees in 2024.
The Committee is cognisant that the ongoing monitoring and review of the effectiveness of the Group’s Internal Audit
function is a key responsibility which all our stakeholders look to the Committee for. During the year the Committee
undertook a number of actions in this area:
Monitor and review the
effectiveness of the Internal
Audit function.
Review, assess and approve
the annual Internal Audit plan.
Review the Internal Audit
reports and monitor the key
issues arising.
•
Assessed the independence and effectiveness of the Internal Audit function
•
Reviewed the results of the annual self-assessment of the function in addition to noting the
completion of a number of actions which resulted from the 2022 external review
•
Monitored key performance indicators of the function against pre-agreed targets
•
Monitored timely completion of internal audits against the 2023 audit plan and approved any
changes to the plan
•
Approved the internal audit activity plan and budget for 2024
•
Reviewed reports submitted periodically by the Head of Internal Audit of activities
undertaken, key audit findings and remediation actions and status reports on completion
of agreed action plans
•
Reviewed and approved the Internal Audit Charter
•
Held meetings with the Group Head of Internal Audit without management present
Throughout 2023, the Committee monitored the effectiveness of Internal Audit activity and the results of audits undertaken.
This provided valuable input into the Committee’s view on the effectiveness of the Group’s risk management, control and
governance framework.
During 2023, the Internal Audit team performed a total of 35 internal audits, which were all conducted through in-person
visits. By visiting the Business sites and locations to conduct the audits it provides a valuable opportunity to build strong
relationships with the local operating companies and to gather additional insights. The activity included audits of all the key
The majority of the operating companies audited were found to have an effective control environment. Where issues were
found, remediation actions were agreed that are tracked to completion and validated before being closed. To the extent that
any Internal Audit action items become overdue, the Business Finance Directors are engaged to assist with ensuring they
are closed as soon as possible. The Committee was satisfied that throughout 2023 management devoted significant
resource to the resolution of action items. The Committee receives regular reports on closure rates and will continue to
monitor outstanding actions. During the year, progress was made in reducing open and overdue high priority items.
The Internal Audit function has continued to develop its analytics capabilities and is ensuring it has the skills to support the
Group’s ERP upgrade programmes, as well as being able to take advantage of further automation opportunities which
consistent finance IT platforms will provide. The target is for analytics to be fully embedded across the Internal Audit
process including risk assessment, scoping, fieldwork testing and assessing the effectiveness of remediation actions
implemented. The Committee is satisfied that the internal audit function has sufficient skills and resources to discharge its
responsibilities effectively.
Annual Report 2023 147
Governance Report
6. External Audit
Oversee the relationship with the Group’s
External Auditor.
External Audit, including approval of the
scope of the annual audit plan and
associated fees, the underlying audit
procedures and approach and the controls
designed to ensure independence and
govern the provision of non-audit services.
Make recommendations to the Board on the
tendering of the External Audit, the
appointment process, remuneration and
engagement terms of the External Auditor.
•
Deloitte’s reports to the Committee covering its interim review and Full
Year audit outcome and opinion
•
Recommendation to reappoint Deloitte at the 2023 AGM
•
Review, challenge and approval of Deloitte’s 2023 audit plan and
associated fees
•
Tracking Deloitte’s progress against audit plan journey – specific areas of
focus included data analytics usage
•
•
Approval of Non-Audit Services Policy alongside processes to govern
auditor independence
•
Regular dialogue with Deloitte through the year, in addition to Committee
meeting time allocated with External Auditor without management present
The Company confirms that it has complied with the provisions of the CMA‘s Statutory Audit Services for Large Companies
for the financial year under review.
External audit effectiveness and quality
year the Committee engaged in a number of specific actions to ensure it continues to fulfil its obligations in this area. These
included:
•
The Committee reviewed the guidance
existing Committee processes and responsibilities in order to confirm compliance.
•
The Committee reviewed the FRC’s latest AQR report on audit
meeting. The Committee was satisfied with the outcome of this review.
•
Following the Group’s participation in the FRC’s pilot
review project on this area in 2022 the Committee agreed a set of AQIs against which Deloitte’s External Audit would be
measured. The criteria covered a variety of factors including: the experience of the audit team; the use of technology to
automate the audit process; the level of input from technical specialists within Deloitte; and the overall communication
process with the Committee. The Committee received a detailed breakdown of performance against the agreed criteria
and was pleased to see strong performance continuing against the agreed metrics.
•
The Committee discussed Deloitte’s detailed audit plan and proposed approach and the
planned scope of the audit during the year, together with the proposed materiality and the identified significant audit risks.
The number of Group operating companies included within the scope of the audit was increased for 2023, primarily due to
2022. Due to the increased size and scope of the Group the Committee worked with Deloitte to implement a
business-by-business structured approach to the 2023 audit. This involved Deloitte having specifically designated audit
teams and partners for each of the Group’s three Businesses, with each working closely with the central Deloitte team in
order to provide additional insight into the operations, controls and reporting within each Business.
As part of this detailed audit plan review, the Committee reviewed and approved the proposed audit fees. In reviewing the
audit fees, the Committee received a detailed breakdown of the proposed fees and was able to satisfy itself that the
•
The Committee considers it important to gather feedback from within the Group and
specifically from the finance teams within the operating companies which interact with the various Deloitte teams as part
of the audit process. Each local finance team is asked to provide feedback on the External Audit process by scoring a
the Committee and Deloitte for discussion with year-on-year movements in the results tracked and detailed. The
feedback from last year led to a number of positively received changes being implemented in the audit process for 2023.
The overall results and audit experience improved year-on-year and incremental opportunities to further improve the
process have been identified and agreed with the Committee for 2024.
Audit, risk and internal control continued
Audit Committee Report continued
Annual Report 2023148
Governance Report
•
Throughout the year, the
Committee worked closely with Deloitte and was able to
process and the performance of key individuals within the
Deloitte team. Throughout these interactions the
Committee felt that Deloitte delivered a consistently high
management’s assumptions, key judgements and
estimates whilst ensuring its audit process focused on the
key risk areas.
Andrew Bond has led the Deloitte audit relationship with
the Group for the past five years. As agreed during the
2022 tender process, Dean Cook will replace Andrew from
2024 onwards and in order to facilitate an effective
transition Dean has spent time with management and
attended a number of Committee meetings during the year.
Via the combination of the activities described above, the
Committee was able to conclude that Deloitte has provided
challenged management and ensured that the Committee
has received appropriate insight and feedback detailing the
process and results. The Committee was also pleased to
by Deloitte within the audit process this year in order to
controls assessment work being undertaken by Deloitte in
order to review and suggest improvements to each of the
Group’s Businesses as they continue on the journey to
upgrade their respective ERP systems.
Safeguarding Auditor independence and objectivity
The Committee recognises that the independence of the
External Auditor is an essential part of the audit framework
and has adopted a policy for determining whether it is
appropriate to engage the Group’s Auditor for non-audit
services. The Auditor Engagement Policy was reviewed and
updated during the year to align with the latest FRC Ethical
Standards. A copy of the Auditor Engagement Policy can be
found on the Group’s website, spiraxgroup.com/
governance-documents.
To safeguard independence and objectivity, the policy sets
out that the maximum period of an audit engagement
without an external tender process taking place is to be 10
years (calculated from the date of the first financial year
Audit provider to be rotated at least every 20 year. Further,
and in line with the Ethical Standard, the policy details the
non-audit services that the Auditor can undertake and
which of those services are subject to the non-audit
services cap.
On non-audit service caps and approvals, the policy states
that any expenditure with the Group’s Auditor on non-audit
fees should not exceed 70% of the average audit fees
charged in the last three-year period.
engagement in relation to the non-audit services are in
set in respect of non-audit services provided by the Auditor,
above which all individual engagements must be
pre-approved by the Committee.
In addition to the Group’s policy, the Auditor performs its
own independence and compliance checks, prior to
accepting any engagement, to ensure that all non-audit
work is compliant with the FRC’s Ethical Standard in force and
that there is no conflict of interest.
During the year, the Group spent £0.2 million on non-audit
services provided by Deloitte LLP, which included work
undertaken on the interim review. These non-audit fees
the past three years. Further details can be found in Note 6
on page 211.
Ensuring a fair, balanced and understandable
Annual Report
the Annual Report and Accounts, as a whole, to be fair,
balanced and understandable and therefore provides the
position, performance, business model and strategy.
During 2023, the Committee considered many components
of business performance to ensure it has a full
understanding of the operations of the Group. Key matters
considered by the Committee include:
•
Reviewing, understanding and supporting the key
judgements taken and estimates made
•
Risk areas set out in the Risk Management
Committee Report
•
Ensuring an appropriate balance of GAAP and non-GAAP
financial measures and disclosures
•
Receipt of regular strategy reports from the Group Chief
Executive and operational reports from the Business
Managing Directors
•
Briefing from the Group Head of Communications on key
reporting themes
•
Reviews of the budget and operational plan alongside the
financial performance
•
Recognising the internal co-ordination and review of the
Group-wide input into the Annual Report which runs
alongside the formal audit process undertaken by the
External Auditor
Through all the above, alongside its monitoring of the
effectiveness of the Company’s controls, Internal Audit and
risk management, the Committee maintains a good
understanding of business performance, key areas of
judgement and decision making processes within the Group.
As a result, the Committee advised the Board that it
considers the Group’s Annual Report to be fair, balanced
and understandable.
Chair of Audit Committee
6th March 2024
Further reading
Annual Report 2023 149
Governance Report
Effective risk management remains fundamental
to the resilience of our Group.”
Nimesh Patel
Chair of Risk Management Committee
Audit, risk and internal control
Risk Management Committee Report
Members
Our Risk Management Committee is comprised of
the Group Executive Committee and Dan Harvey
Membership
Sarah Peers
provided outside of the meeting
Committee roles and responsibilities
•
•
•
•
•
•
and countermeasures
How the Committee spent its time %
Risk register review
59% 29%
12%
Spirax Group 150
Governance Report
Chair’s review of 2023
Summary of key focus areas
Key activities
August
•
September
•
•
• Deep dive on ‘Loss of Manufacturing output at any Group
•
October
•
•
Respond to Changes in Customer Needs
•
December
•
•
of high economic growth which has positioned China as the
undertook an Enterprise Risk Management review to
Spirax Group 151
Governance Report
Chair’s review of 2023 continued
continued
Modern Slavery Statement
Identifying emerging and Principal Risks
they considered may affect their activities to ensure new or
countermeasures that Group operating companies have in
Monitoring effectiveness
(i) Risk management systems
risks facing the Group and the mitigation measures for those
Group-wide risk reports which are maintained and reviewed
First line of defence
Second line of defence
Third line of defence
(ii) Internal control framework
Identify/prioritise risks
Set risk appetite
Set operating principles
Produce and maintain detailed policies/procedures
Validate and test compliance with policies
Report on policy compliance
Manage exceptions
Audit, risk and internal control continued
Risk Management Committee Report continued
Spirax Group 152
Governance Report
Spirit Awards
expectations of operating companies for the operation of
identified from these processes and reviews give rise to
integrity and working in a way that is fair and honest and
(iii) Internal audit
Risk Appetite Statement
•
•
•
Spirax Group 153
Governance Report
Risk Appetite Statement continued
that come with those risks and we appreciate that without
Board and Audit Committee oversight
the Risk Management Committee and the Group Executive
Changes to the Committee
Viability Statement
Nimesh Patel
Chair of Risk Management Committee
Focus for 2024
•
•
•
Undertake a top-down risk assessment exercise
•
•
Undertake a deep dive assessment of a designated
•
•
Further reading
Audit, risk and internal control continued
Risk Management Committee Report continued
Spirax Group 154
Governance Report
The Committee is pleased the remuneration framework
has worked as expected, acting in shareholders’ best
interests by providing appropriate flexibility to support
Board changes while ensuring pay outcomes reflect
business performance.”
Jane Kingston
Chair of Remuneration Committee
Remuneration
Remuneration Committee Report
Members
Key activities undertaken
February and March
•
•
•
targets
•
•
2023 targets
•
• Review of 2022 gender pay gap and Group Chief Executive pay ratio
•
June
•
arrangements
August
•
•
•
arrangements
November and December
•
•
•
•
•
How the Committee spent its time %
PSP achievement and target setting
Gender pay gap and wider workforce pay
35%
15%
10%
20% 10%
10%
Committee role and responsibilities
Executive and senior manager remuneration having
Spirax Group 155
Governance Report
Introduction
performance this year and the intended arrangements for
Board changes
Nicholas Anderson – retirement
communities in which we operate and the impact we have
Nimesh Patel – appointment to Group CEO
Remuneration continued
Remuneration Committee Report continued
Remuneration principles
Our remuneration framework is structured to
interests of our Executive Directors with
committed to transparent communication
rewards performance against key
Risk Alignment to culture
can attract and retain the executives needed
strategies and the views of wider
years from the date of award creates
Spirax Group 156
Governance Report
Louisa Burdett – appointment to CFO
Context of business performance
Strategic alignment of pay
structures and incentive arrangements for Executive
2023 performance – key strategic highlights
Group adjusted operating profit
£349.1m
Group adjusted operating profit growth outturn
in respect of adjusted operating profit.
Earnings Per Share Growth
20.5%
Earnings per share grew over the three-year
Cash generation
£281.7m
AIP PSP
Spirax Group 157
Governance Report
Single figure table and incentive outcomes
achievement of demanding performance targets and is
Remuneration continued
Remuneration Committee Report continued
Annual Incentive Plan outcomes in 2023
Financial Non-financial
operating profit
Group cash
generation
% of AIP
20%
0% 0%
10% achieved
0% 0%
10% achieved
Single figure remuneration 2023
0 1,2001,000800600400200
N.B. Patel
N.J. Anderson
Fixed pay PSP
TSR
Application of discretion
Spirax Group 158
Governance Report
Stakeholder engagement (with colleagues
and shareholders)
advance of making any changes to the Executive Director
Wider colleague engagement
through the HR function to the Group Executive Committee
Committee ensures Executive Director remuneration is fair
Wider colleague pay arrangements
of our approach to setting country-specific percentage
Spirax Group 159
Governance Report
Pay arrangements for 2024
Committee agreed the incentive schemes worked as
performance metrics which together focus on driving
Remuneration continued
Remuneration Committee Report continued
Looking forward
Jane Kingston
Chair of Remuneration Committee
Committee focus for 2024
•
Continue to review the incentive arrangements to
•
•
remuneration issues
Spirax Group 160
Governance Report
Executive Directors’ remuneration framework
Pay outcomes for 2023
Pay subject to performance
extent the stretching performance conditions have
Pay at risk
Share ownership
Actual shareholding – achievement against guideline
Fixed pay
motivate high performing Executive
CEO CFO
5.3% inflationary
increase in January
2023 in line with other
UK senior leaders
•
•
• Pension
Payments made were
10% of maximum bonus
opportunity
•
• Measured against Group
18.9% of 2021 PSP
award vested
•
• Measured against EPS
Total payments for
of maximum potential
•
Fixed pay
Performance period
AIP
PSP
Year 5Year 4Year 3Year 2Year 1
800%
N.B. Patel
N.J. Anderson
+ + =
Fixed pay Total pay
AIP PSP
1,000%600%400%200%0%
% of salary shareholding
Spirax Group 161
Governance Report
Annual remuneration report
Governance
Advice to the Committee
Audited information
N.J. Anderson N.B. Patel
2023 2022 2023 2022
750,000 529,448
30,107 19,173
Pension
75,000 52,945
855,107 601,566
112,500
PSP
179,971 125,542
ESOP
1,788 1,883
294,259 193,606
1,149,366 795,172
Remuneration continued
Spirax Group 162
Governance Report
J. Pike R. Gillingwater J.S. Kingston K.J. Thompson
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Fees 309,000 76,800 76,800 76,800 76,800
Other — — — — — — — — — —
Total 309,000 76,800 76,800 76,800 76,800
P. France A. Archon
2023 2022 2023 2022 2023 2022 2023 2022
Fees 61,800 70,800 5,150 25,750 —
Other — — 50,379 0 — —
Total 61,800 121,179 5,150 25,750 —
Notes to the remuneration table
Additional requirements in respect of the single total figure table of remuneration
Performance-related pay earned in the year to 31st December 2023
For the 2023 AIP Executive Directors were measured against the following financial and non-financial objectives:
Group operating profit 70%
20%
10%
Group cash generation
Financial
Non-financial
Spirax Group 163
Governance Report
Remuneration continued
Additional requirements in respect of the single total figure table of remuneration continued
Performance related pay earned in the year to 31st December 2023 continued
Financial metrics
2023 measures
Actual
performance
Achieved
Threshold Target Maximum
% of metric achieved
% of metric achieved 0.0%
0.0%
Non-financial metrics – personal objectives
Personal strategic objectives 2023
•
•
performance
Strong progress made against a scorecard of
•
incorporate Gender and Ethnicity criteria during
assessment of ethnic diversity in the Senior Leadership
Result: Based on the above assessments, 100% of this metric was achieved.
Spirax Group 164
Governance Report
Personal strategic objectives 2023
•
•
Significant progress made in 2023 towards
identification and prioritisation of new
•
emphasis on achieving further gender and
as the Change the Race Ratio and co-Chairing
•
and systems
•
Strong progress made during the year to
Result: Based on the above assessments, 100% of this metric was achieved.
Spirax Group 165
Governance Report
Additional requirements in respect of the single total figure table of remuneration continued
Non-financial metrics – personal objectives continued
Performance targets
achieved
achieved
Not
achieved
% of
maximum
achieved
3 0 0
0 0
Bonus
Actual % of
maximum
Maximum
bonus
Bonus
TSR Vesting
Actual achievement Below median 0.0%
Vesting
Actual achievement 20.5% 31.5%
Remuneration continued
Spirax Group 166
Governance Report
No. of
shares
1
Price at
grant
Value at
grant
No. of
shares
vesting
Vesting
2
Vesting
value
Amount
attributable
to growth
in share
price
Scheme interests awarded during the period
PSP shares
granted
Face value of
1
of the
performance
period
Vesting at
threshold
performance
Performance measure Weight Threshold requirement Maximum requirement
EPS growth
2
30%
20%
Earnings per share growth 50%
30%
20%
Reduction in greenhouse gas emissions
Financial
Non-financial
Spirax Group 167
Governance Report
Remuneration continued
Additional requirements in respect of the single total figure table of remuneration continued
continued
Benefits (excluding pension)
Benefits N.J. Anderson N.B. Patel
Pension
Spirax Group 168
Governance Report
Directors to be appointed to the Board
Payments to past Directors
Payments for loss of office
External directorships
Statement of Directors’ shareholding and share interests
Share ownership guidelines
0% 1,400%1,200%1,000%800%600%400%200%
N. Patel
N. Anderson
Outstanding share interests
1
PSP
2
shares
Total
31.12.23
Total
3
— —
— —
— —
— —
— —
— —
— —
300 — — 300 300
Spirax Group 169
Governance Report
10.0%
PSP vesting
18.9%
Additional requirements in respect of the single total figure table of remuneration continued
Unvested share awards (included in the previous table)
performance conditions
Shares
performance
conditions
2022 2023
awards
13,786 38
8,515 40
Unaudited information
TSR performance graph
Aligning pay with performance
Remuneration continued
Dec 2020 Dec 2022 Dec 2023
300
200
0
Spirax Group 170
Governance Report
Percentage change in remuneration of the Directors and employees
% change on prior year for 2020 % change on prior year for 2022
fees
fees
fees
fees Benefits Bonus
7.1% 7.1 %
19.0% 7.1 %
5.3% 7.1 %
3.0%
2.4%
2.4%
2.4%
3.0%
18.0% 61.0%
3.0%
2.4%
Group Chief Executive pay ratio
25th percentile 50th percentile 75th percentile
2023
2022
2020
Single figure total remuneration
25th percentile 50th percentile 75th percentile
PSP — — —
Pension £0
ESOP
Year-on-year commentary
Spirax Group 171
Governance Report
Unaudited information continued
Relative importance of spend on pay
2023 2022 Change
Group average headcount 10,122
Statement of voting at the Annual General Meeting
for %
against %
Remuneration continued
Spirax Group 172
Governance Report
Operation of Policy for 2024
•
•
Pension
Annual Incentive Plan
Performance measure
Cash conversion 20%
Performance Share Plan
•
•
•
Performance measure Weight
EPS growth
30%
20%
Spirax Group 173
Governance Report
Unaudited information continued
Directors’ service agreements and letters of appointment
date
reappointment letter Notice period
as at
3 month
Chair and Non-Executive Directors
Remuneration Policy
Jane Kingston
Chair of Remuneration Committee
Remuneration continued
Spirax Group 174
Governance Report
Executive Directors’ 2023 Summary Remuneration Policy
Maximum potential value
not exceed the average increase
awarded to other Group
Pension
benefits
•
Company car and associated running costs or cash
•
•
Life assurance
•
related
benefits
Annual
Incentive Plan
Spirax Group 175
Governance Report
Maximum potential value
Performance
Share Plan
Share
Shareholding
requirement
For the Group Chief Executive
other Executive Directors the
Recruitment Policy and service contracts
Approach
Service contract
Pension
Remuneration continued
Executive Directors’ 2023 Summary Remuneration Policy continued
Spirax Group 176
Governance Report
Approach
Performance Share Plan
Termination Policy
Approach
common benefits
Performance Share Plan
Spirax Group 177
Governance Report
Remuneration continued
Non-Executive Directors’ 2023 Summary Remuneration Policy
•
•
•
basic fee
•
•
Additional fees
•
•
•
Committee Chair
•
Benefits
•
•
•
Remuneration framework for other colleagues
Spirax Group 178
Governance Report
Regulatory disclosures
Good governance is at the heart of our business
helping us to manage and progress our objectives.”
Scope of the reporting in this Annual Report
Directors
Biographies of the Directors and details of the gender and ethnic
The Directors present their report and
the audited Financial Statements of the
Group for the year ended 31st December
2023. The following regulatory
disclosures are made in compliance with
and the 2018 UK Corporate Governance
Spirax Group 179
Governance Report
Results
Dividend
Directors’ and Officers’ Insurance
Appointment, replacement and powers of Directors
Conflicts of interest
Directors may have and for the authorisation of such
Capital structure
was made up of ordinary shares which each carry one vote
are no restrictions on the transfer of shares in the Company
and there are no restrictions on the voting rights in the
Share capital – special rights and restrictions
on the transfer of ordinary shares in the Company other
shares or the exercise of any voting rights attached to the
Articles of Association
Regulatory disclosures continued
Spirax Group 180
Governance Report
Change of control
Substantial shareholdings
represent 3% or more of the voting rights attached to issued
Substantial
shareholdings
Number of
shares
% of
issued
share
capital
Number of
shares
% of
issued
share
capital
Management
Purchase of own shares
Auditor
Disclosure of information to the Auditor
Treasury and foreign exchange
enters into forward contracts and continues to monitor
Political donations
Spirax Group 181
Governance Report
Diversity and inclusion
Number of
Board
members
Percentage
of Board
Number of
senior
positions
on the
Board
Number in
executive
management
Percentage
of executive
management
Men
Women — 2
— — — — —
Number of
Board
members
Percentage
of Board
Number of
senior
positions
on the
Number in
executive
management
Percentage
of executive
management
3
— — — — —
— — —
— — — — —
— — — — —
Annual General Meeting
Regulatory disclosures continued
Spirax Group 182
Governance Report
Additional information
Location in Annual Report
Strategic Report
Strategic Report
and
230
2
Greenhouse gas emissions
Going concern statement
Statement
Spirax Group 183
Governance Report
Statement of Directors’ Responsibilities
Board of Directors
and fair view of the state of affairs of the Group and Parent
•
•
•
•
as a going concern
Cautionary statement
Responsibility statement
•
•
they face
•
Nimesh Patel
Group Chief Executive Officer
The Group navigated a challenging trading
Nimesh Patel
Group Chief Executive Officer
Spirax Group 184
Governance Report
Financial Statements
In this section
186 Independent Auditor’s Report
195 Consolidated Statement of Financial Position
196 Consolidated Income Statement
197 Consolidated Statement of Comprehensive Income
198 Consolidated Statement of Changes in Equity
199 Consolidated Statement of Cash Flows
200 Notes to the Consolidated Financial Statements
SpiraxGroup Annual Report 2023 185
Financial Statements
Independent Auditor’s Report
To the members of Spirax-Sarco Engineering plc
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
•
the Financial Statements of Spirax-Sarco Engineering plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give
a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the
Group’s profit for the year then ended;
•
the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board (IASB);
•
the Parent Company Financial Statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
•
the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
•
the Consolidated and Parent Company Statements of Financial Position;
•
the Consolidated Income Statement;
•
the Consolidated Statement of Comprehensive Income;
•
the Consolidated and Parent Company Statements of Changes in Equity;
•
the Consolidated Statement of Cash Flows;
•
the related notes 1 to 27 to the Consolidated Financial Statements and 1 to 11 for the Parent Company Financial Statements.
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable
law and United Kingdom adopted international accounting standards and IFRSs as issued by the IASB. The financial
reporting framework that has been applied in the preparation of the Parent Company Financial Statements is applicable law
and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the Financial
Statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the Financial Statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Group and Parent Company for the year are disclosed in note 6 to the
Financial Statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Keyauditmatters
The key audit matters that we identified in the current year were:
• goodwill valuation for the Electric Thermal Solutions (ETS) group cash generating units (CGU);
• defined benefit pension liability valuation for certain schemes; and
• revenue recognition in relation to cut off for certain components.
Materiality
The materiality that we used in the current year was £16.0m (2022: £17.8m) which was determined on the basis of
5% of forecast adjusted profit before tax.
Scoping
We completed full scope audit work on 24 reporting entities and specified audit procedures were performed on 16
reporting entities. Our full scope and specified audit procedures covered 72% of total Group revenue and 81% of
adjusted profit before tax.
Significantchanges
inourapproach
In the prior year, we identified the purchase price accounting for the acquisition of Vulcanic as a key audit matter
but this has been removed given there have been no significant acquisitions for the Group during 2023.
SpiraxGroup Annual Report 2023186
Financial Statements
4. Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the Financial Statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
•
evaluated the financing facilities available to the Group including nature of facilities, repayment terms and covenants;
•
considered the business model and principal risks and uncertainties;
•
challenged the assumptions used in the forecasts by reference to historical performance, trading run rate, and other
supporting evidence, such as the current macroeconomic environment;
•
recalculated and assessed the amount of headroom in the forecasts (cash and covenants);
•
performed a sensitivity analysis to consider specific scenarios including a reverse stress test; and
•
assessed the appropriateness of the going concern disclosures in the Financial Statements
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the Financial Statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the Financial Statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Financial Statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1. Goodwill valuation for the Electrical Thermal Solutions (ETS) group of CGU
Keyauditmatter
description
The Group holds £680.5m (2022: £703.3m) of goodwill. The value of goodwill for the ETS group of CGU as at the
balance sheet date was £494.7m (2022: £514.9m). Management performs an impairment review of the carrying
value of each CGU on an annual basis in line with the requirements of IAS 36. The impairment assessment
involves judgement in considering whether the carrying value of the CGU is recoverable.
There is a high level of judgement surrounding the valuation of goodwill due to the significant growth anticipated
in management forecasts. Key judgements include assumptions in estimating future revenue and earnings before
interest and tax (EBIT) margins in the short term (2024-2028), alongside setting an appropriate discount rate. We
have identified a key audit due to sensitivity of these assumptions.
The Audit Committee Report on page 138 refers to impairment of goodwill and other intangibles as an area
considered by the Audit Committee. Note 1 to the Consolidated Financial Statements sets out the Group’s
accounting policy for testing of goodwill for impairment. The basis for the impairment reviews is outlined in Note
14 to the Consolidated Financial Statements, including details of the discount rates and growth rates used. Note
14 to the Consolidated Financial Statements also includes details of the extent to which the CGU to which the
goodwill and other intangible assets are allocated are sensitive to changes in the key inputs.
SpiraxGroup Annual Report 2023 187
Financial Statements
Howthescope
ofouraudit
respondedtothe
keyauditmatter
In response to the key audit matter identified, we performed the following procedures:
• obtained an understanding and assessed relevant controls relating to the goodwill impairment review process;
• assessed the integrity of management’s impairment model through testing of the mechanical accuracy and
evaluating the application of the input assumptions;
• assessed the revenue and EBIT growth assumptions, held meetings with finance and commercial management
and visited two facilities within the ETS Business (Ogden and Durex Industries) to challenge and understand the
growth assumptions within the impairment model;
• considered external evidence, such as forecast IP and GDP growth, market reports and order intake, to assess
accuracy and reasonableness of management’s forecasts;
• compared the change in model assumptions from 2022 and understood the driver of any variances;
• evaluated historical forecasting accuracy by comparing prior year plans to actual results achieved;
• with the involvement from our internal valuations specialist, we assessed the discount rate used utilising their
knowledge and expertise;
• performed a sensitivity analysis on the assumptions used within the model;
• completed a stand back review by evaluating the reasonableness of the assumptions in aggregate, by
comparing the EBIT multiple of ETS to the EBIT multiple of the Group and enterprise value to the value in use;
and
• assessed the appropriateness of the related disclosures.
Keyobservations
From the work performed above we are satisfied that the value in use used in the goodwill impairment review for
the ETS Group of CGUs supports the carrying value. This was on the basis that the key assumptions, applied,
when taken in aggregate, are within our acceptable range. We consider the related disclosures to be appropriate.
5.2. Defined benefit pension liability valuation for certain schemes
Keyauditmatter
description
At 31st December 2023 the gross retirement benefit liability recognised in the Consolidated Statement of
Financial Position was £388.9m (2022: £393.7m). There is a risk of material misstatement relating to the
judgements made by management in valuing the defined benefit pension liabilities including the use of key model
input assumptions specifically the discount rates, mortality assumptions and inflation rates over the four main
schemes (three in the UK and one in the USA). These variables can have a material impact in calculating the
quantum of the retirement benefit liability. Management involved third party actuaries to complete valuations of
the pension liabilities.
Refer to Note 1 for the Group’s policy on defined benefit plans and post-retirement benefit key sources of
estimation uncertainty, Note 22 for the financial disclosure including the key estimates and assumptions used in
the defined benefit pension plan valuation and the significant issues section of the Audit Committee Report on
page 144.
Howthescope
ofouraudit
respondedtothe
keyauditmatter
We have obtained an understanding and assessed relevant controls relating to the pensions cycle.
We involved our internal actuarial specialists to assess key assumptions applied in determining the pension
obligations for the four main pension schemes, and determined whether the key assumptions are reasonable.
Testing covered 93.6% (2022: 93.9%) of defined benefit pension liabilities and is explained in more detail below.
For each of the four schemes, we challenged management’s key assumptions by reference to illustrative
benchmark rates, sensitising any difference between management’s rates and the illustrative benchmark rates.
Additionally, we benchmarked the key assumptions against other listed companies to check for any outliers in the
data used.
We also evaluated the management expert’s competence, capabilities and objectivity and assessed their reports
considering compliance with IAS 19 and IFRIC 14 and have considered the appropriateness of the related
disclosures.
Keyobservations
From the work performed, we are satisfied that the valuation of the defined benefit pension liability is appropriate
and the key assumptions applied in respect of the valuation of the schemes’ liabilities are reasonable.
Independent Auditor’s Report continued
SpiraxGroup Annual Report 2023188
Financial Statements
5. Key audit matters continued
5.3. Revenue recognition in relation to cut off for certain components
Keyauditmatter
description
The Group policy is to recognise revenue when performance obligations have been fulfilled which, in the majority
of cases, is at time of dispatch (‘ex works’) or at time of delivery (‘FOB’). We have identified a key audit matter
relating to a risk of material misstatement due to fraud in relation to cut off for revenue recognition.
In particular, we have identified a risk on revenue in components where external revenue recognised in December
2023 is both above the component’s materiality and contributes a higher proportion (10% or more) of annual
external revenue compared to the rest of the year. The risk for these components focuses on the recognition of
revenue by reference to the contracted shipping terms and meeting the performance obligations for product
despatches and deliveries spanning year end.
Refer to Note 1 for the Group’s revenue recognition policy and the significant issues section of the Audit
Committee Report on page 144.
Howthescope
ofouraudit
respondedtothe
keyauditmatter
Our audit response at the relevant components consisted of several procedures including:
• obtained an understanding and assessed relevant controls relating to the revenue cycle;
• evaluated the product despatch cycle and revenue recognition profile across the year-end period;
• evaluated a sample of items by assessing whether the performance obligation was met in line with the revenue
recognition date in accordance with the terms of trade with customers; and
• assessed the appropriateness of the related disclosures.
Keyobservations
From the procedures performed above, we consider that revenue across the Group has been appropriately
recognised and that the year-end cut off is materially accurate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
GroupFinancialStatements ParentCompanyFinancialStatements
Materiality
£16.0m (2022: £17.8m) £5.6m (2022: £6.2m)
Basisfor
determining
materiality
We determined materiality on the basis of 5% of
forecasted adjusted profit before tax (2022: 5% of
forecast adjusted profit before tax), this represents
5.2% of final adjusted profit before tax, as defined in the
Alternative Performance Measures appendix.
Parent Company materiality is set at 3% of net assets
(2022: 3% of net assets), which is capped at 50% of the
Group performance materiality. This is consistent with
prior year.
Rationaleforthe
benchmarkapplied
We have used adjusted profit before tax for determining
materiality. This is considered to be a key benchmark as
this metric is important to the users of the Financial
Statements (investors and analysts being the key users
for a listed entity) because it portrays the performance
of the business and hence its ability to pay a return on
investment to the investors.
We have considered net assets as the appropriate
measure given the Parent Company is primarily a
holding Company for the Group.
Adjusted PBT
Group materiality
Group materiality
£16.0m
Component
materiality range
£4.5m to £5.6m
Adjusted PBT
£309m
Audit Committee
reporting threshold
£0.8m
SpiraxGroup Annual Report 2023 189
Financial Statements
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the Financial Statements as a whole.
GroupFinancialStatements ParentCompanyFinancialStatements
Performance
materiality
70% (2022: 70%) of Group materiality 70% (2022: 70%) of Parent Company materiality
Basisandrationale
fordetermining
performance
materiality
In determining performance materiality, we considered our risk assessment, including our assessment of the
Group’s overall control environment and the level of corrected and uncorrected misstatements identified in previous
audits. We have also considered changes in key management personnel of the Group.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £800,000
(2022: £890,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of
the Financial Statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at the Group level. Based on that assessment, we focused our
Group audit scope primarily on the audit work at 40 components (2022: 34 components). 24 (2022: 24) of these were
subject to a full audit, whilst the remaining 16 components (2022: 10 components) were subject to specified audit
procedures where the extent of our testing was based on our assessment of the risks of material misstatement and of the
materiality of the Group’s operations at those components. These components represent the principal business units and
account for 72% (2022: 73%) of the Group’s revenue and 81% (2022: 85%) of the adjusted profit before tax. They were also
selected to provide an appropriate basis for undertaking audit work to address the risks of material misstatement identified
above. Our Group audit scoping remained consistent with prior year, except for changes made to reflect the material
contribution from the Vulcanic and Durex Industries acquisitions which ensured that we maintained our overall coverage,
particularly within the ETS division. The Parent Company is located in the UK and is audited directly by the Group audit
team. Our work on the components, including the Parent Company, was executed at levels of materiality applicable to each
individual component, which were lower than Group materiality and ranged from £4.5m to £5.6m (2022: £5.0m to £6.2m).
At the Parent Company level, we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information of the
remaining components not subject to audit or audit of specified account balances.
Revenue Profitbeforetax
59%
78%
28%
19%
Full audit scope
Specified audit procedures
Review at group level
Full audit scope
Specified audit procedures
Review at group level
13%
3%
Independent Auditor’s Report continued
SpiraxGroup Annual Report 2023190
Financial Statements
7. An overview of the scope of our audit continued
7.2. Our consideration of the control environment
The Group operates a range of IT systems which underpin the financial reporting processes. This can vary by geography
and/or reporting entity. For certain components subject to full scope audits, we identified relevant IT systems for the
purpose of our audit work. These were typically the principal Enterprise Resource Planning (ERP) systems for each relevant
component that govern the general ledger and transaction accounting balances and also included the Group’s consolidation
system. Our approach was principally designed to inform our risk assessment and, as such, with the involvement of our IT
specialists we obtained an understanding of relevant IT controls and tested the general IT controls for some operating entities.
In the current year we did not plan to rely on the operating effectiveness of controls (automated or otherwise). This strategy
reflected our historical knowledge of the: disaggregated nature of the control environment, which brings inherent
segregation of duty challenges in certain smaller businesses; limited formality of the control environment specifically around
retention of evidence of a control’s operation sufficient for testing purposes; and our understanding of the Group’s business
transformation programme to upgrade legacy systems, including gaps in associated user access and change management
controls. This understanding was reconfirmed in the current year and was factored into our planned audit approach and risk
assessment.
The Group-wide G3 programme seeks to enhance the internal control framework and has both IT and business control
aspects that span multi-years. Therefore, in addition to the audit work on IT controls described above, additional audit work
on controls was limited to obtaining an understanding of the relevant controls in key financial reporting process cycles to
inform our risk assessment.
The Group continues to invest time in responding to and addressing our observations on IT and entity level controls.
Management determines their response to these observations and continues to monitor their resolution with reporting to
and oversight from the Audit Committee as explained in the Audit Committee report on page 138, which includes
consideration of developments in control in the context of the recent FRC guidance and changes to the Combined Code. As
management develops and completes the business transformation project, we expect our audit approach to evolve in future
years alongside these developments in the internal control environment.
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its Financial Statements.
The Group has assessed the risk and opportunities relevant to climate change which has been included as an emerging risk
across the Group. This risk has also been considered and embedded into the businesses as explained in the Strategic
Report on page 99.
As a part of our audit procedures, we have obtained management’s risk register and held discussions with those charged
with governance to understand the process of identifying climate-related risks, the determination of mitigating actions and
the impact on the Group’s Financial Statements. While management has acknowledged that the transition and physical risks
posed by climate change have the potential to impact the medium to long term success of the business, they have assessed
that there is no material impact arising from climate change on the judgements and estimates determining the valuations
within the Financial Statements as at 31 December 2023 as explained in Note 1.
We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account
balances and classes of transaction, and did not identify any additional risks of material misstatement. We have also
evaluated the appropriateness of disclosures included in the Financial Statements and read climate-related disclosures
included in the Strategic Report to consider whether they are materially consistent with the disclosures made in Financial
Statements and our knowledge obtained in the audit.
7.4. Working with other auditors
The Group audit was conducted exclusively by a global network of Deloitte member firms under the direction and
supervision of the UK Group audit team. Dedicated members of the Group audit team were assigned to each component to
facilitate an effective and consistent approach to component oversight. We reviewed the work performed by component
teams and discussed the results with them. We maintained regular communication between the Group and component
teams and remote access to relevant documents was provided.
8. Other information
The other information comprises the information included in the annual report, other than the Financial Statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
SpiraxGroup Annual Report 2023 191
Financial Statements
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether
due to fraud or error.
In preparing the Financial Statements, the directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group and the Parent Company or to cease
operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
•
the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
•
Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by
the board on 6 March 2024;
•
results of our enquiries of management, internal audit, the Directors and the Audit Committee about their own
identification and assessment of the risks of irregularities, including those that are specific to the Group’s sector;
•
any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
•
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of
non-compliance;
•
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged
fraud;
•
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
•
the matters discussed among the audit engagement team including significant component audit teams and relevant
internal specialists, including tax, valuations, pensions and IT specialists regarding how and where fraud might occur in
the Financial Statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the following areas: revenue recognition in relation to cut-off for
certain components. In common with all audits under ISAs (UK), we are also required to perform specific procedures to
respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in
the Financial Statements. The key laws and regulations we considered in this context included the Companies Act, Listing
Rules, pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial
Statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty.
Independent Auditor’s Report continued
SpiraxGroup Annual Report 2023192
Financial Statements
11. Extent to which the audit was considered capable of detecting irregularities, including fraud continued
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition in relation to cut-off for certain components as a key
audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more
detail and also describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
•
reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the Financial Statements;
•
enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and
claims;
•
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
•
reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with HMRC; and
•
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal
course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialist and significant component audit teams, and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
•
the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 41;
•
the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 42;
•
the directors’ statement on fair, balanced and understandable set out on page 108;
•
the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 152;
•
the section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on pages 152 and 153; and
•
the section describing the work of the Audit Committee set out on page 138.
SpiraxGroup Annual Report 2023 193
Financial Statements
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not received all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the Parent Company Financial Statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Directors and subsequently at the Annual
General Meeting on 11 May 2014 to audit the Financial Statements for the year ending 31 December 2014 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm
is 10 years, covering the years ending 31 December 2014 to 31 December 2023.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR
4.1.18R, these Financial Statements will form part of the Electronic Format Annual Financial Report filed on the National
Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance
over whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR
4.1.18R.
AndrewBond,FCA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
6 March 2024
Independent Auditor’s Report continued
SpiraxGroup Annual Report 2023194
Financial Statements
Consolidated Statement of Financial Position
at 31st December 2023
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Assets | |||
| Non-currentassets | |||
Property, plant and equipment | 12 | ||
Right-of-use assets | 13 | ||
Goodwill | 14 | ||
Other intangible assets | 14 | ||
Prepayments | |||
Investment in Associate | 11 | ||
Taxation recoverable | |||
Deferred tax assets | 15 | ||
| Currentassets | |||
Inventories | 16 | ||
Trade receivables | 27 | ||
Other current assets | 17 | ||
Taxation recoverable | |||
Cash and cash equivalents | 23 | ||
Totalassets | |||
| Equityandliabilities | |||
| Currentliabilities | |||
Trade and other payables | 18 | ||
Provisions | 19 | ||
Bank overdrafts | 23 | ||
Current portion of long-term borrowings | 23 | ||
Short-term lease liabilities | 23 | ||
Current tax payable | |||
Netcurrentassets | |||
| Non-currentliabilities | |||
Long-term borrowings | 23 | ||
Long-term lease liabilities | 23 | ||
Deferred tax liabilities | 15 | ||
Post-retirement benefits | 22 | ||
Provisions | 19 | ||
Long-term payables | |||
Totalliabilities | |||
Netassets | 2 | ||
| Equity | |||
Share capital | 20 | ||
Share premium account | |||
Translation reserve | 20 | ( | |
Other reserves | 20 | ( | ( |
Retained earnings | |||
Equity shareholders’ funds | |||
Non-controlling interest | |||
Totalequity | |||
Totalequityandliabilities |
SpiraxGroup Annual Report 2023 195
Financial Statements
| 2023 | 2022 | ||
| Notes | £m | £m | |
Revenue | 2 | ||
Operating costs | 3 | ( | ( |
Operatingprofit | 2 | ||
Financial expenses | ( | ( | |
Financial income | |||
Net financing expense | 2, 5 | ( | ( |
Share of profit/(loss) of Associate | 11 | ||
Profitbeforetaxation | 6 | ||
Taxation | 8 | ( | ( |
Profitfortheyear | |||
| Attributable to: | |||
Equity shareholders | |||
Non-controlling interest | |||
Profitfortheyear | |||
Earningspershare | 9 | ||
Basic earnings per share | |||
Diluted earnings per share | |||
Dividends | 10 | ||
Dividends per share | |||
Dividends paid during the year (per share) |
The Notes on pages 200 to 239 form an integral part of the Financial Statements.
Consolidated Income Statement
for the year ended 31st December 2023
SpiraxGroup Annual Report 2023196
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2023
| 2023 | 2022 | ||
| Notes | £m | £m | |
Profitfortheyear | |||
| Items that will not be reclassified to profit or loss: | |||
Remeasurement loss on post-retirement benefits | 22 | ( | ( |
Deferred tax on remeasurement loss on post-retirement benefits | 22 | ||
( | ( | ||
| Items that may be reclassified subsequently to profit or loss: | |||
Foreign exchange translation and net investment hedges (loss)/gain | 20 | ( | |
Transfer to Consolidated Income Statement of cumulative translation differences on disposal of subsidiaries | 26 | ||
Gain/(loss) on cash flow hedges net of tax | 20, 27 | ( | |
( | |||
Totalcomprehensiveincomefortheyear | |||
| Attributable to: | |||
Equity shareholders | |||
Non-controlling interest | |||
Totalcomprehensiveincomefortheyear |
Consolidated Statement of Changes in Equity
for the year ended 31st December 2023
| Share | Equity | Non- | |||||||
| Share | premium | Translation | Other | Retained | shareholders’ | controlling | Total | ||
| capital | account | reserve | reserves | earnings | funds | interest | equity | ||
| Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
Balanceat1stJanuary2023 | ( | ||||||||
Profitfortheyear | |||||||||
| Other comprehensive (expense)/ | |||||||||
| income: | |||||||||
| Foreign exchange translation and net | |||||||||
investment hedges loss* | 20 | ( | ( | ( | |||||
| Remeasurement loss on post-retirement | |||||||||
benefits | 22 | ( | ( | ( | |||||
Deferred tax on remeasurement loss on post-retirement benefits | 15, 22 | ||||||||
Gain on cash flow hedges net of tax* | 20, 27 | ||||||||
| Totalothercomprehensive(expense)/ | |||||||||
incomefortheyear | ( | ( | ( | ( | |||||
| Totalcomprehensive(expense)/ | |||||||||
incomefortheyear | ( | ||||||||
| Contributions by and distributions | |||||||||
| to owners of the Company: | |||||||||
Dividends paid | 10 | ( | ( | ( | ( | ||||
Equity settled share plans net of tax | ( | ( | ( | ||||||
Issue of share capital | 20 | ||||||||
Employee Benefit Trust shares | 20 | ||||||||
Balanceat31stDecember2023 | ( | ( |
* During the year, there has been a reclassification in relation to prior year deferred tax on cash flow hedges of £0.9 m
Other reserves represent the Group’s cash flow hedges, capital redemption and Employee Benefit Trust reserves (see Note
20). The non-controlling interest is a 2.5% share of Spirax Sarco Korea Ltd.
SpiraxGroup Annual Report 2023 197
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31st December 2022
| Share | Equity | Non- | |||||||
| Share | premium | Translation | Other | Retained | shareholders’ | controlling | Total | ||
| capital | account | reserve | reserves | earnings | funds | interest | equity | ||
| Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
Balanceat1stJanuary2022 | ( | ( | |||||||
Profitfortheyear | |||||||||
| Other comprehensive income/ | |||||||||
| (expense): | |||||||||
| Foreign exchange translation and net | |||||||||
investment hedges gain | 20 | ||||||||
| Transfer to Consolidated Income | |||||||||
| Statement of cumulative translation | |||||||||
differences on disposal of subsidiaries | 20,26 | ||||||||
| Remeasurement loss on post-retirement | |||||||||
benefits | 22 | ( | ( | ( | |||||
Deferred tax on remeasurement loss on post-retirement benefits | 15,22 | ||||||||
Loss on cash flow hedges net of tax | 20,27 | ( | ( | ( | |||||
| Totalothercomprehensiveincome/ | |||||||||
(expense)fortheyear | ( | ( | |||||||
| Totalcomprehensiveincome/ | |||||||||
(expense)fortheyear | ( | ||||||||
Contributions by and distributions to owners of the Company: | |||||||||
Dividends paid | 10 | ( | ( | ( | ( | ||||
Equity settled share plans net of tax | ( | ( | ( | ||||||
Issue of share capital | 20 | ||||||||
Employee Benefit Trust shares | 20 | ( | ( | ( | |||||
Balanceat31stDecember2022 | ( |
SpiraxGroup Annual Report 2023198
Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31st December 2023
| 2023 | 2022 | ||
| Notes | £m | £m | |
| Cashflowsfromoperatingactivities | |||
Profit before taxation | |||
Depreciation, amortisation and impairment | 2,3 | ||
Loss/(profit) on disposal of property, plant and equipment | 6 | ( | |
Cash payments to the pension schemes greater than the charge to operating profit | 22 | ( | ( |
(Profit)/loss on disposal of businesses | ( | ||
Acquisition-related costs | |||
Restructuring-related provisions and current asset impairments | ( | ||
Equity settled share plans | 22 | ||
Net financing expense | 5 | ||
Operatingcashflowbeforechangesinworkingcapitalandprovisions | |||
Decrease/(increase) in trade and other receivables | ( | ||
(Increase)/decrease in inventories | ( | ( | |
Increase/(decrease) in provisions | ( | ||
(Decrease)/increase in trade and other payables | ( | ||
Cashgeneratedfromoperations | |||
Income taxes paid | ( | ( | |
Netcashfromoperatingactivities | |||
| Cashflowsfrominvestingactivities | |||
Purchase of property, plant and equipment | 12 | ( | ( |
Proceeds from sale of non-current assets | |||
Purchase of software and other intangibles | 14 | ( | ( |
Development expenditure capitalised | 14 | ( | ( |
Disposal of businesses | ( | ||
Acquisition of businesses net of cash acquired | 25 | ( | ( |
Interest received | 5 | ||
Netcashusedininvestingactivities | ( | ( | |
| Cashflowsfromfinancingactivities | |||
Proceeds from issue of share capital | 20 | ||
Employee Benefit Trust share purchase | ( | ( | |
Repaid borrowings | 23 | ( | ( |
New borrowings | 23 | ||
Interest paid and interest on lease liabilities | 5 | ( | ( |
Repayment of lease liabilities | 23 | ( | ( |
Dividends paid (including minorities) | ( | ( | |
Netcashusedinfinancingactivities | ( | ||
Netchangeincashandcashequivalents | 23 | ( | |
Net cash and cash equivalents at beginning of the year | 23 | ||
Exchange movement | 23 | ( | |
Netcashandcashequivalentsatendoftheyear | 23 | ||
Borrowings | 23 | ( | ( |
Netdebtatendoftheyear | 23 | ( | ( |
Leaseliabilities | 23 | ( | ( |
Netdebtincludingleaseliabilitiesatendoftheyear | 23 | ( | ( |
SpiraxGroup Annual Report 2023 199
Financial Statements
1 Accounting policies
Notes to the Consolidated Financial Statements
SpiraxGroup Annual Report 2023200
Financial Statements
1 Accounting policies continued
Basis of preparation continued
SpiraxGroup Annual Report 2023 201
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
Basis of accounting continued
SpiraxGroup Annual Report 2023202
Financial Statements
1 Accounting policies continued
SpiraxGroup Annual Report 2023 203
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
Intangible assets continued
SpiraxGroup Annual Report 2023204
Financial Statements
1 Accounting policies continued
Going concern continued
SpiraxGroup Annual Report 2023 205
Financial Statements
Notes to the Consolidated Financial Statements continued
1 Accounting policies continued
Revenue continued
SpiraxGroup Annual Report 2023206
Financial Statements
1 Accounting policies continued
SpiraxGroup Annual Report 2023 207
Financial Statements
Notes to the Consolidated Financial Statements continued
2 Segmental reporting
As required by IFRS 8 Operating Segments, the segmental structure reflects the current internal reporting provided to the
Chief Operating Decision Maker (considered to be the Board) on a regular basis to assist in making decisions on resource
allocation to each segment and to assess performance.
The Group is organised into 3 segments with the following core product expertise:
•
Steam Thermal Solutions - Industrial and commercial steam systems
•
Electric Thermal Solutions - Electrical process heating and temperature management solutions
•
Watson-Marlow - Peristaltic and niche pumps and associated fluid path technologies
No changes to the structure of operating segments have been made during the current period.
Analysis by operating segment
2023
| Total | |||
| operating | Operating | ||
| Revenue | profit | margin | |
| £m | £m | % | |
Steam Thermal Solutions | 910.1 | 205.2 | 22.5% |
Electric Thermal Solutions | 378.5 | 25.8 | 6.8% |
Watson-Marlow | 394.0 | 81.2 | 20.6% |
Corporate | — | (27.8) | |
Total | 1,682.6 | 284.4 | 16.9% |
Net financing expense | (39.9) | ||
Share of (loss)/profit of Associate | — | ||
Profit before tax | 244.5 |
2022
| Total | |||
| operating | Operating | ||
| Revenue | profit | margin | |
| £m | £m | % | |
Steam Thermal Solutions | 866.0 | 196.2 | 22.7% |
Electric Thermal Solutions | 256.1 | 7.3 | 2.9% |
Watson-Marlow | 488.5 | 154.4 | 31.6% |
Corporate | — | (39.1) | |
Total | 1,610.6 | 318.8 | 19.8% |
Net financing expense | (10.7) | ||
Share of (loss)/profit of Associate | — | ||
Profit before tax | 308.1 |
The following table details the split of revenue by geography for the combined Group:
| 2023 | 2022 | |
| £m | £m | |
Europe, Middle East and Africa | 718.7 | 649.6 |
Asia Pacific | 357.4 | 384.3 |
Americas | 606.5 | 576.7 |
Total revenue | 1,682.6 | 1,610.6 |
Revenue generated by Group companies based in the USA is £454.2m (2022: £433.0m), in China is £177.8m (2022:
£213.2m), in Germany is £153.2m (2022: £134.3m), in the UK is £110.0m (2022: £115.7m) and in the rest of the world is
£787.4m (2022: £714.4m).
SpiraxGroup Annual Report 2023208
Financial Statements
2 Segmental reporting continued
Net financing income and expense
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
| Income | Expense | Net | Income | Expense | Net | |
| £m | £m | £m | £m | £m | £m | |
Steam Thermal Solutions | 4.1 | (3.3) | 0.8 | 3.6 | (1.8) | 1.8 |
Electric Thermal Solutions | 0.8 | (1.6) | (0.8) | 0.3 | (0.5) | (0.2) |
Watson-Marlow | 0.9 | (1.2) | (0.3) | 0.3 | (0.6) | (0.3) |
Corporate | 5.5 | (45.1) | (39.6) | 1.4 | (13.4) | (12.0) |
Total net financing expense | 11.3 | (51.2) | (39.9) | 5.6 | (16.3) | (10.7) |
Net assets
| 2023 | 2023 | 2022 | 2022 | |
| Assets | Liabilities | Assets | Liabilities | |
| £m | £m | £m | £m | |
Steam Thermal Solutions | 714.1 | (203.7) | 756.8 | (219.2) |
Electric Thermal Solutions | 1,128.8 | (82.7) | 1,171.9 | (80.2) |
Watson-Marlow | 429.3 | (43.6) | 423.8 | (55.3) |
Corporate* | 31.9 | (1.1) | 15.5 | (7.4) |
2,304.1 | (331.1) | 2,368.0 | (362.1) | |
Liabilities | (331.1) | (362.1) | ||
Net deferred tax | (37.2) | (59.1) | ||
Net tax payable | (14.7) | (21.4) | ||
Net debt including lease liabilities | (763.4) | (755.6) | ||
Net assets | 1,157.7 | 1,169.8 |
* In order to align with how we manage net assets across the Group, we have reallocated specific assets and liabilities to the corporate operating
segment in both the current period and the comparative periods. In the prior year, for assets, £9.6m has been allocated out of Steam Thermal
Solutions with the remaining balance split between Electric Thermal Solutions and Watson-Marlow. For liabilities, £7.6m has been allocated out of
Steam Thermal Solutions with the remaining adjustment split between Electric Thermal Solutions and Watson-Marlow.
Non-current assets in the USA were £689.1m (2022: £686.8m), in France were £388.7m (2022: £403.1m), in the UK were
£251.1m (2022: £284.1m), in Germany were £161.0m (2022: £165.6m) and in the rest of the world were £193.7m (2022:
£191.8m).
Capital additions, depreciation, amortisation and impairment
| 2023 | 2022 | |||
| 2023 | Depreciation, | 2022 | Depreciation, | |
| Capital | amortisation | Capital | amortisation | |
| additions | andimpairment | additions | and impairment | |
| £m | £m | £m | £m | |
Steam Thermal Solutions | 48.2 | 47.9 | 43.8 | 32.9 |
Electric Thermal Solutions | 32.2 | 40.3 | 285.4 | 24.7 |
Watson-Marlow | 66.6 | 24.5 | 76.4 | 19.0 |
Corporate* | 14.1 | — | 3.3 | 4.4 |
Group total | 161.1 | 112.7 | 408.9 | 81.0 |
* In order to align with how we manage net assets across the Group, we have reallocated specific capital additions, depreciation, amortisation and
impairment to the corporate operating segment in both the current period and the comparative periods. In the prior year, both capital additions
and depreciation, amortisation and impairment have been allocated out of Steam Thermal Solutions.
Capital additions include property, plant and equipment of £84.0m (2022: £135.0m) and intangible assets of £25.0m (2022:
£258.3m). Right-of-use asset additions of £52.1m (2022: £15.6m) occurred during the 12-month period to 31st December
2023. Capital additions split between the USA, UK and rest of the world are USA £68.7m (2022: £186.4m), UK £43.6m
(2022: £51.8m) and rest of the world £48.8m (2022: £170.7m).
SpiraxGroup Annual Report 2023 209
Financial Statements
Notes to the Consolidated Financial Statements continued
| 2023 | 2022 | |
| £m | £m | |
Cost of inventories recognised as an expense | 402.5 | 385.1 |
Staff costs (Note 4) | 630.4 | 570.3 |
Depreciation, amortisation and impairment | 112.7 | 81.0 |
Other operating charges | 252.6 | 255.4 |
Total operating costs | 1,398.2 | 1,291.8 |
4 Staff costs and numbers
The aggregate payroll costs of persons employed by the Group were as follows:
| 2023 | 2022 | |
| £m | £m | |
Wages and salaries | 523.1 | 463.2 |
Social security costs | 82.0 | 79.9 |
Pension costs | 29.1 | 29.2 |
Total payroll costs | 634.2 | 572.3 |
The average number of persons employed by the Group (including Directors) during the year was as follows:
2023 | 2022 | |
United Kingdom | 2,608 | 2,699 |
Rest of the world | 7,514 | 6,670 |
Group average | 10,122 | 9,369 |
| 2023 | 2022 | |
| £m | £m | |
| Financial expenses | ||
Bank and other borrowing interest payable | (46.9) | (14.0) |
Interest expense on lease liabilities | (2.2) | (1.5) |
Net interest on pension scheme liabilities | (2.1) | (0.8) |
(51.2) | (16.3) | |
| Financial income | ||
Bank interest receivable | 11.3 | 5.6 |
Net financing expense | (39.9) | (10.7) |
Net bank interest | (35.6) | (8.4) |
Interest expense on lease liabilities | (2.2) | (1.5) |
Net interest on pension scheme liabilities | (2.1) | (0.8) |
Net financing expense | (39.9) | (10.7) |
SpiraxGroup Annual Report 2023210
Financial Statements
| 2023 | 2022 | |
| £m | £m | |
Depreciation of property, plant and equipment | (35.5) | (33.2) |
Depreciation of right-of-use assets | (16.2) | (13.5) |
Amortisation of acquired intangibles | (37.2) | (23.7) |
Amortisation of other intangibles | (8.1) | (8.1) |
Non-current asset impairment | (15.7) | (2.5) |
Leases exempt from IFRS 16 (short-term, low value or variable lease payments) | (3.1) | (2.5) |
Exchange difference gains | 1.8 | 5.1 |
(Loss)/profit on disposal of non-current assets | (0.1) | 1.4 |
Research and development | (16.8) | (15.8) |
| 2023 | 2022 | |
| £m | £m | |
Audit of these Financial Statements | 0.7 | 0.4 |
| Amounts receivable by the Company’s Auditor and its Associates in respect of: | ||
Audit of Financial Statements of subsidiaries of the Company | 1.9 | 1.9 |
Total audit fees | 2.6 | 2.3 |
Audit-related assurance services | 0. 2 | 0.1 |
Total non-audit fees | 0.2 | 0.1 |
Total Auditor’s remuneration | 2.8 | 2.4 |
7 Directors’ emoluments
Directors represent the key management personnel of the Group under the terms of IAS 24 Related Party Disclosures. Total
remuneration is shown below.
Further details of salaries and short-term benefits, post-retirement benefits, share plans and long-term share incentive
plans are shown in the Annual Report on Remuneration 2023 on pages 162 to 174. The share-based payments charge
comprises a charge in relation to the Performance Share Plan and the Employee Share Ownership Plan (as described in
Note 22).
| 2023 | 2022 | |
| £m | £m | |
Salaries and short-term benefits | 2.4 | 2.9 |
Post-retirement benefits | 0.1 | 0.2 |
Share-based payments | 0.3 | 2.0 |
Total Directors’ remuneration | 2.8 | 5.1 |
SpiraxGroup Annual Report 2023 211
Financial Statements
Notes to the Consolidated Financial Statements continued
8 Taxation
| 2023 | 2022 | |
| £m | £m | |
| Analysis of charge in the year | ||
| UK corporation tax: | ||
Current tax on income for the year | 9.4 | 7.1 |
Adjustments in respect of prior years | (0.1) | (0.7) |
9.3 | 6.4 | |
| Foreign tax: | ||
Current tax on income for the year | 75.3 | 88.6 |
Adjustments in respect of prior years | (0.7) | (1.3) |
74.6 | 8 7.3 | |
Total current tax charge/(credit) | 83.9 | 93.7 |
| UK deferred tax: | ||
Origination and reversal of timing differences | (11.4) | (0.4) |
Adjustment in respect of prior years | 0.7 | (0.7) |
(10.7) | (1.1) | |
| Foreign deferred tax: | ||
Origination and reversal of timing differences | (8.6) | (11.9) |
Adjustment in respect of prior years | (4.1) | 2.4 |
(12.7) | (9.5) | |
Total deferred tax (credit)/charge | (23.4) | (10.6) |
Tax on profit on ordinary activities | 60.5 | 83.1 |
Reconciliation of effective tax rate
| 2023 | 2022 | |
| £m | £m | |
Profit before tax and share of profit/(loss)ofAssociate | 244.5 | 308.1 |
Expected tax at blended rate of 26.6% (2022 : 25.5%) | 65.0 | 78.7 |
Increased withholding tax on overseas dividends | 7.6 | 6.2 |
Non-deductible expenditure | 0.8 | 3.6 |
Overprovided in prior years | (4.2) | (0.3) |
Other reconciling items | (8.7) | (5.1) |
Total tax in Consolidated Income Statement | 60.5 | 83.1 |
Effective tax rate | 24.7% | 27.0% |
The Group’s tax charge in future years will be affected by the proportion of profits arising and the effective tax rates in the
various countries in which the Group operates. The rate may also be affected by the impact of any acquisitions.
The Group is subject to a tax adjustment in Argentina that seeks to offset the impact of inflation upon taxable profits. Given
the current high levels of inflation in Argentina, this has a meaningful impact on the group’s tax charge. The adjustment gave
a reduction in the Group’s effective tax rate in the year of 260 bps being £6.4m on a statutory basis (2022 : 180 bps being
£5.5m), included within ‘Other reconciling items’ in the reconciliation above. Whilst we include the expected impact of this
adjustment in our guidance for the effective tax rate, this is difficult to accurately forecast given the current volatility of
Argentinian inflation.
The Group monitors income tax developments in the territories in which it operates.
On 14th July 2023, the government of the United Kingdom, where the parent company is incorporated, enacted the Pillar
Two income taxes legislation effective from 1st January 2024. Under the legislation, the parent company will be required to
pay top-up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15 per cent. The main
jurisdiction where this initiative may impact is Argentina. As noted above, given the volatility of Argentinian inflation it is
difficult to accurately forecast the impact that this Base Erosion and Profit Shifting (BEPS) initiative will have on the Group’s
tax charge. The Group is continuing to assess the impact of the Pillar Two income taxes legislation on its future financial
performance.
SpiraxGroup Annual Report 2023212
Financial Statements
8 Taxation continued
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for
deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets and
liabilities related to Pillar Two income taxes.
In October 2017, the European Commission (EC) opened a State Aid investigation into the UK’s Controlled Foreign Company
(CFC) regime. In April 2019, the EC published its final decision that the UK CFC Finance Company Exemption (FCE)
constituted State Aid in certain circumstances, following which the UK Government appealed the decision to the EU General
Court. In June 2022, the EU General Court dismissed the UK Government’s appeal following which the UK Government
lodged a further appeal to the European Court of Justice. The UK Government’s appeal has been heard but no decision has
been released. Like other UK Groups, the Group submitted its own appeal against the EC’s decision.
The Group’s benefit from the FCE in the period from 1st January 2013 to 31st December 2023 is approximately £8.9m,
including compound interest. To date, the Group has received, paid, and appealed Charging Notices totalling £4.9m,
assessed for the period from 1st January 2017 to 31st December 2018. The Group expects to recover this in the event of a
successful appeal and has recognised a receivable for the full amount at the year end balance sheet date as a non-current
asset. The Group has not recognised a receivable for any repayment interest, estimated at £0.2m, on the amount of £4.9m.
The Group has not received a Charging Notice for the period prior to 1st January 2017, the benefit for this period being
£2.9m. HMRC has enquired into the benefit received during 2019, which the Group estimates to be £1.1m. No provisions
have been recognised at the year end balance sheet date for either the Charging Notice amounts or for the estimates for
the other periods.
No tax (after double tax relief for underlying tax) is expected to be payable on the future remittance of retained earnings of
overseas subsidiaries.
The expected tax at blended rate is the product of accounting profit arising in each country multiplied by the statutory tax
rates in each country.
The effective tax rate is calculated as a percentage of profit before tax and share of profit/(loss) of Associates.
9 Earnings per share
2023 | 2022 | |
Profit attributable to equity shareholders (£m) | 183.6 | 224.7 |
Weighted average shares (million) | 73.6 | 73.6 |
Dilution (million) | 0.2 | 0.2 |
Diluted weighted average shares (million) | 73.8 | 73.8 |
Basic earnings per share | 249.5p | 305.1p |
Diluted earnings per share | 248.9p | 304.4p |
Basic and diluted earnings per share calculated on an adjusted profit basis are included in the Appendix.
The dilution is in respect of the Performance Share Plan.
10 Dividends
| 2023 | 2022 | |
| £m | £m | |
| Amounts paid in the year: | ||
Final dividend for the year ended 31st December 2022 of 109.5p (2021: 97.5p) per share | 80.7 | 71.9 |
Interim dividend for the year ended 31st December 2023 of 46.0p (2022: 42.5p) per share | 33.8 | 31.2 |
Total dividends paid | 114.5 | 103.1 |
| Amounts arising in respect of the year: | ||
Interim dividend for the year ended 31st December 2023 of 46.0p (2022: 42.5p) per share | 33.8 | 31.2 |
Proposed final dividend for the year ended 31st December 2023 of | 84.0 | 80.8 |
Total dividends arising |
The proposed dividend is subject to approval in 2024. It is therefore not included as a liability in these Financial Statements.
No scrip alternative to the cash dividend is being offered in respect of the proposed final dividend for the year ended
31st December 2023.
SpiraxGroup Annual Report 2023 2 13
Financial Statements
Notes to the Consolidated Financial Statements continued
| Associate | Associate | |
| 2023 | 2022 | |
| £m | £m | |
Cost of investment | 3.0 | 1.4 |
Share of equity | — | (1.4) |
Total investment in Associate | 3.0 | — |
Profit for the year | — | 0.1 |
| Country of incorporation | Proportion of ownership interest and | ||
| Name of Associate | and operation | voting power held | Principal activity |
Kyoto Group AS | Norway | 15.0% | Manufacturing and selling |
| Country of incorporation | Proportion of ownership interest and | ||
| Name of Associate | and operation | voting power held | Principal activity |
Econotherm (UK) Ltd | UK | 14.7% | Manufacturing and selling |
SpiraxGroup Annual Report 2023214
Financial Statements
12 Property, plant and equipment
2023
| Fixtures, | ||||||
| Freehold | Leasehold | fittings, | ||||
| land and | land and | Plant and | tools and | Assets under | ||
| buildings | buildings | machinery | equipment | construction | Total | |
| £m | £m | £m | £m | £m | £m | |
| Cost: | ||||||
At 1st January 2023 | 165.1 | 53.6 | 244.4 | 121.5 | 58.2 | 642.8 |
Exchange adjustments | (4.4) | (3.3) | (6.6) | (4.5) | (2.0) | (20.8) |
160.7 | 50.3 | 237.8 | 117.0 | 56.2 | 622.0 | |
Additions | 3.4 | 1.3 | 27.9 | 10.6 | 40.8 | 84.0 |
Transfers | 35.9 | — | 3.1 | 5.5 | (45.8) | (1.3) |
Disposals | (2.4) | (1.4) | (14.9) | (7.8) | (0.4) | (26.9) |
At 31st December 2023 | 197.6 | 50.2 | 253.9 | 125.3 | 50.8 | 67 7.8 |
| Depreciation: | ||||||
At 1st January 2023 | 38.5 | 12.9 | 139.2 | 67.7 | — | 258.3 |
Exchange adjustments | (1.1) | (0.8) | (3.7) | (2.2) | — | (7.8) |
37.4 | 12.1 | 135.5 | 65.5 | — | 250.5 | |
Charged in year | 4.8 | 2.1 | 17.2 | 11.4 | — | 35. 5 |
Impairment | — | — | 1.8 | — | — | 1.8 |
Transfers | — | — | (0.2) | 0.3 | — | 0.1 |
Disposals | (2.4) | (1.4) | (13.6) | (7.8) | — | (25.2) |
At 31st December 2023 | 39.8 | 12.8 | 140.7 | 69.4 | — | 262.7 |
| Net book value: | ||||||
At 31st December 2023 | 157.8 | 37.4 | 113.2 | 55.9 | 50.8 | 415.1 |
2022
| Fixtures, | ||||||
| Freehold | Leasehold | fittings, | ||||
| land and | land and | Plant and | tools and | Assets under | ||
| buildings | buildings | machinery | equipment | construction | Total | |
| £m | £m | £m | £m | £m | £m | |
| Cost: | ||||||
At 1st January 2022 | 157.7 | 40.8 | 204.2 | 89.4 | 22.3 | 514.4 |
Exchange adjustments | 6.1 | 1.7 | 9.0 | 3.1 | 1.8 | 21.7 |
163.8 | 42.5 | 213.2 | 92.5 | 24.1 | 536.1 | |
Acquisitions | 7.3 | 9.4 | 11.2 | 2.1 | 0.7 | 30.7 |
Additions | 2.8 | 1.4 | 23.1 | 1 7.1 | 59.9 | 104.3 |
Transfers | — | 0.7 | 7.9 | 17.5 | (26.4) | (0.3) |
Disposal of subsidiaries | — | (0.3) | (0.6) | (0.3) | — | (1.2) |
Disposals | (8.8) | (0.1) | (10.4) | (7.4) | (0.1) | (26.8) |
At 31st December 2022 | 165.1 | 53.6 | 244.4 | 121.5 | 58.2 | 642.8 |
| Depreciation: | ||||||
At 1st January 2022 | 36.9 | 10.9 | 127.4 | 61.8 | — | 237.0 |
Exchange adjustments | 1.8 | 0.5 | 5.9 | 2.7 | — | 10.9 |
38.7 | 11.4 | 133.3 | 64.5 | — | 247.9 | |
Charged in year | 6.4 | 1.8 | 15.5 | 9.5 | — | 33.2 |
Impairment | 2.1 | — | 0.4 | — | — | 2.5 |
Transfers | — | — | — | — | — | — |
Disposals of subsidiaries | — | (0.3) | (0.4) | (0.2) | — | (0.9) |
Disposals | (8.7) | — | (9.6) | (6.1) | — | (24.4) |
At 31st December 2022 | 38.5 | 12.9 | 139.2 | 67.7 | — | 258.3 |
| Net book value: | ||||||
At 31st December 2022 | 126.6 | 40.7 | 105.2 | 53.8 | 58.2 | 384.5 |
SpiraxGroup Annual Report 2023 215
Financial Statements
Notes to the Consolidated Financial Statements continued
12 Property, plant and equipment continued
All impaired assets have been impaired down to a recoverable amount of £nil. In 2023, the Group identified indicators of
impairment as a result of the restructure of the Watson- Marlow Business. A total of £1.8m was recognised within Group
operating profit. In the prior year, £2.5m was recognised in relation to the Chromalox manufacturing operations in Soissons
(France).
The total amount of transfers relates to property, plant and equipment transferred to other intangible assets (see Note 14).
13 Leases
| Leased fixtures, | ||||
| Leased land | Leased plant | fittings, tools | Total right-of- | |
| and buildings | and machinery | and equipment | use assets | |
| £m | £m | £m | £m | |
| Cost: | ||||
At 1st January 2023 | 86.2 | 21.6 | 3.1 | 110.9 |
Exchange adjustments | (3.1) | (0.6) | (0.2) | (3.9) |
83.1 | 21.0 | 2.9 | 107.0 | |
Additions | 44.4 | 7.4 | 0.3 | 52.1 |
Disposals | (7.4) | (4.0) | (0.6) | (12.0) |
At 31st December 2023 | 120.1 | 24.4 | 2.6 | 147.1 |
| Depreciation: | ||||
| At 1st January 2023 | 28.2 | 13.3 | 2.2 | 43 .7 |
Exchange adjustments | (0.9) | (0.4) | (0.1) | (1.4) |
27.3 | 12.9 | 2.1 | 42.3 | |
Charged in the year | 11.5 | 4.5 | 0.2 | 16.2 |
Disposals | (5.9) | (3.3) | (0.6) | (9.8) |
At 31st December 2023 | 32.9 | 14.1 | 1.7 | 48.7 |
| Net book value: | ||||
At 31st December 2023 | 87.2 | 10.3 | 0.9 | 98.4 |
SpiraxGroup Annual Report 2023216
Financial Statements
13 Leases continued
Right-of-use assets continued
| Leased fixtures, | ||||
| Leased land | Leased plant | fittings, tools | Total right-of- | |
| and buildings | and machinery | and equipment | use assets | |
| £m | £m | £m | £m | |
| Cost: | ||||
At 1st January 2022 | 73.9 | 17.2 | 2.4 | 93.5 |
Exchange adjustments | 3.9 | 1.0 | 0.2 | 5.1 |
77.8 | 18.2 | 2.6 | 98.6 | |
Acquisitions | 3.8 | 0.1 | 0.2 | 4.1 |
Additions | 6.5 | 4.7 | 0.3 | 11.5 |
Disposals | (1.9) | (1.4) | — | (3.3) |
At 31st December 2022 | 86.2 | 21.6 | 3.1 | 110.9 |
| Depreciation: | ||||
At 1st January 2022 | 19.0 | 9.8 | 1.8 | 30.6 |
Exchange adjustments | 1.6 | 0.6 | 0.1 | 2.3 |
20.6 | 10.4 | 1.9 | 32.9 | |
Charged in the year | 9.1 | 4.1 | 0.3 | 13.5 |
Disposals | (1.5) | (1.2) | — | (2.7) |
At 31st December 2022 | 28.2 | 13.3 | 2.2 | 43.7 |
| Net book value: | ||||
At 31st December 2022 | 58.0 | 8.3 | 0.9 | 67.2 |
| 31st | 31st | |
| December | December | |
| 2023 | 2022 | |
| £m | £m | |
Depreciation expense on right-of-use assets | 16.2 | 13.5 |
Interest expense on lease liabilities | 2.2 | 1.5 |
Expense relating to short-term leases | 1.9 | 1.9 |
Expense relating to leases of low value assets | 0.9 | 0.4 |
Expense relating to variable lease payments not included in the measurement of the lease liability | 0.3 | 0.2 |
Income from sublease right-of-use assets | (0.1) | (0.2) |
Total impact on profit before tax | 21.4 | 17.3 |
SpiraxGroup Annual Report 2023 217
Financial Statements
Notes to the Consolidated Financial Statements continued
| Acquired | Development | Computer | Total other | ||
| intangibles | costs | software | intangibles | Goodwill | |
| £m | £m | £m | £m | £m | |
| Cost: | |||||
At 1st January 2023 | 632.6 | 34.9 | 88.6 | 756.1 | 710.8 |
Exchange and other adjustments | (19.8) | (0.2) | (2.9) | (22.9) | (22.6) |
612.8 | 34.7 | 85.7 | 733.2 | 688.2 | |
Additions | 3.6 | 7.2 | 14.2 | 25.0 | — |
Transfers from property, plant and equipment | — | 1.7 | (0.4) | 1.3 | — |
Disposals | — | (7.1) | (1.7) | (8.8) | — |
At 31st December 2023 | 616.4 | 36.5 | 97.8 | 750.7 | 688.2 |
| Amortisation: | |||||
At 1st January 2023 | 176.8 | 22.0 | 57.0 | 255.8 | 7.5 |
Exchange adjustments | (4.1) | (0.1) | (1.5) | (5.7) | 0.2 |
172.7 | 21.9 | 55.5 | 250.1 | 7.7 | |
Charged in the year | 37.2 | 3.0 | 5.1 | 45.3 | — |
Impairment | — | — | 13.9 | 13.9 | — |
Transfers from property, plant and equipment | — | — | (0.1) | (0.1) | — |
Disposals | — | (5.6) | (1.7) | (7.3) | — |
At 31st December 2023 | 209.9 | 19.3 | 72.7 | 301.9 | 7.7 |
| Net book value: | |||||
At 31st December 2023 | 406.5 | 17.2 | 25.1 | 448.8 | 680.5 |
| Acquired | Development | Computer | Total other | ||
| intangibles | costs | software | intangibles | Goodwill | |
| £m | £m | £m | £m | £m | |
| Cost: | |||||
At 1st January 2022 | 359.2 | 30.2 | 78.0 | 467.4 | 418.4 |
Exchange and other adjustments | 28.8 | 0.3 | 1.7 | 30.8 | 33.1 |
388.0 | 30.5 | 79.7 | 498.2 | 451.5 | |
Acquisitions | 244.6 | 0.1 | 0.4 | 245.1 | 259.3 |
Additions | — | 4.3 | 8.9 | 13.2 | — |
Transfers from property, plant and equipment | — | — | 0.3 | 0.3 | — |
Disposal of subsidiary | — | — | (0.3) | (0.3) | — |
Disposals | — | — | (0.4) | (0.4) | — |
At 31st December 2022 | 632.6 | 34.9 | 88.6 | 756.1 | 710.8 |
| Amortisation: | |||||
At 1st January 2022 | 142.4 | 19.5 | 49.8 | 211.7 | 7. 2 |
Exchange adjustments | 10.7 | 0.2 | 2.0 | 12.9 | 0.3 |
153.1 | 19.7 | 51.8 | 224.6 | 7.5 | |
Charged in the year | 23.7 | 2.3 | 5.8 | 31.8 | — |
Disposal of subsidiary | — | — | (0.3) | (0.3) | — |
Disposals | — | — | (0.3) | (0.3) | — |
At 31st December 2022 | 176.8 | 22.0 | 57.0 | 255.8 | 7.5 |
| Net book value: | |||||
At 31st December 2022 | 455.8 | 12.9 | 31.6 | 500.3 | 703.3 |
SpiraxGroup Annual Report 2023218
Financial Statements
14 Goodwill and other intangible assets continued
| Manufacturing | |||||
| Brand names | designs and | Non-compete | Total | ||
| Customer | and | core | undertakings | acquired | |
| relationships | trademarks | technology | and other | intangibles | |
| £m | £m | £m | £m | £m | |
| Cost: | |||||
At 1st January 2023 | 181.9 | 338.1 | 84.2 | 28.4 | 632.6 |
Exchange and other adjustments | (5.9) | (11.4) | (2.3) | (0.2) | (19.8) |
176.0 | 326.7 | 81.9 | 28.2 | 612.8 | |
Additions | 3.6 | — | — | — | 3.6 |
At 31st December 2023 | 179.6 | 326.7 | 81.9 | 28.2 | 616.4 |
| Amortisation and impairment: | |||||
At 1st January 2023 | 51.9 | 6 7.0 | 34 .8 | 23.1 | 176.8 |
Exchange adjustments | (1.0) | (2.4) | (0.5) | (0.2) | (4.1) |
50.9 | 64.6 | 34.3 | 22.9 | 172.7 | |
Amortisation and impairment | 11.9 | 17.1 | 4.6 | 3.6 | 37.2 |
At 31st December 2023 | 62.8 | 81.7 | 38.9 | 26.5 | 209.9 |
| Net book value: | |||||
At 31st December 2023 | 116.8 | 245.0 | 43.0 | 1.7 | 406.5 |
| Manufacturing | |||||
| Brand names | designs | Non-compete | Total | ||
| Customer | and | and core | undertakings | acquired | |
| relationships | trademarks | technology | and other | intangibles | |
| £m | £m | £m | £m | £m | |
| Cost: | |||||
At 1st January 2022 | 87.1 | 190.2 | 60.2 | 21.7 | 359.2 |
Exchange and other adjustments | 5.0 | 19.0 | 3.9 | 0.9 | 28.8 |
92.1 | 209.2 | 64.1 | 22.6 | 388.0 | |
Acquisitions | 89.8 | 128.9 | 20.1 | 5.8 | 244.6 |
At 31st December 2022 | 181.9 | 338.1 | 84.2 | 28.4 | 632.6 |
| Amortisation and impairment: | |||||
At 1st January 2022 | 42.2 | 49.9 | 28.6 | 21.7 | 142.4 |
Exchange adjustments | 2.9 | 5.0 | 1.8 | 1.0 | 10.7 |
45.1 | 54.9 | 30.4 | 22.7 | 153.1 | |
Amortisation and impairment | 6.8 | 12.1 | 4.4 | 0.4 | 23.7 |
At 31st December 2022 | 51.9 | 67.0 | 34.8 | 23.1 | 176.8 |
| Net book value: | |||||
At 31st December 2022 | 130.0 | 271.1 | 49.4 | 5.3 | 455.8 |
SpiraxGroup Annual Report 2023 219
Financial Statements
Notes to the Consolidated Financial Statements continued
14 Goodwill and other intangible assets continued
| 2023 | 2022 | |
| Goodwill | Goodwill | |
| £m | £m | |
Steam Thermal Solutions | 125.8 | 127.4 |
Electric Thermal Solutions | 494.7 | 514.9 |
Watson-Marlow | 60.0 | 61.0 |
Total goodwill | 680.5 | 703.3 |
| Period of | Period of | |||||||
| 2023 | annual | 2022 | annual | |||||
| Short to | 2023 | cashflow | Short to | 2022 | cashflow | |||
| 2023 | medium-term | Long-term | forecast | 2022 | medium-term | Long-term | forecast | |
| Operating segment | Discount rate | growth rate | growth rate | (years) | Discount rate | growth rate | growth rate | (years) |
Steam Thermal Solutions | 13.7% | 5.0% – 6.3% | 3.8% | 5 | 14.1% | 5.5%–10.5% | 3.1% | 5 |
Electric Thermal Solutions | 11.3% | 6.3% – 17.1% | 3.2% | 5 | 11.3% | 5.9%–10.1% | 2.4% | 8 |
Watson-Marlow | 12.6% 11.0% – 11.4% | 3.5% | 5 | 12.0% | (1.0)%–12.4% | 2.7% | 5 |
SpiraxGroup Annual Report 2023220
Financial Statements
14 Goodwill and other intangible assets continued
Impairment continued
| 1st January | Recognised | Recognised | Recognised | 31st December | ||
| 2023 | in income | in OCI | in equity | Acquisitions | 2023 | |
| £m | £m | £m | £m | £m | £m | |
Accelerated capital allowances | (22.8) | 1.4 | — | 0.4 | — | (21.0) |
Provisions | 11.8 | (0.7) | — | (0.7) | — | 10.4 |
Losses | 16.2 | 11.3 | — | — | — | 2 7.5 |
Inventory | 7.3 | (0.9) | — | (0.1) | — | 6.3 |
Pensions | 13.2 | (0.7) | 1.1 | (0.3) | — | 13.3 |
Acquired intangibles | (91.0) | 9.2 | — | 2.3 | (0.8) | (80.3) |
Leases - right of use assets* | (14.4) | (7.3) | — | 0.6 | — | (21.1) |
Leases - liabilities* | 15.1 | 7.1 | — | (0.6) | — | 21.6 |
Other temporary differences | 5.5 | 4.0 | (2.1) | (1.3) | — | 6.1 |
Group total | (59.1) | 23.4 | (1.0) | 0.3 | (0.8) | (37.2) |
| 1st January | Recognised | Recognised | Recognised | 31st December | ||
| 2022 | in income | in OCI | in equity | Acquisitions | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Accelerated capital allowances | (12.3) | (9.9) | — | (0.4) | (0.2) | (22.8) |
Provisions | 8.1 | 3.4 | (0.4) | 0.5 | 0.2 | 11.8 |
Losses | 5.6 | 9.5 | — | 0.1 | 1.0 | 16.2 |
Inventory | 5.0 | 2.3 | — | — | — | 7.3 |
Pensions | 12.0 | (1.5) | 1.7 | 0.7 | 0.3 | 13.2 |
Acquired intangibles | (55.0) | 4.1 | (2.3) | (5.6) | (32.2) | (91.0) |
Leases - right of use assets* | (13.5) | 0.8 | — | (0.6) | (1.1) | (14.4) |
Leases - liabilities* | 14.1 | (0.7) | — | 0.6 | 1.1 | 15.1 |
Other temporary differences | 0.3 | 2.6 | 2.8 | (0.4) | 0.2 | 5.5 |
Group total | (35.7) | 10.6 | 1.8 | (5.1) | (30.7) | (59.1) |
| 2023 | 2022 | |
| £m | £m | |
Deferred tax asset | 31.0 | 69.0 |
Deferred tax liability | (68.2) | (128.1) |
Net deferred tax liability | (37.2) | (59.1) |
SpiraxGroup Annual Report 2023 221
Financial Statements
Notes to the Consolidated Financial Statements continued
15 Deferred tax assets and liabilities continued
16 Inventories
| 2023 | 2022 | |
| £m | £m | |
Raw materials, consumables and components | 130.4 | 136.1 |
Work in progress | 40.2 | 39.5 |
Finished goods and goods for resale | 114.6 | 114.4 |
Total inventories | 285.2 | 290.0 |
The write-down of inventories recognised as an expense during the year was £15.2m (2022: £9.0m). This comprises a cost
of £15.6m (2022: £10.5m) to write down inventory to net realisable value reduced by £0.4m (2022: £1.5m) for reversal of
previous write-down reassessed as a result of customer demand.
The value of inventories expected to be recovered after more than 12 months is £15.1m (2022: £12.6m).
There is no material difference between the Statement of Financial Position value of inventories and their replacement cost.
None of the inventory has been pledged as security.
| 2023 | 2022 | |
| £m | £m | |
Contract assets | 17.0 | 11.7 |
Prepayments | 24.9 | 25.5 |
Other receivables | 29.5 | 42.4 |
Total other current assets | 71.4 | 79.6 |
| 2023 | 2022 | |
| £m | £m | |
Trade payables | 79.2 | 89.9 |
Contract liabilities | 32.9 | 20.6 |
Social security | 9.5 | 9.4 |
Accruals | 95.2 | 113.2 |
Other payables | 34.4 | 49.9 |
Total trade and other payables | 251.2 | 283.0 |
SpiraxGroup Annual Report 2023222
Financial Statements
| Legal, | |||
| Product | contractual | ||
| warranty | and other | Total | |
| 2023 | £m | £m | £m |
At 1st January 2023 | 2.7 | 15.5 | 18.2 |
Additional provision in the year | 0.4 | 9.3 | 9.7 |
Utilised or released during the year | (0.5) | (8.5) | (9.0) |
Exchange adjustments | (0.6) | (1.2) | (1.8) |
At 31st December 2023 | 2.0 | 15.1 | 17.1 |
| Legal, | |||
| Product | contractual | ||
| warranty | and other | Total | |
| 2022 | £m | £m | £m |
At 1st January 2022 | 2.1 | 4.6 | 6.7 |
Additional provision in the year | 0.6 | 7.9 | 8.5 |
Utilised or released during the year | (0.9) | (2.5) | (3.4) |
Acquisition of subsidiary | 0.8 | 5.2 | 6.0 |
Exchange adjustments | 0.1 | 0.3 | 0.4 |
At 31st December 2022 | 2.7 | 15.5 | 18.2 |
| 2023 | 2022 | |
| £m | £m | |
Current provisions | 9.5 | 12.0 |
Non-current provisions | 7.6 | 6.2 |
Total provisions | 17.1 | 18.2 |
| 2023 | 2022 | |||
| £m | £m | |||
| Ordinary shares of 26 12/13p (2022: 26 12/13p) each: | ||||
Authorised 111,428,571 | (2022: | 111,428,571) | 30.0 | 30.0 |
Allotted, called up and fully paid 73,776,048 (2022: 73,776,048) | 19.8 | 19.8 |
SpiraxGroup Annual Report 2023 223
Financial Statements
Notes to the Consolidated Financial Statements continued
20 Called-up share capital and reserves continued
| 1st January | Change | 31st December | |
| 2023 | in year 2023 | ||
| £m | £m | £m | |
Net investment hedge reserve | (2.7) | 8.3 | 5.6 |
Translation reserve | 20.2 | (86.2) | (66.0) |
Total translation reserve | 17.5 | (77.9) | (60.4) |
| 1st January | Change | 31st December | |
| 2022 | in year 2022 | ||
| £m | £m | £m | |
Net investment hedge reserve | 12.7 | (15.4) | (2.7) |
Translation reserve | (53.2) | 73.4 | 20.2 |
Total translation reserve | (40.5) | 58.0 | 17.5 |
| 1st January | Change | 31st December | |
| 2023 | in year 2023 | ||
| £m | £m | £m | |
Cash flow hedges reserve | (3.7) | 5.0 | 1.3 |
Capital redemption reserve | 1.8 | — | 1.8 |
Employee Benefit Trust reserve | (21.5) | 5.5 | (16.0) |
Total other reserves | (23.4) | 10.5 | (12.9) |
| 1st January | Change | 31st December | |
| 2022 | in year 2022 | ||
| £m | £m | £m | |
Cash flow hedges reserve | (0.2) | (3.5) | (3.7) |
Capital redemption reserve | 1.8 | — | 1.8 |
Employee Benefit Trust reserve | (19.3) | (2.2) | (21.5) |
Total other reserves | (17.7) | (5.7) | (23.4) |
| 2023 | 2022 | |
| £m | £m | |
Capital expenditure contracted for but not provided | 14.5 | 67.0 |
SpiraxGroup Annual Report 2023224
Financial Statements
22 Employee benefits
Retirement benefit obligations
The Group operates a wide range of retirement benefit arrangements, which are established in accordance with local
conditions and practices within the countries concerned. These include funded defined contribution and funded and
unfunded defined benefit schemes.
Other matters
In June 2023, the High Court judged that amendments made to the Virgin Media scheme were invalid because the scheme’s
actuary did not provide the associated S37 certificate necessary. This may have a potential impact to the Group but the
impact is not yet known and continues to be assessed.
In October 2023, the Company agreed to a buy-out of the Spirax-Sarco Inc Pension Plan covering approximately 230
pension plan participants. The Plan paid the insurance premium on 31 October 2023 and the insurance company has taken
over benefit obligations effective 1 January 2024. This has been allowed for as a settlement and resulted in a charge to the
profit and loss.
Principal Risks
The pension schemes create a number of risk exposures. Annual increases in benefits are, to a varying extent from scheme
to scheme, dependent on inflation so the main uncertainties affecting the level of benefits payable are future inflation levels
and the actual longevity of the membership. Benefits payable will also be influenced by a range of other factors including
member decisions on matters such as when to retire and the possibility to draw benefits in different forms. A key risk is that
additional contributions are required if the investment returns fall short of those anticipated when setting the contributions
to the pension schemes. All pension schemes are regulated by the relevant jurisdictions. These include extensive legislation
and regulatory mechanisms that are subject to change and may impact on the Group’s pension schemes. The IAS 19 liability
measurement known as defined benefit obligation (DBO) and the service cost are sensitive to the actuarial assumptions
made on a range of demographic and financial matters that are used to project the expected benefit payments, the most
important of these assumptions being the future inflation levels and the assumptions made about life expectation. The DBO
and service cost are also very sensitive to the IAS 19 discount rate, which determines the discounted value of the projected
benefit payments. The discount rate depends on market yields on high quality corporate bonds. Investment strategies are
set with funding rather than IAS 19 considerations in mind and do not seek to provide a specific hedge against the IAS 19
measurement of DBO. As a result the difference between the market value of the assets and the IAS 19 DBO may be volatile.
Further information on the investment strategy for the UK schemes can be found in the Financial Review on pages 36 to 43.
Sensitivity analysis to changes in discount rate and inflation are included on page 229.
SpiraxGroup Annual Report 2023 225
Financial Statements
Notes to the Consolidated Financial Statements continued
22 Employee benefits continued
Principal Risks continued
The financial assumptions used at 31st December were:
| Assumptions weighted by value of liabilities % per annum | ||||
| Overseas pensions | ||||
| UK pensions | andmedical | |||
| 2023 | 2022 | 2023 | 2022 | |
| % | % | % | % | |
Rate of increase in salaries | n/a | n/a | 2.7 | 2.9 |
Rate of increase in pensions | 2.9 | 2.9 | 2.3 | 2.6 |
Rate of price inflation | 3.0 | 3.2 | 2.2 | 2.4 |
Discount rate | 4.5 | 4.7 | 4.4 | 4.7 |
Medical trend rate | n/a | n/a | 7.5 | 7.5 |
The UK pensions are closed to future accrual; therefore, the rate of increase in salaries is not applicable.
The weighted average duration of the defined benefit obligation at 31st December 2023 was approximately 13 years
(2022: 15 years) for the Spirax-Sarco Employees’ Pension Fund, 8 years (2022: 10 years) for the Spirax-Sarco Executives’
Retirement Benefits Scheme and 18 years (2022: 16 years) for the Watson-Marlow Pension Fund.
The mortality assumptions for the material defined benefit schemes at 31st December 2023 and 31st December 2022 were:
| Spirax-Sarco Employees’ | At 31st December 2023: 100% of the SAPS 3 normal tables, CMI 2021 future |
| Pension Fund | improvements, 1.25% long term trend, smoothing factor of 7, 0.25% initial addition and a |
| w parameter of 10%. | |
| At 31st December 2022: 100% of SAPS 3, with CMI 2021 projections with a long-term | |
| trend of 1.25% pa and an initial addition parameter of 0.25% and w2020 parameter of | |
| 10%. | |
| Spirax-Sarco Executives’ | At 31st December 2023: 84%/87% (male/female) of SAPS S3 light normal, CMI 2021 |
| Retirement Benefits Scheme | future improvements, 1.25% long term trend, smoothing factor of 7, 0.25% initial addition |
| and a w parameter of 10%. | |
| At 31st December 2022: 84%/87% (male/female) of SAPS S3 light normal, CMI 2021 | |
| projections with a long-term trend of 1.25% pa and an initial additional parameter of | |
| 0.25% and w2020 parameter of 10%. | |
Watson-Marlow Pension Fund | At 31st December 2023: 102% of the SAPS 3 pensioner tables, CMI 2021 future |
| improvements, 1.25% long term trend, smoothing factor of 7, 0.25% initial addition and a | |
| w parameter of 10%. | |
| At 31st December 2022: 102% of SAPS S3, CMI 2021 projections with a long-term trend | |
| of 1.25% pa and an initial additional parameter of 0.25% and w2020 parameter of 10%. | |
US Pension Scheme | At 31st December 2023: SOA Pri-2012 Amount-Weighted Blue Collar Mortality Tables |
| projected generationally with MP2021 | |
| At 31st December 2022: SOA Pri-2012 Amount-Weighted Blue Collar Mortality Tables | |
| with Mortality Improvement Scale MP2021. |
By way of example the mortality tables indicate the following life expectancy across the UK schemes:
2023 life expectancy at 65 | 2022 life expectancy at 65 | |||
Current age | Male | Female | Male | Female |
65 | 21.9 | 24.5 | 22.1 | 24.6 |
50 | 22.8 | 25.5 | 23.0 | 25.6 |
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which,
due to the timescale covered, may not necessarily be borne out in practice.
SpiraxGroup Annual Report 2023226
Financial Statements
22 Employee benefits continued
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Fair value of schemes’ assets | 285.8 | 284.6 | 51.7 | 57.0 | 337.5 | 341.6 |
Present value of funded schemes’ liabilities | (313.6) | (309.2) | (56.9) | (65.5) | (370.5) | (374.7) |
Deficit in the funded schemes | (27.8) | (24.6) | (5.2) | (8.5) | (33.0) | (33.1) |
Present value of unfunded schemes’ liabilities | — | — | (18.4) | (19.0) | (18.4) | (19.0) |
| Retirement benefit liability recognised in the Consolidated | ||||||
Statement of Financial Position | (27.8) | (24.6) | (23.6) | (27.5) | (51.4) | (52.1) |
Related deferred tax asset | 6.9 | 6.2 | 6.4 | 7.0 | 13.3 | 13.2 |
Net pension liability | (20.9) | (18.4) | (17.2) | (20.5) | (38.1) | (38.9) |
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Quoted equities | 44.6 | 46.9 | 29.7 | 30.1 | 74.3 | 7 7.0 |
Quoted bonds | 109.0 | 132.5 | 15.4 | 13.1 | 124.4 | 145.6 |
Other | 45.0 | 54.4 | 0. 5 | 7. 4 | 45.5 | 61.8 |
Total with quoted market price | 198.6 | 233.8 | 45.6 | 50.6 | 244.2 | 284.4 |
Cash and cash equivalents | 43.8 | 45.9 | 0.7 | 0.6 | 44.5 | 46.5 |
Unquoted equities | 2.7 | 2.8 | — | — | 2.7 | 2.8 |
Unquoted bonds | 0.7 | — | — | — | 0.7 | — |
Real estate | 14.4 | 0.3 | — | — | 14.4 | 0.3 |
Derivatives | 12.2 | — | — | — | 12.2 | — |
Other | 13.4 | 1.8 | 5.4 | 5.8 | 18.8 | 7.6 |
Total other securities | 87.2 | 50.8 | 6.1 | 6.4 | 93.3 | 57.2 |
Total market value in aggregate | 285.8 | 284.6 | 51.7 | 57.0 | 337.5 | 341.6 |
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Defined benefit obligation at beginning of year | (309.2) | (507.5) | (84.5) | (97.9) | (393.7) | (605.4) |
Acquisitions | — | — | — | (1.5) | — | (1.5) |
Current service cost | — | — | (0.1) | (0.7) | (0.1) | (0.7) |
Interest cost | (14.1) | (9.1) | (3.8) | (2.5) | (17.9) | (11.6) |
Administration costs | — | — | (0.6) | (0.7) | (0.6) | (0.7) |
Remeasurement gain/(loss) | 2.7 | 207.0 | (1.5) | 23.0 | 1.2 | 230.0 |
Actual benefit payments | 17.4 | 15.9 | 5.3 | 5.3 | 22.7 | 21.2 |
Experience (loss)/gain | (10.4) | (15.5) | 0.4 | (0.5) | (10.0) | (16.0) |
Settlements | — | — | 5.9 | — | 5.9 | — |
Currency gain/(loss) | — | — | 3.6 | (9.0) | 3.6 | (9.0) |
Defined benefit obligation at end of year | (313.6) | (309.2) | (75.3) | (84.5) | (388.9) | (393.7) |
SpiraxGroup Annual Report 2023 227
Financial Statements
Notes to the Consolidated Financial Statements continued
22 Employee benefits continued
Fair value of scheme assets continued
The movements in the fair value of plan assets during the year were:
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Value of assets at beginning of year | 284.6 | 4 97.5 | 57.0 | 63.2 | 341.6 | 560.7 |
Acquisitions | — | — | — | 0.4 | — | 0.4 |
Expected return on assets | 13.1 | 9.0 | 2.7 | 1.8 | 15.8 | 10.8 |
Remeasurement gain/(loss) | 1.0 | (210.9) | 4.0 | (11.5) | 5.0 | (222.4) |
Contributions paid by employer | 5.3 | 5.4 | 2.0 | 1.8 | 7.3 | 7. 2 |
Actual benefit payments | (17.3) | (15.9) | (5.4) | (5.3) | (22.7) | (21.2) |
Administration costs | (0.9) | (0.5) | (6.0) | — | (6.9) | (0.5) |
Currency (loss)/gain | — | — | (2.6) | 6.6 | (2.6) | 6.6 |
Value of assets at end of year | 285.8 | 284.6 | 51.7 | 57.0 | 337.5 | 341.6 |
The estimated employer contributions to be made in 2024 are £6.9m.
The history of experience adjustments is as follows:
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| £m | £m | £m | £m | £m | |
Defined benefit obligation at end of year | (388.9) | (393.7) | (605.4) | (630.3) | (559.1) |
Fair value of schemes’ assets | 337.5 | 341.6 | 560.7 | 531.7 | 487.8 |
Retirement benefit liability recognised in the Statement of Financial Position | (51.4) | (52.1) | (44.7) | (98.6) | (71.3) |
Experience adjustment on schemes’ liabilities | (10.0) | (16.0) | (2.9) | 11.4 | — |
As a percentage of schemes’ liabilities | 2.6% | 4.1% | 0.5% | 1.8% | 0.0% |
Experience adjustment on schemes’ assets | 5.0 | (222.4) | 35.7 | 46.5 | 49.0 |
As a percentage of schemes’ assets | 1.5% | 65.1% | 6.4% | 8.7% | 10.0% |
The expense recognised in the Consolidated Income Statement was as follows:
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Current service cost | — | — | (0.1) | (0.7) | (0.1) | (0.7) |
Administration costs | (0.9) | (0.5) | (0.6) | (0.7) | (1.5) | (1.2) |
Net interest on schemes’ liabilities | (1.1) | — | (1.0) | (0.8) | (2.1) | (0.8) |
Total expense recognised in Consolidated Income Statement | (2.0) | (0.5) | (1.7) | (2.2) | (3.7) | (2.7) |
The expense is recognised in the following line items in the Consolidated Income Statement:
| 2023 | 2022 | |
| £m | £m | |
Operating costs | (1.6) | (1.9) |
Net financing expense | (2.1) | (0.8) |
Total expense recognised in Consolidated Income Statement | (3.7) | (2.7) |
SpiraxGroup Annual Report 2023228
Financial Statements
22 Employee benefits continued
Fair value of scheme assets continued
The gain or loss recognised in the Statement of Comprehensive Income (OCI) was as follows:
| Overseas pensions | ||||||
| UK pensions | and medical | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
| Remeasurement effects recognised in OCI: | ||||||
Due to experience on DBO | (10.4) | (15.5) | 0.4 | (0.5) | (10.0) | (16.0) |
Due to demographic assumption changes in DBO | 10.2 | 4.3 | — | — | 10.2 | 4.3 |
Due to financial assumption changes in DBO | (7.5) | 202.8 | (1.5) | 23.0 | (9.0) | 225.8 |
Return on assets | 1.0 | (210.9) | 4.0 | (11.5) | 5.0 | (222.4) |
Total remeasurement (loss)/gain recognised in OCI | (6.7) | (19.3) | 2.9 | 11.0 | (3.8) | (8.3) |
| Deferred tax on remeasurement (loss)/gain and change in rate | ||||||
recognised in OCI | 1.7 | 4.8 | (0.6) | (3.0) | 1.1 | 1.8 |
Cumulative loss recognised in OCI at beginning of year | (54.1) | (39.6) | (13.1) | (21.1) | (67.2) | (60.7) |
Cumulative loss recognised in OCI at end of year | (59.1) | (54.1) | (10.8) | (13.1) | (69.9) | (67.2) |
Sensitivity analysis
The effect on the defined benefit obligation at 31st December 2023 of an increase or decrease in key assumptions is as follows:
| Overseas | |||
| pensionsand | |||
| UK pensions | medical | Total | |
| £m | £m | £m | |
| (Decrease)/increase in pension deficit: | |||
Discount rate assumption being 1.0% higher | (36.7) | (7.7) | (44.4) |
Discount rate assumption being 1.0% lower | 42.1 | 9.3 | 51.4 |
Inflation assumption being 1.0% higher | 25.6 | 1.5 | 2 7.1 |
Inflation assumption being 1.0% lower | (23.9) | (1.3) | (25.2) |
Mortality assumption life expectancy at age 65 being one year higher | 11.1 | (0.6) | 10.5 |
The above sensitivities reflect reasonable possible changes in the assumptions and therefore have been selected on
this basis.
The average age of active participants in the UK schemes at 31st December 2023 was 55 years (2022: 53 years) and in the
overseas schemes 47 years (2022: 47 years).
Cash payments to the pension scheme greater or less than the expense to operating profit
| 2023 | 2022 | |
| £m | £m | |
Defined benefit arrangements | (1.6) | (1.9) |
Defined contribution arrangements | (26.7) | (27.0) |
Total expense recognised in operating costs | (28.3) | (28.9) |
Defined benefit arrangements | 7.3 | 7.2 |
Defined contribution arrangements | 26.7 | 2 7.0 |
Total contributions paid by employer | 34.0 | 34.2 |
Cash payments to the pension scheme greater than the expense to operating profit | 5.7 | 5.3 |
| 2023 | 2022 | |
| £m | £m | |
Performance Share Plan | 4.3 | 7.3 |
Employee Share Ownership Plan | 1.8 | 1.6 |
Total expense recognised in Consolidated Income Statement | 6.1 | 8.9 |
SpiraxGroup Annual Report 2023 229
Financial Statements
Notes to the Consolidated Financial Statements continued
22 Employee benefits continued
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Grant | Grant | Grant | Grant | Grant | |
Grant date | 15th May | 12th March | 4th May | 14th March 13th March | |
Mid-market share price at grant date | 8,161.0p | 7,775.0p | 11,770.0p | 11,910.0p | 10,880p |
Number of employees | 133 | 104 | 106 | 108 | 138 |
Shares under scheme | 112,159 | 140,934 | 89,806 | 92,951 | 145,505 |
Vesting period | 3 years | 3 years | 3 years | 3 years | 3 years |
Probability of vesting | 74.1% | 74.3% | 73.9% | 76.1% | 81.2% |
Fair value | 6,048.9p | 5,779.2p | 8,698.0p | 9,057.6p | 8,829.1p |
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Grant | Grant | Grant | Grant | Grant | |
Grant date | 1st October 1st October 1st October 1st October 1st October | ||||
Exercise price | 7,835.0p | 11,102.0p | 15,043.3p | 10,348.3p | 9,413p |
Number of employees | 1,318 | 1,373 | 1,400 | 1,671 | 1,644 |
Shares under scheme | 16,820 | 12,480 | 9,429 | 16,832 | 19,256 |
Vesting period | 3 years | 3 years | 3 years | 3 years | 3 years |
Expected volatility | 21% | 25% | 26.5% | 28.7% | 26.5% |
Risk-free interest rate | 0.5% | 0.1% | 0.2% | 4.0% | 4.9% |
Expected dividend yield | 1.8% | 1.5% | 1.0% | 1.0% | 1.2% |
Fair value | 8,305.1p | 11,956.9p | 16,382.2p | 11,579.7p | 10,486.4p |
SpiraxGroup Annual Report 2023230
Financial Statements
| 1st | 31st | ||||
| January | Acquired | Exchange | December | ||
| 2023 | Cash flow | debt * | movement | 2023 | |
| £m | £m | £m | £m | £m | |
Current portion of long-term borrowings | (202.9) | (3.6) | |||
Non-current portion of long-term borrowings | (731.3) | (875.9) | |||
Total borrowings | (934.2) | (879.5) | |||
Lease liabilities | (65.2) | 16.1 | (49.9) | 2.3 | (96.7) |
Borrowings | (934.2) | 28.3 | — | 26.4 | (879.5) |
Changes in liabilities arising from financing | (999.4) | 44.4 | (49.9) | 28.7 | (976.2) |
Cash at bank | 328.9 | 46.5 | — | (15.7) | 359.7 |
Bank overdrafts | (85.1) | (62.8) | — | 1.0 | (146.9) |
Net cash and cash equivalents | 243.8 | (16.3) | — | (14.7) | 212.8 |
Net debt and lease liability | (755.6) | 28.1 | (49.9) | 14.0 | (763.4) |
Net debt excluding lease liability | (690.4) | 12.0 | — | 11.7 | (666.7) |
| 1st | 31st | |||||
| January | Acquired | Disposal of | Exchange | December | ||
| 2022 | Cash flow | debt * | subsidiaries | movement | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Current portion of long-term borrowings | (59.6) | (202.9) | ||||
Non-current portion of long-term borrowings | (289.9) | (731.3) | ||||
Total borrowings | (349.5) | (934.2) | ||||
Lease liabilities | (60.1) | 12.9 | (15.2) | — | (2.8) | (65.2) |
Borrowings | (349.5) | (497.7) | (67.0) | — | (20.0) | (934.2) |
Changes in liabilities arising from financing | (409.6) | (484.8) | (82.2) | — | (22.8) | (999.4) |
Cash at bank | 274.6 | 46.3 | — | (2.8) | 10.8 | 328.9 |
Bank overdrafts | (55.6) | (26.7) | — | — | (2.8) | (85.1) |
Net cash and cash equivalents | 219.0 | 19.6 | — | (2.8) | 8.0 | 243.8 |
Net debt and lease liability | (190.6) | (465.2) | (82.2) | (2.8) | (14.8) | (755.6) |
Net debt excluding lease liability | (130.5) | (478.1) | (67.0) | (2.8) | (12.0) | (690.4) |
SpiraxGroup Annual Report 2023 231
Financial Statements
Notes to the Consolidated Financial Statements continued
25 Purchase of businesses
The provisional fair value accounting is shown below:
2023
During the period the Group acquired distributors resulting in a total cash outflow of £5.2m and creating acquired
intangibles of £3.6m. No other subsidiaries were acquired during 2023.
Additionally, during the period the fair value of the assets acquired as part of the acquisition of Vulcanic (and its related
companies) as well as Durex Industries were reassessed. The outcome of this reassessment was an immaterial decrease in
goodwill for Durex Industries and an offsetting immaterial increase in goodwill for Vulcanic.
2022
| Durex | ||||
| Cotopaxi | Vulcanic | Industries | ||
| fair value | fair value | fair value | Total | |
| £m | £m | £m | £m | |
| Non-current assets: | ||||
Property, plant and equipment | — | 15.8 | 14.9 | 30.7 |
Right-of-use assets | — | 4.1 | — | 4.1 |
Acquired intangibles | 2.8 | 115.6 | 126.2 | 244.6 |
Software and other intangibles | — | 0.5 | — | 0.5 |
Deferred tax assets | — | 2.9 | 0.5 | 3.4 |
2.8 | 138.9 | 141.6 | 283.3 | |
| Current assets: | ||||
Inventories | — | 17.4 | 7.3 | 24.7 |
Trade receivables | 0.8 | 24.5 | 9.5 | 34.8 |
Other receivables | 0.4 | 3.5 | 1.2 | 5.1 |
Cash and cash equivalents | 0.6 | 10.3 | 14.8 | 25.7 |
1.8 | 55.7 | 32.8 | 90.3 | |
Total assets | 4.6 | 194.6 | 174.4 | 373.6 |
| Current liabilities: | ||||
Trade payables | 0.1 | 7.5 | 1.1 | 8.7 |
Other payables, accruals and provisions | 0.6 | 15.9 | 7.0 | 23.5 |
Short-term lease liabilities | — | 1.1 | — | 1.1 |
0.7 | 24.5 | 8.1 | 33.3 | |
| Non-current liabilities: | ||||
Long-term borrowings | — | 67.0 | — | 67.0 |
Long-term payables | — | 3.7 | — | 3.7 |
Long-term lease liabilities | — | 3.0 | — | 3.0 |
Deferred tax liabilities | 0.6 | 33.4 | 0.1 | 34.1 |
Non-current provisions | — | 4.6 | 0.1 | 4.7 |
Post-retirement benefit plans | — | 1.1 | — | 1.1 |
0.6 | 112.8 | 0.2 | 113.6 | |
Total liabilities | 1.3 | 137.3 | 8.3 | 146.9 |
Total net assets | 3.3 | 57.3 | 166.1 | 226.7 |
Goodwill | 10.0 | 119.2 | 130.1 | 259.3 |
Total | 13.3 | 176.5 | 296.2 | 486.0 |
| Satisfied by: | ||||
Cash paid | 13.3 | 176.5 | 296.2 | 486.0 |
Total consideration | 13.3 | 176.5 | 296.2 | 486.0 |
| Cash outflow for acquired businesses in the Statement of Cash Flows: | ||||
Cash paid for businesses acquired in the period and debt repaid | 13.3 | 243.5 | 296.2 | 553.0 |
Debt repaid | — | (67.0) | — | (67.0) |
Cash paid for businesses acquired in the period | 13.3 | 176.5 | 296.2 | 486.0 |
Less cash acquired | (0.6) | (10.3) | (14.8) | (25.7) |
Net cash outflow | 12.7 | 166.2 | 281.4 | 460.3 |
SpiraxGroup Annual Report 2023232
Financial Statements
25 Purchase of businesses continued
2022 continued
1. On a debt-free cash-free basis the cash outflow for acquisitions was £535.5m consisting of £486.0m paid to the
vendors, £67.0m of debt acquired and repaid and £8.2m of acquisition costs less cash acquired of £25.7m.
2. The acquisitions of 100% of Vulcanic (completed on 29th September 2022 for consideration of €200.8m or £176.5m),
100% of Durex Industries (completed on 30th November 2022 for consideration of US$357.1m or £296.2m) and 100% of
Cotopaxi Limited (completed on 30th January 2022 for consideration of £13.3m) have all been accounted for under the
acquisition method. The separately identified intangibles of all three acquisitions are recorded as part of the provisional
fair value adjustment. The acquired intangibles relate to brand names and trademarks, manufacturing designs and core
technology and customer relationships. The goodwill recognised represents the skilled workforce acquired and the
opportunity to achieve synergies from being part of a larger Group.
3. Vulcanic is a European leader in industrial process heating solutions and is highly complementary to Chromalox within
our ETS Business. As the lead brands within ETS for electric process heating, Chromalox and Vulcanic will support the
effective deployment of our industry-leading decarbonisation solutions alongside Steam Thermal Solutions. Goodwill
arising on the acquisition of Vulcanic is not expected to be tax deductible. Following completion of the acquisition,
Vulcanic generated €34.8m (£29.7m) of revenue and €8.3m (£7.1m) of adjusted pre-tax profit. Had the acquisition been
made on 1st January 2022, Vulcanic revenue and adjusted pre-tax profit would have been approximately €111.9m
(£95.5m) and €21.1m (£18.0m) respectively.
4. Durex Industries, located in Illinois (USA), is a specialist in custom electric thermal solutions for ultra-high criticality
industrial equipment and is highly complementary to Thermocoax within our ETS Business. Together, Thermocoax and
Durex Industries are well positioned to capitalise on the growing demand for increasingly stringent thermal energy
requirements in high technology equipment within market sectors with high barriers to entry. Goodwill arising on the
acquisition of Durex Industries is expected to be tax deductible in the USA. Following completion of the acquisition,
Durex Industries generated US$5.6m (£4.5m) of revenue and US$1.2m (£1.0m) of adjusted pre-tax profit. Had the
acquisition been made on 1st January 2022, Durex Industries revenue and adjusted pre-tax profit would have been
approximately US$81.3m (£65.5m) and US$26.4m (£21.3m) respectively.
5. Cotopaxi Limited is a UK-based digitally enabled global energy consulting and optimisation company, which will enable
Steam Thermal Solutions to digitally enhance its customer bonding through the provision of physical and digital
connections to customers’ infrastructure and equipment. Goodwill arising on the acquisition of Cotopaxi is not expected
to be tax deductible. Following completion of the acquisition, Cotopaxi generated £2.9m of revenue and £0.5m of
pre-tax profit. Had the acquisition been made on 1st January 2022, Cotopaxi revenue and pre-tax profit would not have
been materially different from the figure disclosed.
26 Disposal of subsidiary
2023
No subsidiaries were disposed of during 2023.
2022
The loss on disposal of subsidiaries relates wholly to the disposal of 100% of Spirax Sarco Russia and Watson-Marlow Russia
on 6th July 2022.
The consideration amounted to £nil which resulted in a loss on disposal for Spirax Sarco Russia of £2.2m and for Watson-
Marlow Russia of £1.7m, including £0.1m of legal fees, and cumulative currency translation losses recycled to the
Consolidated Income Statement of £3.2m. £2.8m of cash and cash equivalents were disposed of as part of the transaction.
These disposals did not meet the definition of a discontinued operation given in IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations and, therefore, no disclosures in relation to discontinued operations have been made.
SpiraxGroup Annual Report 2023 233
Financial Statements
Notes to the Consolidated Financial Statements continued
SpiraxGroup Annual Report 2023234
Financial Statements
27 Derivatives and other financial instruments continued
Fair values of financial assets and financial liabilities continued
| 2023 | 2023 | 2022 | 2022 | |
| Carrying | Fair | Carrying | Fair | |
| value | value | value | value | |
| £m | £m | £m | £m | |
| Financial assets: | ||||
Cash and cash equivalents | 359.7 | 359.7 | 328.9 | 328.9 |
Trade, other receivables and contract assets | 346.3 | 346.3 | 395.2 | 395.2 |
Total financial assets | 706.0 | 706.0 | 724.1 | 724.1 |
| 2023 | 2023 | 2022 | 2022 | |
| Carrying | Fair | Carrying | Fair | |
| value | value | value | value | |
| £m | £m | £m | £m | |
| Financial liabilities: | ||||
Borrowings | 879.5 | 888.5 | 934.2 | 918.1 |
Lease liabilities | 96.7 | 96.7 | 65.2 | 65.2 |
Bank overdrafts | 146.9 | 146.9 | 85.1 | 85.1 |
Trade payables | 79.2 | 79.2 | 89.9 | 89.9 |
Other payables and contract liabilities | 67.3 | 67.3 | 70.5 | 70.5 |
Long-term payables | 11.4 | 11.4 | 8.8 | 8.8 |
Accruals | 95.2 | 95.2 | 113.2 | 113.2 |
Total financial liabilities | 1,376.2 | 1,385.2 | 1,366.9 | 1,350.8 |
| Financial | ||||
| Fixed rate | Floating rate | liabilities on | ||
| financial | financial | which no | ||
| Total | liabilities | liabilities | interest is paid | |
| 2023 | £m | £m | £m | £m |
Euro | 758.8 | 628.8 | 6 6.7 | 63.3 |
US dollar | 363.2 | 310.7 | 1.8 | 50.7 |
Sterling | 149.0 | 20.7 | 90.1 | 38.2 |
Renminbi | 39.5 | 5.1 | — | 34.4 |
Other | 65.7 | 16.2 | 1.2 | 48.3 |
Group total | 1,376.2 | 981.5 | 159.8 | 234.9 |
SpiraxGroup Annual Report 2023 235
Financial Statements
Notes to the Consolidated Financial Statements continued
27 Derivatives and other financial instruments continued
Interest rate risk profile of financial liabilities continued
| Financial | ||||
| Fixed rate | Floating rate | liabilities on | ||
| financial | financial | which no | ||
| Total | liabilities | liabilities | interest is paid | |
| 2022 | £m | £m | £m | £m |
Euro | 762.9 | 642.2 | 44.9 | 75.8 |
US dollar | 341.9 | 283.6 | 3.0 | 55.3 |
Sterling | 107.3 | 21.0 | 36.3 | 50.0 |
Renminbi | 46.3 | 2.0 | — | 44.3 |
Other | 108.5 | 18.3 | 36.1 | 54.1 |
Group total | 1,366.9 | 967.1 | 120.3 | 279.5 |
| 2023 | 2022 | ||||
| Nominal | Year | Carrying value | Carrying value | ||
| Currency | interest rate | of maturity | £m | £m | |
Unsecured private placement – €225.0m | € | 1.1% | 2023 | — | 202.0 |
Unsecured private placement – $185.0m | $ | 5.3% | 2028 | 145.3 | 152.9 |
Unsecured bank facility – $150.0m | $ | 6.8% | 2025 | 117.8 | 124.0 |
Unsecured private placement – €140.0m | € | 3.9% | 2027 | 124.7 | 123.9 |
Unsecured private placement – €125.0m | € | 4.2% | 2029 | 108.4 | 110.6 |
Unsecured private placement – €120.0m | € | 2.4% | 2026 | 104.4 | 106.2 |
Unsecured private placement – €110.0m | € | 4.4% | 2030 | 95.4 | — |
Unsecured bank facility – €90.0m | € | 4.7% | 2026 | 78.0 | — |
Unsecured bank facility | € | 4.6% | 2029 | 95.5 | 79.6 |
Unsecured bank facility | £ | 5.6% | 2024 | 81.7 | 39.3 |
Unsecured bank facility | € | 3.9% | 2024 | 64.4 | 38.5 |
Unsecured bank facility | £ | 5.9% | 2029 | 10.0 | 35.0 |
Unsecured bank facility | € | 0.0% | 2023 | — | 5.2 |
Unsecured bank facility | € | 3.9% | 2024 | 0.5 | 2.0 |
Unsecured bank facility | € | 3.9% | 2024 | 0.2 | 0.1 |
Unsecured bank facility | $ | 5.2% | 2024 | 0.1 | — |
Total outstanding borrowings | 1,026.4 | 1,019.3 |
SpiraxGroup Annual Report 2023236
Financial Statements
27 Derivatives and other financial instruments continued
| Floating | Financial assets | |||
| Fixed rate | rate | on which no | ||
| financial | financial | interest is | ||
| Total | assets | assets | earned | |
| 2023 | £m | £m | £m | £m |
Euro | 211.6 | 7.9 | 76.5 | 127.2 |
US dollar | 193.5 | 1.1 | 1.7 | 190.7 |
Sterling | 41.8 | 0.1 | 16.4 | 25.3 |
Renminbi | 67.6 | 2.8 | 23.4 | 41.4 |
Other | 191.5 | 11.3 | 41.4 | 138.8 |
Group total | 706.0 | 23.2 | 159.4 | 523.4 |
| Floating | Financial assets | |||
| Fixed rate | rate | on which no | ||
| financial | financial | interest is | ||
| Total | assets | assets | earned | |
| 2022 | £m | £m | £m | £m |
Euro | 205.8 | 0.2 | 62.2 | 143.4 |
US dollar | 186.3 | 0.8 | 36.4 | 149.1 |
Sterling | 49.5 | 0.1 | 19.6 | 29.8 |
Renminbi | 92.4 | 6.4 | 41.1 | 44.9 |
Other | 190.1 | 8.6 | 22.7 | 158.8 |
Group total | 724.1 | 16.1 | 182.0 | 526.0 |
| Trade, other | |||||
| payables, accruals | |||||
| and contract | Lease | ||||
| liabilities | Overdrafts | liabilities | Long-term | Total | |
| 2023 | £m | £m | £m | borrowings | £m |
In six months or less, or on demand | 233.4 | 146.9 | 9.6 | 2.7 | 392.6 |
In more than six months but no more than twelve | 9.0 | — | 9.1 | 1.2 | 19.3 |
In more than one year but no more than two | 2.1 | — | 16.3 | 119.8 | 138.2 |
In more than two years but no more than three | 6.2 | — | 13.8 | 183.4 | 203.4 |
In more than three years but no more than four | 1.5 | — | 11.2 | 122.9 | 135.6 |
In more than four years but no more than five | 0.2 | — | 7.9 | 145.3 | 153.4 |
In more than five years | 0.7 | — | 56.4 | 310.0 | 367.1 |
Total contractual cash flows | 253.1 | 146.9 | 124.3 | 885.3 | 1,409.6 |
Statement of Financial Position values | 253.1 | 146.9 | 96.7 | 87 9.5 | 1,376.2 |
SpiraxGroup Annual Report 2023 237
Financial Statements
Notes to the Consolidated Financial Statements continued
27 Derivatives and other financial instruments continued
Maturity of financial liabilities continued
| Trade, other | |||||
| payables | |||||
| and contract | Lease | ||||
| liabilities | Overdrafts | liabilities | Long-term | Total | |
| 2022 | £m | £m | £m | borrowings | £m |
In six months or less, or on demand | 271.0 | 85.1 | 7.9 | 37.3 | 401.3 |
In more than six months but no more than twelve | 6.8 | — | 7.0 | 201.4 | 215.2 |
In more than one year but no more than two | 1.7 | — | 10.9 | 84.2 | 96.8 |
In more than two years but no more than three | 1.3 | — | 7.7 | 147.0 | 156.0 |
In more than three years but no more than four | 0.8 | — | 5.6 | 107.5 | 113.9 |
In more than four years but no more than five | — | — | 4.2 | 341.5 | 345.7 |
In more than five years | 0.8 | — | 28.1 | 142.6 | 171.5 |
Total contractual cash flows | 282.4 | 85.1 | 71.4 | 1,061.5 | 1,500.4 |
Statement of Financial Position values | 282.4 | 85.1 | 65.2 | 934.2 | 1,366.9 |
| Less than | 6 to 12 | More than | ||
| 6 months | months | 12 months | Total | |
| 2023 | £m | £m | £m | £m |
| Contracted cash in/(out): | ||||
Sterling | 54.9 | 67.5 | — | 122.4 |
Euro | (20.5) | (22.3) | — | (42.8) |
US dollar | (13.6) | (18.8) | — | (32.4) |
Other | (19.6) | (24.9) | — | (44.5) |
Total contractual cash flows | 1.2 | 1.5 | — | 2.7 |
| Less than | 6 to 12 | More than | ||
| 6 months | months | 12 months | Total | |
| 2022 | £m | £m | £m | £m |
| Contracted cash in/(out): | ||||
Sterling | 72.8 | 70.0 | — | 142.8 |
Euro | (30.4) | (26.2) | — | (56.6) |
US dollar | (23.7) | (27.9) | — | (51.6) |
Other | (22.8) | (20.8) | — | (43.6) |
Total contractual cash flows | (4.1) | (4.9) | — | (9.0) |
SpiraxGroup Annual Report 2023238
Financial Statements
27 Derivatives and other financial instruments continued
| 2023 | 2022 | |
| £m | £m | |
Expiring in one year or less | — | — |
Expiring in more than one year but no more than two years | — | — |
Expiring in more than two years but no more than three years | — | — |
Expiring in more than three years | 294.5 | 285.4 |
Total Group undrawn committed facilities | 294.5 | 285.4 |
| Gross | Impairment | Net | Gross | Impairment | Net | |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
| £m | £m | £m | £m | £m | £m | |
Not past due date | 236.6 | (1.0) | 235.6 | 236.2 | (1.8) | 234.4 |
0–30 days past due date | 35.0 | (0.2) | 34.8 | 48.8 | (0.1) | 48.7 |
31–90 days past due date | 17.3 | (0.1) | 17.2 | 29.0 | (0.1) | 28.9 |
91 days to one year past due date | 13.9 | (1.7) | 12.2 | 26.9 | (1.3) | 25.6 |
More than one year | 7.3 | (7.3) | — | 13.9 | (10.4) | 3.5 |
Group total | 310.1 | (10.3) | 299.8 | 354.8 | (13.7) | 341.1 |
| 2023 | 2022 | |
| £m | £m | |
Balance at 1st January | 13.7 | 12.9 |
Additional impairment | 3.0 | 1.0 |
Amounts written off as uncollectable | (0.4) | (0.3) |
Amounts recovered | (0.4) | (0.6) |
Impairment losses reversed | (5.1) | (0.3) |
Exchange differences | (0.5) | 1.0 |
Balance at 31st December | 10.3 | 13.7 |
SpiraxGroup Annual Report 2023 239
Financial Statements
Appendix
In this section
241 Appendix: Alternative performance measures
SpiraxGroup Annual Report 2023240
Financial Statements
Appendix: Alternative performance measures
The Group reports under International Financial Reporting Standards (IFRS) and also uses alternative performance measures
where the Board believes that they help to effectively monitor the performance of the Group and users of the Financial
Statements might find them informative. Certain alternative performance measures also form a meaningful element of
Executive Directors’ variable remuneration. Please see the Annual Report on Remuneration 2023 on pages 162 to 174 for
further detail. A definition of the alternative performance measures and a reconciliation to the closest IFRS equivalent are
disclosed below. The term ‘adjusted’ is not defined under IFRS and may therefore not be comparable with similarly titled
measures reported by other companies. Adjusted performance measures are not considered to be a substitute for, or
superior to, IFRS measures.
Adjusted operating profit
Adjusted operating profit excludes items that are considered to be significant in nature and/or quantum at either a Group or
an operating segment level and where treatment as an adjusted item provides all our stakeholders with additional useful
information to assess the period-on-period trading performance of the Group. The Group excludes such items including
those defined as follows:
•
Amortisation and impairment of acquisition-related intangible assets
•
Costs associated with the acquisition or disposal of businesses
•
Gain or loss on disposal of a subsidiary and/or disposal groups
•
Reversal of acquisition-related fair value adjustments to inventory
•
Changes in deferred and contingent consideration payable on acquisitions
•
Costs associated with a material restructuring programme
•
Material gains or losses on disposal of property
•
Accelerated depreciation, impairment and other related costs on non-recurring, material property redevelopments
•
Material non-recurring pension costs or credits
•
Costs or credits arising from regulatory and litigation matters
•
Other material items which are considered to be non-recurring in nature and/or are not a result of the underlying trading
of the business
•
Related tax effect on adjusting items above and other tax items which do not form part of the underlying tax rate
A reconciliation between operating profit as reported under IFRS and adjusted operating profit is given below.
2023
£m
2022
£m
OperatingprofitasreportedunderIFRS 284.4 318.8
Amortisation of acquisition-related intangible assets 37.2 23.7
Significant software related impairment 13.9 —
Acquisition-related items 5.7 9.1
Restructuring costs 5.2 15.5
Asset related impairment 1.8 —
Reversal of acquisition-related fair value adjustments to inventory 1.3 1.8
Disposal of associate (0.4) —
Disposal of subsidiaries in Russia — 7.1
Accelerated depreciation and other related costs on one-off property redevelopments — 4.2
Totaladjustingitems 64.7 61.4
Adjustedoperatingprofit 349.1 380.2
SpiraxGroup Annual Report 2023 241
Financial Statements
Appendix: Alternative performance measures continued
Adjusted earnings per share
2023 2022
ProfitfortheyearattributabletoequityholdersasreportedunderIFRS(£m) 183.6 224.7
Items excluded from adjusted profit (£m) 64.7 62.5
Tax effects on adjusted items (£m) (18.3) (9.4)
Adjustedprofitfortheyearattributabletoequityholders(£m) 230.0 2 77.8
Weighted average shares (million) 73.6 73.6
Basicadjustedearningspershare 312.4p 377.2p
Diluted weighted average shares (million) 73.8 73.8
Dilutedadjustedearningspershare 311.8p 376.3p
Basic adjusted earnings per share are defined as adjusted profit for the period attributable to equity holders divided by the
weighted average number of shares. Diluted adjusted earnings per share are defined as adjusted profit for the period
attributable to equity holders divided by the diluted weighted average number of shares. Basic and diluted EPS calculated
on an IFRS profit basis are included in Note 9.
Dividend cover
The Group monitors dividend cover to ensure this remains within the Group’s expected range. Dividend cover is calculated
as adjusted earnings per share divided by dividends per share.
Adjusted cash flow
A reconciliation showing the items that bridge between net cash from operating activities as reported under IFRS to an
adjusted basis is given below. Adjusted cash from operations is used by the Board to monitor the performance of the Group,
with a focus on elements of cash flow, such as net capital expenditure, which are subject to day-to-day control by the business.
2023
£m
2022
£m
NetcashfromoperatingactivitiesasreportedunderIFRS 298.6 241.1
Restructuring and acquisition-related costs 10.8 10.2
Net capital expenditure excluding acquired intangibles from acquisitions (102.3) (113.5)
Income tax paid 90.7 90.0
Repayments of principal under lease liabilities (16.1) (12.9)
Adjustedcashfromoperations 281.7 214.9
Adjusted cash conversion in 2023 is 81% (2022: 57%). Cash conversion is calculated as adjusted cash from operations
divided by adjusted operating profit. The adjusted cash flow is included in the Financial Review on page 40. The impact of
adjustments to operating profit as reported under IFRS of £64.7m (2022: £61.4m) on net change in cash and cash
equivalents is a total outflow of £5.6m (2022: £13.5m). Included within cash generated from operations is acquisition-related
items of £0.8m and restructuring costs of £5.2m. Included within net cash used in investing activities is profit on disposal of
businesses of £0.4m.
Cash generation
Cash generation is one of the Group’s key performance indicators used by the Board to monitor the performance of the
Group and measure the successful implementation of our strategy. It is one of two financial measures on which Executive
Directors’ variable remuneration is based.
Cash generation is calculated as adjusted operating profit after adding back depreciation and amortisation, less cash
payments to pension schemes in excess of the charge to operating profit, equity settled share plans, net capital expenditure
excluding acquired intangibles, working capital changes and repayment of principal under lease liabilities. Cash generation
is equivalent to adjusted cash from operations, a reconciliation between this and net cash from operating activities as
reported under IFRS is shown in the table above.
Return on invested capital (ROIC) and return on capital employed (ROCE)
The Group distinguishes between invested capital and capital employed when calculating return on capital. Invested capital
represents the total capital invested in the business and is equal to total equity plus net debt and therefore includes the
impact of acquisitions and disposals. Capital employed is invested capital less certain non-current assets and non-current
liabilities and therefore reflects capital that is more operational in nature. Both of these return metrics are used to ensure a
full assessment of business performance.
SpiraxGroup Annual Report 2023242
Financial Statements
Return on invested capital (ROIC)
ROIC measures the post-tax return on the total capital invested in the Group. It is calculated as adjusted operating profit
after tax divided by average invested capital. Average invested capital is defined as the average of the closing balance at
the current and prior year end. Taxation is calculated as adjusted operating profit multiplied by the adjusted effective tax rate.
An analysis of the components is as follows:
2023
£m
2022
£m
Total equity 1,157.7 1,169.8
Net debt including lease liabilities 763.4 755.6
Totalinvestedcapital 1,921.1 1,925.4
Averageinvestedcapital 1,923.2 1,563.0
Averageinvestedcapital(excludingacquisitions,disposalsandleases) 1,336.4 1,263.8
Operating profit as reported under IFRS 284.4 318.8
Adjustments (see adjusted operating profit) 64.7 61.4
Adjusted operating profit 349.1 380.2
Taxation (89.0) (94.9)
Adjustedoperatingprofitaftertax 260.1 285.3
Adjustedoperatingprofitaftertax(excludingacquisitions,disposalsandleases) 236.7 27 7.6
Returnoninvestedcapital 13.5% 18.3%
Returnoninvestedcapital(excludingacquisitions,disposalsandleases) 17.7% 22.0%
Return on capital employed (ROCE)
ROCE measures effective management of fixed assets and working capital relative to the profitability of the Group. It is
calculated as adjusted operating profit divided by average capital employed. Average capital employed is defined as the
average of the closing balance at the current and prior year end. More information on ROCE can be found in the Capital
Employed and ROCE sections of the Financial Review on pages 39 and 40.
An analysis of the components is as follows:
2023
£m
2022
£m
Property, plant and equipment 415.1 384.5
Right-of-use assets 98.4 67.2
Software and development costs 42.3 44.5
Prepayments 1.9 2.0
Inventories 285.2 290.0
Trade receivables 299.8 341.1
Other current assets 71.4 79.6
Tax recoverable 13.6 19.0
Trade, other payables and current provisions (260.7) (295.0)
Current tax payable (28.3) (40.4)
Capitalemployed 938.7 892.5
Averagecapitalemployed 915.6 775.9
Averagecapitalemployed(excludingacquisitions,disposalsandleases) 772.4 67 7.5
Operating profit 284.4 318.8
Adjustments (see adjusted operating profit on page 241) 64.7 61.4
Adjustedoperatingprofit 349.1 380.2
Adjustedoperatingprofit(excludingacquisitions,disposalsandleases) 317.7 369.9
Returnoncapitalemployed 38.1% 49.0%
Returnoncapitalemployed(excludingacquisitions,disposalsandleases) 41.1% 54.6%
SpiraxGroup Annual Report 2023 243
Financial Statements
Appendix: Alternative performance measures continued
Return on capital employed (ROCE) continued
A reconciliation of capital employed to net assets as reported under IFRS and disclosed in the Consolidated Statement of
Financial Position is given below.
2023
£m
2022
£m
Capitalemployed 938.7 892.5
Goodwill and acquired intangibles 1,087.0 1,159.1
Investment in associate 3.0 —
Post-retirement benefits (51.4) (52.1)
Net deferred tax (37.2) (59.1)
Non-current provisions and long-term payables (19.0) (15.0)
Lease liabilities (96.7) (65.2)
Net debt (666.7) (690.4)
NetassetsasreportedunderIFRS 1,157.7 1,169.8
Net debt including lease liabilities
A reconciliation between net debt and net debt including lease liabilities is given below. A breakdown of the balances that
are included within net debt is given within Note 23. Net debt excludes lease liabilities to be consistent with how net debt is
defined for external debt covenant purposes, as well as to enable comparability with prior years.
2023
£m
2022
£m
Netdebt 666.7 690.4
Lease liabilities 96.7 65.2
Netdebtandleaseliabilities 763.4 755.6
Net debt to earnings before interest, tax, depreciation and amortisation (EBITDA)
To assess the size of the net debt balance relative to the size of the earnings for the Group, we analyse net debt as a
proportion of EBITDA. EBITDA is calculated by adding back depreciation and amortisation of owned property, plant and
equipment, software and development and the 12 month proforma EBITDA impact of acquisitions and disposals to adjusted
operating profit. Net debt is calculated as cash and cash equivalents less bank overdrafts and external borrowings
(excluding lease liabilities). The net debt to EBITDA ratio is calculated as follows:
2023
£m
2022
£m
Adjustedoperatingprofit 349.1 380.2
Depreciation and amortisation of property, plant and equipment, software and development 44.2 37.4
Acquisitions and disposals proforma basis (EBITDA) — 33.7
Earningsbeforeinterest,tax,depreciationandamortisation 393.3 451.3
Net debt 666.7 690.4
NetdebttoEBITDA 1.7 1.5
The components of net debt are disclosed in Note 23.
Organic measures
As we are a multi-national Group of companies, who trade in a large number of currencies and also acquire and sometimes
dispose of companies, we also refer to organic performance measures throughout the Annual Report. These strip out the
effects of the movement in exchange rates and of acquisitions and disposals. The Board believe that this allows users of the
accounts to gain a further understanding of how the Group has performed. Exchange translation movements are assessed
by re-translating prior period reported values to current period exchange rates. Exchange transaction impacts on operating
profit are assessed on the basis of transactions being at constant currency between years.
The incremental impact of any acquisitions that occurred in either the current period or prior period is excluded from the
organic results of the current period at current period exchange rates. For any disposals that occurred in the current or prior
period, the current period organic results include the difference between the current and prior period financial results only
for the like-for-like period of ownership.
The organic percentage movement is calculated as the organic movement divided by the prior period at current period
exchange rates, excluding disposals for the non-like-for-like period of ownership. The organic bps change in adjusted
operating margin is the difference between the current period margin, excluding the incremental impact of acquisitions, and
the prior period margin excluding disposals for the non-like-for-like period of ownership at current period exchange rates.
SpiraxGroup Annual Report 2023244
Financial Statements
Organic measures continued
A reconciliation of the movement in revenue and adjusted operating profit compared to the prior period is given below.
2022
£m
Exchange
£m
Organic
£m
Acquisitions
and disposals ¹
£m
2023
£m Organic Reported
Revenue 1,610.6 (27.2) (16.0) 115.2 1,682.6 -1% +4%
Adjusted operating profit 380.2 (7.1) (45.9) 21.9 349.1 -12% -8%
Adjusted operating margin 23.6% 20.7% -270bps -290bps
1 Results include the impact of (i) the acquisition of Vulcanic and Durex Industries and (ii) the treatment of our Russian operating companies as
disposals from the date at which the Group suspended all trading with and within Russia.
The term ‘sales’ is used interchangeably with ‘revenue’ when describing the financial performance of the business. Drop
through is calculated as the organic increase in adjusted operating profit divided by the organic increase in revenue. The
reconciliation for each segment is included in the Strategic Report.
Proforma Revenue
Due to the disposal of our Russian operating companies and the acquisitions of Cotopaxi Limited, Vulcanic and Durex
Industries, our reported financial results for 2022 only include the impact of these operations for the period of ownership by
the Group. The table below reconciles between statutory revenue as reported within the Consolidated Income Statement,
and the 2022 proforma revenue had all acquisition and disposal transactions occurred on 1st January 2022. This allows
users of the accounts to compare 2023 revenue to 2022 revenue on a like-for-like basis.
Revenue (statutory)
£m
Proforma adjustments*
£m
Revenue (proforma)
£m Proportion of Group
Steam Thermal Solutions 866.0 (1.2) 864.8 50%
Electric Thermal Solutions 256.1 126.8 382.9 22%
Watson-Marlow 488.5 (1.9) 486.6 28%
Total 1,610.6 123.7 1,734.3
* Includes the 2022 pre-acquisition financial results of Cotopaxi Limited, Vulcanic and Durex Industries, and the removal of the 2022 statutory
results of our Russian operating companies disposed
Analysis by operating segment
2023
Revenue
£m
Adjusted
operating
profit
£m
Adjusted
operating
margin
%
Steam Thermal Solutions 910.1 224.0 24.6%
Electric Thermal Solutions 378.5 59.2 15.6%
Watson-Marlow 394.0 93.7 23.8%
Corporate — (27.8)
Total 1,682.6 349.1 20.7%
Net financing expense (39.9)
Share of (loss)/profit of Associate —
Profitbeforetax 309.2
2022
Revenue
£m
Adjusted
operating
profit
£m
Adjusted
operating
margin
%
Steam Thermal Solutions 866.0 206.1 23.8%
Electric Thermal Solutions 256.1 39.9 15.6%
Watson-Marlow 488.5 160.0 32.8%
Corporate — (25.8)
Total 1,610.6 380.2 23.6%
Net financing expense (9.6)
Share of (loss)/profit of Associate —
Profitbeforetax 370.6
SpiraxGroup Annual Report 2023 245
Financial Statements
Appendix: Alternative performance measures continued
Operating costs
2023
Adjusted
£m
2023
Adjustments
£m
2023
Total
£m
2022
Adjusted
£m
2022
Adjustments
£m
2022
Total
£m
Cost of inventories recognised as an expense 401.2 1.3 402.5 381.2 3.9 385.1
Staff costs (Note 4) 630.4 — 630.4 570.3 — 570.3
Depreciation, amortisation and impairment 60.4 52.3 112.7 50.9 30.1 81.0
Other operating charges 241.5 11.1 252.6 228.0 27.4 255.4
Totaloperatingcosts 1,333.5 64.7 1,398.2 1,230.4 61.4 1,291.8
Total cost of inventories recognised as an expense includes the reversal of acquisition-related fair value adjustments to
inventory £1.3m (2022: £1.8m) and in the previous period the write down of inventory resulting from the closure of
Chromalox’s manufacturing operations in Soissons (France) of £2.1m.
Total depreciation, amortisation and impairment includes amortisation of acquisition-related intangible assets of £37.2m
(2022: £23.7m), an impairment of software related assets of £13.9m and an impairment of assets within Watson-Marlow as a
result of the restructure in the business of £1.8m as well as profit on the sale of the Chromalox’s manufacturing operations in
Soissons of £0.6m which had been fully impaired in the prior year. In the previous period it included accelerated
depreciation on one-off property redevelopments of £3.9m and impairment charges resulting from the closure of
Chromalox’s manufacturing operations in Soissons (France) of £2.5m.
Total other operating charges include restructuring costs of £7.5m in Watson-Marlow to right-size manufacturing capacity
as well as a credit of £1.7m for the release of restructuring costs booked in the previous period for the closure of
Chromalox’s manufacturing operations in Soissons (France) (2022: £10.9m). Total operating charges also include
acquisition-related items of £5.7m (2022: £9.1m) relating to the acquisition of Vulcanic and Gestra Malaysia and profits on
the disposal of Econotherms (UK) Ltd, an associate investment, of £0.4m. In the previous period, other operating charges
included cost of £7.1m relating to the disposal of subsidiaries in Russia and costs of £0.3m on one-off property
redevelopments. Operating costs include exchange difference gains of £1.8m (2022: £5.1m).
The reconciliation for each operating segment for adjusting items is analysed below:
2023
Amortisation
ofacquisition-
related
intangible
assets
£m
Reversalof
acquisition-
relatedfair
value
adjustments
toinventory
£m
Restructuring
costs
£m
Acquisition
relateditems
£m
Disposalof
associate
£m
Impairments
£m
Total
£m
Steam Thermal Solutions (4.5) — — (0.4) — (13.9) (18.8)
Electric Thermal Solutions (29.5) (1.3) 2.3 (4.9) — — (33.4)
Watson-Marlow (3.2) — (7.5) — — (1.8) (12.5)
Corporate — — — (0.4) 0.4 — —
Total (37.2) (1.3) (5.2) (5.7) 0.4 (15.7) (64.7)
Electric Thermal Solutions restructuring costs credit of £2.3m is made up of a £1.7m release of restructuring costs booked in
the previous period and £0.6m in relation to the sale of a previously fully impaired asset.
2022
Amortisation
of acquisition-
related
intangible
assets
£m
Reversal of
acquisition-
related fair
value
adjustments
to inventory
£m
Disposal of
subsidiaries
in Russia
£m
Restructuring
costs
£m
Acquisition-
related items
£m
Accelerated
depreciation
and other
related costs
on one-off
property
redevelopments
£m
Total
£m
Steam Thermal Solutions (4.6) — (5.3) — — — (9.9)
Electric Thermal Solutions (15.3) (1.8) — (15.5) — — (32.6)
Watson-Marlow (3.8) — (1.8) — — — (5.6)
Corporate — — — — (9.1) (4.2) (13.3)
Total (23.7) (1.8) (7.1) (15.5) (9.1) (4.2) (61.4)
SpiraxGroup Annual Report 2023246
Financial Statements
Tax on adjusting items
2023
Adjusted
£m
2023
Adjustments
£m
2023
Total
£m
2022
Adjusted
£m
2022
Adjustments
£m
2022
Total
£m
Analysisofchargeinyear
UK corporation tax:
Current tax on income for the year 9.4 — 9.4 7.3 (0.2) 7.1
Adjustments in respect of prior years (0.1) — (0.1) (0.7) — (0.7)
9.3 — 9.3 6.6 (0.2) 6.4
Foreign tax:
Current tax on income for the year 81.4 (6.1) 75.3 89.4 (0.8) 88.6
Adjustments in respect of prior years (0.7) — (0.7) (1.3) — (1.3)
80.7 (6.1) 74.6 88.1 (0.8) 87.3
Total current tax (credit)/charge 90.0 (6.1) 83. 9 94.7 (1.0) 93.7
UK deferred tax:
Origination and reversal of timing differences (6.5) (4.9) (11.4) 0.3 (0.7) (0.4)
Adjustment in respect of prior years (0.4) 1.1 0.7 (0.7) — (0.7)
(6.9) (3.8) (10.7) (0.4) (0.7) (1.1)
Foreign deferred tax:
Origination and reversal of timing differences (4.7) (3.9) (8.6) (2.2) (9.7) (11.9)
Adjustment in respect of prior years 0.4 (4.5) (4.1) 0.4 2.0 2.4
(4.3) (8.4) (12.7) (1.8) (7.7) (9.5)
Total deferred tax (credit)/charge (11.2) (12.2) (23.4) (2.2) (8.4) (10.6)
Taxonprofitonordinaryactivities 78.8 (18.3) 60.5 92.5 (9.4) 83.1
Reconciliation of effective tax rate
2023
Adjusted
£m
2023
Adjustments
£m
2023
Total
£m
2022
Adjusted
£m
2022
Adjustments
£m
2022
Total
£m
Profitbeforetaxandshareofprofit/(loss)ofAssociate 309.2 (64.7) 244.5 370.6 (62.5) 308.1
Expected tax at blended rate 80.5 (15.5) 65.0 93.0 (14.3) 78.7
Increased withholding tax on overseas dividends 7.6 — 7.6 6.2 — 6.2
Non-deductible expenditure 0.2 0.6 0.8 0.6 3.0 3.6
Over provided in prior years (0.8) (3.4) (4.2) (2.3) 2.0 (0.3)
Other reconciling items (8.7) — (8.7) (5.0) (0.1) (5.1)
TotaltaxinConsolidatedIncomeStatement 78.8 (18.3) 60.5 92.5 (9.4) 83.1
Effectivetaxrate 25.5% 28.3% 24.7% 25.0% 15.0% 27.0%
SpiraxGroup Annual Report 2023 247
Financial Statements
Company Financial
Statements
In this section
249 Company Statement of Financial Position
250Company Statement of Changes to Equity
251 Notes to the Company Financial Statements
SpiraxGroup Annual Report 2023248
Financial Statements
Company Statement of Financial Position
at 31st December 2023
Notes
2023
£m
2022
£m
Assets
Non-currentassets
Property, plant and equipment 11 20.7 5.9
Loans to subsidiaries 3,9 104.0 106.2
Investment in subsidiaries 2 758.8 756.6
Investment in Associate 2 3.0 —
Deferred tax assets 6 8.2 10.5
Post-retirement benefits 7 5.5 3.9
900.2 883.1
Currentassets
Loans to subsidiaries 3,9 0.4 200.2
Due from subsidiaries* 9 68.5 6 7.7
Other current assets 4 7.8 3.8
Cash and cash equivalents* 39.2 31.4
115.9 303.1
Totalassets 1,016.1 1,186.2
Equityandliabilities
Currentliabilities
Trade and other payables 5 5.8 10.6
Due to subsidiaries* 9 90.4 98.7
Current portion of long-term borrowings* 10 0.3 200.1
Short-term borrowings* 81.8 39.3
178 .3 348.7
Netcurrent(liabilities)/assets (62.4) (45.6)
Non-currentliabilities
Long-term borrowings* 10 112.5 141.2
Deferred tax liabilities 6 0.2 1.4
Due to subsidiaries* 9 7.0 3.2
119.7 145.8
Totalliabilities 298.0 494.5
Netassets 718.1 691.7
Equity
Share capital 8 19.8 19.8
Share premium account 90.1 88.1
Other reserves 8 14.7 2.0
Retained earnings 593.5 581.8
Totalequity 718.1 691.7
Totalequityandliabilities 1,016.1 1,186.2
*
The prior period comparatives have been adjusted to reflect a reclassification to meet the presentational requirements of FRS101, with further detail given
within Note 1. This had no impact on the net assets of the Company.
The loss before dividends received was £28.4m (2022: £30.6m). Dividends from subsidiary undertakings of £169.1m (2022:
£72.4m) are excluded from this amount. Total profit recognised during the year was £140.7m (2022: £41.8m).
These Financial Statements of Spirax-Sarco Engineering plc, company number 00596337, were approved by the Board of
Directors and authorised for issue on 6th March 2024 and signed on its behalf by:
N.B.Patel
Director
SpiraxGroup Annual Report 2023 249
Financial Statements
Company Statement of Changes in Equity
for the year ended 31st December 2023
Share
capital
£m
Share
premium
account
£m
Other
reserves
£m
Retained
earnings
£m
Total
equity
£m
Balanceat1stJanuary2023 19.8 88.1 2.0 581.8 691.7
Profit for the year — — — 140.7 140.7
Other comprehensive income:
Cash flow hedges net of tax* — — 5.0 (0.9) 4.1
Remeasurement gain on post-retirement benefits — — — 1.6 1.6
Deferred tax on remeasurement gain on post-retirement benefits — — — (0.4) (0.4)
Totalothercomprehensiveincomefortheyear — — 5.0 0.3 5.3
Totalcomprehensiveincomefortheyear — — 5.0 141.0 146.0
Contributions by and distributions to owners of the Company:
Dividends paid — — — (114.5) (114.5)
Equity settled share plans net of tax — — — (14.8) (14.8)
Issue of share capital — 2.0 — — 2.0
Employee Benefit Trust shares — — 5.5 — 5.5
Investment in subsidiaries in relation to share options granted — — 2.2 — 2.2
Balanceat31stDecember2023 19.8 90.1 14.7 593.5 718.1
* During the year, there has been a reclassification in relation to prior year deferred tax on cash flow hedges of £0.9m
For the year ended 31st December 2022
Share
capital
£m
Share
premium
account
£m
Other
reserves
£m
Retained
earnings
£m
Total
equity
£m
Balanceat1stJanuary2022 19.8 86.3 4.5 657.4 768.0
Profit for the year — — — 41.8 41.8
Other comprehensive income:
Cash flow hedges net of tax — — (3.5) — (3.5)
Remeasurement loss on post-retirement benefits — — — (1.3) (1.3)
Deferred tax on remeasurement loss on post-retirement benefits — — — 0.3 0.3
Totalothercomprehensiveincomefortheyear — — (3.5) (1.0) (4.5)
Totalcomprehensiveincomefortheyear — — (3.5) 40.8 37.3
Contributions by and distributions to owners of the Company:
Dividends paid — — — (103.1) (103.1)
Equity settled share plans net of tax — — — (13.3) (13.3)
Issue of share capital — 1.8 — — 1.8
Employee Benefit Trust shares — — (2.2) — (2.2)
Investment in subsidiaries in relation to share options granted — — 3.2 — 3.2
Balanceat31stDecember2022 19.8 88.1 2.0 581.8 691.7
Other reserves represent the Company’s share-based payments, capital redemption and Employee Benefit Trust reserves
(see Note 8).
The Notes on pages 251 to 256 form an integral part of the Financial Statements.
SpiraxGroup Annual Report 2023250
Financial Statements
1 Accounting policies
The separate Financial Statements of the Company are presented as required by the Companies Act 2006. The Company
meets the definition of a qualifying entity under FRS 100. Accordingly the Company has adopted FRS 101 Reduced
Disclosure Framework. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available
under that standard in relation to share-based payments, financial instruments and the presentation of a Cash Flow
Statement. Where relevant, equivalent disclosures have been given in the Consolidated Financial Statements.
Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own Income
Statement. As permitted by the audit fee disclosure regulations, disclosure of non-audit fees information is not included in
respect of the Company.
The Company’s accounting policies are the same as those set out in Note 1 of the Consolidated Financial Statements,
except as noted below.
The Directors have concluded that no critical judgements or key sources of estimation uncertainty have been made in the
process of applying the Company’s accounting policies.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Loans to or from other Group undertakings and all other payables and receivables are initially recorded at fair value, which is
generally the proceeds received. They are then subsequently carried at amortised cost.
Reclassification of prior period balances
The Company participates in a number of Group cash pooling arrangements. Historically the sterling zero balance account
pool, for which the Company holds the header account, has been incorrectly disclosed net within cash and cash equivalents
and short-term borrowings in the Statement of Financial Position. The correct classification under FRS101 is to present the
header account within cash and cash equivalents or short-term borrowings, with the accounts relating to subsidiaries being
shown within amounts due to or from subsidiaries. As a result, for presentational purposes, amounts have been reclassified
in the comparative year with the impact being an increase to cash & cash equivalents of £10.9m, a decrease in short-term
borrowings of £10.5m, an increase in amounts due from subsidiaries of £50.3m and an increase in amounts due to
subsidiaries of £71.7m.
Furthermore, a reclassification of £98.7m from non-current liabilities to current liabilities has been made to reflect that cash
pool related liabilities are due within 12 months. The prior year Revolving Credit Facility (RCF) balance of £35.0m has also
been reclassified from the current portion of long-term borrowings to the non-current portion of long-term borrowings.
These changes had no impact on the net assets of the Company.
2 Investments in subsidiaries and associates
2a Investment in subsidiaries
2023
£m
2022
£m
Cost:
At 1st January 756.6 748.8
Share options issued to subsidiary company employees 2.2 3.2
Disposals — (0.2)
Additions — 4.8
At31stDecember 758.8 756.6
Investments are stated at cost less provisions for any impairment in value.
Details relating to subsidiary undertakings are given on pages 258 to 263. Except where stated, all classes of shares were
100% owned by the Group at 31st December 2023. The country of incorporation of the principal Group companies is the
markets except those companies identified as a holding company on pages 258 to 263.
2b Investment in associates
On 4th July 2023 the Company invested in 15.0% of Kyoto Group AS (Kyoto) for total consideration of 41.1m NOK (£3.0m). On
the same date the Company disposed of its 14.7% investment in Econotherm (UK) Ltd for consideration of £0.4m.
Notes to the Company Financial Statements
SpiraxGroup Annual Report 2023 251
Financial Statements
Notes to the Company Financial Statements continued
3 Loans to subsidiaries
2023
£m
2022
£m
Cost:
At 1st January 306.4 291.0
Advances — —
Interest 3.9 4.7
Repayments (200.3) (4.7)
Exchange adjustment (5.6) 15.4
At31stDecember 104.4 306.4
The terms and conditions of loans to subsidiaries at 31st December 2023 were as follows:
Currency
Nominal
interestrate
Yearof
maturity
2023
£m
2022
£m
Spirax-Sarco Overseas Limited € 1.10% 2023 — 199.8
Spirax-Sarco Overseas Limited € 2.36% 2026 104.4 106.6
Total loans to subsidiaries 104.4 306.4
Due within one year 0.4 200.2
Due after more than one year 104.0 106.2
4 Other current assets
2023
£m
2022
£m
Prepayments and accrued income 7.8 3.8
Totalothercurrentassets 7.8 3.8
5 Trade and other payables
2023
£m
2022
£m
Accruals 5.8 10.6
Totaltradeandotherpayables 5.8 10.6
Trade and other payables are due within one year.
6 Deferred tax assets and liabilities
Movement in deferred tax during the year 2023
1stJanuary
2023
£m
Recognised
inincome
£m
Recognised
inOCI
£m
Recognised
inequity
£m
31stDecember
2023
£m
Other temporary differences 10.5 0.2 (1.4) — 9.3
Pensions liability (1.4) 0.5 (0.4) — (1.3)
Companytotal 9.1 0.7 (1.8) — 8.0
Movement in deferred tax during the year 2022
1st January
2022
£m
Recognised
in income
£m
Recognised
in OCI
£m
Recognised
in equity
£m
31st December
2022
£m
Other temporary differences asset 0.1 9.5 0.9 — 10.5
Pensions liability (1.3) 0.3 (0.4) — (1.4)
Companytotal (1.2) 9.8 0.5 — 9.1
SpiraxGroup Annual Report 2023252
Financial Statements
7 Employee benefits
Pension plans
The Company is accounting for pension costs in accordance with International Accounting Standard 19.
The disclosures shown here are in respect of the Company’s defined benefit obligations. Other plans operated by the
Company were defined contribution plans.
The total expense relating to the Company’s defined contribution pension plans in the current year was £1.2m (2022:
£0.9m).
At 31st December 2023 the post-retirement mortality assumptions in respect of the Company defined benefit scheme
follows 84%/87% (male/female) of SAPS S3 light,CMI 2021 future improvements, 1.25% long term trend, smoothing factor of
7, 0.25% initial addition and a w parameter of 10%. At 31st December 2022 the post-retirement mortality assumptions in
respect of the Company defined benefit scheme follows 84%/87% (male/female) of SAPS S3 light, CMI 2021 projections with
a long-term trend of 1.25% pa, and an initial additional parameter of 0.25% and w2020 parameter of 10%. These assumptions
are regularly reviewed in light of scheme-specific experience and more widely available statistics.
The financial assumptions used at 31st December were:
Weighted average
assumptions used to define
the benefit obligations
2023
%
2022
%
Rate of increase in pensions 2.9% 2.9
Rate of price inflation 3.0% 3.2
Discount rate 4.5% 4.7
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions, which
due to the timescale covered, may not necessarily be borne out in practice.
Fair value of scheme assets:
2023
£m
2022
£m
Equities 6.3 5.2
Bonds 17.1 22.7
Other 19.3 14.6
Totalmarketvalueinaggregate 42.7 42.5
£27.6m (2022: £32.5m) of scheme assets have a quoted market price in an active market.
The actual return on plan assets was a gain of £3.2m (2022: a loss of £15.0m).
The amounts recognised in the Company Statement of Financial Position are determined as follows:
2023
£m
2022
£m
Fair value of scheme’s assets 42.7 42.5
Present value of funded scheme’s liabilities (37.2) (38.6)
Retirement benefit asset recognised in the Statement of Financial Position 5.5 3.9
Related deferred tax (1.3) (1.4)
Netpensionasset 4.2 2.5
The movements in the defined benefit obligation (DBO) recognised in the Statement of Financial Position during the year were:
2023
£m
2022
£m
Defined benefit obligation at beginning of year (38.6) (55.2)
Interest cost (1.7) (1.0)
Remeasurement gain/(loss) 0.3 14.9
Actual benefit payments 2.8 2.7
Definedbenefitobligationatendofyear (37.2) (38.6)
SpiraxGroup Annual Report 2023 253
Financial Statements
Notes to the Company Financial Statements continued
7 Employee benefits continued
Pension plans continued
The movements in the fair value of plan assets during the year were:
2023
£m
2022
£m
Value of assets at beginning of year 42.5 60.3
Expected return on assets 1.9 1.1
Remeasurement gain/(loss) 1.3 (16.1)
Administration costs (0.2) (0.1)
Actual benefit payments (2.8) (2.7)
Valueofassetsatendofyear 42.7 42.5
The estimated employer contributions to be made in 2024 are £nil.
The history of experience adjustments is as follows:
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
Defined benefit obligation at end of year (37.2) (38.6) (55.2) (55.2) (53.9)
Fair value of scheme’s assets 42.7 42.5 60.3 60.8 59.5
Retirement benefit recognised in the Statement of Financial Position 5.5 3.9 5.1 5.6 5.6
Experience adjustment on scheme’s liabilities 0.1 0.9 3.5 (5.0) —
As a percentage of scheme’s liabilities 0.3% 2.3% 6.3% 9.1% 0.0%
Experience adjustment on scheme’s assets 1.3 (16.1) 2.4 2.6 4.1
As a percentage of scheme’s assets 3.0% 37.9% 4.0% 4.3% 6.9%
The expense recognised in the Company Income Statement was as follows:
2023
£m
2022
£m
Current service and administration cost (0.2) (0.1)
Net interest on scheme’s assets and liabilities 0.2 0.1
TotalexpenserecognisedinIncomeStatement — —
Statement of Comprehensive Income (OCI):
2023
£m
2022
£m
Remeasurement effects recognised in OCI:
Due to experience on DBO (0.1) (0.9)
Due to demographic assumption changes in DBO 1. 0 0.5
Due to financial assumption changes in DBO (0.6) 15.3
Return on assets 1.3 (16.1)
Total remeasurement gain/(loss) recognised in OCI 1.6 (1.2)
Deferred tax on remeasurement amount recognised in OCI (0.4) 0.3
Cumulative loss recognised in OCI at beginning of year (11.5) (10.6)
CumulativelossrecognisedinOCIatendofyear (10.3) (11.5)
Sensitivity analysis
The effect on the defined benefit obligation at 31st December 2023 of an increase or decrease in key assumptions is as follows:
Increase/(decrease)inpensiondefinedbenefitobligation £m
Discount rate assumption being 1.00% higher (2.8)
Discount rate assumption being 1.00% lower 3.0
Inflation assumption being 1.00% higher 2 .0
Inflation assumption being 1.00% lower (1.9)
Mortality assumption life expectancy at age 65 being one year higher 1.1
Share-based payments
Disclosures of the share-based payments offered to employees of the Company are set out below. The description and
operation of each scheme is the same as outlined in the Group disclosure.
SpiraxGroup Annual Report 2023254
Financial Statements
7 Employee benefits continued
Performance Share Plan
The relevant disclosures in respect of the Performance Share Plan grants are set out below.
2019
Grant
2020
Grant
2021
Grant
2022
Grant
2023
Grant
Grant date 15th May 12th March 4th May 14th March 13thMarch
Mid-market share price at grant date 8,161.0p 7,775.0p 11,770.0p 11,910.0p 10,880.0p
Number of employees 12 19 15 13 15
Shares under scheme 60,626 82,607 45,815 42,573 52,259
Vesting period 3 years 3 years 3 years 3 years 3years
Probability of vesting 74.1% 74.3% 73.9% 76.1% 81.2%
Fair value 6,048.9p 5,779.2p 8,698.0p 9,057.6p 8,829.1p
8 Called-up share capital and reserves
2023
£m
2022
£m
Ordinary shares of 26 12/13p (2022: 26 12/13p) each
Authorised 111,428,571 (2022: 111,428,571) 30.0 30.0
Allotted, called up and fully paid 73,776,048 (2022: 73,776,048) 19.8 19.8
35,794 shares with a nominal value of £9,637 were issued in connection with the Group’s Employee Share Schemes for a
consideration of £2.0m received by the Company. In 2023 the Parent Company purchased 114,000 shares representing
0.15% of called-up share capital with a nominal value of £30,692 for a consideration of £12,749,424. The shares were placed
in an Employee Benefit Trust (EBT) to be used in connection with the Group’s Employee Share Scheme. At 31st December
2023 139,907 shares were held in an Employee Benefit Trust and available for use in connection with the Group’s Employee
Share Schemes. 15 senior employees of the Company have been granted options on ordinary shares under the Share Option
Scheme and Performance Share Plan (details in Note 7).
Other reserves in the Company Statement of Changes in Equity on page 250 are made up as follows:
1stJanuary
2023
£m
Change
inyear
£m
31stDecember
2023
£m
Share-based payments reserve 25.4 2.2 27.6
Cash flow hedges reserve (3.7) 5.0 1.3
Capital redemption reserve 1.8 — 1.8
Employee Benefit Trust reserve (21.5) 5.5 (16.0)
Totalotherreserves 2.0 12.7 14.7
Share-based payments reserve
This reserve records the Company’s share-based payment charge that is recognised in reserves.
Cash flow hedges reserve
This reserve records the Company’s cumulative net change in the fair value of forward exchange contracts where they are
designated as effective cash flow hedge relationships
Capital redemption reserve
This reserve records the historical repurchase of the Company’s own shares.
SpiraxGroup Annual Report 2023 255
Financial Statements
8 Called-up share capital and reserves continued
Employee Benefit Trust reserve
The Company has an Employee Benefit Trust which is used to purchase, hold and issue shares in connection with the
Group’s Employee Share Schemes. The shares held in Trust are recorded in this separate reserve.
9 Related party transactions
2023
£m
2022
£m
Dividends received from subsidiaries 169.1 72.4
Current loans due from subsidiaries at 31st December 0.4 200.2
Non-current loans due from subsidiaries at 31st December 104.0 106.2
Current amounts due from subsidiaries at 31st December 68.5 6 7.7
Current amounts due to subsidiaries at 31st December 90.4 98.7
Non-current amounts due to subsidiaries at 31st December 7.0 3.2
10 Financial instruments
The terms and conditions of outstanding loans at 31st December 2023 are as follows:
Currency
Nominal
interestrate
Yearof
maturity
Carrying
value
£m
Unsecured private placement – €120.0m € 2.4% 2026 104.3
Revolving Credit Facility – Drawdown £10.0m £ 5.9% 2028 8.5
Totaloutstandingloans 112.8
Current portion of long-term borrowings due before 31st December 2024 0.3
Long-term borrowings payable after 31st December 2024 112.5
Totaloutstandingloans 112.8
Currency
Nominal
interestrate
Yearof
maturity
Carrying
value
£m
Unsecured private placement – €225.0m € 1.1% 2023 199.8
Unsecured private placement – €120.0m € 2.4% 2026 106.5
Revolving Credit Facility – Drawdown £35.0m £ 4.0% 2027 35.0
Totaloutstandingloans 341.3
Current portion of long-term borrowings due before 31st December 2023* 200.1
Long-term borrowings payable after 31st December 2023* 141.2
Totaloutstandingloans 341.3
* The prior period comparatives have been adjusted to reflect a reclassification, please see Note 1 for further details.
11 Other information
Dividends
Dividends paid by the Company are disclosed in Note 10 of the Consolidated Financial Statements.
Property, plant and equipment
The Company holds freehold property with a cost of £23.6m (2022: £7.1m), accumulated depreciation of £2.9m (2022:
£1.2m) and a net book value of £20.7m (2022: £5.9m). Included within the net book value of £20.7m as at 31st December
2023 is an amount of £17.4m (2022: £3.9m) in relation to assets under construction for the Group Head Office building in
Cheltenham (UK).
Employees
The total number of employees of the Company at 31st December 2023 was 129 (2022: 117).
Directors’ remuneration
The remuneration of the Directors of the Company is shown in the Annual Report on Remuneration 2023 on pages 162
to 174.
Auditor’s remuneration
Auditor’s remuneration in respect of the Company’s annual audit has been disclosed on a consolidated basis in the
Company’s Consolidated Financial Statements as required by Section 494(4)(a) of the Companies Act 2006.
Contingent liabilities and capital commitments
The Company has no contingent liabilities. Capital commitments of £3.9m exist at 31st December 2023 in respect of the
completion of the Group Head Office building in Cheltenham (UK) (2022: £nil).
Notes to the Company Financial Statements continued
SpiraxGroup Annual Report 2023256
Financial Statements
Corporate Information
In this section
258Our Global Operations
264Officers and Advisers
SpiraxGroup Annual Report 2023 257
Corporate Information
Corporate Information
Our Global Operations
Steam Thermal Solutions (formerly Steam Specialties) – EMEA
Country/Territory Companyname Registeredofficeaddress
Belgium Spirax Sarco NV Industriepark 5, B-9052 Zwijnaarde, Belgium
Czech Republic Spirax Sarco spol sro Prazska 1455, 102 00 Praha, Hostivar, Czech Republic
Egypt Spirax Sarco Egypt 19 Farid Street, Heliopolis, Cairo, Egypt
Spirax Sarco Energy Solutions LLC (H) 19 Farid Street, Heliopolis, Cairo, Egypt
Finland Spirax Oy Niittytie 25 A 24, 01300 Vantaa, Helsinki, Finland
France Spirax Sarco SAS Zone Industrielle des Bruyères 8 Avenue le Verrier, 78190 Trappes, France
Spirax-Sarco France HoldCo SAS (H) 23 Route de Château-Thierry, 02200 Noyant-et-Aconin, Soissons, France
Gestra France SAS Zone Industrielle des Bruyères, 8 Avenue Le Verrier 78190 Trappes, France
Spirax Sarco North & West Africa SAS Zone Industrielle des Bruyères, 8 Avenue Le Verrier, 78190 Trappes, France
Germany Spirax Sarco GmbH Regelapparate Reichenaustr. 210, 78467 Konstanz, Germany
Spirax-Sarco Germany Holdings GmbH (H) Reichenaustr. 210, 78467, Konstanz, Germany
Gestra AG Muenchener Str. 77, 28215, Bremen, Germany
Gestra HoldCo GmbH (H) Muenchener Str. 77, 28215, Bremen, Germany
Hungary Spirax-Sarco Kft 1103 Budapest Koér utca 2/A, Hungary
Italy Spirax Sarco Srl Via Per Cinisello 18, 20834 Nova Milanese, Italy
Italgestra Srl Via Per Cinisello 18, 20834 Nova Milanese, Italy
Kenya Spirax Sarco East Africa Limited Clifton Park, Mombasa Road, Nairobi, Kenya
Morocco Spirax Sarco Maghreb Secteur 3, Lot 146, Rue Arfoud, Bureaux 5 et 6, commerce 2-12000 Temara,
Morocco
Netherlands Spirax-Sarco Netherlands BV Industrieweg 130A, 3044 AT, Rotterdam, Netherlands
Spirax-Sarco Engineering BV (H) Industrieweg 130A, 3044 AT, Rotterdam, Netherlands
Spirax-Sarco Investments BV (H) Industrieweg 130A, 3044 AT, Rotterdam, Netherlands
Spirax-Sarco Netherlands Holdings
Coöperative WA (H)
Sluisstraat 7, 7491 GA Delden, Delden, Netherlands
Norway Spirax Sarco AS Vestvollveien 14A, N-2019 Skedsmokorset, Norway
Poland Spirax Sarco Sp Zoo Jutrzenki 98, 02-230, Warszawa, Poland
Gestra Polonia Sp Zoo ul Ku Ujściu 19, PL 80-172, Gdansk, Poland
Portugal Spirax Sarco Equipamentos Ind Lda Rua Quinta do Pinheiro, No 8 & 8A, 2794-058 Carnaxide, Portugal
Gestra Portugal, Lda Avenida Dr Antunes Guimaraes, Numero 1159, Porto 4100-082, Portugal
Romania Spirax-Sarco SRL 2-4 Traian Street, Cluj-Napoca Municipality, Cluj County, Romania
South Africa Spirax Sarco Investments (Pty) Limited (H) Corner Brine Avenue and Horn Street, Chloorkop Ext 23, Gauteng 1624, South
Africa
Spirax Sarco South Africa (Pty) Limited Corner Brine Avenue and Horn Street, Chloorkop Ext 23, Gauteng 1624, South
Africa
Spain Spirax-Sarco SAU C/ Sant Josep, 130 08980 Sant Feliu de Llobregat, Barcelona, Spain
Spirax-Sarco Engineering SLU (H) C/ Sant Josep, 130 08980 Sant Feliu de Llobregat, Barcelona, Spain
Gestra Espanloa SA Calle Luis Cabrera 86-88, 28002, Madrid, Spain
Sweden Spirax Sarco AB Evenemansgatan 40, 169 56 Solna, Sweden
Switzerland Spirax Sarco AG Gustav-Maurer-Strasse 9, 8702 Zollikon, Switzerland
Turkey Spirax Sarco Valf Sanayi ve Ticaret A.S Serifali Mevkii, Edep Sok No 27, 34775 Yukari Dudullu – Ümraniye, Istanbul, Turkey
United Arab
Emirates
Spirax Sarco Trading LLC 38-0, R338 Um Hurair Second, Dubai, United Arab Emirates
United Kingdom Spirax-Sarco Limited* Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax-Sarco America Limited (H) Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax-Sarco America Investments
Limited* (H)
Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax-Sarco Investments Limited* (H) Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax-Sarco Overseas Limited* (H) Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Gestra Holdings Limited* (H) Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Gestra UK Limited Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Cotopaxi Limited Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
SpiraxGroup Annual Report 2023258
Corporate Information
Steam Thermal Solutions – Asia Pacific
Country/Territory Companyname Registeredofficeaddress
Australia Spirax Sarco Pty Limited 14 Forge St., Blacktown, NSW 2148, Australia
China Cotopaxi Energy Technology Development
(Beijing) Co. Ltd
Room 506, Unit 101 Floor 2-7, Building No. 1, 3 Chuangda Road, Chaoyang
District, Beijing, China 100102
Spirax-Sarco Engineering (China) Limited No 800 XinJun Ring Road, Pujiang Hi Tech Park, Shanghai, China
Spirax Sarco Trading (Shanghai) Co
Limited
No 800 XinJun Ring Road, Pujiang Hi Tech Park, Shanghai, China
Gestra (Shanghai) Fluid Control
Technology Co Limited
Room 333 3rd Floor of 4th Area Building 1, No.2001 North Yanggao Road
China (Shanghai) Free Trade Pilot Zone, Shanghai, China
Hong Kong Spirax Sarco Hong Kong Co Limited Unit 1507, 15th Floor, Prosperity Center, 25 Chin Yip Street, Kwun Tong,
Kowloon, Hong Kong
India Spirax-Sarco India Private Limited Plot No. 6, Central Avenue, Mahindra World City, Chengalpattu Taluk,
Kancheepuram District 603004, India
Indonesia PT Spirax Sarco Indonesia Kawasan Infinia Park Blok C-99, Jl. Dr Sahardjo No. 45, Manggarai Tebet,
Jakarta Selatan 12850, Indonesia
Japan Spirax Sarco Godo Gaisha 261-0025, 2-37 Hamada, Mihama-ku, Chiba, Japan
Malaysia Gestra Steam Solutions Sdn Bhd 18 Tidak Melebihi Baru Ditubuhkan, Malaysia
Spirax Sarco Sdn Bhd No 10, Temasya 18, Jalan Pelukis U1/46A, 40150 Shah Alam, Selangor,
Malaysia
Spirax Sarco Investment Limited (H) 6th Floor, Akademi Etiqa, No23 Jalan Melaka, 50100 Kuala Lumpur, Malaysia
Myanmar Spirax Sarco Limited No.192, Kabar Aye Pagoda Road, Myanmar Centre – Tower 2, Unit.1218, Bahan
Township, Yangon, Myanmar
New Zealand Spirax Sarco Limited 6 Nandina Avenue, East Tamaki, Auckland 2013, New Zealand
Philippines Spirax-Sarco Philippines Inc 2308 Natividad Building, Chino Roces Avenue Extension, Makati City,
Philippines
Singapore Spirax Sarco Pte Limited 21 Changi South Avenue 2, #01-01 Singapore 486630, Singapore
Spirax-Sarco APAC Investments Pte
Limited
21 Changi South Avenue 2, #01-01 Singapore 486630, Singapore
Gestra Singapore Pte Limited 21 Changi South Avenue 2, #01-01 Singapore 486630, Singapore
South Korea Spirax Sarco Korea Limited Steam People House, 99 Sadangro 30gil, Dongjak-gu, Seoul, Republic of Korea
Taiwan Spirax Sarco Co Limited 6F-3, No. 12, Lane 270, Sec. 3, Pei Shen Road, Shen Keng District, New Taipei
City 22205, Taiwan
Thailand Spirax Sarco (Thailand) Limited 38 Krungthepkreeta Road, Khlong Song Ton Nun, Lat Krabang, Bangkok
10520, Thailand
Vietnam Spirax Sarco Vietnam Co Limited 4th Floor, 180 Nguyen Van Troi Street, Ward 8, Phu Nhuan District, Ho Chi
Minh City, Vietnam
Steam Thermal Solutions – Americas
Country/Territory Companyname Registeredofficeaddress
Argentina Spirax Sarco SA Av. del Libertador 498, 12th Floor, Buenos Aires C1001ABR, Argentina
Brazil Spirax Sarco Ind e Com Limiteda Avenida Manoel Lages do Chão, 268, Bairro Portão, Cotia, São Paulo,
06705-050, Brazil
Hiter Controls Engenharia Limiteda Avenida Manoel Lages do Chão, 268, Bairro Portão, Cotia, São Paulo,
06705-050, Brazil
Canada Spirax Sarco Canada Limited 383 Applewood Crescent, Concord, ON L4K 4J3, Canada
Chile Spirax-Sarco Chile Limiteda Las Garzas 930, Galpón E, Quilicura, Santiago de Chile, Chile
Inversiones Spirax-Sarco Chile Limiteda (H) Las Garzas 930, Galpón D, Quilicura, Santiago de Chile, Chile
Colombia Spirax Sarco Colombia SAS Carretera Panamericana No 3-150, Jamundi, Valle del Cauca, Cali, Colombia
Mexico Spirax Sarco Mexicana, SAPI DE CV Boulevard Alianza 30B, Parque Industrial CPA, Ciénega de Flores Nuevo León,
CP 65550, Mexico
Peru Spirax Sarco Peru SAC Av. Guillermo Dansey 2124, Lima, Lima, Perú
United States Spirax Sarco Inc 1209 Orange Street, Wilmington, DE 19801, United States
Sarco International Corp (H) 1209 Orange Street, Wilmington, DE 19801, United States
Spirax Sarco Investments, Inc (H) 251 Little Falls Drive, Wilmington, DE 19808-1674, United States
Gestra USA, Inc 1209 Orange Street, Wilmington, DE 19801, United States
SpiraxGroup Annual Report 2023 259
Corporate Information
Our Global Operations continued
Electric Thermal Solutions
Country/Territory Companyname Registeredofficeaddress
Australia Vulcanic TEE Pty Limited 7 Buckman Cl, Toormina NSW 2452, Australia
Belgium Vulcanic SA Uitbreidingstraat 60-62, 2600 Berchem, Belgium
Brazil Chromalox Engenharia Limiteda Avenida Manoel Lages do Chão, 268, Bairro Portão, Cotia, São Paulo, 06705-050,
Brazil
Canada Canadian Heat Acquisition Corp (H) 7051 68th Ave NW, Edmonton, Alberta, T6B 3E3, Canada
China Chromalox Precision Heat Control
(Shanghai) Co Limited
88 Taigu Road, Suite A2, 4th Floor – Fenggu Building, Shanghai, 200131, China
Chromalox Precision Heat Control
(Suzhou) Co Limited
T02, No 1801, Pangjin Road, Pangjin Industrial Park, Wujiang, Suzhou, 215200,
China
Thermocoax (Chengdu) Co Limited No.11 Fujiang Road, Shuangliu Park, Jiaelong Industry Port, Chengdu, Sichuan,
China
France Constructions Electro-Thermiques
D’Alsace SAS
42 Rue des Aviateurs, 67500 Haguenau, France
Etirex SAS 23 Route de Château Thierry, Noyant-et-Aconin, Soissons, Cedex, F 02203, France
Loreme SAS 12 Rue des Potiers d’Etain, 57070 Metz, France
RS Isolec SAS 45 Avenue des Acacias, 45120 Cepoy, France
Thermocoax Developpement SAS 40 Boulevard Henri Sellier, 92150 Suresnes, France
Thermocoax SAS Usine de Planquivon, Athis-de-l’Orne, 61430 Athis-Val de Rouvre, France
Univers 32 SAS (H) 41 Avenue de Friedland, 75008 Paris, France
Vulcanic Assets SAS (H) 48 Rue Louis Ampère, 93330 Neuilly-sur-Marne, France
Vulcanic Management 1 SAS (H) 48 Rue Louis Ampère, 93330 Neuilly-sur-Marne, France
Vulcanic Management 2 SAS (H) 48 Rue Louis Ampère, 93330 Neuilly-sur-Marne, France
Vulcanic Group Holding SAS (H) 48 Rue Louis Ampère, 93330 Neuilly-sur-Marne, France
Vulcanic SAS 48 Rue Louis Ampère, 93330 Neuilly-sur-Marne, France
Germany Chromalox Isopad GmbH Englerstraße 11, 69126 Heidelberg, Germany
Vulcanic GmbH Donaustraße 21, 63452 Hanau, Germany
Vulcanic Triatherm GmbH Flurstraße 9, 96515 Sonneberg, Germany
Hong Kong Chromalox Hong Kong Holdings Limited (H) 33/F, Shui On Centre, Nos 6-8 Harbour Road, Wanchai, Hong Kong
India Chromalox India Precision Heat & Control
Private Limited
1st Floor, 6 Unicom House, A-3 Commercial Complex, New Delhi, Janakpuri,
110058, India
Mexico ELW Industrial S. de R. L. de C.V. Carretera Nacional, K.M. 8.5, Modulo Industrial de America, Lote #5,
Nuevo Laredo, Tamaulipas, 88277, Mexico
Singapore Chromalox Precision Heat and Control
(Singapore) Pte Limited
No 11 Woodlands Close, #05-34, Singapore, 737854, Singapore
Spain Vulcanic Termoelectrica SLU Carretera de Viernoles no.32, 39300 Torrelavega, Cantabria, Spain
Thailand Chromalox (Asia Pacific) Limited 383/2, The Village Business Centre, Unit D16-A, Moo 12, Sukhumvit Road,
Nongprue, Banglamung, Chon Buri, 20151, Thailand
United Arab
Emirates
Chromalox Gulf DWC, LLC PO Box 390012, Office No: E-2-0226, Business Park, Dubai Aviation City,
United Arab Emirates
United Kingdom Chromalox (UK) Limited AMP House, 2nd Floor, Dingwall Road, Croydon, Surrey CR0 2LX, United Kingdom
Thermocoax UK Limited Tower House, Lucy Tower Street, Lincoln LN1 1XW, United Kingdom
Vulcanic UK Limited Windward Barn, Honningham Thorpe Business Park Norwich Road, Colton,
Norwich NR9 5BZ, United Kingdom
United States 190 Detroit Street, LLC 2280 Hicks Rd., STE 500 Rolling Meadows, IL 60008, United States
305 Cary Point, LLC 190 Detroit Street, Cary, IL 60013, United States
325 Cary Point, LLC 190 Detroit Street, Cary, IL 60013, United States
Cary Detroit, LLC 190 Detroit Street, Cary, IL 60013, United States
Chromalox, Inc. 2711 Centerville Rd., Suite 400, Wilmington, DE 19808, United States
Durex HoldCo Corp (H) 1209 Orange Street, Wilmington, DE 19801, United States
Durex International, LLC 251 Little Falls Drive, Wilmington, DE 19808-1674, United States
Heat Acquisition Corp (H) 2711 Centerville Rd., Suite 400, Wilmington, DE 19808, United States
Thermocoax, Inc 1209 Orange Street, Wilmington, DE 19801, United States
Vulcanic EML, LLC 5907 Breen Drive, Houston, TX 77086, United States
Vulcanic US, Inc (H) Capitol Services, Inc., 108 Lakeland Ave., Dover, DE 19901, United States
SpiraxGroup Annual Report 2023260
Corporate Information
Watson-Marlow Fluid Technology Solutions
Country/Territory Companyname Registeredofficeaddress
Australia Watson-Marlow Pty Limited Unit 15, 19-26 Durian Place, Wetherill Park, NSW 2164, Australia
Austria Watson-Marlow Austria GmbH Rathaus Viertel 3/1 OG/TOP 311, Guntramsdorf A 2353, Wien, Austria
Belgium Watson-Marlow NV Industriepark 5, B-9052 Zwijnaarde, Belgium
Brazil Watson-Marlow Bredel Ind e Com de
Bombas Limiteda
Alameda Oceania, 63, Polo Empresarial Tamboré, Santana de Parnaiba, São
Paulo, CEP 06543-308, Brazil
Canada Watson-Marlow Canada Inc 383 Applewood Crescent, Concord, ON L4K 4J3, Canada
Chile Watson-Marlow Bombas Chile Limiteda Las Garzas 930, Galpón E, Quilicura, Santiago de Chile, Chile
China Shanghai Watson-Marlow Limited No. 211, Wenjing Road, Shanghai Minhang District, China
Colombia Watson-Marlow Colombia SAS Carretera Panamericana No 3-150, Jamundi, Valle del Cauca, Cali, Colombia
Czech Republic Watson-Marlow sro Pražská 1455/18a, 102 00 Praha 10, Czech Republic
Denmark Watson-Marlow Flexicon A/S Frejasvej 2, 4100 Ringsted, Denmark
Finland Watson-Marlow Finland Oy Niittytie 25 A 24, 01300 Vantaa, Helsinki, Finland
France Watson-Marlow SAS 9 Route De Galluis, Zi Les Croix, 78940 La Queue Lez Yvelines, France
Germany Watson-Marlow GmbH Kurt-Alder-Str. 1, 41569 Rommerskirchen, Germany
Hungary Watson-Marlow Kft Lajos ucta 30, Budapest 1023, Hungary
India Watson-Marlow India Private Limited Mahalaxmi Icon, S. No. 132/2A-3A, Near Sai HP Petrol Pump, Pune-Mumbai
Bypass Road, Tathawade, Pune, Maharashtra, 411 033, India
Ireland Watson-Marlow Limited Unit 1013, Gateway Business Park, New Mallow Rd., Cork, Ireland
Italy Watson-Marlow Srl Via Padana Superiore 74/D, 25080 Mazzano, Brescia, Italy
Japan Watson-Marlow Co Limited 4-23-21 Ukima Kita-ku, Tokyo 115-0051, Japan
Malaysia Watson-Marlow SDN BHD 6th Floor, Akademi Etiqa No. 23 Jalan Melaka, 50100 Kuala Lumpur W.P.,
Malaysia
Mexico Watson-Marlow S de RL de CV Boulevard Alianza 30B, Parque Industrial CPA, Ciénega de Flores Nuevo León,
CP 65550, Mexico
Netherlands Watson-Marlow BV Oslo 9 – 11, 2993LD Barendrecht, Netherlands
Watson-Marlow Bredel BV Sluisstraat 7, 7491 GA, Delden, Netherlands
Watson-Marlow Bredel Holdings BV (H) Sluisstraat 7, 7491 GA, Delden, Netherlands
Watson-Marlow Bredel Holdings II BV (H) Sluisstraat 7, 7491 GA, Delden, Netherlands
New Zealand Watson-Marlow Limited Unit F, 6 Polaris Place, East Tamaki, Auckland 2013, New Zealand
Norway Watson-Marlow Norge AS Vestvollveien 14A, 2019 Skedsmokorset, Norway
Philippines Watson-Marlow Inc 10th Floor EGI Rufino Plaza, Sen. Gil Puyat Avenue, Corner Taft Avenue,
Barangay, 38 Pasay City, Fourth District, Philippines
Poland Watson-Marlow Sp Zoo Al. Jerzego Waszyngtona 146, 04-076 Warszawa, Poland
Singapore Watson-Marlow Pte Limited 421 Tagore Industrial Avenue, #01-13, Singapore 787805, Singapore
South Africa Watson-Marlow Bredel SA (Pty) Limited Unit 6 Cradleview Industrial Park, Cnr Beyers Naude Drive & Johan Street,
Laser Park, South Africa
Spain Watson-Marlow SLU Tuset, 20 3 – 08006, Barcelona, Spain
Sweden W-M Alitea AB Hammarby Fabriksväg 29-31, SE-120 30 Stockholm, Sweden
Switzerland Watson-Marlow AG Gustav-Maurer-Strasse 9, 8702 Zollikon
Taiwan Watson-Marlow Co Limited No.9 Lane 270 Sec. Beishen Road, Shenkeng District, New Taipei City 222,
Taiwan
United Arab
Emirates
Watson Marlow FZCO Office Number FZJOA2005, Jafza One, Jebel Ali Free Zone, Dubai, United Arab
Emirates
United Kingdom Aflex Hose Limited Dyson Wood Way, Bradley, Huddersfield HD2 1GZ, United Kingdom
BioPure Technology Limited Bickland Water Road, Falmouth, Cornwall TR11 4RU, United Kingdom
Watson-Marlow Limited* Bickland Water Road, Falmouth, Cornwall TR11 4RU, United Kingdom
United States ASEPCO 1161 Cadillac Ct, Milpitas, CA 95035, United States
Watson-Marlow America Manufacturing
Inc
37 Upton Drive, Wilmington, MA 01887, United States
Watson Marlow Inc 37 Upton Technology Park, Wilmington, MA 01887, United States
Watson-Marlow Flow Smart Inc 1675 South State St., Suite B, Dover, DE 19901, United States
SpiraxGroup Annual Report 2023 261
Corporate Information
Our Global Operations continued
Dormant companies
Country/Territory Companyname Registeredofficeaddress
Canada Canadian Heat Holding Corp 6600-100 King Street W., 1 First Canadian Place, Toronto, Ontario M5X 1B6, Canada
France Heat Holding France SAS 23 Route de Château-Thierry, 02200 Noyant-et-Aconin, Soissons, France
Russia Vulcanic (Representative Office) Business Centre Grad, 1 Bld, 3A Solnechnaya Street, Moskovskoe Poselenie,
108811 Moscow, Russia
United Kingdom Gervase Instruments Limited* Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Heat Holding (UK) Limited Lansdowne Building, 2 Lansdowne Road, Croydon CR9 2ER, United Kingdom
SARCO Limited* Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Sarco Thermostats Limited Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax Group Limited Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax Manufacturing Co Limited Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Spirax-Sarco Europe Limited* Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
United States Spirax-Sarco International Limited* Charlton House, Cirencester Road, Cheltenham, Gloucestershire GL53 8ER,
United Kingdom
Heat Acquisition Corp. 251 Little Falls Drive, Wilmington, DE 19808-1674, United States
Mexican Heat Holding Corp. c/o RA PO Box 20380, Carson City, Nevada 89706, United States
Mexican Heat Holding, LLC 160 Greentree Dr., Suite 101, Dover, Delaware 19904, United States
Ogden Manufacturing Co. 2711 Centerville Rd., Suite 400, Wilmington, DE 19808, United States
The global operations listed on pages 258 to 262 are registered companies.
In addition to these operations, we have a number of other operating units, including an Associate company; a company that
is part owned with a third-party trust; branches of Spirax Sarco steam or Watson-Marlow companies; and several Watson-
Marlow businesses that operate via Spirax Sarco steam business companies. The Spirax Group Education Fund, established
in 2021, is not included in the consolidated financial statements as under IFRS 10 the Group does not have control of this
fund.
Details of these operations can be found on page 263.
Key
* Direct subsidiary owned by Spirax-Sarco Engineering plc.
(H) Holding company.
SpiraxGroup Annual Report 2023262
Corporate Information
Notes
1. All subsidiaries in the tables on pages 258 to 262 are indirect subsidiaries
of Spirax-Sarco Engineering plc, unless indicated*. All subsidiaries listed
are ultimately 100% owned by the Group, except as follows:
Company %ownedbytheGroup
Spirax Sarco Egypt 98.867%
Spirax Sarco Energy Solutions LLC,
Egypt
98.992%
Spirax Sarco Korea Ltd 97.5%
Spirax-Sarco Philippines Inc 99.998%
Spirax Sarco Services 48.51%. (51.49% is owned
by a third-party trust, The
Tomorrow Trust). The
Group has control of the
company and exposure, or
rights, to variable returns
from its investment in the
investee.
Spirax Sarco (Thailand) Ltd 99.995%
2. In addition to the subsidiaries in the tables on pages 258 to 262,
we have the following operations:
SteamTechnologySolutions:
Country Operatingasabranchof
Cambodia Spirax Sarco Pte Limited, Singapore
Denmark Spirax-Sarco Limited, UK
Ghana Spirax-Sarco Limited, UK
Greece Spirax-Sarco Limited, UK
Ireland Spirax-Sarco Limited, UK
Japan Spirax-Sarco Limited, UK
Pakistan Spirax-Sarco Limited, UK
Saudi Arabia Spirax-Sarco Limited, UK
Slovakia Spirax Sarco Spol. s.r.o.
Sri Lanka Spirax-Sarco India Private Limited, India
Tanzania Spirax-Sarco Limited, UK
Uganda Spirax-Sarco Limited, UK
Zambia Spirax Sarco South Africa (Pty) Limited,
South Africa
Watson-MarlowFluidTechnologySolutions:
Country Operatingasabranchof
Serbia Watson-Marlow Austria GmbH
Operatingvia
Argentina Spirax Sarco SA, Argentina
China Spirax-Sarco Engineering (China) Limited
Indonesia PT Spirax-Sarco Indonesia
South Korea Spirax Sarco Korea Limited
Thailand Spirax Sarco (Thailand) Limited
Vietnam Spirax Sarco Vietnam Co Limited
This complete list of our global operations, including subsidiaries,
forms part of the audited Financial Statements. For more information
see Note 2 in the Company Financial Statements.
3. UK registered subsidiaries exempt from audit:
Companyname Companynumber
BioPure Technology Limited 03665190
Chromalox (UK) Limited 04325451
Cotopaxi Limited 07038605
Gestra UK Limited 10639879
Spirax-Sarco America Limited 07829847
Spirax-Sarco Investments Limited 00100995
Spirax-Sarco Overseas Limited 01472201
Gestra Holdings Limited 11612492
Spirax-Sarco America Investments Limited 11639451
Heat Holding (UK) Limited 04325456
Aflex Hose Limited 01088141
Thermocoax U.K. Limited 03504380
Vulcanic UK Limited 07194498
The companies listed above qualify to take the statutory audit exemption
as set out within Section 479A of the Companies Act 2006 for the period
ended 31st December 2023. Spirax-Sarco Engineering plc will guarantee
the debts and liabilities of the companies claiming the statutory audit
exemption at the balance sheet date in accordance with Section 479C of
the Companies Act 2006.
SpiraxGroup Annual Report 2023 263
Corporate Information
Officers and Advisers
Secretary and registered office
A.J. Robson
Group General Counsel and Company Secretary
Tel: +44 (0)1242 535000
Email: group.legal@spiraxgroup.com
Web: spiraxgroup.com
Auditor
Deloitte LLP
Financial advisers
Rothschild
JPMorgan Securities plc (JPMorgan Cazenove)
Financial PR
Teneo
Bankers
Barclays Bank PLC HSBC Bank PLC
BNP Paribas Citibank, N.A.
Crédit Industriel et Commercial ING Bank, N.V.
UniCredit Bank AG Wells Fargo Bank, N.A.
Corporate brokers
JPMorgan Securities plc (JPMorgan Cazenove)
Morgan Stanley & Co. International plc
Registrars
The Company’s Registrar is Equiniti Limited.
Equiniti provide a range of services to shareholders.
Extensive information including many answers to frequently
asked questions can be found online.
Use the QR code to register for free at www.shareview.co.uk
Equiniti’s registered address is:
Aspect House, Spencer Road, Lancing, West Sussex,
BN99 6DA.
Solicitors
Baker & McKenzie LLP
Important dates
Annual General Meeting 15th May 2024
2024 Half Year Results 8th August 2024
Final dividend**
Ordinary shares quoted ex-dividend 25th April 2024
Record date for final dividend 26th April 2024
Final dividend payable 24th May 2024
** Subject to shareholder approval at the AGM
SpiraxGroup Annual Report 2023264
Corporate Information
Spirax Group’s commitment to environmental stewardship is
reflected in this Annual Report, which has been printed on Revive
100 Silk, which is 100% post-consumer recycled, FSC
®
certified
and totally chlorine free (TCF) paper. Printed in the UK by Park
Communications using vegetable-based inks, with 99% of dry
waste being diverted from landfill. The printer is a CarbonNeutral
®
company. Both the mill and the printer are certified to ISO 14001
(Environmental Management System) and ISO 9001 (Quality
Management System).
Spirax Group
Charlton House
Cirencester Road
Cheltenham
Gloucestershire
GL53 8ER
spiraxgroup.com
Spirax Group Annual Report 2023