spiraxsarco engineering plc 
annual report and accounts 2013
delivering 
sustainable  
growth spiraxsarco engineering plc annual report and accounts 2013
about us
our vision 
to deliver consistent profitable and sustainable growth 
and shareholder value and to be the customers’ first 
choice provider of solutions for the effective use of steam 
and industrial fluids worldwide as well as the global 
leader in the development and manufacture of peristaltic 
and niche pumps
our purpose 
to help our customers implement environmentally 
friendly solutions for energy savings process efficiency 
product quality and improvements in plant health safety 
and regulatory compliance
our execution 
our business model is anchored by deep customer 
insight and our ability to provide our customers with 
applied engineering solutions six key strategic priorities 
drive our business model these are to strengthen 
our position deliver solutions broaden our global 
presence grow our market share generate growth 
and operate sustainably
our values 
to act ethically at all times and embody our core values 
of respect accountability passion integrity and delivery
about us welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis 01 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
our progress in 2013
 based on adjusted operating profit 
 at constant currency
†
 2012 restated for ias 19r earlier years adjusted on estimated basis
financial metrics
nonfinancial metrics
revenue £m
operating profit margin 
earnings per share p
revenue growth  
organic
operational efficiency  
change in sales per person 
dividends per share p
operating profit £m
return on capital employed 
health and safety 
accidents with over seven days of 
lost time per 1000 employees
co
2
 intensity 
tonnes per £m of inflation adjusted 
sales at constant currency
strategic report
2013
2012
2011
2010
2009
6894
6617
6500
5897
5187
2013
2012
2011
2010
2009
4
5
9
9
7
2013
2012
2011
2010
2009
38
43
37
101
57
2013
2012
2011
2010
2009
220
206
206
202
173
2013
2012
2011
2010
2009
444
394
411
421
333
2013
2012
2011
2010
2009
1388
1222
 †
1210
 †
1032
 †
794
 †
2013
2012
2011
2010
2009
1516
1362
1340
1191
899
2013
2012
2011
2010
2009
44
55
60
2013
2012
2011
2010
2009
590
530
490
430
361
special dividend
1000
250
2013
2012
2011
2010
2009
493
430
440
477
575 spiraxsarco engineering plc annual report and accounts 2013 02
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
welcome to our 
2013 report
about us
welcome to our 2013 report
strategic report continued
welcome to our 2013 report 02 
chairman’s statement 04 
our structure 05 
our marketplace 06 
our business model 12 
our strategy 22 
our key performance indicators 24 
our risks 26 
group performance at a glance 28  
group chief executive’s report 30 
europe middle east and africa emea  32 
asia pacific 35 
americas 38 
watsonmarlow 41 
financial review 44 
sustainability report 48
strategic report  
pages 01 to 55
1 2 3
governance  
pages 56 to 99
financial statements  
pages 100 to 152
chairman’s introduction 58 
board of directors 60 
corporate governance report 62 
audit committee 66 
nomination committee 69 
risk management committee 70 
remuneration committee letter of 
introduction 73 
remuneration policy report 2014 75 
annual report on remuneration 2013 83 
regulatory disclosures 96 
statement of directors’ responsibilities 99
independent auditor’s report  100 
statements of financial position  103 
consolidated income statement  104 
consolidated statement of 105 
comprehensive income 
consolidated statements of  105 
changes in equity 
statements of changes in equity  107 
cash flow statements 108 
notes to the accounts  109 
financial summary 2004–2013  148 
spirax sarco worldwide 150 
officers and advisers  152 03 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
we have a robust business model and a clear strategic vision 
which are enabling us to strengthen our position as the market 
leader in steam systems and peristaltic and niche pumps and 
to deliver sustainable growth and shareholder value
the groups sustainability 
strategy and performance are 
evaluated through the use of 
metrics and targets
we outline our financial results 
explain our progress in 2013 
and give details of our outlook
we set out our business model 
summarise our strategic 
priorities outline our kpis and 
explain our risks
our chairman highlights the 
group’s financial progress and 
explains the structural changes 
to the 2013 annual report
chairman’s 
statement
read more 
page 04
our performance
read more 
pages 12–27
our business model 
and strategy
read more 
pages 28–47
sustainability review
read more 
pages 48–55 spiraxsarco engineering plc annual report and accounts 2013 04
welcome to our 
2013 report
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
our
structure
chairman’s  
statement
about us
strategic report continued
chairman’s statement
performance and dividend
sales increased by over 4 to £6894 million 
2012 £6617 million organic sales growth 
was 4 continuing the trend reported in the 
first half year sales growth was strongest 
in asia pacific followed by watsonmarlow 
and emea sales in the americas were 
marginally lower overall currency effects 
were negligible
operating profit increased by 1 1 to 
£1516 million 2012 £1362 million with 
an outstanding improvement in emea 
the operating profit margin rose from 
206 to a record 220 net finance 
costs reduced and pretax profit was 12 
higher at £151 1 million 2012 £1349 million 
adjusted earnings per share increased by 
14 to 1388p 2012 1222p
cash generation was once again very 
strong with good cash conversion and we 
finished the year with a net cash balance 
of £16 million which was after payment 
of the 100p per share special dividend of 
£78 million
the interim dividend was raised by 13 to 
180p per share which was paid in november 
2013 the board is recommending an 
increase in the final dividend of 1 1  to 410p 
per share payable on 30th may 2014 to 
shareholders on the register at 2nd may 
2014 the total ordinary dividend for the year 
is therefore increased by 1 1  to 590p per 
share 2012 530p per share
a full review of our financial performance 
commences on page 28 
the board recognises the contribution made 
by our many exceptional people around the 
world who exemplify the company’s core 
values on behalf of the board i would like 
to express our gratitude to all our employees 
worldwide for their hard work and 
commitment throughout the year and for 
their individual contributions which together 
culminated in the good results achieved 
in 2013
prospects
we have a robust and resilient business 
model built around our direct sales 
approach delivering solutions to meet 
our customers’ energy saving process 
efficiency and sustainability challenges 
with a high proportion of sales coming from 
customers’ operating and maintenance 
budgets steam is universal as an energy 
source used in processes in a diverse 
range of industries across the world and our 
markets therefore reflect general economic 
activity and rates of industrial production
our assumption is that markets will continue 
to exhibit low levels of growth but with 
modest overall improvement through 2014 
we remain focused on our strategic priorities 
to generate our own growth through 
broadening our global presence capitalising 
on our investment in new products and 
innovation increasing market share and 
delivering application specific solutions 
through our teams of highly trained sales 
and service engineers our fundamental 
strengths and growth strategies give the 
board confidence that the group will make 
further progress in 2014 although stronger 
sterling and currency weakness in a number 
of emerging markets has provided a strong 
headwind in the early months of this year
governance and board changes
the board is ultimately responsible for 
ensuring that the group successfully 
implements its strategies and achieves its 
objectives of generating shareholder value 
through consistent and sustainable growth 
in earnings and dividends the board and 
its committees operate to the highest 
ethical standards and corporate governance 
practices and demonstrates transparency 
through fair balanced and understandable 
reporting our full governance review 
commences on page 56 
during 2013 mark vernon announced his 
intention to retire as group chief executive 
on 15th january 2014 on behalf of the 
board and shareholders i would like to 
convey our sincere thanks to mark for 
his significant contribution in guiding the 
company through a challenging economic 
period and meaningfully improving on the 
group’s record of strong and consistent 
growth and we wish him well on his 
retirement back home in his native america
the board was delighted to appoint nick 
anderson as group chief executive in 
january 2014 nick joined the company 
in september 201 1 bringing his broad 
experience in the industrial engineering 
industry to the group with an emphasis 
on international business operations and 
sales management
structure of the annual report 
and accounts
the board welcomes the move to improve 
corporate reporting and the 2013 annual 
report and accounts fully embraces the 
new regulatory and disclosure requirements 
the annual report and accounts now leads 
with a strategic report explaining our market 
place our business model our strategy and 
our performance in a clear and integrated 
way the governance section explains 
the detailed work of the board and its 
committees and presents a remuneration 
policy report for consideration by 
shareholders at the annual general meeting 
on 20th may 2014 we hope that you enjoy 
reading this annual report and accounts 
and that it is helpful to your understanding 
of our business
“ i am pleased to report further good 
progress in 2013 achieving record 
sales and profit”
bill whiteley 
chairman 05 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
our structure
spiraxsarco engineering plc
our spirax sarco steam specialties business is the global 
leader in the supply of engineered solutions for the design 
maintenance and operation of efficient industrial and 
commercial steam systems
as a heat source steam is the natural choice in most industrial 
processes due to its high heatcarrying capacity controllability 
sterility and efficiency as a heat transfer fluid with our specialist 
knowledge technical expertise and wide range of products and 
services as well as our extensive global presence spirax sarco 
is uniquely positioned to provide a broad range of environmentally 
friendly engineered solutions to the many industries using steam
our customers face a variety of challenges including high energy 
costs pressure to improve the operating efficiency and capacity 
of existing processes and the need to comply with increasingly 
stringent health safety and environmental legislation our direct 
sales force is highly trained in product application system 
performance and the troubleshooting of steam systems
the spirax sarco offering is very wide from single products 
through to complete turnkey bespoke packages that can include 
design fabrication installation commissioning and maintenance 
our extensive product range includes steam traps pressure and 
temperature control valves condensate recovery pumps strainers 
separators humidifiers flow meters boiler controls prefabricated 
trap manifolds and heat transfer and recovery packages
watsonmarlow is the global leader in peristaltic 
pumps specialising in the design and manufacture 
of the most advanced peristaltic and niche pumps 
and tubing our pumps are ideally suited for a wide 
variety of applications ranging from biotechnology and 
pharmaceutical processes that demand sterility and 
precision to the gentle lowshear requirements of delicate 
food processing to highly corrosive or erosive slurries 
typically seen in precious metal processing
the watsonmarlow pumps group comprises seven established 
brands each with its own area of expertise but together offering 
our customers an unrivalled breadth of pumping solutions  
watsonmarlow pumps peristaltic tube pumps watsonmarlow 
tubing precision tubing for pumping and singleuse applications 
bio pure hygienic connectors connectors for pumping and  
singleuse applications bredel heavy duty industrial hose pumps 
alitea highprecision peristaltic pumps for oem customers  
flexicon aseptic filling and capping systems and masosine  
gentle lowshear pumps 
our pumps are the ideal solution in a wide variety of difficult pumping 
applications and are highly accurate controllable and virtually 
maintenance free our direct field sales force works closely with 
our customers to reduce their lifecycle pumping costs and improve 
plant operations
emea americas asia pacific
revenue by business operating profit by business
 steam specialties emea  £2443m
 steam specialties asia pacific  £1828m
 steam specialties americas  £1320m
 watsonmarlow pumps  £1303m
total  £6894m
 steam specialties emea  £482m
 steam specialties asia pacific  £480m
 steam specialties americas  £26 1m
 watsonmarlow pumps  £395m
corporate expenses £102m
total  £1516m
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welcome to our 
2013 report
chairman’s  
statement
our
structure
our business
model
our business
model in action
our
strategy
our
kpis
about us our
marketplace
our marketplace
strategic report continued
global trends
with 64 operating units in 39 
countries and a direct sales presence 
in over 50 countries worldwide 
we are an organisation with a truly 
global reach as a global company 
our operations are affected by 
a number of world megatrends 
such as population growth ageing 
populations increasing global energy 
consumption the economic rise of 
the east and climate change
we predominantly view these 
megatrends as longterm drivers 
for growth for example population 
growth will stimulate increased 
consumption and hence a demand 
in all our major industries ageing 
populations will increase demand 
for healthcare and pharmaceutical 
products an increase in global 
energy consumption will 
drive investment in the oil and 
petrochemical industry in the short 
term and energy management 
solutions in the short medium and 
long term the economic rise of the 
east is opening new markets and 
increasing consumer demand while 
national and international climate 
change mitigation strategies are 
encouraging companies to reduce 
their carbon footprint by managing 
energy more effectively thereby 
increasing demand for our energy 
management products and services  
5
5
8
4
6
5
9
6
11
5
0
8
7
8
9
4
2 2
9
5
4
120
60
90
30
0
60
30
90
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  group organic sales  global industrial production
group organic sales and global industrial output 
9
2003
key
  spirax operating companies
  spirax sales offices
  watsonmarlow operating companies
  watsonmarlow sales offices
operating units include operating companies branches and associates
as steam is so widely used across 
industry our markets tend to reflect 
changes in industrial production 
our sales have consistently 
increased ahead of our markets 
as we have expanded our 
addressable markets extended 
our geographic penetration and 
grown our market share
our global operations 07 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
emea
  emerging 
markets
35
7
asia pacific
  emerging 
markets
27
23
americas
  emerging 
markets
19
8
watsonmarlow
  emerging 
markets
 19
4
35
of group  
revenue
 27
of group  
revenue
19
of group  
revenue
19
of group  
revenue total market
£46bn
niche 
pumps
16
condensate  
management
27
controls
22
energy  
management
35
spiraxsarco engineering plc annual report and accounts 2013 08
welcome to our 
2013 report
chairman’s  
statement
our
structure
our business
model
our business
model in action
our
strategy
our
kpis
about us our
marketplace
our marketplace continued
strategic report continued
we estimate that our total addressable market is £46 billion with the steam 
specialties market representing £39 billion and watsonmarlow £07 billion our total 
market share is 15 with a 14 share of the global steam specialties market and 
an 18 share of the peristaltic and niche pumps market
within the steam specialties market we recognise three principal segments 
comprising 84 of our total market opportunity firstly traditional condensate 
management products such as steam traps condensate return pumps and isolation 
valves secondly controls including automatic control valves pressure regulators 
and temperature controls thirdly energy management products consisting 
principally of our metering products boiler house products heat transfer packages 
and energy services our addressable niche pump market represents the final 
16 of the total market  09 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
growing our market share
growing our market share is an essential 
element of our growth strategy and we have 
made good gains during the last five years 
we gain market share through our ability to 
solve problems for our customers which 
other suppliers cannot and by winning new 
installations that then become the base for 
future revenue
we also view market expansion as an 
essential element in creating future growth 
opportunities we attribute approximately 
half of our addressable market growth 
during the past five years to new product 
development and acquisitions 
good regional balance
group revenues are well spread 
geographically with a good balance 
in regional market share a key factor 
in the resiliency of our business
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18
total market
£17bn
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11
16
total market
£17bn
total market
£12bn
emea asia pacific americas
market size market share
total market
£46bn
2013
15 spiraxsarco engineering plc annual report and accounts 2013 10
welcome to our 
2013 report
chairman’s  
statement
our
structure
our business
model
our business
model in action
our
strategy
our
kpis
about us our
marketplace
our marketplace continued
strategic report continued
our diverse markets 
we serve a wide range of industries and have a great diversity of end markets and 
customers diversity is one of the core strengths of the group and insulates us from much 
seasonal and cyclical demand we have an excellent balance between highergrowth 
end markets and those that are more “defensive” and recession proof more than 50 
of the group’s revenue is derived from these defensive end markets including foods 
beverages hvac pharmaceuticals healthcare chemicals water treatment and power 
generation 
within the steam specialties business approximately 50 of revenue is derived from the 
replacement of our installed product base to maintain operational efficiency production 
output and product quality regular maintenance spending is required by our customers 
in the group as a whole more than 85 of our revenues are derived from our customers’ 
annual maintenance and operational budgets ensuring the resiliency of our business 
in times of recession
revenue by sector
 foods
 brewing and distilling
 hvac
 oem machinery
 refining and petrochemical
 pharmaceuticals
 healthcare
 precious metal processing
 chemicals
 water treatment
 power generation
 rubber and plastics
 other
t otal revenue by sector
£6894m 11 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
foods
steam is widely used in the 
production of packaged 
foods for blanching cooking 
baking packaging 
and sterilising
refining and 
petrochemical
our steam system services 
and products enable optimum 
performance in steam and 
condensate systems 
and reduce energy use 
during refining and 
petrochemical production
water treatment
peristaltic pumps are used 
to accurately dose chemicals 
during water treatment 
processes and efficiently 
transfer viscous and abrasive 
slurries
hvac
our products are used 
to provide space heating 
humidification and hot water 
to create comfortable working 
conditions for employees 
and visitors in public and 
private buildings
healthcare
our products have a wide 
range of applications in 
hospitals and clinics for space 
heating hot water production 
humidification and sterilisation
power generation
superheated steam is an 
ideal fluid to transfer chemical 
energy in fuel into electrical 
energy through steam 
turbines steam is also used 
to distribute and reuse waste 
heat formed during the power 
generation process
brewing and distilling
steam is essential for brewing 
and distilling processes 
it is used to protect product 
quality and flavour and 
ensure compliance with 
industry standards
pharmaceuticals
clean steam reduces the 
risk of product and process 
contamination and our 
peristaltic pumps enable 
precise flow control and 
fluid isolation in the 
pharmaceutical industry
chemicals
steam is widely used as an 
energy source in chemical 
production and product 
processing
oem machinery
we work with manufacturers 
to optimise the performance 
of a diverse range of 
equipment including 
mixers reactors paper 
and packaging machines 
dryers sterilisers and clinical 
diagnostic equipment
precious metal 
processing
peristaltic pumps reduce 
water energy and chemical 
use and increase reliability and 
productivity while moving and 
processing highly abrasive 
ores and slurries
rubber and plastics
our products facilitate 
temperature control of 
exothermic process reactors 
critical to the manufacture of 
modern composite materials spiraxsarco engineering plc annual report and accounts 2013 12
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model in action
our
strategy
our
kpis
our business
model
about us
our business model
strategic report continued
we have built a resilient business model that 
has enabled the business to prosper despite 
the challenging global economic environment 
over the past few years and that positions 
us well to deliver continued good organic 
revenue growth we benefit from the diversity 
of our enduser markets and customers 
broad product range our wide geographic 
spread and significant presence in emerging 
markets high replacement content in 
our revenue streams and a large base 
of industrial steam systems installed around 
the world that require continual upkeep 
and improvement 
our business model relies on the 
fundamental aspects of expertise solutions 
and sustainability in delivering value to our 
customers we employ a technical direct 
sales approach that allows us to better 
understand customer plant operating 
issues and to implement appropriate 
environmentally friendly engineering solutions
customer closeness
our ability to help our customers solve difficult 
productivity control and energy efficiency problems 
enables us to build deep longterm relationships that 
are central in assisting our customers to achieve 
operational sustainability we expect our local sales and 
service engineers who comprise more than one 
quarter of our total workforce to be knowledgeable of 
the processes and operating issues of individual 
customer’s manufacturing plants and facilities
read more 
pages 14–15
applied engineering
it is not our products alone that provide value to our 
customers – it is the application of our extensive 
knowledge in systems design operations and 
maintenance our customers increasingly rely on our 
systems expertise and knowledge of their processes 
applications and plant operating issues to deliver unique 
engineering solutions that allow them to achieve 
enhanced and sustainable operating efficiencies 
read more 
pages 16–17
wide product range
our commitment to new product development is critical 
to our longterm success and we have invested heavily 
in the past five years to widen our range of products 
and prefabricated engineered packages the breadth 
of our product offering is unmatched by our 
competitors and our onestop shop approach simplifies 
the procurement process for our customers who are 
increasingly seeking partnerships with competent 
fullservice suppliers
read more 
pages 18–19
regional manufacturing
we operate on very short order books that are typically 
less than six weeks local availability of a wide range 
of products that meet applicable regional design codes 
is critical to our business model and we believe 
enhances topline revenue growth we have 
strategically located our major manufacturing plants 
in all key world geographic regions including europe 
north america latin america and asia
read more 
pages 20–21 drive
strategic
13 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
strategy pages 22–23
we are continuing to implement our strategy for developing the business 
over the long term this strategy both builds upon the foundation of our 
robust and resilient business model and drives its operation the primary 
elements of our growth and business development strategy are
1  strengthen our global market position
2  deliver solutions to reduce energy usage
3  broaden our global presence
4  grow our market share
5  generate consistent organic growth
6  operate sustainably
driving sustainable growth 
and shareholder value pages 28–47
we have a track record of revenue and profit 
growth and a 46 year dividend record with 
dps cagr of 1 10 over the last 30 years 
combining investments made in the last five 
years together with our clear strategy we look 
forward to continuing to create sustainable value 
for shareholders
aligned to reward pages 73–95
our remuneration policy creates a strong 
alignment between the achievement of strategic 
objectives the creation of longterm shareholder 
value and executive director remuneration 
in order to align results with rewards a significant 
percentage of each executive director’s 
remuneration package is dependent upon 
meeting challenging performance targets spiraxsarco engineering plc annual report and accounts 2013 14
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our
strategy
our
kpis
about us our business
model in action
strategic report continued
“ developing strong relationships with our customers is 
essential word of mouth recommendations are vital 
in the communities where i work in the midwestern 
united states – and not just regarding the products 
but the people too in wisconsin for example there’s 
a strong pulp and paper mill industry if one mill has 
enjoyed success with a bredel pump for instance 
it only takes a casual chat over a cup of coffee on a 
saturday morning for word to spread if we’ve done 
our job right we’ll get a glowing report”
kurt krummrich
district sales manager for the industrial division  
at watsonmarlow pumps group usa
our business model in action
customer  
closeness 15 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
customer closeness helps watsonmarlow to improve 
process efficiency in the paper industry
at watsonmarlow we work closely with our customers to 
understand and overcome their process challenges and 
problems within the paper industry the sector expertise 
of our sales engineers enables them to offer customers the 
most appropriate pump for each application for example 
during paper dyeing it is critical that multiple colours of dye 
are metered precisely onto paper rolls if the colour of a roll 
falls outside of an acceptable tolerance range it must be 
scrapped and the process begun again costing time and 
money selecting the right pump for the application reduces 
downtime and wastage
the sectorspecific knowledge which arises from working 
closely with our customers enables our engineers to 
practically demonstrate the value of peristaltic pumps 
to a particular industry for example in nonperistaltic 
pump types dye comes in contact with pump 
components increasing the need for regular maintenance 
maintenance crews often become covered in dye as the 
pumps are taken apart and reassembled in our peristaltic 
pumps the unique design means that the liquid being 
pumped flows through tubes and does not come into 
contact with pump components maintaining our pumps is 
clean and quick extracting and replacing the tubing takes 
only minutes to complete our paper mill customers benefit 
from our industryspecific knowledge of their processes and 
applications as well as the metering accuracy and ease of 
maintenance supplied by our pumps spiraxsarco engineering plc annual report and accounts 2013 16
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our
strategy
our
kpis
strategic report continued
about us our business
model in action
“ our ability to design and install 
engineered solutions which 
improve process efficiency sets 
us apart from our competitors 
and adds value to our customers 
who appreciate our expertise”
györgy balkányi
sales manager spirax sarco hungary 
our business model in action continued
applied 
engineering 17 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
applied engineering improves steam quality and process 
efficiency at a hungarian pharmaceutical plant
experiencing escalating maintenance costs and the 
frequent shutdowns of fermenters at their budapest plant 
gedeon richter plc hungary’s largest biotechnology and 
pharmaceutical company asked spirax sarco to design 
a solution for the effective lubrication of mechanical seals 
which were requiring frequent and expensive repairs 
and replacements
after a system survey spirax sarco identified a range 
of problems including insufficient steam traps a faulty 
pressure reduction valve and excess pressure which 
were causing operational issues
a bespoke engineered solution was designed by spirax 
sarco to improve steam quality and operational efficiency 
across the site stainless steel elements of the solution 
included the installation of a prv station for precise 
pressure control and separator units ahead of mechanical 
seals a variety of appropriately selected and installed 
steam traps a range of strainers and a small condensate 
recirculating pump for improved lubrication
the innovative solution was so successful that 
gedeon richter plc has implemented elements of it at 
their new biotechnology plant in debrecen hungary spiraxsarco engineering plc annual report and accounts 2013 18
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our
strategy
our
kpis
strategic report continued
about us our business
model in action
spirax sarco freme heat  
recovery package
freme flash recovery energy management 
equipment is an innovative packaged system that 
recovers all of the energy in condensate and flash 
steam and uses it to preheat boiler feed water 
this reduces the amount of work a boiler needs 
to do to raise steam increasing boiler efficiency 
reducing energy costs eliminating the need to 
dump condensate and reducing water supply 
and treatment costs 
wide product 
range
our business model in action continued
spirax sarco freme heat recovery package 19 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
spirax sarco’s heat recovery packages help refood uk ltd 
save over 100mwh per day and £80000 per year
at refood uk limited’s anaerobic digester facility in 
doncaster 45000 tonnes of food waste are broken down 
each year the methane produced as a result of the 
process is used to run a series of combined heat and 
power engines that generate heat and electrical energy 
a surplus of hot water is generated by the engines and 
three spirax sarco heat recovery packages have been 
installed to utilise the waste heat and carry out three 
separate heating roles at the plant 
the first heat recovery package raises the temperature 
of the site’s boiler feed water the second heats water to 
feed the site’s generalpurpose hot water tank and the 
third maintains the temperature of circulating water that 
is used to prevent oils and fats in the food waste from 
solidifying in the tanks 
the three heat recovery packages recover valuable waste 
heat that would otherwise be lost to the atmosphere 
save energy and contribute to the production of 
renewable energy spiraxsarco engineering plc annual report and accounts 2013 20
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our
strategy
our
kpis
strategic report continued
about us our business
model in action
manufacturing output by destination
regional 
manufacturing
our business model in action continued
      emea
      asia pacific
      americas
      spirax sarco factory
chart area is proportional to revenue 21 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
spirax sarco invests £5 million in a new factory offices 
and training centre in mexico
during 2013 construction began on a new factory offices 
and steam technology training centre on a 25000m² site in 
monterrey mexico the factory which became operational 
during early 2014 is double the size of the previous factory 
and has the capacity to increase production from 30000 to 
90000 parts per month 
the new facilities represent a key investment in our regional 
manufacturing strategy and will create a competitive 
advantage in the local market due to a higher availability 
of products and lower manufacturing costs the factory 
currently supplies the home market and exports to the usa 
and canada but with the increased manufacturing capacity 
it is well positioned to fulfil specific product requirements for 
central and south america 
environmental sustainability was central to the design of 
the new facilities skylights are increasing natural light in 
buildings a geothermal cooling system is providing air 
conditioning and solar panels are helping to meet the site’s 
electricity needs rainwater harvesting is providing water for 
bathrooms and once treated for water fountains while grey 
water generated by hand washing is used to irrigate the 
gardens green roofs have been planted and the grounds 
have been landscaped an initiative called “taking root in 
spirax” was launched to engage the local workforce in the 
sustainability concept the company has bought dozens of 
small trees which are now being cared for by the employees 
until they are big enough to plant outside  spiraxsarco engineering plc annual report and accounts 2013 22
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
kpis
about us our
strategy
strategic report continued
1
2013
2012
2011
2010
2009
4
6
3 7
4
2 9
15
19
2012
2013
2011
2010
2009
520 459 271 2013
2012
2011
2010
2009
116
101
99
74
67
new markets cumulative emea asia pacific americas
  2009–2012 figures restated to include the opening of new 
territories for wmpg
1 strengthen position 2 deliver solutions 3 broaden presence
strengthen our global  
market position
our ability to help our customers solve difficult 
productivity control and energy efficiency 
problems builds deep longterm relationships 
that are central to our business model this 
demands that our sales and service engineers 
are intimate with our customers’ operating 
issues and that they are skilled in steam or 
niche pumping systems knowledge and cost
effective product applications
to continually improve the competency 
and technical skills of our sales and service 
engineers we have developed a wide
ranging online university curriculum and other 
internetbased training tools as well as formal 
classroom training that is available in our 42 
training centres located throughout the world 
we have also installed global information 
collection and sharing software to improve our 
ability to share application knowledge across 
our global sales network
deliver solutions to reduce 
energy usage
our customers are increasingly calling upon our 
sales and service engineers to provide energy 
audits aimed at reducing energy and water 
usage lowering plant emissions and improving 
energy efficiency while audits typically cover 
the thermal aspects of plant energy usage 
we are developing capabilities to help our 
customers manage other areas of energy 
consumption including plant compressed 
air usage boiler and hvac efficiency
our ability to deliver an increasingly wider 
range of solutions rests with our commitment 
to new product development we have 
significantly increased our investments 
during the last five years to widen our 
range of products and applications and to 
develop unique energy recovery solutions 
innovative peristaltic pumping developments 
are delivering new solutions in previously 
unaddressed applications
broaden our global 
presence
our strong global presence is a result of decades 
of effort and investment to build global brands 
that are easily recognisable and symbolise 
expertise and reliability we have a longstanding 
presence in many key developing markets our 
strong infrastructure around the world is helping 
us to more quickly branch out into neighbouring 
markets that in most cases are at an earlier 
stage of economic development 
we are also pioneering the introduction of 
peristaltic pumps in much of the developing 
world demonstrating their superior technology 
and lower life cycle cost benefits continued 
investment in the development of emerging 
markets and in market penetration of mature 
markets forms the basis of longterm growth 
opportunities for the group
we look to make acquisitions that deliver 
market access or widen our product range 
or add technological capability
progress in 2013
we have continued to broaden our global 
presence and added three new operating 
companies in 2013 spirax sarco middle east 
spirax sarco indonesia and watsonmarlow 
austria we also began direct selling in 
peru and panama for the steam specialties 
business and in malaysia for watsonmarlow
outlook
we will continue to strengthen our global 
position during 2014 with the appropriate 
expansion of our direct sales force through 
the creation of 30 additional bespoke 
“elearning” courses we will further develop 
the skills of our direct sales people 
outlook
we will continue to maintain our rd spend 
at its current higher level going forward we 
will see the benefit of our investments as 
we develop new products and extend our 
product ranges to meet the evolving needs 
of our customers
outlook
we will continue to establish new operating 
companies as demand reaches a crucial 
threshold we perceive opportunities for further 
development in new and emerging markets 
and seek to strengthen our presence in our 
mature markets
progress in 2013
we have added sales resource in key regions 
particularly in the emerging markets in asia 
pacific and continued to invest in the training 
of our sales and service engineers during 
2013 we launched a groupwide “elearning” 
programme with approximately 50 online 
courses directed at enhancing the knowledge 
and skills of our sales and service engineers
progress in 2013
we have maintained the significant investment 
in rd established in recent years we have 
focused on helping our customers to meet 
their sustainability targets and improve their 
process efficiencies revenue from our energy 
management solutions has increased by over 
30 since 2008 
number of sales and service 
engineers by region
rd expenditure £m opening of new 
geographic territories
our strategy
six key strategic priorities drive our business model 23 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
2013
2008
2003
xxxx
xxxx
73
72
84 16
28
27 2013
2012
2011
2010
2009
6894
6617
6500
5897
5187
traditional initiatives key initiatives
5 generate growth 6 operate sustainably 4 grow share
generate consistent 
organic growth
our knowledge of our customers’ processes 
and operational issues enables us to deliver 
unique engineering solutions in so doing we 
also instil confidence that in turn strengthens 
our overall customer relationships and builds 
our installed base we continually strive to 
strengthen our customer relationships through 
problem solving and supplying a wider range of 
products and services
investing in local manufacturing facilities has 
enabled us to expand our manufacturing 
footprint closer to the point of sale the 
combination of our skilled local sales and 
service expertise close customer relationships 
and offtheshelf availability of our extensive 
range of steam system and pump products 
enhance our ability to generate consistent 
topline revenue growth
operate sustainably
our approach to sustainability encompasses 
five primary areas of emphasis good corporate 
governance financial health employee 
wellbeing community engagement and 
environmental stewardship we believe 
that effective management in each of these 
areas is essential to longterm sustainability 
further our business is centred on providing 
environmentallyfriendly solutions to our 
customers helping them to improve the 
efficiency of their plant operations and reduce 
their energy and water usage
we have exceptional people who share 
our core values of respect accountability 
passion integrity and delivery we maintain 
professionally challenging and safe workplaces 
and provide for ongoing training and 
development our corporate values are the 
foundation upon which we base our decisions 
and actively manage our global operations
grow market share
our direct sales approach allows us to leverage 
our brands into new products and applications 
as we widen our product portfolio we are 
making it easier for our customers to buy from 
us resulting in an increasing spend on our 
products and engineered packages for small
scale maintenance improvement activities and 
capital projects
a wider range of new products in areas such 
as energy management controls condensate 
management and new pumping technologies 
and systems have contributed about 20 to 
the organic sales growth in the past five years 
we are also transitioning our watsonmarlow 
selling organisation in europe to a more 
sectorised technical direct sales approach 
that results in faster rates of growth
progress in 2013
during 2013 we invested £5 million in a new 
manufacturing facility in mexico which became 
operational in early 2014 ongoing investment 
to develop the skills of our sales people and to 
strengthen relationships with our customers 
have resulted in a successful year of revenue 
growth during 2013
progress in 2013
during 2013 we appointed a senior group 
hse executive to monitor sustainability 
performance across the group and appointed 
a thirdparty organisation to provide limited 
assurance of our co 2e emissions data 
we increased the average number of formal 
training days per customer facing employee 
and donated £200000 to charity
progress in 2013
we have developed a number of new products 
during 2013 including the staps wireless 
steam trap monitoring system which offers an 
alternative to manual steam trap surveys and 
hard wired monitoring systems significant 
revenue has been derived from key product 
initiatives such as the qdos pump launched 
by watsonmarlow in 2012
outlook
our new facility in mexico will improve 
efficiency and our ability to meet demand 
in the americas the skills of our customer 
facing employees mean that we are well 
positioned to capitalise on any improvement 
in economic conditions
outlook
during 2013 we received thirdparty assurance 
of our co 2e emissions data we intend to 
maintain the momentum generated by this 
process through investing in further carbon 
management strategies 
outlook
our onestop shop customer approach 
wide product range packaged solutions and 
direct selling model have positioned us well for 
continuing future growth 
revenue £m percentage of sales  
from key initiatives 
ftse4good is an equity index series that is 
designed to facilitate investment in companies that 
meet globally recognised corporate responsibility 
standards companies in the ftse4good index 
series have been independently assessed and have 
met stringent environmental social and governance 
criteria spiraxsarco engineering plc has been a 
constituent of the ftse4good index since 2009 spiraxsarco engineering plc annual report and accounts 2013 24
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
about us our
kpis
strategic report continued
link to strategy pages 22–23 link to strategy pages 22–23 link to strategy pages 22–23
2013
2012
2011
2010
2009
1516
1362
1340
1191
899
2013
2012
2011
2010
2009
4
5
9
9
7
2013
2012
2011
2010
2009
220
206
206
202
173
4 2 5 6 3 1 4 2 5 6 3 1 4 2 5 6 3 1
 direct link indirect link  direct link indirect link   direct link indirect link 
progress in 2013
organic sales increased by 4 
growth was strongest in asia pacific 
followed by watsonmarlow and emea 
sales in the americas were marginally 
lower emerging markets again generally 
did well and there was a good contribution 
from new products
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 
progress in 2013
adjusted operating profit increased by 
1 1 and by 10 at constant currency 
profits grew in all our segments at 
constant currency with an outstanding 
improvement in emea
link to remuneration
group operating profit is the other key 
element of the annual planning process 
bonus targets are driven off annual plans 
and therefore profit is a key measure of 
variable remuneration 
progress in 2013
the operating profit margin jumped from 
206 to a record 220 the cost of 
raw materials and components was 
broadly flat we benefited from a greater 
focus on price management and we fully 
realised the fullyear cost savings from 
the restructuring in 2012
link to remuneration
executive directors variable remuneration 
is measured on two main indicators profit 
and roce operating profit margin is a 
key driver of both profit and roce 
our key performance indicators
revenue growth  
organic
operating profit £m operating profit 
margin 
we use a range of quantitative financial and nonfinancial key performance indicators to 
monitor the group’s progress against our objectives of delivering consistent profitable and 
sustainable growth and shareholder value 
 based on adjusted operating profit 
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
operating profit is the profit earned 
from our business operations before 
interest taxes the share of profit of 
associate companies and certain non
operational items 
definition
operating profit margin is defined as 
operating profit expressed as a percentage 
of revenue from continuing operations 25 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
link to strategy pages 22–23 link to strategy pages 22–23 link to strategy pages 22–23
2013
2012
2011
2010
2009
1388
1210
 †
1032
 †
794
 †
 
1222
 †
2013
2012
2011
2010
2009
444
394
411
421
333
2013
2012
2011
2010
2009
44
55
60
4 2 5 6 3 1 4 2 5 6 3 1 4 2 5 6 3 1
 direct link indirect link no link  direct link indirect link  direct link indirect link 
†
  2012 restated for ias 19r earlier years 
adjusted on estimated basis
progress in 2013
basic adjusted earnings per share 
increased by 14 reflecting the growth in 
profit and the reduction in shares in issue 
following the special dividend of 1000p 
per share and the associated 26 for 27 
share consolidation
link to remuneration
aggregate eps measured over threeyear 
periods is one of the two components of 
the performance share plan
progress in 2013
our accident rate has reduced by 20 
during the year and we are now close to 
the industry benchmark actions included 
beginning to roll out a behavioural 
based safety programme across all our 
manufacturing sites
link to remuneration
the safety of our employees is central 
to the sustainability of our business and 
has an impact on the financial success 
and profitability of the group creating 
an indirect link with executive directors 
variable remuneration 
progress in 2013
this important measure of overall 
performance shows a marked increase 
to a record 444 resulting from a 
combination of the 1 1 rise in operating 
profit and a small reduction in average 
capital employed
link to remuneration
roce is a key measure in executive 
directors’ annual bonus arrangements 
basic earnings per 
share eps p
hs accidents with over 
seven days of lost time 
per 1000 employees
return on capital 
employed roce 
definition
earnings per share is a measure of the 
profit performance of the group taking 
into account the equity structure eps is 
defined as aftertax profit attributable 
to equity shareholders divided by the 
weighted average number of shares 
in issue
definition
the number of workrelated accidents that 
resulted in over seven days of absence per 
1000 employees for an accident to be 
considered “work related” the machinery 
plant substances or equipment being 
used the way the work was carried out or 
the condition of the site must have played 
a significant role
definition
roce is a pretax measure of the 
efficiency with which the group generates 
operating profits from its capital roce is 
calculated as operating profit divided by 
average capital employed spiraxsarco engineering plc annual report and accounts 2013 26
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
strategic report continued
principal risks
a summary of the principal risks their likely impact and an explanation of how the group mitigates each risk is set out in the table below 
the direction of change in particular risks during the year is explained in the “principal risk” column and illustrated by the arrow in the 
“change” column please note that the “change” column shows the change in the risk and not the mitigation of the risk we have also 
set out the relevance of the risk to our strategy
principal risk change impact mitigation relevance to 
strategy
economic and political instability
the group operates worldwide 
economic and political instability 
creates risks for our locally based 
direct operations the group 
has reviewed country credit 
liquidity and currency risks and 
in particular those arising from 
european debt issues
fluctuations in profit 
from significant 
currency movements
reduced profit due to 
impact on customers 
with economic 
problems
potential 
redenomination 
of local currency 
devaluation and high 
inflation
compliance with group treasury policy
strong internal controls with internal audit and 
appropriate insurance
resilient business model see pages 12–21
senior managers in the emea division undertook 
a eurozone scenario planning workshop externally 
facilitated by pa consulting group which considered 
the impact of countries leaving the eurozone the 
objective was to improve the group’s preparedness 
in respect of this risk the toolkit developed is to be 
deployed by other operating companies
the operations in argentina were profitable despite a 
general devaluation in argentina this is mainly due to 
the move of the business to the us dollar
broaden our  
global presence
significant exchange 
rate movements
the group reports its results 
and pays dividends in sterling 
operating companies including 
manufacturing trade in 
local currency
 e x c h a n g e r a te 
movements impact 
landed costs and 
therefore gross profits 
depending upon the 
country of origin 
nonsterling receipts 
are translated 
into sterling on 
consolidation
regional manufacturing strategy to spread 
manufacturing across a number of currency areas 
and consideration of exchange rate exposures in the 
manufacturing strategy
forward cover where appropriate and in line with the 
treasury policy however this has only a relatively 
shortterm effect up to two years after which the 
underlying currency cost base and exchange rates 
apply
focus on reducing manufacturing costs including 
sourcing materials where appropriate from cheaper 
areas such as china and india
strengthen our 
global market 
position
generate 
consistent organic 
growth
loss of manufacturing output at 
any group factory
in relation to the steam business 
the group manufactures most 
of the products we sell in eight 
main factory units which supply 
our sales operations worldwide 
loss of manufacturing output at 
any important plant risks serious 
disruption to sales operations 
in watsonmarlow pumps group 
pump and tubing manufacturing 
are separated
reduced sales and 
profit due to inability to 
meet customer orders
loss of market share
damage to reputation
group manufacturing strategy to regionalise 
manufacturing base and increase resilience
business continuity planning and disaster 
recovery plans
stocks of components and finished products in 
sales companies
regular and comprehensive backups of it systems
use of insurance auditsinspections and business 
interruption insurance
operate 
sustainably
strengthen our 
global market 
position
breach of regulatory requirements
the group operates in a large 
number of countries across the 
world and is subject to many 
different laws and regulations 
including the uk bribery act 
the us foreign and corrupt 
practices act health and safety 
competition laws and local quality 
regulations breaching these 
laws and regulations could have 
serious consequences
fines and regulatory 
action and resultant 
reduced profit
damage to reputation
diversion of 
management time
significant improvements to our compliance 
programme including i participation by over 2800 
employees in antibribery training “antibribery
work” ii issue of sanctions embargoes and 
restrictions policy and guide and iii the intended 
rollout of a behavioural based safety programme
robust internal controls policies and procedures 
and group management code
established strong ethical culture supported by 
communication and training
review of commercial arrangements and regulatory 
requirements with appropriate professional advice
maintain local quality accreditations
operate 
sustainably
strengthen our 
global market 
position
our risks 27 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
our  
risks
following the reprioritisation of the principal risks in 2013 by the risk management committee we have added one new principal 
risk significant exchange rate movements and removed one principal risk shown in our 2012 annual report and accounts risk of 
product failure
the way in which the risk management committee reviews and controls our risk management processes and procedures is set out 
in the risk management committee report on pages 70 to 72
there may be other risks and uncertainties which are unknown to the group or which could become material in the future these risks 
may cause the group’s results to vary materially from historic and expected results
principal risk change impact mitigation relevance to 
strategy
noncompliance with health safety 
and environmental legislation
the group places great emphasis 
on health safety and environmental 
issues in relation to our employees 
and operations and those of 
our customers suppliers and 
communities so as to avoid the 
risk of major health safety or 
environmental problems
damage to reputation
reduced profit due to 
fines compensation 
and cleanup costs
enforcement action 
by regulatory  
authorities
compliance with legislation and codes of best 
practice
regular audits checks and reporting to management 
and the board on health safety and environmental 
issues
ongoing training
appointment of a group health safety and 
environment executive and improvement in health 
and safety awareness across the group
operate 
sustainably
strengthen our 
global market 
position
broaden our global 
presence
defined benefit pension deficit
defined benefit pension schemes 
carry risks in relation to investment 
performance security of assets 
longevity and inflation total defined 
benefit pension liabilities represent 
approximately 52 of total group 
assets
this risk has reduced further in the 
year as a result of the operation of 
the mercer “dynamic derisking 
solution”
increase in liabilities
increase in pension 
costs and cash 
contributions
fluctuations in 
pension fund asset 
and liability values
use of independent professional advisers and 
custodians for defined benefit pension schemes
pension scheme derisking strategy to automatically 
reduce equity exposure and increase matching 
assets at preagreed trigger points
use of mercer “dynamic derisking solution”
operate 
sustainably
failure to respond to technological 
developments or customer needs
the group has significantly 
increased rd resources and 
risks this being ineffective if we 
fail to respond to development 
and customer needs or if we 
fail to manage and protect our 
intellectual property
failure to achieve 
expected return on 
the rd investment
reduced profit
loss of market share
loss of intellectual 
property
maintain market knowledge and monitor competitor 
developments making effective use of our direct field 
sales force
maintain investment in rd programmes in order  
to satisfy customers’ technical requirements
maintain appropriate intellectual property 
registrations taking enforcement action where 
appropriate
regular updating of technical and product 
improvement roadmaps
operate 
sustainably 
generate 
consistent organic 
growth
deliver solutions 
to reduce energy 
usage
failure to realise 
acquisition objectives
the group’s strategy is focused 
on organic growth complemented 
by acquisitions we risk failing 
to achieve the expected return 
on investment if acquisitions are 
not properly identified executed 
and integrated
failure to achieve 
expected return on 
investment
assumption of 
unexpected liabilities
evaluation of potential targets against strategic plan 
and acquisition criteria
project management disciplines
appropriate due diligence by group personnel 
and external advisers covering commercial legal 
accounting environmental market and technical 
issues
the group has expanded its acquisitions team to 
strengthen its due diligence process
grow market share
deliver solutions 
to reduce energy 
usage
increased risk no change to risk decreased risk spiraxsarco engineering plc annual report and accounts 2013 28
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
197 263
£482m £480m
5 10 £2443m £1828m
about us our
kpis
strategic report continued
group performance at a glance
ungroup
expand
pathﬁnder  trim
delete white paths
35
revenue
£2443m
ungroup
expand
pathﬁnder  trim
delete white paths
27
the group comprises the spirax sarco steam specialties business and 
watsonmarlow peristaltic and niche pumps the spirax sarco steam 
specialties business is split into three regional divisions europe middle east 
and africa emea asia pacific and americas
revenue was £559 1 million for the spirax sarco steam specialties business 
and £1303 million for watsonmarlow pumps in 2013
steam specialties  
europe middle east and africa emea
steam specialties  
asia pacific
revenue revenue
operating profit operating profit
operating margin operating margin
31 9
390bps 0bps
change change
revenue
£1828m
highlights
organic sales increased by 3 despite difficult economic 
conditions operating profit rose by an outstanding 26 at 
constant currency and the margin rose to a record 197 
the margin was underpinned by an increased focus on price 
management restructuring benefits and improved performance 
from the consolidated manufacturing site in cheltenham 
there was good sales growth in the uk africa and the 
middle east
highlights
organic sales increased by 8 with good growth in controls 
flow metering and services market conditions remained 
favourable in china where our business performed strongly and 
our business in korea delivered another good result we continued 
to add sales resource expanding our direct sales presence in the 
philippines and indonesia overall operating profit was up 6 
at constant currency 29 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group chief 
executive’s report
emea asia  
pacific
americas financial  
review
sustainability 
report
watsonmarlow
198 303
£261m £395m
4 5 £1320m £1303m
ungroup
expand
pathfinder  trim
delete white paths
19
ungroup
expand
pathﬁnder  trim
delete white paths
19
steam specialties  
americas
watsonmarlow 
peristaltic and niche pumps
revenue revenue
operating profit operating profit
operating margin operating margin
0 7
70bps 70bps
change change
revenue
£1320m
revenue
£1303m
highlights
organic sales were broadly flat with growth in latin america 
but with lower sales in north america due to the nonrepeat of 
large projects in the usa and lower project activity in canada 
operating profit was up 6 at constant currency and the 
operating profit margin returned to almost 20 with a good 
contribution from cost reductions and efficiencies in the usa
highlights
organic sales increased by 4 with growth in biopharm and 
food  beverage markets but with a difficult comparison in the 
second half year due to several large nonrepeating projects 
underlying demand was sustained and we ended 2013 with a 
strong order book the new qdos and apex products contributed 
significantly and we continued to add sectorfocused sales 
resource operating profit increased by 7 at constant currency
group performance  
at a glance spiraxsarco engineering plc annual report and accounts 2013 30
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
strategic report continued
group chief executive’s report
“ group sales increased to £6894 million 
with organic sales growth of nearly 
4 our focus remains on creating our 
own growth opportunities through the 
implementation of our growth strategy”
nick anderson 
group chief executive
key highlights
•	organic sales grew by nearly 35 
in the steam specialties business 
and by 4 for the watsonmarlow 
pumps business
•	operating profit increased by 11 
to £1516 million and at constant 
exchange rates operating profit 
was ahead 10
•	sales in emerging markets 
expanded to 42 of group 
revenue and emerging markets 
accounted for 45 of group 
operating profit in 2013
•	group operating profit margin 
reached a record 220
introduction
this is a truly exceptional company with 
many fundamental strengths the success 
and strong performance during recent 
years despite a challenging global 
economic environment demonstrates that 
our strategy robust business model and 
talented organisation delivers superior value 
to our shareholders as i take over as group 
chief executive my priority is to continue 
to leverage our strengths and build on this 
solid base
the skills and applications knowledge of 
our people especially our direct sales and 
service engineers is central to our ability 
to provide customers with solutions to 
their energy efficiency productivity quality 
and sustainability issues we manage the 
business for the long term and continually 
invest in widening our addressable markets 
expanding our market penetration and 
extending our geographic presence 
especially into newly emerging markets 
our focus on solution selling underpins 
our growth in both emerging and 
developed markets
in recent years we have improved processes 
and significantly increased our investment in 
research and development resources which 
is central to our ability to expand the size of 
our addressable market i would expect new 
products to make an increasing contribution 
to sales growth in the future
we have increased regional manufacturing 
to enhance local availability of an unrivalled 
range of products improving customer 
service and supporting sales growth we will 
look to increase supply chain effectiveness 
by optimising our global distribution network 
and leveraging manufacturing efficiencies
global environment
global industrial production provides a 
reasonable indicator for the conditions in 
our markets we entered 2013 with very low 
rates of industrial production growth that 
had been progressively slowing through 
the previous year the first half of 2013 
saw a continuation of this trend but with 
some acceleration in growth through the 
second half of the year for the full year 
growth in industrial production was overall 
broadly the same as the prior year’s growth 
the outlook for 2014 however is a little 
more positive we have a robust and resilient 
business model but we are not immune 
from economic swings which our markets 
can lag by up to nine months although our 
focus remains on creating our own growth 
opportunities through the implementation of 
our growth strategy
market conditions remained weak across 
most of europe with overall industrial 
production flat yearonyear although 
with recent indications of improvement in 
market conditions towards the end of the 
year markets in north america remained 
challenging and in developed markets 
generally project activity was slow with lower 
demand for higher value energy saving and 
process efficiency improvement projects 
routine maintenance spending by customers 
was modestly higher
emerging market conditions were 
mixed with stable growth in china and 
improvement in parts of southeast asia and 
eastern europe in latin america there was 
an improving trend in economic conditions 
entering 2013 which flattened in the second 
half currency pressures in argentina 
erupted in early 2014 with a knockon 
effect in a number of other emerging 
market currencies creating a degree of 
market uncertainty
progress in 2013
group sales increased by over 4 from 
£6617 million to £6894 million organic 
sales growth was nearly 4 for the year 
repeating the growth achieved in the first 
half year growth was led by asia pacific  31 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
group chief 
executive’s report
group performance  
at a glance
with china continuing its strong progress 
followed by watsonmarlow modest sales 
growth was achieved in emea despite the 
difficult economic background and sales 
in the americas were marginally lower due 
to north america mitigated by growth in 
latin america overall sales in emerging 
markets expanded to 42 of group revenue 
from 40 in 2012 favourable currency 
movements at the half year were steadily 
eroded by the strengthening of sterling and 
weakness in a number of emerging market 
currencies particularly in the fourth quarter 
of 2013 if current exchange rates prevail 
through 2014 sales would be reduced 
by around 5 on translation into sterling 
versus 2013
in the steam specialties business organic 
sales grew by nearly 35 sales of our 
traditional condensate management 
products were higher with increased sales 
of traps and valves which reflected the 
solid underlying demand from the core 
maintenance and operating expenditures 
of our customers in general demand 
for higher value energy saving and plant 
improvement projects has been soft 
metering sales increased nicely driven 
by the introduction of innovative and 
technologically advanced products over the 
past two years with particular success in 
emea and asia pacific sales of controls 
products grew well with progress in all 
regions and energy services also did well 
following the exceptionally strong growth 
in heat exchange packages in 2012 the non
repeat of several large projects meant that 
heat exchange package sales were down 
in 2013
rd in the steam specialties business 
continued to benefit from the higher level 
of investment and resource in recent years 
which was maintained through 2013 as 
well as the improvement in processes and 
techniques focus was directed onto fewer 
higher incremental sales value opportunities 
where we can best leverage new product 
sales we expect that the investment and 
improvements will generate an increasing 
contribution to future sales growth from 
new products
in the watsonmarlow pumps business 
organic sales grew 4 with a particularly 
tough second half comparison due to 
several large nonrepeating wastewater 
treatment and mining projects shipped in 
the second half of the prior year there was 
particularly good progress in europe where 
an increase in the direct sales channel and 
greater focus through further sectorisation 
of the sales teams delivered solid growth 
new products contributed strongly with 
the new qdos pump making a particular 
impact the higher level of rd resource 
in watsonmarlow has been maintained 
with innovative new products that continue 
to expand the performance envelope 
that increases the addressable market 
displacing other pump types
the group has added resource and 
intensified the search for suitable acquisition 
candidates focusing on expanding our 
addressable markets through new products 
and technologies direct market access and 
complementary businesses our strong 
balance sheet and debt capacity provides 
us with considerable flexibility
we achieved a good increase in operating 
profit of 1 1 from £1362 million to 
£1516 million using constant exchange 
rates operating profit was ahead 10 
following the exaggerated seasonal bias 
in 2012 of profits to the second half year 
of 4357  2013 returned to a more normal 
pattern of 4555 emerging markets 
accounted for 45 of group operating 
profit in 2013 in line with the prior 
year this reflects the significant profit 
improvement achieved in the developed 
markets of europe
the group operating profit margin jumped 
from 206 to a record 220 the cost 
of raw materials and components was 
broadly flat reflecting subdued world 
metals prices plus our ongoing initiatives 
to improve the operation of our supply 
chain we fully realised the benefits from the 
greater focus on price management and 
margin as well as from the restructuring 
of our european sales companies that 
delivered a yearonyear cost reduction of 
£35 million profits rebounded from the 
low levels in the prior year in our european 
steam specialties manufacturing operations 
in europe particularly in the uk where we 
achieved further efficiency improvements 
from the consolidated site we continue to 
invest in geographic expansion and market 
penetration in emerging markets which 
remains a strategic priority
market outlook
we have an outstanding business 
model and over recent years have made 
significant and farreaching improvements 
to our performance through a time of 
great economic uncertainty this has been 
achieved whilst at the same time investing 
heavily in our manufacturing capability 
and capacity in our rd resources and 
processes in our people development and 
in our expanding network of direct sales and 
service engineers
our markets are heavily influenced by 
the level of industrial production we are 
not immune from economic tides but 
our business is resilient having a high 
proportion of sales drawn from customers’ 
maintenance and operating budgets and 
with less exposure to the capital cycle 
our focus is on our strategic actions to 
outperform our markets and we are well 
positioned to leverage the investments 
we have made to achieve growth and 
improvements in our business spiraxsarco engineering plc annual report and accounts 2013 32
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
europe middle east and africa
strategic report continued
“ organic sales increased by 3 to 
£2443 million despite continuing difficult 
economic conditions operating profit 
increased by an outstanding 26 at 
constant currency”
neil daws 
executive director
progress in 2013 
sales in emea increased by 5 to 
£2443 million 2012 £2328 million 
we achieved organic sales growth of 3 
and favourable exchange rate movements 
added 2 to sales due to the stronger 
euro partially offset by weakness in 
the south african rand and turkish lira 
operating profit more than recovered the 
dip in 2012 and rose strongly by 31 to 
£482 million 2012 £367 million and 
at constant exchange rates the increase 
was 26 the operating profit margin 
expanded significantly from 158 to 197 
with only a small benefit from exchange 
rate movements
economic conditions remained difficult 
across most of our markets and in 
particular industrial production overall in 
europe was flat for the year after starting 
the year in decline industrial production 
progressively improved and was positive 
in the fourth quarter for the first time in 
two years our business tends to lag the 
economic cycle by several quarters and 
our markets were again weak but stable 
and we achieved modest growth from our 
customers’ core maintenance and plant 
operations project work for energy saving 
and plant improvements was down in 
part due to the nonrepeat of several large 
orders in the prior year and we continued 
to see project delays as customers deferred 
committing to larger value opportunities
emerging markets in emea produced good 
growth in both sales and profits sales were 
strongly ahead in the middle east following 
our increased investment in sales resource 
in the region culminating in the creation of 
our latest operating company in the uae 
the czech republic did well delivering 
a large steam injector project at a major 
steel mill and sales were ahead in turkey 
business levels stabilised in russia following 
the decline in refining and petrochemicals 
activity in the prior year and we anticipate 
improvements in this important market 
from increased focus on our core business 
our business in south africa performed well 
increasing sales and reducing costs
in our developed markets in emea which 
account for broadly 80 of segment sales 
we achieved a very small sales increase 
but profits were significantly higher as 
we realised the fullyear benefit of the 
restructuring actions in 2012 and increased 
our focus on pricing and margin in our large 
more mature markets in france germany 
italy spain and the uk overall sales 
were marginally ahead largely due to the 
strong performance in the uk and profits 
were sharply higher in all five operations 
elsewhere in scandinavia profits were also 
well ahead but sales were modestly down 
as we refocused on the more attractive 
sections of the market
revenue
£2443m
5
2012 £2328m 2012 £367m
operating profit
£482m
31
operating margin
197
2012 158
390bps
revenue £m operating profit £m percentage of group revenue
2013
2012
2011
2010
2009
2443
2328
2501
2300
2255
2013
2012
2011
2010
2009
482
367
425
368
356
ungroup
expand
pathﬁnder  trim
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35
2012 35 33 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
emea
as expected the trading performance in 
our european manufacturing operations 
rebounded strongly in particular we realised 
a significant improvement in profit from the 
single consolidated site in the uk through 
efficiency and process improvements 
and cost reductions the final piece of 
investment was completed when the 
new distribution centre in cheltenham 
became fully operational in april 2013 
and we now have for the first time an 
integrated manufacturing plant from receipt 
of raw materials and components to the 
warehousing and despatch of finished 
goods rd expenditure was maintained at 
the much higher level of investment reached 
over recent years
market overview
the group’s most mature business 
operations are centred in europe at year 
end the emea region comprised 22 
operating companies during 2013 we 
established an operating company in 
the middle east located in dubai which 
started trading in november within the 
emea region our most important markets 
are foods beverages pharmaceuticals 
institutions and oem customers supplying 
these industries
during 2013 our markets across europe 
remained stubbornly flat amid continued 
challenging economic conditions and 
low investment confidence driven by 
ongoing concerns surrounding the debt 
crisis only critical maintenance spending 
remained robust throughout the first half 
year although trend indicators suggest 
some signs of progress during the second 
half year elements of our business are late 
cycle and any improvement in business 
conditions will have a lagged effect
our biggest single operation within the 
eurozone is the uk which rebounded into 
solid positive growth on a strengthening 
economy and as some large projects 
came to fruition during 2013 belgium 
sweden and our humidification business 
in germany also posted positive growth 
helping to offset general weakness in 
most other european markets
markets in france italy and germany 
showed no sign of improvement and 
iberia remained significantly depressed 
the nordics lacked signs of positive 
investment during 2013 and we faced 
significant competitive pressure in the 
region project business declined slightly 
in russia the czech republic and turkey 
in markets where we have seen steady 
growth in recent years however export 
markets throughout much of eastern 
europe remained positive as did much 
of the middle east
strategy and outlook
quotation logs are healthy and economic 
indicators turned marginally positive as we 
entered 2014 and we hope to see some of 
this reflected in our markets in 2014 
through our direct sales model we 
provide customers with a wide range of 
solutions for energy saving and process 
productivity our investments in training 
our people and widening our service 
offering mean that we are well placed 
to take advantage of any improvement 
in markets 
we remain committed to growing our 
presence and investing in emerging 
markets in eastern europe russia the 
middle east and africa despite some 
slowdown in major project activity in 2013 
the demand for improved infrastructure 
in these markets remains and we expect 
some strengthening of project activity 
during 2014
 compared with the prior year in countries where we have operating companies
key markets
foods
pharmaceuticals healthcare
oem
neutral unfavourable favourable
industrial production growth rate 2013
5 to 0 0 to 5 5 to 10  10 source  chr economics spiraxsarco engineering plc annual report and accounts 2013 34
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
europe middle east and africa continued
strategic report continued
spirax sarco 
provides saudi 
arabian hospital 
with a clean steam 
solution
at a university teaching hospital in saudi 
arabia a new intensive care unit icu 
is being constructed spirax sarco 
was asked to design a system to 
supply steam humidification a reliable 
domestic hot water supply and hot water 
for use in the building’s heating system 
the bespoke solution needed to utilise 
an existing hightemperature water 
supply from a central boiler plant   
a building consultant had suggested inserting 
a flash vessel into the existing hot water 
system to generate steam for humidification 
spirax sarco identified several problems with 
this approach for example water lost from the 
flash steam vessel would need to be replaced 
by cold water reducing boiler efficiency and 
increasing energy usage and the flash steam 
produced would contain boiler water chemicals 
and so be of insufficient quality for use in a 
hospital environment  
spirax sarco recommended installing a water 
to clean steam generator and stainless steel 
humidifiers to provide clean efficiently generated 
steam for humidification purposes the steam 
generated would be of a good enough quality to 
meet a number of international standards such 
as en285 the european standard for steam 
quality for use in sterilisation and the ashrae 
standard for acceptable indoor air quality 
a packaged plate heat exchanger was installed 
to provide a source of heat for the air heating 
system and a range of products were added to 
the existing water supply to ensure a constant 
source of domestic hot water 
in addition to providing a fully functional and 
bespoke engineered solution that meets the 
icu’s humidification heating and domestic water 
needs spirax sarco enabled the university to 
purchase a complete package from a reputable 
single source further the solution that was 
installed will require less maintenance and offer 
substantial energy savings compared with 
alternative solutions the university was so 
impressed that they have asked spirax sarco to 
install the same system in a new cardiac centre 
and in a new teaching hospital  35 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea americas watsonmarlow financial  
review
sustainability 
report
asia  
pacific
emea
asia pacific
“ we achieved a good sales increase in 
asia pacific rising by 10 to £1828 
million organic sales increased by 
8 with good growth in controls 
flow metering and services”
klaus rümler 
divisional director
progress in 2013 
we achieved a good sales increase in 
asia pacific rising by 10 to £1828 million 
2012 £1669 million exchange movements 
were generally favourable adding 2 
to sales on translation into sterling due 
to the chinese rmb and the korean 
won both strengthening by 4 against 
sterling partially offset by the weakening 
of the australian dollar and japanese 
yen organic sales therefore increased by 
8 with continued progress in traditional 
products and good growth in controls flow 
metering and services market conditions 
remained favourable in china but elsewhere 
were mixed the widespread applications 
for industrial steam in particular in food 
 beverage and healthcare provides 
good resilience to our business in asia 
operating profit increased by 9 to 
£480 million 2012 £439 million and at 
constant currency the increase was 6 
the operating profit margin was unchanged 
at 263 2012 263 as the benefit from 
the additional sales volume was offset by 
the costs of transitioning to a fullyfledged 
operating company in the philippines 
and in preparation for our new company 
in indonesia that commenced trading in 
january 2014 following the acquisition of 
our largest distributor
our steam specialties business in china is 
the largest sales and profit contributor in 
the group accounting for 10 of group 
sales in 2013 and again performed strongly 
although the pace of industrial production 
growth eased and some projects were 
delayed our business derives largely 
from sectors linked to domestic chinese 
consumption particularly food  beverages 
pharmaceuticals textiles and healthcare all 
of which have been resilient we continue 
to add sales resource expanding our 
extensive network of sales offices to 43 and 
deepening our penetration of the market 
in line with our regional manufacturing 
strategy production at our plant in shanghai 
continues to increase rapidly across an 
expanding range of products this is 
primarily to meet local demand and also 
to support regional demand in southeast 
asia increasing flexibility and improving 
customer service
our business in korea again performed 
well with record sales and profits despite 
a more difficult economic environment 
where industrial production was negative 
for most of the year as expected second 
half sales were much stronger in korea as a 
number of large projects were completed 
elsewhere we grew sales in japan in a 
challenging market but had to contend 
with the impact of higher landed costs of 
imported products from the significant 
currency weakness we continued to 
invest in market development adding sales 
resource in both the more established and 
newly emerging markets
revenue
£1828m
10
2012 £1669m 2012 £439m
operating profit
£480m
9
operating margin
263
2012 263
0bps
revenue £m operating profit £m percentage of group revenue
2013
2012
2011
2010
2009
1828
1669
1471
1315
1047
2013
2012
2011
2010
2009
480
439
378
343
231
ungroup
expand
pathﬁnder  trim
delete white paths
27
2012 25 spiraxsarco engineering plc annual report and accounts 2013 36
about us welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
asia pacific continued
strategic report continued
market overview
the group has invested heavily in 
developing the important asia pacific 
region over the past 20 years today this 
region generates 33 of total steam 
specialties business sales and the group’s 
business operations in china and korea 
are continuing to be two of the largest 
in the group we have 1 1 operating 
companies and one associate in the region 
and additionally have a good direct sales 
presence in newly emerging markets such 
as vietnam and cambodia in the past 
three years our headcount has increased 
significantly as we have added important 
sales and sales support people throughout 
the region and have increased our 
manufacturing footprint
market conditions were strong in china 
as we benefited from our direct sales 
approach to domestic consumer industries 
and from our continued investment 
in geographic coverage localised 
manufacturing and sales of a broader 
range of engineering solutions
we see good growth potential in most of 
southeast asia and are taking additional 
steps to increase our direct selling 
presence in some of these still small but 
important emerging markets elsewhere in 
the region our australian and new zealand 
markets were more flat but careful cost 
control provided us with good profit
within the asia pacific region our most 
important industry sector is foods  
beverages it is easily our single largest 
sector and comprises a much higher 
percentage of sales in asia pacific 
than it does elsewhere for the group 
this industry segment is continuously 
growing in a number of countries as we 
see a movement towards better product 
quality and higher food safety standards 
which foster higher quality manufacturing 
equipment we also saw good levels of 
customer spending at the refineries and 
petrochemical plants and higher levels of 
activity in pharmaceuticals
strategy and outlook
we see very good midterm growth 
opportunities throughout asia pacific 
due to the rapidly growing demand in 
local consumption our business model 
particularly benefits from our direct end
user approach in foods  beverages 
healthcare facilities pharmaceuticals and 
textiles the chemical industry rubber and 
tyre and also in public buildings hvac 
we therefore see continued good potential 
for organic growth
we employ a direct sales model 
throughout the region and we see 
additional growth opportunities by 
increasing market share and geographic 
reach as our people become more 
highly skilled in selling the broad range of 
engineering solutions already existing in 
our product portfolio new and increasing 
demand for energy reduction process 
efficiency improvements cost reduction 
reduced carbon footprint and emissions 
requires our people to be flexible and highly 
qualified our business model is based 
on highest quality advice and support 
to customers a key strategic priority is 
therefore the training for our customer 
facing staff this differentiates us from 
other companies in the market we will 
further focus and invest in training and 
staff recruitment
our local manufacturing strategy will further 
help us to improve customer service and 
drive costs down it also helps us manage 
our own carbon footprint we have made 
good progress in controlling stock and 
target further improvements during 2014 
our expectations for 2014 are further 
growth and good trading margins 
this growth will come from general 
economic growth demand for energy 
saving and process improvements 
our own sales initiatives and our newly 
developed operations
key markets
foods
pharmaceuticals chemicals
refining and petrochemical
neutral unfavourable favourable
industrial production growth rate 2013
 compared with the prior year in countries where we have operating companies
5 to 0 0 to 5 5 to 10  10 source  chr economics 37 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
37 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
hospital 
emergency 
averted by a rapid 
response from 
spirax sarco 
australia
on a wednesday afternoon in july at 
a private hospital in victoria one of 
the hospital’s two hot water calorifiers 
water heating units imploded due to 
a rupture of the internal steam heating 
tubes fortunately the hospital’s 
second calorifier was able to maintain 
the hospital’s hot water supply but the 
fear was that if one could fail so could 
the second
spirax sarco was asked to assess the damage 
and ensure that a backup water heating 
solution was installed as quickly as possible 
spirax sarco’s expert engineers found that 
the calorifier was too extensively damaged to 
repair and recommended the installation of an 
ausiheat 2 heat exchanger package to replace 
the damaged calorifier 
the ausiheat arrived in spirax sarco’s 
melbourne office on friday and was in place in 
the hospital by friday evening by the following 
evening the hospital had a fully operational 
backup hot water supply 
before long the second calorifier began to show 
signs of failure causing it to be shut down and 
the ausiheat 2 became the hospital’s sole water 
supply the ausiheat’s exceptional performance 
and ability to handle the peak loads in the 
hospital impressed the hospital’s engineering 
staff to such an extent that they requested that 
spirax sarco install a second ausiheat 2 heat 
exchanger package to provide a backup hot 
water supply once installed the two ausiheat 2 
heat exchanger packages only occupied one
third of the space of the two oldstyle hot water 
storage calorifiers
as well as the packages’ exceptional 
performance and spirax sarco’s rapid response 
and problem solving capability the hospital 
was impressed by the afterservice support 
offered by spirax sarco the hospital engineers 
now feel confident that the hospital’s hot water 
supply is secure for the foreseeable future  spiraxsarco engineering plc annual report and accounts 2013 38
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
americas
strategic report continued
“ sales were broadly flat at constant 
currency with growth in all our operations 
in latin america offset by lower sales 
in north america due to nonrepeating 
projects operating profit increased 
by 6”
alberto grandi 
divisional director
progress in 2013 
sales in the americas declined by 4 
to £1320 million 2012 £137 5 million 
although excluding unfavourable exchange 
rate movements particularly in argentina 
and brazil sales were broadly flat overall 
sales of traditional products were ahead 
reflecting resilient demand from core 
maintenance and operations spending 
by customers we made further good 
progress with controls although sales of 
heat exchange packages and services 
were lower due to the nonrepeat of 
large projects and generally subdued 
project activity operating profit was flat 
at £26 1 million 2012 £262 million but 
at constant exchange rates was ahead 
6 the operating profit margin advanced 
from 19 1 to 198 due to cost reduction 
actions and efficiency improvements 
including a small reduction in headcount
in north america economic conditions 
were reasonable but sales were lower 
due to the nonrepeat of two large service 
contracts in the usa and significantly lower 
project activity related to the alberta tar 
sands in canada operating profit was 
only marginally lower having benefited from 
cost reductions and from a good increase 
in contribution from our new packages 
fabrication facility in south carolina in the 
usa the new president of our business 
started in the fourth quarter and the focus is 
on the development and improvement of our 
business performance as we take actions 
to improve our market approach and better 
segment our business
in latin america market conditions were 
generally positive with industrial production 
returning to growth in the second quarter 
after more than a year of decline but this 
flattened out in the second half we achieved 
sales growth in all our operations and our 
new company in chile performed well in its 
first year our business in argentina had a 
very good year against the background of 
a fragile economy that finally succumbed 
in the fourth quarter with significant 
currency weakness that continued in 
2014 and that will no doubt impact the 
local economy the export of ball valves 
in dollars from our centre of excellence in 
argentina helps to mitigate the impact of 
the currency devaluation brazil our largest 
company in the region returned to growth 
and we made further progress in mexico 
where the new manufacturing plant will 
be fully operational in the second quarter 
of 2014 and will be integrated into our 
americas regional manufacturing strategy 
overall in latin america operating profits 
were nicely ahead
revenue
£1320m
4
2012 £1375m 2012 £262m
operating profit
£261m
0
operating margin
198
2012 191
2012 21
70bps
revenue £m operating profit £m percentage of group revenue
2013
2012
2011
2010
2009
1320
1375
1344
1252
1046
2013
2012
2011
2010
2009
261
262
274
243
139
ungroup
expand
pathfinder  trim
delete white paths
19 39 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
asia  
pacific
watsonmarlow financial  
review
sustainability 
report
americas emea
market overview
the group’s involvement in the major 
markets in the americas dates back many 
years over 100 years in the usa and 
60 years in latin america as a result 
the group has a strong share of these 
established markets however this is 
balanced by more recent investment in the 
developing economies in the region where 
there are good opportunities to achieve 
rapid growth through strengthening our 
market share and marketing a more 
extensive range of products and services
market share is highest in those markets 
where the group established a presence 
early in the cycle of industrial development 
this applies notably in argentina and brazil 
and more recently in mexico by contrast 
there are many competitors based in 
north america
the oil and petrochemical industry is a 
key market for the group throughout the 
region but the importance of other key 
market segments varies with the economic 
climate and trends in consumer spending 
for example in north america district 
heating of government buildings and 
university campuses underpins a strong 
hvac market whereas in latin america 
the food beverages and pharmaceuticals 
industries continue to invest in improving 
their processes and their energy efficiency 
and are therefore key targets for the group 
in this region
market conditions were at best neutral 
throughout the americas in 2013 in north 
america business confidence was 
undermined by continuing uncertainties 
relating to government spending and 
as a result there was less project work 
this has been accentuated over recent 
years by more specific influences notably 
the reduction in energy costs following 
the development of shale gas in the usa 
and the impact of a less buoyant oil price 
on tar sands projects in canada in latin 
america as the year progressed it became 
clear that earlier growth projections 
had been too optimistic particularly in 
brazil and mexico however this was 
partially offset by continuing industrial 
development in markets such as colombia 
and chile where we are investing to 
keep pace with continuing increases in 
domestic consumption
strategy and outlook
even in our more mature markets the 
continuing desire of equipment users to 
reduce their carbon footprint provides 
opportunities to grow the core business by 
offering a more complete range of steam 
related products and services our priority 
in these markets is therefore to invest in 
streamlining that capability as evidenced 
by the new fabrication facility in the usa 
which enables us to expand our portfolio 
of prefabricated engineered packages for 
heat transfer applications
we see continuing opportunities to 
strengthen our market position through 
expanding our geographical sales 
coverage as we are doing in mexico and 
chile and in various other markets in latin 
america we also continue to invest in 
generating consistent organic growth and 
improving our competitiveness through 
the further development of our regional 
manufacturing strategy as evidenced by 
our new factory in mexico
key markets
foods
pharmaceuticals
refining and petrochemical
neutral unfavourable favourable
industrial production growth rate 2013
hvac
 compared with the prior year in countries where we have operating companies
5 to 0 0 to 5 5 to 10  10 source  chr economics spiraxsarco engineering plc annual report and accounts 2013 40
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
americas continued
strategic report continued
spirax sarco 
mexico saves 
nestlé energy and 
reduces water 
consumption by 
28000m³ per year
when specialist engineers from spirax 
sarco audited the steam system at 
nestlé’s instant coffee plant in toluca 
mexico they were asked to develop 
and install a solution to recover 100 
of condensate from distiller bells and to 
increase steam system efficiency
the audit found that condensate was being lost 
as a result of back pressure being imposed on 
the condensate line by a flash steam recovery 
vessel spirax sarco installed an automatic 
pump trap to overcome the back pressure 
enabling the existing flash vessel to function 
correctly flash steam generated in the flash 
vessel is now used to preheat water before 
it enters a newly installed easiheat™ unit 
which is producing hot water for the plant 
the condensate from both the flash vessel 
and the easiheat™ unit is now returned to 
the boiler house saving energy water and 
water treatment chemicals where it is used to 
generate steam
the solution cost nestlé £76000 but is saving 
£67 000 per year in addition it is reducing 
energy consumption at the plant by 6700 
gigajoules per annum and is saving 147 tonnes 
of co
2 emissions each year furthermore 
improved steam system efficiency has reduced 
water consumption by as much as 28513m³ 
per year
mr ricardo morales energy manager at nestlé 
mexico explained “we are making investments 
to increase our energy efficiency each year in 
nestlé mexico we have the objective of saving 
around 4 in the use of energy and water 
the participation of spirax sarco is key to 
improving the energy efficiency of our company 
in matters relating to steam production and 
distribution condensate recovery heat 
exchange and delivering expert training to 
our staff” 41 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
watsonmarlow
watsonmarlow americas asia  
pacific
“ organic sales increased by 4 against 
a tough comparison in the prior year  
with the new qdos and apex products 
making a meaningful contribution the 
operating profit margin strengthened 
further to 303”
jay whalen 
executive director
progress in 2013 
sales increased by 5 to £1303 million 
2012 £1245 million and were ahead 4 
at constant exchange rates sales growth 
slowed in the second half against a 
particularly difficult comparison due to 
several large nonrepeating projects that 
shipped in the prior year but demand 
continued and we ended 2013 with a 
strong order book there was good growth 
across most product lines with a meaningful 
contribution from the new qdos and apex 
products but the larger capacity bredel hose 
pump sales were lower due to the reduced 
project activity in the wastewater treatment 
and mining segments watsonmarlow 
operating profit increased by 7 to 
£395 million 2012 £368 million with an 
overall neutral effect from exchange rate 
movements the operating profit margin 
strengthened further to 303 2012 296
trading conditions were strong in the 
biopharmaceutical market which is our 
largest sector in both north america and in 
europe with positive investment trends by 
customers in the industry food  beverage 
markets were ahead with good activity in 
latin america and also now asia pacific 
mining precious metals markets have 
been difficult in south africa and australia 
but this was mitigated by inroads made in 
russia and brazil water and wastewater 
markets continued to be under pressure 
due to restrictions on government finances 
in many countries although mitigated by 
increased market penetration from our new 
qdos pump and with early indications of 
improving conditions in the usa overall 
there was a lower level of projects across 
most markets but generally more positive 
base business demand
sales were higher in all geographic regions 
despite an unfavourable economic 
background sales growth was robust 
across emea which accounts for almost 
40 of total watsonmarlow sales 
with virtually all operations contributing 
we reaped the benefit of our strategic 
actions over the last three years to increase 
industry sector focus in the sales teams 
continue our conversions to direct sales 
and expand our network of direct sales 
operations with new companies added in 
austria and poland during 2013 growth was 
strong in eastern europe particularly russia
revenue
£1303m
5
2012 £1245m 2012 £368m
operating profit
£395m
7
operating margin
303
2012 296
2012 19
70bps
revenue £m operating profit £m percentage of group revenue
2013
2012
2011
2010
2009
1303
1245
1184
1030
838
2013
2012
2011
2010
2009
395
368
344
308
223
ungroup
expand
pathﬁnder  trim
delete white paths
19 spiraxsarco engineering plc annual report and accounts 2013 42
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
watsonmarlow continued
strategic report continued
sales in asia pacific were ahead and our 
newer operations in india singapore and 
malaysia all performed well our more 
established operations in china and korea 
made good progress in the food  beverage 
sector but saw lower levels of project work 
we continue to add sectorfocused direct 
sales resource across the asia pacific 
region to increase our market presence 
and widen the addressable market as we 
present the whole lifecycle cost benefits of 
peristaltic and niche pumps in these under
developed markets
sales growth was strong in latin america 
driven by success with new products and 
underpinned by additional sectorfocused 
sales resource north america was unable 
to match the very good performance in the 
prior year that included a number of large 
nonrepeating projects but base business 
was nicely ahead across most sectors 
the americas account for almost 40 of 
total watsonmarlow sales
product development has been a key driver 
of our sales growth and we continue to 
add resource focused on expanding the 
capability functionality and performance of 
our niche pump and tubing to reduce the 
totalcostofownership for our customers 
these developments grow our addressable 
market as we displace other pump types 
in more applications the revolutionary 
qdos peristaltic metering pump with its 
renu pumphead is a particular success 
exceeding expectations alongside the 
new apex hose pump and new product 
developments also in alitea flexicon 
and masosine
key markets
neutral unfavourable favourable
industrial production growth rate 2013
pharmaceuticals foods
water treatment oem machinery
 compared with the prior year in countries where we have operating units
5 to 0 0 to 5 5 to 10  10 source  chr economics
market overview
the watsonmarlow pumps business 
was acquired in 1990 and since then 
has grown from contributing 4 of sales 
that year to 19 of group sales in 2013 
recent acquisitions have played a key role 
in expanding our addressable markets 
by increasing our applications capability 
in the important biopharmaceutical 
and foods  beverages industries 
new product development has expanded 
our addressable markets particularly 
in industrial oem and water and 
wastewater markets
our watsonmarlow pumps business is 
centred in europe and the united states 
together comprising about 80 of total 
pump sales about evenly split but we 
continue to expand into emerging markets 
in asia eastern europe and latin america 
with good results our core markets are 
biopharmaceutical which represents 
about onethird of total pump sales oem 
water and wastewater mining precious 
metals foods  beverages and general 
industrial these applications are ideal 
for our pumps which are unequalled 
in the pumping of hygienic fluids and 
alternatively abrasive or aggressive fluids 
or slurries
the market conditions for watsonmarlow 
pumps in 2013 were largely similar 
to the steam specialties business 
from a geographical perspective 
maintenance and project spending 
for biopharmaceuticals increased 
but capital spending on wastewater 
treatment particularly in the usa and 
mining slowed
strategy and outlook
we continue to focus on strategically 
delivering growth through the penetration 
of emerging markets where we see 
excellent opportunities for growth as 
we pioneer the introduction of peristaltic 
pumps we aim to grow our market 
share within emerging regions as we 
demonstrate the peristaltic pump’s 
superior technology and lower life
cycle cost benefits for applications in 
biopharmaceuticals precious metals 
processing food production and chemical 
dosing in water and wastewater treatment 
we will also focus on the sectorisation 
of our field sales force to ensure our 
engineers have the specific market and 
applications knowledge to add value 
to customers
we have achieved significant success 
through transitioning from distributor 
sales to a valueadded direct sales 
approach in our more mature european 
markets and we will continue this process 
in more markets in asia europe and 
latin america 
further we will continue to expand 
the ranges of recently introduced new 
pumps with revolutionary new pumping 
technology which continues our strategy 
of increasing our addressable markets by 
taking market share from other positive 
displacement pump types we will also 
selectively seek acquisitions of synergistic 
valueadded niche pumps and associated 
equipment that will allow us to leverage 
sales of new and existing products 
through our direct and market sector 
sales channels 43 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
group performance 
at a glance
watsonmarlow emea
qdos metering 
pumps solve 
turbidity testing 
dilemma for welsh 
water
at the pontsticill water treatment works 
in the brecon beacons national park 
regular turbidity testing is undertaken 
as a means of assessing water quality 
turbidity is a measure of the cloudiness 
of a fluid caused by the suspension 
of particles while some suspended 
particles will settle quickly if a sample 
is left to stand others will not settle or 
will require a long period of time to do 
so causing the liquid to appear turbid 
in drinking water a high turbidity level 
increases the risk that people may 
develop gastrointestinal problems 
until recently turbidity testing at the pontsticill 
water treatment works relied on bellows pump 
technology however the bellows pumps 
introduced air into the samples giving false or 
unreliable readings marek cegielski a process 
scientist and manager at d ˆ wr cymru welsh 
water explained “this is a clean water site 
and the quality of sample is very important 
in the past we have tried other types of turbidity 
monitoring devices such as dip probes but 
without much success we have even used 
bubble traps in conjunction with our bellows 
pumps but we still fell short of 100 reliability”
however the installation of a qdos 30 metering 
pump is now ensuring consistently accurate 
readings “our main requirement is for a 
constant pulsefree flow” says mr cegielski 
“previously we had tried fitting back valves to 
bellows pumps to stop the pulsing but in truth 
we could not properly buffer the effect and still 
ended up with false readings” the qdos 30 
pump is providing d ˆ wr cymru welsh water with 
a steady pulsefree flow speed of 280 mlmin 
completely free from air or flow variation
“so far so good as far as we are concerned – 
when new technology comes along that has a 
clear advantage over existing market solutions 
then we are always willing to give it a try” 
concludes mr cegielski “if our existing qdos 
30 continues to meet expectations then we will 
place an order for a further three pumps” spiraxsarco engineering plc annual report and accounts 2013 44
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
financial review
strategic report continued
“ we achieved good results in 2013 
producing record sales profit and 
margins sales increased by just over 4 
with strongest growth in asia pacific and 
adjusted operating profit increased by 
1 1  with an outstanding performance 
in emea”
david meredith 
finance director
key highlights
•	the board has proposed a final 
dividend of 410p per share 
t ogether with the interim dividend 
this gives a total ordinary dividend 
of 590p per share an increase 
of 11
•	adjusted basic earnings per share 
increased by 14 to 1388p
•	return on capital employed 
reached a record 444
•	adjusted operating cash flow 
rose by £132 million or 10 to 
£1430 million
spirax sarco reports its results under 
international financial reporting standards 
ifrs and in addition uses adjusted figures 
as key performance indicators as the board 
believes that these are more representative 
of the underlying performance unless 
otherwise stated adjusted figures are used 
throughout and in 2013 they excluded the 
amortisation and impairment of acquisition
related intangible assets and acquisition and 
disposal costs together with the tax effects 
of these items additionally in 2012 they 
included contingent consideration  
fairvalue adjustments and oneoff 
exceptional restructuring charges of 
£7 2 million largely related to headcount 
reductions in our european operations 
the benefit of which has been seen in our 
emea results 2012 results have been 
restated to reflect the adoption of ias 19r 
employee benefits
this annual report and accounts has 
been prepared in line with the latest 
requirements for integrated reporting and 
the board has taken care to ensure that 
it is “fair balanced and understandable” 
the annual report clearly sets out our 
resilient and robust business model and 
explains how our strategy is implemented 
through the business model with the 
aim of delivering longterm sustainable 
profitable growth and the creation of value 
for shareholders our key performance 
indicators have been carefully selected and 
we show the link from strategy through to 
directors’ remuneration the section on risk 
management has been enhanced and the 
work of the various board committees is 
detailed in the governance section including 
the new remuneration policy report that 
will be the subject of a binding vote by 
shareholders at the annual general meeting 
on 20th may 2014 sustainability is part of 
our strategy and we report a number of non
financial measures including the group’s 
employee serious accident rate which 
shows a yearonyear improvement and 
the group’s co
2e intensity which shows a 
reversal in 2013 after several years of good 
reductions investment in a combined heat 
and power plant for our manufacturing unit 
in cheltenham has been approved for 2014 
which will reduce energy usage and 
improve resilience
we achieved good results in 2013 
producing record sales profit and 
margins sales increased by just over 4 
to £6894 million 2012 £6617 million 
organic sales increased by nearly 4 
with the strongest growth in asia pacific 
followed by more modest growth in 
watsonmarlow and emea in the americas 
progress in latin america was broadly 
offset by a decline in north america 
favourable currency gains in the first 
half year were progressively eroded by 
the strengthening of sterling and were 
negligible for the full year a number of 
emerging market currencies were weak 
in 2013 including the brazilian real south 
african rand and argentine peso the latter 
devalued by 13 in the final quarter and by 
significantly more in early 2014 if current 
exchange rates prevail through 2014 
sales would be reduced by around 5 
on translation into sterling versus 2013
operating profit increased by 1 1 to 
£1516 million 2012 £1362 million and 
by 10 at constant exchange rates 
favourable currency movements produced 
an overall gain of 1 or £17 million to 
operating profit versus the prior year 
segmentally there were exchange 
gains in emea of £17 million and asia 
pacific of £16 million a neutral position 
in watsonmarlow and an unfavourable 
£16 million in the americas the most 
significant factors driving the overall increase 
in operating profit in 2013 were
adjusted operating 
cash flow £m
2013
2012
2011
2010
2009
1430
1298
762
917
833
dividends per share p
2013
2012
2011
2010
2009
590
530
490
430
361
special dividend
1000
250 45 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
financial  
review
•	 	 th e 	 b en e fi c i a l	 e ffec t 	 o n 	 p r o fi t	 fr o m 	 th e	
higher sales particularly in emerging 
markets where overall sales growth 
was robust
•	 	 th e 	 f o c u s 	 o n 	 p r i c e 	 m a n a g e m en t 	 a n d	
business mix particularly in emea
•	 	 th e 	 b r o a d l y 	 fl at 	 c o s ts 	 o f 	 m a t e r i a l s 	
reflecting subdued prices for base metals 
that underlie the cost of castings forgings 
and other parts and components 
purchased through the year
•	 	 a 	 f u rth er 	 b en e fi t	 o f 	 £3  5 	 m i l l i o n 	 fr o m 	 th e	
fullyear effect of the restructuring actions 
that were largely completed at the end of 
2012 fully capturing the expected total 
benefit of £55 million
•	 	 th e 	 s i g n i fi ca n t	 i m p r o v e m en t 	 i n 	 p r o fi t	 fr o m	
our steam specialties manufacturing 
operations in europe and in particular 
the cost savings and efficiency gains 
delivered from the consolidated site in 
cheltenham
•	 	 th e 	 g r o w i n g 	 c o n tri b u ti o n 	 fr o m 	 n e w	
products especially in watsonmarlow 
reflecting the significantly increased 
investment in product development and 
processes over the last five years or so
•	 	 th e 	 i n c r ea s e 	 i n 	 m a r k e t 	 d e v e l o p m en t	
investments with additional direct 
sales resource in emerging and newly 
emerging markets
•	 	 th e 	 a d o p ti o n 	 o f 	 i a s 	 1 9  r  	 e m p l o y ee	
benefits increased overheads by 
£04 million in respect of pension scheme 
fund management fees that are now 
recorded within overheads
the operating profit margin jumped from 
206 to a record 220
interest
net interest cost reduced by £09 million 
to £23 million 2012 £32 million restated 
the adoption of ias 19r employee 
benefits for 2013 significantly changed 
the accounting for investment returns in 
respect of defined benefit pension schemes 
investment returns are now assessed based 
on bond returns for an assumed 100 
holding in bonds in place of the previous 
method that used a blended investment 
return based on actual assets being held 
by the pension schemes 2012 net interest 
has accordingly been restated to show 
an additional cost of £36 million under 
ias 19r net interest in respect of the 
group’s defined benefit pension schemes 
improved by £02 million versus the prior 
year mainly due to the increase in asset 
values in 2012 that produced an improved 
assumed return on assets for 2013 
net bank interest was £06 million better 
due to the good cash flow and despite the 
payment of the £78 million special dividend 
midyear
associates
the group’s aftertax share of the profits 
of associates was down 8 at £17 million 
2012 £19 million and was broadly 
unchanged at constant exchange rates 
the group’s 493 share of spiraxmarshall 
in india was ahead but this was offset 
by a small loss in respect of the group’s 
30 interest in the econotherm heat pipe 
technology startup
pretax profit
the profit before tax increased by 12 to 
£151 1 million 2012 £1349 million and 
at constant exchange rates the increase 
was 1 1 the statutory profit before tax 
takes into account certain nonoperating 
items listed below and rose by 17 to 
£1457 million 2012 £124 1 million restated
• 	 	 a 	 c h a r g e 	 o f 	 £ 4  6 	 m i l l i o n 	  2 0 1 2  	 £ 4  1 	 m i l l i o n 	
in respect of the amortisation of 
acquisitionrelated intangible assets 
£08 million of which related to associates 
2012 £03 million
•	 	 a 	 g o o d w i l l 	 i m p a i rm en t 	 c h a r g e 	 o f	
£0 1 million on the disposal of the hvac 
business of eirdata
•	 	 a c q u i s i ti o n 	 a n d 	 d i s p o s a l 	 c o s ts 	 o f	
£06 million 2012 £03 million
•	 	 c o n ti n g en t 	 c o n s i d er a t i o n 	 f a i r 	 v a l u e	
consideration costs were nil 2012 credit 
of £06 million
•	 	 on e o ff 	 e x c ep ti o n a l 	 r es tru c tu ri n g 	 c o s ts	
were nil 2012 £7 2 million the large 
majority of the 2012 costs were paid in 
that year but a residual £16 million of 
these costs were a cash outflow in 2013
taxation
the tax charge on the adjusted pretax 
profit excluding associates was marginally 
higher at 298 2012 297 restated 
the group’s direct sales business model 
means that we are structured with many 
largely small operating entities spread 
worldwide addressing our customers 
directly with a local sales team and local 
stocks our tax rates essentially reflect the 
blended average of the many different tax 
jurisdictions in which we operate during the 
year we reorganised the funding of several 
of our european companies under the 
legislation introduced by the uk government 
that will have a modest tax benefit in 
future years
earnings per share
the group’s prime financial objective is to 
provide enhanced value to shareholders 
through the consistent growth in earnings 
per share and dividends per share 
adjusted basic earnings per share increased 
by 14 to 1388p 2012 1222p primarily 
reflecting the 12 rise in pretax profit 
the marginally higher tax rate detracted from 
earnings per share growth but this was more 
than outweighed by the 37 reduction in 
the number of shares in issue from midyear 
following the 26 for 27 share consolidation 
linked to the special dividend this will have 
a further small fullyear benefit to earnings 
per share growth in 2014 the statutory 
basic earnings per share increased by 19 
to 1334p 2012 1 122p restated reflecting 
the adjusted profit increase and also the 
nonrepeat of the oneoff exceptional 
restructuring costs in 2012 the fully diluted 
earnings per share were not materially 
different in either year
dividends
the board has proposed a final dividend 
of 410p per share which is an increase 
of 1 1 from 37 0p in the prior year 
together with the interim dividend of 180p 
per share 2012 160p this gives a total 
ordinary dividend of 590p per share for 
the year an increase of 1 1 over the total 
of 530p per share in 2012 our dividend 
record is extended to 46 years that has a 
compound annual growth rate of 1 1 over 
that period if approved by shareholders at 
the annual general meeting on 20th may 
2014 the final dividend will be paid on 30th 
may 2014 to shareholders on the register at 
2nd may 2014
a special dividend of 1000p per share was 
paid on 3rd july 2013 in respect of 2012 
including this special dividend total dividend 
payments in 2013 amounted to £121 million 
or 1550p per share
acquisitions and disposals
during the year additional resource was 
added to the team as we intensified our 
search for suitable acquisition candidates 
our acquisition strategy is interwoven with 
our growth strategy and our focus is largely 
directed at expanding addressable markets 
adding new products and technologies 
for our existing businesses and extending 
direct market access although we remain 
interested in complementary businesses that 
are adjacent to our main markets our strong 
balance sheet and debt capacity provides 
us with considerable flexibility spiraxsarco engineering plc annual report and accounts 2013 46
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
financial review continued
strategic report continued
on 22nd january 2013 the group 
announced the acquisition of a 30 stake 
in econotherm uk ltd for £10 million with 
an option to acquire the remaining equity 
econotherm specialises in the design and 
manufacture of heat pipes and associated 
heat exchangers for industrial waste heat 
recovery and other industrial applications 
utilising unique and patented technology 
this startup technology business made 
a loss in the year ahead of an expected 
rampup in sales
on 26th july 2013 the group announced 
an agreement to acquire the business and 
assets of pt petrolog mum our steam 
specialties distributor in the java region 
of indonesia for a total consideration of 
£17 million indonesia is an expanding 
market with good future growth prospects 
that will be enhanced by our direct sales 
approach as expected following a short 
transition period our new subsidiary 
commenced trading in january 2014
in april 2013 the group disposed 
of the hvac business of eirdata for 
£06 million that reduced sales in the year 
by approaching £1 million we retained the 
eirdata energy advisory services business 
which contributes to our solutions selling 
and energy management value propositions 
on 6th january 2014 the group announced 
the acquisition of ukbased bio pure 
technology limited for £85 million bio pure 
specialises in the design and production 
of advanced singleuse tubing connector 
systems for the biopharmaceutical industry 
where there is already a strong commercial 
relationship with watsonmarlow 
jointly promoting products to shared 
customers the acquisition strengthens 
watsonmarlow’s presence in the rapidly 
growing singleuse biopharmaceutical 
market complementing our existing range 
of flexicon peristaltic filling systems
research and development
investment in product development was 
maintained at the higher level established 
over recent years in the steam specialties 
business there was a reduction in the 
number of new or updated products 
released during the year as we focused 
on fewer potentially higher value projects 
resources are focused on supporting our 
strategic growth initiatives and product 
launches during the year included an 
innovative continuous wireless steam trap 
monitoring system desuperheaters several 
important flowmeters and various control 
valve releases in the watsonmarlow 
peristaltic and niche pumps business 
the qdos pump that utilises revolutionary 
pulseless pumping technology made 
significant progress in its first full year after 
launch and the bredel apex range gained 
real traction in the second half of the year 
we expect that new products will make a 
greater contribution to sales growth than 
in prior years
capital employed
the focus on capital employed was 
increased in 2013 and in particular the 
continued rollout of systems to optimise 
stock levels to improve delivery performance 
and customer service overall total capital 
employed increased by £5 million to 
£344 million at constant exchanges rates 
the increase was 45
the net book value of fixed assets excluding 
intangible assets increased by £2 million 
or 1 at constant exchange rates to 
£17 4 million with capital expenditure 
of £27 million at 1 18 of depreciation 
the most significant investments were the 
construction of a new manufacturing plant 
in mexico that will be fully operational by 
april 2014 and the start of a major project 
to modernise the core it systems in all of 
watsonmarlow’s operations we have 
continued to add production equipment in 
china as we expand output and to upgrade 
our machining capability in our main regional 
manufacturing locations our energy costs 
have been increasing particularly in the 
uk where we have expanded product 
development and testing facilities and we 
have approved the investment in energy 
saving projects that are being implemented 
in 2014 which will also have a positive 
impact on our energy intensity and co
2e 
measures overall we expect capital 
expenditure to be a little higher in 2014
total working capital at £170 million 
was up 8 at constant exchange rates 
inventory rose by 4 at constant exchange 
rates and we achieved a further small 
reduction in stock weeks whilst also 
improving the balance of stocks held to 
support higher levels of customer service 
the overall balance of debtors and creditors 
increased by £9 million largely due to a rise in 
debtors the ratio of working capital to sales 
was marginally lower at 247 2012 248
return on capital employed
this important measure of overall 
performance shows a marked increase to a 
record 444 more than recovering the dip 
to 394 in the prior year the improvement 
results from a combination of the 1 1 rise in 
the adjusted operating profit to £1516 million 
and a small reduction in average capital 
employed using the average of opening 
and closing sterling balance sheets for 
2013 and 2012
postretirement benefits
the net postretirement benefit liability 
shown on the balance sheet was marginally 
lower at £720 million £54 1 million net of 
deferred tax asset values rose by 12 
as investment returns again exceeded 
scheme assumptions and deficit reduction 
contributions of nearly £7 million were 
made to the main uk schemes however 
liability value increased by 9 largely 
due to unfavourable changes in financial 
assumptions the majority of the group’s 
defined benefit pension liabilities relate to 
the main uk schemes that were closed to 
new members in 2001 for the past two 
years these have been managed under a 
dynamic derisking strategy whereby asset 
capital employed
2013
£000
2012
£000
property plant and equipment 174218 174836
inventories 104164 103690
trade receivables 145380 145686
prepayments and other current assetsliabilities 79284 85140
capital employed 344478 339072
intangibles and investment in associate 97398 97268
postretirement benefits 72043 72663
deferred tax 18619 23696
provisions and longterm payables 1318 2500
net cash 16400 51676
net assets 403534 436549
return on capital employed
adjusted operating profit 151626 136245
average capital employed 341775 345812
return on capital employed 444 394 47 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow sustainability 
report
financial  
review
adjusted cash flow
2013
£000
2012
£000
operating profit 151626 136245
depreciation and amortisation 22707 21241
adjustments including share plans 2700 2559
working capital changes 7 345 546
net capital expenditure including rd 26693 29691
cash from operations 142995 129808
net interest paid 417 206
tax paid 42318 37941
free cash flow 101094 91661
net dividends paid 119992 37887
pension deficit reduction payments and provisions 6985 6974
restructuring costs paid 1623 5569
buybackproceeds from issue of shares 582 4028
acquisitions 5601 4501
cash flow for the year 33689 40758
exchange movements 1587 1351
opening net cash 51676 12269
net cash at 31st december 16400 51676
and liability values are monitored on a daily 
basis by the asset manager and appropriate 
asset allocation decisions taken as the 
funding level improves against preagreed 
trigger points
at the last triennial valuations of the uk 
schemes as at 31st december 2010 deficit 
reduction contributions of approximately 
£8 million per year were agreed that 
progressively reduce in steps to nil by 2018 
the latest triennial valuations as at 31st 
december 2013 are currently in progress
cash flow and treasury policy
we achieved another year of good cash 
flow in 2013 generating greater operating 
cash inflows with good cash conversion 
adjusted operating cash flow rose by 
£132 million or 10 to £1430 million 
essentially due to the profit increase for 
the year as reflected through a high 
cash conversion rate of 94 a relatively 
small cash outflow of £7 3 million in 
respect of working capital was mitigated 
by a small reduction of £30 million in 
capital expenditure
taxation paid increased by £44 million 
to £423 million with corporation tax paid 
in virtually every one of the 39 countries 
in which the group has subsidiaries 
free cash flow therefore rose by £94 million 
to £101 1 million dividend payments were 
£1200 million comprising £783 million in 
respect of the 1000p per share special 
dividend for 2012 paid in july 2013 and 
£425 million in respect of core ordinary 
dividends per share paid that increased 
by 9 in the year net of associate 
company dividends received of £10 million 
pension deficit reduction contributions 
and provisions were a cash outflow of 
£7 0 million and the balance of £16 million 
restructuring costs were paid having been 
charged against profit in 2012 there was an 
outflow of £56 million for acquisitions largely 
relating to the deferred consideration in 
respect of our acquisition in mexico in 2010 
including an accelerated final instalment 
brought forward from 2014 there was a 
net cash outflow of £06 million comprising 
a payment in november of £46 million in 
respect of shares bought back and lodged 
in an employee benefit trust to provide 
shares for the future vesting of awards 
under the group’s longterm performance 
share plan net of an inflow from the issue of 
shares under the group’s various employee 
share schemes
the net cash outflow for the year was 
therefore £337 million which together 
with an unfavourable currency movement 
effect on translation of £16 million gave a 
closing net cash balance of £164 million 
at 31st december 2013 compared with 
£517 million a year earlier
the group has a direct sales business 
model which dictates that we have a large 
number of operating companies dealing on 
a local level directly with customers trading 
in local currencies our trading results and 
balance sheet can therefore be affected 
by relative movements in exchange rates 
the most significant of which are the euro 
dollar chinese renminbi and korean won 
mitigating this exposure is the wide spread of 
our business across many different countries 
and currencies the partial natural hedge that 
we have from our cost base also being in 
local currencies people are our largest cost 
and our regional manufacturing strategy that 
balances the concentration of manufacturing 
from any one currency base we have a 
rigorously applied treasury policy and do not 
undertake complex derivative transactions 
typically using simple forward contracts to 
manage exposures to known cash flows 
where this can provide an appropriate 
degree of certainty for landed costs
capital structure
we continue to follow a policy of maintaining 
a strong balance sheet to protect the 
business and to provide flexibility of 
funding for our growth either through 
organic expansion capital investment or 
acquisitions our emphasis is to reinvest 
in the business where we believe that 
capital can be put to most effective use 
in the generation of increased future 
returns we also seek to make appropriate 
acquisitions that make strategic commercial 
and economic sense and where we can 
see that good returns can be achieved 
however where cash resources exceed 
future expected requirements we will 
generally seek to return excess cash 
to shareholders
a return of capital to shareholders of 
£78 million was made in the form of a special 
dividend of 1000p per share paid in july 
2013 this was equivalent to approximately 
4 of the market capitalisation of the 
company at the time and as is common 
with a significant return of capital to 
shareholders was accompanied by a 
share consolidation on the basis of 26 
new ordinary shares for every 27 existing 
ordinary shares the purpose of the 
share consolidation was to seek as far as 
possible to maintain comparability of the 
share price before and after the special 
dividend and to remove the impact of 
the special dividend on employee equity
based incentives spiraxsarco engineering plc annual report and accounts 2013 48
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
welcome to our 
2013 report
about us
sustainability report
strategic report continued
sustainability is one of the six key strategic priorities through which 
we are driving growth and achieving shareholder value while 
managing our environmental and social impact 
we recognise the importance of corporate sustainability and believe 
that sustainability is synonymous with resiliency a sustainable 
business is one that can survive shocks and economic challenges 
because it has been managed with an eye to both the present and 
the future 
our sustainability strategy is focused on three core areas our 
business our communities and our environment within these three 
broad areas we have identified eight key objectives
our business
•	 t o govern the business ethically and uphold our 
core values
•	t o achieve consistent and sustainable growth and 
shareholder value
•	t o maintain professionally challenging and 
safe workplaces 
•	t o provide for the ongoing training and development 
of our people
our communities
•	t o engage positively with the communities in which 
we operate
•	t o offer financial support to approved charities through 
the spirax sarco group charitable trust
our environment
•	t o manage and minimise the environmental impacts 
of our operations 
•	t o help our customers to achieve their 
sustainability targets
achieving our sustainability objectives requires a clear and well
defined management structure the group chief executive has 
overall responsibility for the company’s sustainability strategy and 
is fully supported by the board of directors we have a senior 
group health safety and environment executive who ensures that 
appropriate policies systems and reporting metrics are in place 
to achieve the group’s sustainability objectives regional and 
general managers have responsibility for ensuring that the group’s 
sustainability policies are upheld and implemented by our operating 
companies and at a local level individuals and groups are organised 
to oversee and report on key aspects of sustainability within 
their workplaces
during 2013 we focused on developing the mechanisms by 
which we share best practice across the group for example in 
september 2013 a health safety and environment hse conference 
was held at spirax sarco usa attended by delegates from 
the spirax sarco hse user group the conference provided an 
opportunity for attendees to learn more about the behavioural based 
safety programme that is in operation in the usa see page 52 and 
to discuss how the programme is to be rolled out across the group 
our environmental targets were also discussed as were strategies 
for achieving them
to ensure that we are recording measuring and reporting key 
sustainability metrics accurately and to provide transparency in our 
sustainability reporting during 2013 we appointed carbon clear 
an independent thirdparty organisation to help us achieve limited 
assurance of our carbon emissions data with assurance provided 
by tüv see page 54 
during 2014 we will continue to invest management time into 
developing and furthering our sustainability agenda we recognise 
that we have an ethical responsibility to manage our economic 
environmental and social impacts but also believe that it makes 
good business sense to do so a focus on sustainability drives 
behaviours which cut costs and increase operational efficiency 
while also creating new market and business opportunities and 
mitigating risks put simply we believe that sustainability enhances 
our competitive edge ensuring financial progress and the delivery 
of shareholder value
spiraxsarco engineering plc 
is a constituent of the  
ftse4good uk index
“ enhancing the sustainability of our 
operations is a key strategic priority for 
the group good progress has been 
made against our sustainability objectives 
during 2013”
nick anderson 
group chief executive 49 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow sustainability 
report
financial  
review
sustainability 
report
our business
objective
to govern the business ethically and to uphold 
our core values 
we believe that good governance is essential to the success 
and sustainability of our business we define good governance 
as managing the business transparently and in accordance with 
best practice the uk corporate governance code 2012 the 
uk stewardship code and all applicable laws and regulations 
during 2013 we were delighted to receive a nomination for a 
transparency in governance award by the institute of chartered 
secretaries and administrators within the category ftse250 best 
board disclosure
in july the strength of our governance and business performance 
was further recognised when watsonmarlow won a prestigious 
pwc 2013 west of england business of the year award the award 
recognised various aspects of business achievement such as 
financial performance product and service innovation business 
management future prospects and contribution to the region
our core values of respect accountability passion integrity and 
delivery provide the foundation upon which we make decisions 
drive innovation and manage our global operations during 2013 
1000 of our employees and senior managers participated in “doing 
the right thing” training designed to increase understanding of 
the core values and antidiscrimination law and to improve diversity 
awareness all employees have responsibility for ensuring that the 
group operates ethically and have an obligation to report breaches 
of company policy the group will not permit retaliation of any kind 
against employees for making good faith reports about an actual 
or suspected violation of group policy 
we communicate regularly with our employees through a variety of 
channels and undertake employee surveys our aim is to ensure that 
all employees are informed about and engaged in their part of the 
business locally while having a wider understanding of the group 
and its future direction
our group management code articulates the standards that 
we expect everyone within the group to meet it includes the 
requirement to comply with laws regulations and group policies 
the rejection of bribery and corruption the promotion of ethical 
business practices the fair treatment of customers the confidentiality 
of information and respect for our people communities and the 
environment it is group policy to conduct business free of bribery 
or corruption the group will not enter into contractual relationships 
with third parties who are known to participate in corrupt practices 
and will not engage in the giving or receiving of bribes we do not 
make political donations
the group supports the human rights principles set out in the 
universal declaration of human rights and the core conventions 
of the international labour organisation we recognise that all 
individuals have the right to lead a dignified life free from fear 
and want and free to express independent beliefs our group 
human rights policy includes the right of all employees to equal 
opportunities and nondiscriminatory treatment security of person 
a safe working environment and a fair wage we also recognise 
the rights of children and reject the use of forced or compulsory 
labour we endeavour to ensure that our direct operations and any 
interactions with business partners do not make us complicit in 
human rights violations and seek suppliers who meet the same 
high standards we set for our own businesses
equal opportunities
total workforce gender diversity
board gender diversity
senior management gender diversity
we recognise that diversity of gender age culture experience 
and expertise serve to enhance our ability to govern the business 
effectively and ethically 
target 25 female board members by 2016
we are fully committed to the principle of equal opportunity 
in employment and ensure that all applicants and employees 
receive equal treatment during their recruitment transfer 
promotion training and assessment of salary and benefits 
we give full and fair consideration to applications for employment 
made by disabled persons having regard to their particular 
aptitudes and abilities we have procedures in place to facilitate 
the continuing employment of those who may become disabled 
during the period in which they are employed by the company 
and disabled persons are entitled to the same opportunities for 
career development as all other employees
during 2013 spiraxsarco engineering plc became a member 
of the business disability forum an organisation that offers 
help and support to companies that are striving to increase their 
disability awareness through giving practical advice and sharing 
best practice
total workforce gender diversity
board gender diversity
senior management gender diversity
males 8    females 1
males 449   females 84
males 3794   females 1025 spiraxsarco engineering plc annual report and accounts 2013 50
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
welcome to our 
2013 report
about us
sustainability report continued
strategic report continued
financial performance
while many of our products and services aid effective energy 
management we have identified a specific range as falling within 
the energy management sector of our marketplace see page 8 
these include our metering products boilerhouse products heat 
transfer packages and energy services we recognise a direct link 
between the sales of energy management products and three of 
our strategic objectives deliver solutions to reduce energy usage 
grow market share and achieve sustainability as a result of our 
strategic focus and investments during the last five years sales of 
our energy management products have increased by more than 
30 at constant currency
our energy management products form a core component of 
many of our engineered solutions during the last five years we 
have invested in rd to enhance existing energy management 
products and to develop new unique energy recovery packages 
ensuring that we deliver effective solutions to our customers
we have been able to grow our market share through widening 
our range of products including energy metering and heat 
recovery packages which have contributed meaningfully to our 
sales growth
as we continue to increase our capacity to solve our customers’ 
process issues improve their productivity and help them 
meet their sustainability targets particularly in relation to 
energy management we are investing in the sustainability of 
our business
a spirax sarco heat transfer package
2013
2012
2011
2010
2009
xxxx
xxxx
xxxx
xxxx
xxxx
sales from energy management products £m
our business continued
objective
to achieve consistent and sustainable growth 
and shareholder value
managing our business sustainability has a positive impact on our 
financial performance through reducing energy consumption 
and managing waste we optimise process efficiency resulting in 
greater cost efficiencies for example by managing our energy 
consumption we not only lower our energy bill but we also reduce 
outlay on carbon taxes incurred through the uk’s carbon reduction 
commitment scheme and climate change levy 
a focus on sustainability is a core component of our risk mitigation 
strategy see pages 26–27 weak environmental social or 
governance performance can have a significant negative impact 
on a company’s reputation and can incur a subsequent financial 
cost by managing all aspects of our business with our sustainability 
objectives in mind we mitigate the risk of breaching regulatory 
requirements avoid noncompliance with health safety and 
environmental legislation and manage our corporate reputation 
contributing to the sustainability and longterm financial viability of 
our business
the wellbeing of our employees is a key sustainability objective 
we recognise our responsibility to treat our employees with 
respect and to provide safe and professionally challenging 
workplaces we believe that high standards of safety and employee 
engagement can mean less time lost to absence and lower voluntary 
employee turnover this also helps us to recruit the best and most 
talented people we take seriously our governance social and 
environmental responsibilities
we believe that a focus on sustainability helps us to access new 
markets for existing products and gain market share as well as 
acting as a catalyst for the innovation of new products and services 
the strategic integration of sustainability helps us to anticipate the 
needs of our customers who are increasingly turning to us for help 
to meet their sustainability targets a core strength of our direct 
sales business model is that our expert sales and service engineers 
can walk our customers’ plants and identify ways to improve their 
operational efficiency and reduce their energy consumption carbon 
emissions or water use 
through investing in rd we continuously improve our product 
range and develop new products to meet our customers’ needs 
thereby ensuring the longterm viability of our business during 2013 
the new qdos 30 metering pump from watsonmarlow won a 
vaaler award from chemical processing in the usa the award 
recognises products and services that can significantly improve plant 
operations and economics 
our wide product range ability to design bespoke engineered 
applied solutions and the expert knowledge of our people help 
to build trust enhance our reputation and ensure that we provide 
outstanding customer service through helping our customers 
to meet their sustainability targets we develop customer loyalty 
which in turn helps us to deliver longterm sustainable growth and 
shareholder value
over 30 growth 51 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
our business continued
objective
to maintain professionally challenging and 
safe workplaces
our people are one of our greatest assets looking after their 
health and wellbeing is a key priority for the group we remain 
committed to improving our health and safety hs record and 
to maintaining a safe environment for our employees visitors and 
subcontractors worldwide 
our goal is to embed a health and safety culture across the group 
through providing our employees with the training and tools needed 
to recognise and understand both the importance of hs practices 
and how to proactively mitigate hs risk this year we began to roll 
out a behavioural based safety bbs programme across all our 
manufacturing sites bbs was first implemented in our operating 
company in the usa the success of this programme see page 52 has 
resulted in the decision to adopt it across the group we anticipate 
a steady improvement in our hs performance over the next 
few years as a result of the cultural change brought about by 
the programme 
our hs management and governance structure is well developed 
as with the other elements of our sustainability strategy the board 
and group chief executive have overall responsibility for hs 
the board formally reviews hs matters at least biannually and 
is supported by a hs executive appointed during 2013 who 
monitors hs practices across the group facilitates the sharing of 
best practice and ensures that appropriate processes are in place 
for collecting and reporting hs data
all hs accidents and near misses are recorded at a local level and 
reported regularly to the board all riddor recordable accidents 
and incidents are reported immediately with a follow up report 
within two days detailing improvements made to prevent a repeat of 
the accident
all of our operating companies are expected to adhere to the group 
hs policy and to have local hs policies in place the group 
policy is reviewed annually and outlines minimum expected hs 
standards for each of our operating companies our operating 
companies define local strategies and objectives which are reviewed 
and approved by local management teams 
each of our operating companies has its own occupational hs 
management system in place with documents that define the 
local hs policy and procedures the occupational health and 
safety systems of our operating companies generally follow the 
requirements of the ohsas 18001 standard but not all operating 
companies have yet been assessed and certified by the end 
of 2013 seven of our operating companies had ohsas 18001 
certification in place 2012 five and we aim to increase this number 
yearonyear
in addition to the hs policies procedures and management 
systems that we have in place annual hs risk assessments are 
conducted within each operating company regular staff training 
also occurs including daily hs briefings in our manufacturing 
plants and we provide our employees with personal protective 
equipment taken together these actions policies and procedures 
help to minimise risk in our workplaces through ensuring that our 
people are safe we protect one of our most valuable assets and 
contribute to the sustainability of our business
health and safety hs
the over seven day lost time accident rate decreased by 20 
during 2013
accidents with over seven days of lost time 
per 1000 employees
2013
2012
2011
2010
2009
44
55
60
2013
2012
2011
21
26
28
2010
2009
total number of accidents with over seven days of 
lost time per 1000 employees
the total number of over seven day accidents decreased by 19 
during 2013 
target
we want all of our employees to return home safely at the end of 
each day as such we have a longterm target of zero accidents 
in the short term however our hs targets are to achieve a 
yearonyear reduction in our over seven day accident rate and 
to achieve a better than benchmark hs record the hs 
benchmark that we use is the riddor over seven day accident 
rate in the uk manufacturing sector which was 40 accidents per 
1000 employees in 20122013
we have made good progress during the last three years and 
have reduced our accident rate by 27 and are now close to 
the hs industry benchmark we are taking action to reduce 
our accident rate further including the adoption of bbs and the 
sharing of best practice across the group 
group hs management structure
heads of  
department
all staff
general managers
divisional directors
group hse 
executive
the board
group chief 
executive
hs officers
hs committees spiraxsarco engineering plc annual report and accounts 2013 52
about us welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us welcome to our 
2013 report
sustainability report continued
strategic report continued
case study  
behavioural based safety and wellness 
programme spirax sarco usa
during 2011 spiraxsarco inc usa launched a 
behavioural based safety and wellness programme 
the programme aims to engage all employees in 
hs enabling them to better identify and eliminate 
risks to drive cultural and behavioural change and 
to incentivise staff to live a healthier lifestyle 
core components of the programme include 
1 a “start with safety” culture
2  regular and formal reviews of all accidents near misses risks 
and risk behaviours
3 ongoing training for all employees
4  the identification of job specific “safe behaviours”
5  a combination of both leading and lagging indicator kpis
the company has seen significant success the reportable 
accident rate has fallen by over 40 from 2010 to 2013 however 
perhaps even more significant has been the phenomenal 
reduction in the number of “light duty days” which have fallen from 
925 in 2010 to 230 during 2013 in addition by 31st december 
2013 the company had completed 483 days without a lost 
time incident
kris brown safety supervisor at spirax sarco usa stated 
“behavioural based safety was a natural progression for 
us over the years our employees have become excellent at 
identifying hazards and safety issues the next logical step was 
to help employees to start to identify positive hs behaviours that 
not only they exhibit but their fellow coworkers as well one of 
the keys of behavioural based safety is to identify behaviours 
positive or negative that have an impact on health safety and 
wellness and address them in a manner reflective of our core 
values”
chip stokes vice president supply of spirax sarco usa stated 
“our efforts in behavioural based safety and wellness is a 
significant part of the foundation we are building to support our 
journey for organisational excellence we have a passion to foster 
a safetyfirst culture that encourages all levels of the organisation 
to take a proactive role in continuously improving our health 
and wellness this allows everyone to be part of creating an 
environment that motivates us to take care of each other it is part 
of spirax sarco’s dna to do the right thing for our greatest asset 
our people” 
our business continued
objective
to provide for the ongoing training and 
development of our people
average number of formal training days per 
customer facing employee
2013
2012
2011
2010
2009
72
56
xxxx
xxxx
xxxx
whatever their position within the company all employees are 
encouraged to develop their skills we support applications for 
training and professional development from workers from the factory 
floor through to senior managers and directors 
the knowledge and skills of our customer facing sales and service 
engineers is a key differentiator and is central to our ability to 
offer value to our customers ensuring that our sales and service 
engineers have unrivalled industry expertise is crucial to achieving 
our first strategic objective of strengthening our global market 
position through local expertise and customer insight 
we spend approximately two years training all new engineers 
once trained our engineers are expected to participate in ongoing 
training and professional development and we provide opportunities 
for them to do so during 2013 we launched a groupwide 
“elearning” programme with approximately 50 online courses 
currently available directed at enhancing the knowledge and skills of 
our sales and service engineers by the end of 2014 we plan to add a 
further 30 courses to the programme while we view “elearning” as 
an important mechanism for the ongoing training of our engineers 
it is designed to supplement and not replace traditional classroom 
based and onthejob training we have over 40 stateoftheart 
training centres worldwide in which we train both our people and 
our customers
we increased our average number of formal classroom based 
training days per customer facing employee by nearly 30 
during 2013 
talent management is essential to prepare promising employees 
for leadership and senior management positions within the 
group and to ensure the longterm sustainability of our business 
during 201 1 we launched our spirax sarco leadership academy 
during 2013 15 of our future leaders attended a two week advanced 
management programme run by the ashridge business school 
the course covers such topics as effective people management 
driving growth and innovation and delivering results by investing in 
the professional development of our future managers we meet their 
ongoing development needs while equipping them to support the 
longterm success of the business
in addition to supporting and facilitating the professional 
development of our people we provide training to ensure that 
they have the necessary knowledge to uphold the company’s 
core values during 2013 1000 of our employees participated in 
“doing the right thing” training see page 49 and since launching 
our “antibriberywork” online course during 2012 over 2800 
customer facing employees and senior managers have participated 
in the training  53 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
charitable donations
objective
to offer financial support to approved 
charities through the spirax sarco group 
charitable trust
sustainability 
report
our communities
objective
to engage positively with the communities in 
which we operate 
we are committed to improving the social and economic conditions 
of the communities in which we operate we recognise that the 
most effective way of doing this is through managing the business 
effectively to ensure its ongoing success and providing employment 
that fairly remunerates people for the work that they do however 
we also seek to positively engage in our local communities 
particularly through improving educational access and helping 
disadvantaged children
for example spirax sarco uk is a sponsor of the annual 
cheltenham science festival each year the company designs a 
stand which is manned by our employees through which it engages 
local people and in particular school children in the science of 
steam and its modern applications the theme of the stand in 2013 
was “the elements”
by making charitable donations to worthwhile causes we can 
focus our efforts on helping specific groups of people eg 
the less advantaged disabled or abused promote education 
improve access to healthcare or offer assistance following 
natural disasters 
during 2013 the spirax sarco group charitable trust trust 
made 49 donations ranging from £1000 to £15000 in 
accordance with its charitable donations policy donations made 
by the trust included £15000 to cobalt a leading medical 
charity that helps in the prevention diagnosis and treatment 
of cancer and other lifelimiting conditions £15000 to open 
door a local cheltenham charity that offers food hospitality and 
support to the homeless and £10000 to the philippines typhoon 
disaster appeal 
in addition to the donations made by the trust a further £64000 
2012 £40000 was donated to charitable causes by our 
operating companies during 2013
our employees frequently undertake independent fundraising 
initiatives and raise significant funds to donate to charitable 
causes that have particular meaning and importance to them
since 2008 spirax sarco has donated more than £80000 to 
the national star college nsc in cheltenham uk the nsc 
provides specialist further education training and personal 
development for young people aged 16 to 25 with complex 
physical educational and emotional needs in september 
2013 a group of 24 runners from spirax sarco completed 
the cheltenham halfmarathon and raised over £1600 in 
sponsorship for the nsc
2013
2012
2011
2010
2009
136
132
132
112
86
group charitable trust donations £’000
during 2013 our masosine business in germany part of the 
watsonmarlow pumps group donated several old computers 
to a local school the computers which were fully depreciated 
had reached the end of their serviceable life for masosine but 
were gratefully received by the school which has limited access to 
it equipment
furthermore throughout 2013 masosine offered several school 
children aged 13 to 14 the opportunity to undertake a weeklong 
work experience placement within the company as well as offering a 
six month internship to an engineering student from a local university 
and employing an apprentice within the factory 
during 2013 masosine offered their local fire department the use of 
the company’s buildings for training finding locations to undertake 
training in “real” conditions is crucial for emergency services but 
access to suitable locations is often limited allowing the fire service 
access to company buildings has also helped masosine to review its 
emergency fire procedures 
spirax sarco korea’s “ jo club” “ jo” meaning “help” in korean has 
continued to make a positive impact on its local community on a 
monthly basis throughout 2013 club members donated money to 
local charities visited and assisted at a centre for the disabled and 
volunteered in a soup kitchen twice during the year club members 
delivered coal bread and rice to the elderly the club is financed 
by donations from the company as well as from money raised by 
collections and fundraising events organised by the club members  2012 figure restated due to improvements in our methodology 
spiraxsarco engineering plc annual report and accounts 2013 54
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
welcome to our 
2013 report
about us
sustainability report continued
strategic report continued
our environment
objective
to manage and minimise the environmental 
impact of our operations
climate change is widely recognised as a global threat with the 
potential to affect world environmental social political and economic 
systems we have a responsibility to address the threat of climate 
change by managing our energy consumption and reducing our 
co
2e emissions
in accordance with national and international directives on climate 
change we endeavour to continuously reduce the carbon intensity 
of our business and implement strategies to minimise our carbon 
footprint we have measured and reported our co
2e emissions 
for several years and welcome the new requirement for listed 
companies to disclose their co 2e emissions we report on all of the 
emission sources required under the greenhouse gas emissions 
directors’ reports regulations 2013
we have employed 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 each of these 
entities we have measured and reported on our relevant scope 1 
and scope 2 emissions scope 1 refers to direct emissions from 
sources owned or controlled by the company scope 2 refers 
to indirect emissions resulting from the purchase of electricity 
generated off site including electricity excluded from our footprint 
boundary are entities where we do not have operational control 
in 2013 this included spiraxmarshall ltd also excluded from the 
footprint boundary are emission sources from operating companies 
established during 2013 and from companies acquired during the 
year we have used the ghg protocol corporate accounting and 
reporting standard revised edition and emission factors from the 
uk government’s ghg conversion factors for company reporting 
2014 to calculate our total co
2e emissions figures
our total co 2e emissions increased during 2013 this was primarily 
due to an increase in energyintensive rd testing at our world
leading steam testing facilities in the uk and the expansion in 
manufacturing capability in the asia pacific region although an 
increase in emissions is undesirable through rd we develop 
products that improve our customers’ energy efficiency and reduce 
emissions furthermore our regional manufacturing strategy is 
improving the efficiency of our manufacturing process and reducing 
emissions associated with transportation of products 
our group environmental policy sets minimum standards that we 
expect all of our operating companies to adhere to and requires 
them to implement local policies to manage their environmental 
impact our operating companies are all expected to take steps 
to minimise their environmental impact and reduce their co
2e 
emissions for example when upgrading its fleet of vehicles 
minimising environmental impact was a top priority for spirax sarco 
canada they chose the hybrid toyota prius because of its excellent 
fuel efficiency and low emissions
through taking steps to manage our co
2e emissions we are 
doing our part to mitigate climate change and are improving the 
sustainability of our business
target to achieve a yearonyear reduction in our co 2e 
emissions intensity
to demonstrate our commitment to measuring managing and 
disclosing our emissions in 2013 we appointed carbon clear 
an independent thirdparty organisation to help us calculate 
our carbon emissions with tüv providing the assurance 
tüv’s statement of limited assurance can be found in full in the 
interactive online annual reports and accounts 2013 on our 
company website wwwspiraxsarcoengineeringcom a short 
version of the assurance statement is given below
“tüv nord uk is acting as the independent verifier of the 
carbon footprint of spirax sarco based on our checks and 
reviews taking into consideration a materiality level of 10 and a 
limited level of assurance we have found no evidence suggesting 
that the calculated greenhouse gas emissions are materially 
misstated and hence they are not an unreasonable assertion 
of the greenhouse gas related data and information
further no facts became evident which led us to the assumption 
that the calculation was not carried out in accordance with the 
applied international norm for the quantification monitoring and 
reporting of ghg emissions ghgprotocol
the emissions for the reporting period 1st january 2013 to 31st 
december 2013 inclusive are 17 266 tco
2e for scope 1 and 
16695 tco 2e for scope 2
tüv nord uk
london
march 2014”
co
2
 emissions
tonnes
tonnes per £m of inflation adjusted sales at constant currency
2013
2012
2011
2010
2009
33961
scope 1
29266
29392
29579
32150
scope 2
2013
2012
2011
2010
2009
493
430
440
477
575
total group co
2
e emissions scope 1 and 2 
co
2
e intensity 55 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
group performance 
at a glance
group chief 
executive’s report
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
our environment continued
objective
to help our customers to achieve their 
sustainability targets by improving their 
process efficiency energy and water 
management through the application of our 
products and the utilisation of our services
tonnes of co
2
e emissions our customers saved as a 
result of purchasing our energy management products
helping our customers to achieve their environmental targets 
is central to our sustainability strategy and business model 
reducing co 2 emissions is one of the key drivers that our customers 
have for improving their onsite energy management
using methodology externally verified by aea group we estimate 
that the spirax sarco energy management products sold this 
year will reduce our customers’ co
2 emissions by 465 million 
tonnes annually these savings are calculated with reference to a 
specific range of products for which we can quantify savings with 
reasonable accuracy many other products such as pressure and 
temperature controls will also provide co
2 savings but as these 
are not easily quantifiable they are excluded from our methodology 
the total amount of co 2 that we save our customers can vary year
onyear as a result of product mix
our direct sales business model enables us to build close 
relationships with our customers in doing so we develop a 
comprehensive understanding of their needs we then deliver 
bespoke engineered solutions to improve process efficiency 
and reduce energy or water consumption in addition our 
comprehensive plantwide energy audits and steam trap monitoring 
systems are used by our customers to monitor and manage their 
energy consumption
many applications for our peristaltic and niche pumps help 
our customers to improve their environmental performance 
for example within the mining industry the installation of a bredel 
slurry pump from watsonmarlow can reduce water consumption 
by as much as 70 this typically equates to water savings of over 
900000m
3
 of water a year for each pump installed
in the water and wastewater industries our customers treat 
industrialmunicipal effluent and return it to clean usable water 
the precision pumping offered by our pumps prevents overdosing 
of chemicals and reduces the need for additional chemicals to 
neutralise any excess
as a group we have doubled our rd spend during the last five 
years we are continuously updating our products and developing 
new ones to ensure that we maintain our marketleading position 
as an expert provider of energy efficient steam solutions and niche 
pumps through maintaining our position as a leading supplier of 
energy management products and services we are responding 
to the threat of climate change driving growth and increasing the 
sustainability of our business
2013
2012
2011
2010
2009
46 m
49 m
40 m
xxxx
xxxx
case study  
spirax sarco delivers steam solution for 
pioneering carbon capture project
spirax sarco delivered a comprehensive steam
driven heat exchange package for a ground
breaking carbon capture project at ferrybridge 
coalfired power station in yorkshire uk the spirax 
sarco system is a key element in the success of 
this cuttingedge project to develop largescale 
technology to mitigate the environmental damage 
from burning fossil fuels 
carbon capture and storage ccs technology aims to capture 
carbon dioxide from the flue gas of major emitters such as power 
stations and store it underground preventing it from contributing 
to climate change 
at ferrybridge the “capture” part of the process takes place 
an aminebased solvent is used to absorb up to 100 tonnes of 
co
2 per day spirax sarco’s steam system is used to reboil and 
regenerate the co 2 saturated solvent for reuse by stripping out 
the co 2 under carefully controlled hightemperature conditions 
the temperature and pressure in the cleanup column has to be 
controlled precisely and steam is the ideal heating medium 
spirax sarco’s allround steam expertise and project 
management capability made us the ideal company to work 
on the project “spirax sarco has an excellent reputation in 
dealing with steam and condensate management” said scott 
hume process engineer at doosan power systems “they 
supplied everything as a package from the steam interface 
back to the condensate return line including the heat exchanger 
that simplified the scope of work for our team and it really helped” spiraxsarco engineering plc annual report and accounts 2013 56
chairman’s introduction board of directors corporate governance report audit committee nomination committee
governance
our governance
our governance
2
governance  
pages 56 to 99
chairman’s introduction  58 
board of directors  60 
corporate governance report  62 
audit committee 66 
nomination committee 69 
risk management committee  70 
remuneration committee letter of 
introduction 73 
remuneration policy report 2014  75 
annual report on remuneration 2013  83 
regulatory disclosures 96 
statement of directors’   
responsibilities 99 57 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
we are committed to high standards of corporate governance and 
disclosure and recognise that effective management of the business 
is central to our longterm sustainability and the generation of 
shareholder value
regulatory disclosures 
are made
the chairman of the 
remuneration committee  
outlines our approach to 
remuneration we set out 
our policy on directors’ 
remuneration and report on 
the implementation of our 
remuneration policy  
during 2013
the audit nomination 
and risk management 
committees give their reports
our chairman outlines our 
approach to corporate 
governance and we give an 
overview of governance 
during 2013
governance  
overview
read more 
pages 58 and 62–65
remuneration
read more 
pages 66–72
committee reports
read more 
pages 73–95
regulatory 
disclosures
read more 
pages 96–98 spiraxsarco engineering plc annual report and accounts 2013 58
board of directors corporate governance report audit committee nomination committee our governance chairman’s introduction
governance continued
chairman’s introduction
we believe that good governance is 
about managing the business effectively 
and in a way that is honest transparent 
and accountable
on the following pages we set out our 
approach to governance explain how the 
board and its committees are structured 
and what they have done during the year 
our governance report explains how 
the group has applied the principles and 
complied with the provisions of the uk 
corporate governance code 2010 and 
2012
1
 code we are fully compliant with the 
requirements of the code compliance with 
the code is set out in detail on the groups 
website wwwspiraxsarcoengineeringcom 
under the governance section
regulatory disclosures required under dtr 
7 26 can be found on page 97 
in his introduction to the remuneration 
report on pages 73 and 7 4 dr rajagopal 
the remuneration committee chairman 
discusses our forwardlooking policy on 
remuneration which will be subject to a 
binding shareholder vote at our annual 
general meeting agm in may 2014 
and thereafter at least every three years 
the annual report on remuneration 
2013 sets out the details of executive 
compensation throughout 2013 which will 
be subject to the normal advisory vote at 
the agm
during 2013 we continued our active 
dialogue with our principal investors and 
shareholder representative bodies to ensure 
that we understand their views
as a board we have ultimate responsibility 
for the group’s performance and for 
overseeing the management of risk 
we acknowledge that shareholders look 
to us to promote the longterm success of 
the group and as chairman i recognise 
that it is my role to provide the leadership 
to enable it to do so effectively in 2012 the 
effectiveness of the board was subject to 
an externally facilitated independent review 
by dr tracy long of boardroom review 
limited in 2013 as part of our annual board 
effectiveness review the board monitored 
progress with the recommendations 
made by dr long i am pleased to report 
that we have followed through with a 
comprehensive set of actions in respect 
of all recommendations
the board takes seriously its responsibility 
for promoting the group’s values and in 
particular for ensuring that all employees 
and everyone associated with the group are 
aware of their responsibility to act lawfully 
and conduct themselves in accordance 
with high standards of business integrity 
these values are embedded in our group 
management code a strong anticorruption 
culture has long been at the centre of the 
group’s values in 2013 we significantly 
improved our compliance programme 
this included i over 2800 employees 
participating in antibribery training using a 
specialised “antibriberywork” programme 
ii the issue of a new sanctions embargoes 
and restrictions policy and guide to ensure 
compliance with un usa and uk laws 
and iii the intended rollout of a behavioural 
based safety programme
a further area of focus in 2013 was a review 
of our arrangements with our external 
auditor following revisions to the code 
recommending that the external audit is put 
out to tender at least every 10 years the 
board has determined that after over 50 
years with kpmg audit plc acting as our 
auditor we change and appoint deloitte llp 
good corporate governance has always 
been an important matter for the board and 
combined with our clear and consistent 
strategy the group is well equipped to 
continue generating value for shareholders 
we will continue to live good governance in 
everything we do i look forward to meeting 
you at our agm on tuesday 20th may 2014
“ high standards of corporate governance 
are central to sustaining our business 
and maintaining the confidence of 
our shareholders”
bill whiteley 
chairman
bringing governance to life
1
 compliance statement
the company is subject to the uk corporate governance code published by the financial reporting 
council and available on their website wwwfrcorguk the edition of the code published in september 
2012 applied throughout our financial year ended 31st december 2013 but the financial conduct 
authority has yet to change the listing rules and therefore requires that certain compliance statements 
are made in relation to the predecessor edition of the code issued in june 2010 this annual report and 
accounts addresses the requirements of both editions of the code 59 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
the boardroom
the bullets in each box indicate areas of experience
1
 mr bullock is retiring and will not seek reelection at the agm we are actively recruiting a new independent nonexecutive director to be appointed 
 before the agm
  chairman
  executive directors
  independent nonexecutive directors
gareth bullock
1
 
senior independent director  
nonexecutive director 
• banking
• risk
• international
david meredith 
finance director 
•  finance and accounting
• engineering
• pensions
krishnamurthy rajagopal  
independent 
nonexecutive director 
• remuneration
• engineering
•  senior management 
experience
neil daws 
executive director emea 
• manufacturing
• engineering
•  broad operational 
experience
trudy schoolenberg 
independent 
nonexecutive director 
• engineering
• product development
•  oil and petrochemical
jay whalen 
executive director wmpg 
• sales and marketing
• engineering
•  international business 
development
clive watson 
independent 
nonexecutive director 
• finance
• tax and treasury
• engineering
bill whiteley 
chairman 
•  senior management 
experience
•  engineering
• international
nick anderson 
group chief executive 
• engineering
• international
•  broad operational 
experience spiraxsarco engineering plc annual report and accounts 2013 60
chairman’s introduction corporate governance report audit committee nomination committee our governance board of directors
board of directors
governance continued
bill whiteley  
bsc fcma 65 
chairman
committees 
nomination chairman
experience 
joined the group as an independent  
nonexecutive director in 2002 and was 
appointed chairman in 2009 until his 
retirement in 2008 mr whiteley was chief 
executive of rotork plc where he had been 
a director since 1984 he is chairman of 
brammer plc and hill  smith holdings plc 
mr whiteley has been awarded an honorary 
doctorate of engineering by the university 
of bath
the board is chaired by 
nonexecutive chairman 
bill whiteley in addition 
to the chairman the 
board will continue with 
four nonexecutive 
directors and four 
executive directors
nick anderson  
bsc mba 53
group chief executive
committees 
nomination risk management chairman
experience 
joined the group in 201 1 as director emea for 
the group’s steam specialties business  
mr anderson was appointed to the board in 
early 2012 became chief operating officer 
in august 2013 and group chief executive 
in january 2014 he has broad experience in 
the industrial engineering industry and prior to 
joining spirax sarco he was vicepresident of 
john crane asia pacific part of smiths group 
plc before that mr anderson was president of 
john crane latin america and he previously 
held senior positions with alcoa aluminio in 
argentina and the foseco minsep group plc 
in brazil
david meredith 
fcma cgma 54
finance director
committees 
risk management
experience 
joined the group in 1988 as group 
accountant mr meredith was appointed to 
the board as finance director in 1992 he 
trained as an accountant with redman heenan 
international a specialist engineering group 
and was appointed accountant at their heenan 
drives ltd subsidiary mr meredith later joined 
english  american reinsurance company 
where he held finance positions prior to joining 
the group
gareth bullock 
ma 60
independent nonexecutive director 
senior independent director
committees 
audit nomination remuneration
experience 
joined the group in 2005 as an independent 
nonexecutive director mr bullock has had 
a career in banking having retired from the 
board of standard chartered plc in 2010 
following roles in technology and operations 
strategy and northeast asia he was 
responsible for africa middle east europe and 
the americas as well as for the risk function 
mr bullock currently serves as a nonexecutive 
director of tesco plc global market group 
ltd and informa plc and is a trustee of the 
british council
krishnamurthy rajagopal  
freng ceng fiet  fimeche fie fcmi phd 60 
independent nonexecutive director 
committees 
audit nomination remuneration chairman
experience 
joined the group in 2009 as an independent 
nonexecutive director  on completing his 
doctorate in 1980 dr rajagopal held senior 
positions in boc group plc prior to being named 
chief executive of boc edwards in 1 998 and 
executive director of the boc group plc in 2000 
before retiring in 2006 he was previously a 
nonexecutive director of foseco ltd and dyson 
group plc dr rajagopal is a nonexecutive director 
of ws atkins plc bodycote plc e2v technologies 
plc and with effect from 1 st april 201 4 porvair plc 
he also serves as chairman of umi
3
 ltd  61 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
neil daws  
ceng fimeche 51
executive director emea
committees 
risk management
experience 
joined the group in 1978 mr daws has wide 
manufacturing experience within the group 
having held positions in production and design 
engineering prior to being named as uk supply 
director mr daws was appointed to the board 
in 2003 and was previously responsible for 
asia pacific and supply including the group’s 
supply operations in the uk and france 
together with the group’s health safety and 
environmental matters in september 2013 
he was appointed as director emea for the 
group’s steam specialties business
jay whalen  
ba mba 57 
executive director wmpg
committees 
risk management
experience 
joined the group in 1991 as president of 
watsonmarlow inc in the usa and was 
appointed to the board in 2012 mr whalen 
was named sales and marketing director of 
the global watsonmarlow pump business in 
2002 and in 2010 was appointed to his current 
group position of president watsonmarlow 
pumps group prior to joining watsonmarlow 
mr whalen was vicepresident operations for 
harvard apparatus
trudy schoolenberg  
phd 55
independent nonexecutive director 
committees 
audit nomination remuneration
experience 
joined the group in 2012 as an independent 
nonexecutive director  dr schoolenberg 
is director of research development and 
innovation for akzo nobel’s decorative paints 
division and prior to that served as vicepresident 
of global research  development at wärtsilä 
oy previously she held senior management 
positions with royal dutch shell plc and was 
head of strategy for shell chemicals 
dr schoolenberg is currently a nonexecutive 
director of cova the dutch strategic oil stocks 
agency and low  bonar plc
clive watson  
b comm acc aca cta 56
independent nonexecutive director 
committees 
audit chairman nomination remuneration
experience 
joined the group in 2009 as an independent 
nonexecutive director mr watson is an 
executive director and group finance director 
of spectris plc he held several tax and finance 
roles before joining black  decker in 1988 as 
director of tax and treasury europe and was 
later appointed vicepresident of business 
planning and analysis in the usa he then 
joined thorn lighting as group finance 
director before working for borealis as chief 
financial officer and executive vicepresident 
of business support 
  chairman
  executive 
directors
  nonexecutive 
directors
ungroup
expand
pathfinder  trim
delete white paths
board composition spiraxsarco engineering plc annual report and accounts 2013 62
chairman’s introduction board of directors audit committee nomination committee our governance corporate governance report our governance
corporate governance report
governance continued
board composition
mr whiteley leads the board as chairman 
he also chairs the nomination committee 
the chairman’s other significant 
commitments are set out in his biography 
on page 60
mr anderson took over as group chief 
executive on 16th january 2014 following 
mr vernons retirement mr anderson leads 
the business and has board responsibility 
for the steam specialties business in the 
americas and asia pacific and the steam 
specialties supply operations in the uk 
and france he also chairs the risk 
management committee
mr meredith is the finance director
mr daws is the executive director for the 
steam specialties business in europe 
the middle east and africa emea
mr whalen is the executive director for the 
watsonmarlow peristaltic pumps business
mr bullock is an independent nonexecutive 
director and senior independent director
dr rajagopal is an independent  
nonexecutive director and after an 
orderly handover with mr bullock became 
chairman of our remuneration committee 
in january 2014
dr schoolenberg is an independent  
nonexecutive director
mr watson is an independent  
nonexecutive director and chairman of  
our audit committee
the board is supported by mr robson 
who is the general counsel and 
company secretary
at the agm to be held on 20th may 2014  
all directors will offer themselves for  
reelection with the exception of  
mr bullock who is retiring and will not seek  
reelection as a director after completing 
nine years which is the maximum period 
for assured independence the nomination 
committee is engaged in a planned 
succession process to appoint a new  
independent nonexecutive director 
before the agm 
the board acknowledges with gratitude  
the significant contributions made by  
mr vernon and mr bullock to the group’s  
growth and prosperity
details of the experience of the directors 
biographical information and their roles are 
set out on pages 60 and 61
board tenure
board nationality
 0–3 years  3
 4–6 years  2
 7–9 years  1
 10 years  3
 british
1
 7
 american
1
 2
 dutch  1
ungroup
expand
pathfinder  trim
delete white paths
ungroup
expand
pathﬁnder  trim
delete white paths
board attendance
details of the number of board and committee meetings and individual attendance by director for 2013 are set out in the table below
board audit committee
nomination 
committee
remuneration 
committee
risk management 
committee
number of meetings 7 4 4 3 2
wh whiteley 7 na 4 na na
me vernon
1
7 na 4 na 2
nj anderson
2
6 na na na 2
dj meredith 7 na na na 2
nh daws 7 na na na 2
jl whalen 7 na na na 2
gr bullock 7 4 3 3 na
k rajagopal 7 4 4 3 na
ge schoolenberg 7 4 4 3 na
cg watson 7 4 4 3 na
1
  retired 15th january 2014
2
  absence due to attendance at the advanced management programme at harvard business school
 na means not applicable
1
  mr anderson holds dual british and american citizenship 63 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
director development
directors attend formal training seminars 
to update their knowledge and duties 
the board is regularly notified of changes to 
relevant laws and regulations nonexecutive 
directors are invited to attend group 
conferences which provide information on 
new product development and sales and 
marketing initiatives business presentations 
are given at board meetings to enable 
a review of new product development 
regional operations business strategies and 
employee development
an induction pack is provided to new 
appointees to the board and induction 
procedures include site visits briefings 
by senior managers and meetings with 
major shareholders
during 2013 mr anderson attended the 
advanced management programme and 
mr whalen attended the leadership best 
practices executive programme both held 
at harvard business school
approach to governance
governance helps us to
• 		 e n s u r e 	 o u r 	 s h a r eh o l d e r s 	 r ec e i v e 	 a 	 g o o d	
return on their investment
• 		 b eh a v e 	 w i th 	 i n t eg ri ty 	 a s 	 c o l l ea g u es 	
making sure that each feels valued 
motivated and rewarded
• 		 t r ea t 	 o u r 	 c u s t o m er s  	 s u p p l i e r s 	 a n d 	 l o c a l	
communities properly
• 	 r es p ec t 	 th e 	 en v i r o n m en t 
board activities in 2013
we aim to embed governance practices 
throughout the group so that they become 
an integral part of running a successful 
business in the diagram below we have 
set out how the board spent its time during 
2013 the board agendas are linked to the 
fundamentals of a trusted brand a clear 
strategic plan strong leadership motivated 
employees and satisfied customers 
together with the necessary checks and 
balances we focus on longterm plans for 
our businesses the issues that matter on 
the ground and what our management and 
people are doing daytoday the board 
spends 25 of its time ensuring the group’s 
operations and risk management controls 
are effective in june 2013 the board 
devoted considerable time to the group’s 
business and corporate strategy looking 
in particular at the global competitive 
environment and emerging global markets 
during 2013 the board also regularly 
reviewed the group’s performance and 
satisfied itself that despite difficult trading 
conditions management was on track 
in delivering the strategic business plan 
in addition the board concentrated its 
efforts on succession planning devoting 
much time to this important subject during 
its strategic planning meeting in june 
the board also regarded engagement with 
shareholders on governance remuneration 
and trading as a significant issue
the board adopted a human rights policy 
to support our values which is explained in 
the sustainability report on page 49
compliance with the code
the governance rules which applied 
to the group for 2013 are found in the 
code the group’s compliance in 2013 
with each provision of the code is set 
out in detail on the group’s website 
wwwspiraxsarcoengineeringcom under 
the governance section
the group complies with every provision 
of the code including provision b 12 
balance of the board between executive 
and nonexecutive directors following the 
retirement of mr vernon and mr bullock 
and the forthcoming appointment of a 
new independent nonexecutive director 
we will deliberately move to a position of 
compliance as the number of independent 
nonexecutive directors excluding the 
nonexecutive chairman will be equal to the 
number of executive directors
the board is committed to the code 
provisions on board diversity and has set 
measurable objectives to monitor progress 
diversity is discussed in more detail in the 
nomination committee’s report on page 69
annual report and accounts
in accordance with the code the directors 
confirm that they consider that 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 
performance business model and strategy
board focus during 2013
 strategy  30
 operations and risk  25
 governance and shareholders  15
 finance 10
 new product development 10
 people and succession 10
ungroup
expand
pathfinder  trim
delete white paths spiraxsarco engineering plc annual report and accounts 2013 64
chairman’s introduction board of directors audit committee nomination committee our governance corporate governance report
governance structure
our governance structure is best illustrated by the diagram set out below
corporate governance report continued
governance continued
nomination  
committee
bill whiteley
audit  
committee
clive watson
risk management 
committee
nick anderson
remuneration 
committee 
krishnamurthy  
rajagopal
group board
bill whiteley
chairman’s responsibilities
• 		 m a n a g i n g 	 th e 	 b u s i n es s 	 o f 	 th e 	 b o a rd 	 a n d 	 f a c i l i t a t i n g 	 th e	
participation of each director
• 		 s a feg u a rd i n g 	 r o b u s t 	 c o r p o r a t e 	 g o v e rn a n c e 	 p r o c ess es 	 a n d 	 th e	
development and maintenance of governance policies
• 		 f a c i l i t a ti n g 	 c o n s tru c ti v e 	 d eb a t e 	 a n d 	 d i s c u ss i o n 	 o n 	 b o a rd 	 a g en d a	
items and ensuring that alternative viewpoints are considered
• 		 m a i n t a i n i n g 	 a p p r o p ri a t e 	 c o n t a c t  	 i n 	 c o n j u n c ti o n 	 w i th 	 th e	
group chief executive with shareholders and in stock market 
related matters
• 		 p r o v i d i n g 	 f o r 	 r eg u l a r 	 e v a l u a ti o n 	 a n d 	 fee d b a c k 	 o f 	 th e 	 p erf o r m a n c e	
of each director and the board
• 		 e n s u r i n g 	 e ffec ti v e 	 s u c c ess i o n 	 p l a n n i n g 	 f o r 	 di r ec t o r s
• 		 i n t e rf a c i n g 	 w i th 	 r eg u l a t o ry 	 b o d i es 	 w h i c h 	 m a y 	 r e q u i r e 	 a c c ess 	 t o	
the chairman
• 		 w o rki n g 	 s u c c es s f u l l y 	 w i th 	 th e 	 gr o u p 	 c h i e f 	 ex ec u t i v e 	 t o 	 en s u r e	
performance objectives are achieved
group chief executive’s responsibilities
• 		 m a n a g i n g 	 th e 	 gr o u p ’ s 	 b u s i n es s 	 a n d 	 th e 	 e ffec ti v e 	 s t e w a rd s h i p	
of capital technical and human resources including senior 
management succession planning
• 		 e n s u ri n g 	 a p p r o p ri a t e 	 i n t ern a l 	 c o n tr o l s 	 f o r 	 ri s k 	 m a n a g em en t
• 		 d e v el o p i n g 	 a n d 	 r ec o m m en d i n g 	 c o rp o r a t e 	 a n d 	 b u s i n es s 	 s tr a t egy	
for board approval
• 		 m a i n t a i n i n g 	 d i r ec t 	 c o n t a c t 	 w i th 	 s h a r eh o l d er s 	 a n d 	 d ea l i n g 	 w i th	
stock market related matters
• 		 p r o v i d i n g 	 l ea d er s h i p 	 t o 	 th e 	 gr o u p ’ s 	 m o s t 	 s en i o r 	 e x ec u ti v es 	 i n 	 th ei r	
management of functional activities
• 		 r ec o m m en d i n g 	 t o 	 th e 	 b o a rd 	 m a j o r 	 c h a n g es 	 i n 	 th e 	 o r g a n i s a ti o n a l	
structure of the group
• 		 e n s u ri n g 	 th a t 	 th e 	 gr o u p 	 c o m p l i es 	 w i th 	 a l l 	 a p p r o p ri a t e 	 l eg i s l a t i o n
• 		 di r ec ti n g 	 th e 	 gr o u p ’ s 	 i n t ern a l 	 a n d 	 e xt ern a l 	 c o m m u n i ca ti o n s
• 		 p erf o rm a n c e 	 o f 	 th e 	 gr o u p 	 i n 	 m ee ti n g 	 i ts 	 s h o rt  	 m e d i u m 	 a n d	 
longterm objectives 65 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
governance structure
the board committees and functions are 
listed below together with an overview 
of their activities and the main person 
responsible the terms of reference for the 
committees are published on the group’s 
website wwwspiraxsarcoengineeringcom 
under the governance section
group board
mr whiteley 
the board relies on executive management 
to run the business and monitor 
management activities and holds them 
accountable against targets and standards 
the board also approves longterm 
corporate and strategic plans after a full 
review and assessment of market and 
technology trends business drivers and 
risks having a senior management team 
that is capable of executing the strategic 
plans is a key focus
the formal schedule of matters 
reserved for the board’s decision 
is available on the group’s website 
wwwspiraxsarcoengineeringcom under 
the governance section
key board matters include
• 		 th e 	 a p p r o v a l 	 o f 	 c o rp o r a t e 	 a n d 	 s tr a t eg i c	
business plans
• 		 th e 	 a p p r o v a l 	 o f 	 th e 	 a n n u a l 	 a n d 	 i n t e r i m	
results
• 	 i n t eri m 	 m a n a g em en t 	 s t a t e m en ts
• 	 a c qui s it i o n s  d i s po s a l s
• 	 m a j o r 	 ca p i t a l 	 e x p en d i tu r e
• 	 di r ec t o r 	 a p p o i n tm en ts
• 	 m a j o r 	 l i ti g a ti o n 
the nonexecutive directors provide 
independent challenge and review bringing 
wide experience specific expertise and a 
fresh objective perspective
the board meets as often as is necessary 
to discharge its duties in 2013 the board 
met seven times 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 chairman of the board or committee 
in addition all board and committee 
members receive the minutes of meetings 
as a matter of course
the directors’ attendance record at board 
and committee meetings is set out on 
page 62 the nonexecutive directors 
meet without the executive directors 
present to discuss the executive directors’ 
performance and other matters the senior 
independent director mr bullock until 
his retirement on 20th may 2014 and as 
nominated is available to discuss concerns 
with shareholders in addition to the normal 
channels of the chairman group chief 
executive or the finance director
the board has a conflicts of interest policy 
and has put in place procedures for the 
disclosure and review of any potential or 
actual conflicts
committee composition
the nonexecutive directors play an 
important governance role in the detailed 
work they carry out on our committees on 
behalf of the board all the nonexecutive 
directors are determined by the board to be 
independent in character and judgement in 
compliance with the code
the general counsel and company 
secretary supports the committee 
chairmen in making sure members are 
equipped for informed decisionmaking 
and that they allocate their time to the 
right subjects
the board has satisfied itself that at least 
one member of the audit committee 
namely mr watson has recent and relevant 
financial experience and is confident that the 
collective experience of its members enables 
it to be effective the audit committee also 
has access to the financial expertise of the 
group the external and internal auditors and 
can seek further professional advice at the 
company’s expense if required
the board has delegated specific 
responsibilities to the four board 
committees the audit committee 
the nomination committee the risk 
management committee and the 
remuneration committee
audit committee
mr watson 
monitors the integrity of the financial 
statements ensures significant issues 
have been addressed and reviews the 
effectiveness of internal controls and 
external audit
nomination committee
mr whiteley 
recommends board appointments and 
reviews succession plans
risk management committee
mr anderson 
ensures that risk management is meaningful 
relevant and focused on improving 
the business
remuneration committee
dr rajagopal 
recommends remuneration strategy and 
framework to attract retain and reward 
senior executives determines annual 
executive director and senior executive 
remuneration and approves awards 
under the performance share plan 
psp the committee also determines 
the remuneration policy set out in the 
remuneration policy report 2014
further information on each of the 
committees’ activities during the 12 month 
period to 31st december 2013 is set out in 
pages 66 to 95
board effectiveness
in 2012 we commissioned an independently 
facilitated board effectiveness review 
conducted by dr long of boardroom 
review limited in accordance with 
the provisions of the code the board 
effectiveness review for 2013 focused 
on monitoring progress with dr long’s 
recommendations as a result the board 
has actioned the following
• 		 d e t a i l e d 	 s tr a t eg i c 	 p l a n n i n g  	 w h i c h 	 w i l l	
continue during 2014
• 		 r e v i e w e d 	 s u c c es s i o n 	 p l a n n i n g 	 a n d	
development of senior managers
• 		 a c ti v el y 	 en g a g e d 	 i n 	 d i v er s i ty 	 th r o u g h	
the deployment of diversity training for 
all uk employees and being involved in 
senior succession planning including 
the appointment of females in the roles 
of president of spirax sarco inc in the 
usa and engineering procurement and 
construction key account manager 
americas
• 		 f o rm a l i s e d 	 c o m m i tt ee 	 fee d b a c k 	 t o	 
the board
• 		 r e v i e w e d 	 th e 	 s c h e d u l e 	 o f 	 b o a rd 	 a n d	
committee meetings across the year spiraxsarco engineering plc annual report and accounts 2013 66
chairman’s introduction board of directors corporate governance report nomination committee our governance audit committee
“ during 2013 governance was paramount 
we focused on processes to make 
our annual report and accounts ‘fair  
balanced and understandable’  considered 
information security risks reviewed and 
resolved significant issues and tendered 
the statutory audit”
clive watson 
chairman audit committee
membership and attendance
committee member attendance
number of meetings 4
cg watson 4
gr bullock 4
k rajagopal 4
ge schoolenberg 4
how the committee spent its 
time during the year
 external audit 20
 corporate governance 15
 finance and tax reviews 15
 results review  15
 internal audit 15
 risk management and controls 15
 information security 5
 
ungroup
expand
pathfinder  trim
delete white paths
audit committee
governance continued
role of the committee
the key responsibility of the committee 
is to review the effectiveness of the 
group’s financial reporting and controls 
accordingly the committee is authorised by 
the board to
• 		 m o n i t o r 	 a n d 	 r e v i e w 	 th e 	 i n t eg ri ty 	 a n d 
the audit of the group’s financial 
results statements
• 		 adv i s e 	 th e 	 b o a rd 	 o n 	 th e 	 f a i r  	 b a l a n c e d	
and understandable status of the annual 
report and accounts
• 		 ov e r s ee 	 th e 	 gr o u p ’ s 	 r e l a ti o n s h i p 	 w i th	
its external auditor including the tender 
process for the appointment of a new 
auditor and reviewing their independence
• 		 a g r ee 	 th e 	 fees 	 a n d 	 t e rm s 	 o f 	 a p p o i n tm en t	
of the external auditor including quality 
and effectiveness
• 		 c o n s i d e r 	 th e 	 p ri n c i p a l 	 ri s k s 	 a n d 	 th e 
risk register
• 		 r e v i e w 	 th e 	 gr o u p ’ s 	 i n t ern a l 	 c o n tr o l s
• 		 c o n s i d e r 	 th e 	 m a n a g em en t 	 l e tt er 	 fr o m	
the external auditor on its review of the 
effectiveness of internal controls
• 		 a g r ee 	 th e 	 i n t ern a l 	 a u d i t 	 w o rk 	 p l a n 	 a n d	
review the resulting output from that plan
• 		 r e v i e w 	 a l l 	 s i g n i fi ca n t	 i ss u es 	 i n c l u d i n g	
finance and tax matters
• 		 r e v i e w 	 th e 	 gr o u p ’ s 	 i n f o rm a ti o n 	 s ec u ri ty
• 		 r e v i e w 	 s i g n i fi ca n t	 fi na n c i a l 
reporting judgements
• 	 s e t 	 th e 	 p o l i c y 	 o n 	 n o n  a u d i t 	 w o rk 
review of 2013
the committee met four times in 2013
both the internal and external auditors attend 
its meetings and have direct access to the 
committee chairman
the committee reviews the effectiveness 
of the internal audit tracks the findings and 
the responsiveness of management to 
any issues identified as a safeguard the 
committee holds separate meetings with 
the external and internal auditors without 
management present to discuss their 
respective areas and any issues arising from 
their audits
during the year the committee received 
reports from external and internal auditors 
on the major findings of their work and the 
progress of management followup 
we received assurance on going concern 
pension valuation and risk management
auditor
the effectiveness of the external auditor is 
vital in underpinning the group’s internal 
controls and the integrity of our systems
following revisions to the code introduced 
by the financial reporting council frc 
in september 2012 and in particular the 
recommendation to put the external audit 
out to tender at least every 10 years during 
the year the committee approved an 
invitation to tender itt document which 
was sent to selected firms 67 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
the itt followed the frc’s guidance 
and coincided with the end of the current 
auditor’s five yearly cycle of partner rotation
the service tendered was the yearend 
external audit other services such as tax 
compliance and advice were not within the 
scope of the itt
the objective of the itt process was to 
benchmark service fees and value and to 
gain insight into new ideas and perspectives 
that would contribute to the current risk and 
control environment
the selection panel comprised the 
committee chairman the finance director 
and the group financial controller with 
consideration of both quantitative and 
qualitative measures including the
• 		 s tr en g th 	 o f 	 th e 	 a u d i t 	 fi r m ’ s 	 c o v e r a g e	 
and reputation
• 		 s tr en g th 	 o f 	 th e 	 t ea m
• 		 d e p th 	 o f 	 kn o w l e d g e 	 a n d 	 u n d e r s t a n d i n g 	 o f	
the business industry and listed company 
requirements
• 		 s e rv i c e 	 a p p r o a c h  	 q u a l i ty 	 a n d	
independence
• 		 f ees 	 a n d 	 v a l u e 	 a d d e d
• 		 t r a n s i t i o n 	 p l a n 
based on reports from the panel the 
committee made a recommendation to the 
board that with effect from 20th may 2014 
deloitte llp be appointed as the external 
auditor subject to shareholder approval at 
the agm
we look forward to a constructive and 
professional relationship with deloitte llp  in 
support of the committee’s responsibility for 
oversight of financial reporting 
the committee with the approval of the 
board has put in place policies that restrict 
the types and the amount of nonaudit 
work that can be carried out by the external 
auditor the committee is provided with a 
report of all nonaudit work carried out by 
the external auditor and a full breakdown of 
fees related to nonaudit work a summary 
of the fees is contained in note 6 on page 
1 17  the policies restrictions and reporting 
requirements allow the committee to ensure 
that auditor objectivity and independence 
is maintained
we will ensure that these policies and 
requirements are satisfied with respect to 
deloitte llp  following their forthcoming 
appointment as external auditor
information security
the group does not consider that it is high 
risk for information theft and assesses itself 
as a low value opportunity for cyberattack 
to date there have been no known  
cyberattacks on the group however 
we remain alert at all times
the group has identified the information 
assets that are at risk to ensure the relevant 
protection is in place
over the past five years changes have 
been made to strengthen our information 
security including
• 		 an ti  v i ru s 	 r o l l  o u t 	 t o 	 m i ti g a t e 	 g l o b a l 
virus threat
• 		 i m p l e m en t a ti o n 	 o f 	 a 	 g l o b a l 	 o p er a ti n g	
company network
• 		 p en e tr a ti o n 	 t es ti n g 	 t o 	 a s s es s 	 th e 	 s ec u ri ty	
of our network
• 		 a 	 s i n g l e 	 p r o v i d er 	 t o 	 m a n a g e 	 o u r 	 n e tw o rk
• 		 an 	 i n f o r m a ti o n 	 s ec u ri ty 	 a u d i t 
the penetration testing is aimed at ensuring 
our global network remains secure
the testing is carried out by the commercial 
arm of the government communications 
headquarters with a full test report provided 
listing any vulnerabilities found and how 
these can be addressed a followup test 
is subsequently carried out to ensure the 
vulnerabilities are fully resolved
our global network provider complies with 
industry best practice and is government 
and ministry of defence certified
significant issues in relation 
to the financial statements
during the year the committee considered 
significant issues in relation to the group’s 
financial statements and disclosures 
relating to
i the carrying value of goodwill
the committee focused on the impairment 
testing by the company of the carrying 
value of goodwill including the sensitivity 
analysis and agreed with the conclusion 
reached that no impairments were required 
the committee agreed with the conclusion 
that following review no reallocation of 
goodwill was required in respect of  
watsonmarlow acquisitions where the 
routes to market had been progressively 
changed from distribution to direct sales
ii rd and software costs 
as set out in note 1 on page 1 1 1 
the group’s intangible assets include 
capitalised development and software 
costs the committee focused on the 
judgements made by the company as to 
the appropriateness of capitalisation of 
these assets particular attention was paid 
to the costs incurred for the implementation 
of a new erp system for watsonmarlow 
which have been capitalised during the year 
the committee enquired as to the progress 
of the system implementation examined the 
nature of the capitalised costs and agreed 
that capitalisation is in accordance with the 
accounting standards 
iii taxation
there is judgement involved in the estimation 
of the group’s tax charge in assessing the 
risk of successful challenge by local tax 
authorities and the recoverability of deferred 
tax assets the committee considered 
reports by the company including those 
relating to transfer pricing arrangements 
the committee also considered the 
appropriateness of recognition of deferred 
tax assets including those relating 
to brought forward tax losses in the 
uk as a result of accelerated pension 
payments the committee reviewed 
and is comfortable with the forecasts 
and assumptions supporting utilisation of 
these losses
iv  ensuring the annual report and 
accounts are fair balanced and 
understandable
we carried out a full assessment and review 
to ensure the new more exacting standard 
was satisfied
v  other judgements in the financial 
statements
pensions provisions and acquisitions 
were addressed chairman’s introduction board of directors corporate governance report our governance nomination committee audit committee
spiraxsarco engineering plc annual report and accounts 2013 68
audit committee continued
governance continued
these issues were discussed with 
management during 2013 and with the 
auditor when reviewing and agreeing the 
audit plan and also at the conclusion of the 
audit of the financial statements
after reviewing the presentations and reports 
from management and consulting with the 
auditor the committee is satisfied that the 
financial statements appropriately address 
the critical judgements and key estimates 
both in respect of the amounts reported 
and the disclosures the committee is also 
satisfied that the significant assumptions 
used for determining the value of assets and 
liabilities have been appropriately scrutinised 
challenged and are sufficiently robust
review of financial 
statements
during 2013 the committee considered 
many components of business performance 
in order to ensure it has a full understanding 
of the operations of the group
examples of processes the committee 
uses include
• 		 d e t e r m i n i n g 	 th e 	 p o s i t i o n 	 a d o p t e d 	 i n 	 k e y	
judgement areas including pensions 
provisions and acquisitions
• 		 r i s k 	 a r ea s 	 s e t 	 o u t 	 i n 	 th e 	 r i s k 	 m a n a g e m en t	
committee report
• 		 r ec e i p t 	 o f 	 r eg u l a r 	 s tr a t eg y 	 r e p o rts 	 fr o m	
the group chief executive and operational 
reports from the divisional directors
• 		 r e q u es ti n g 	 m em b er s 	 o f 	 m a n a g e m en t 	 t o	
attend committee meetings to provide 
updates on operational and strategic 
matters
• 		 r e v i e w s 	 o f 	 th e 	 b u d g e t 	 a n d 	 o p e r a ti o n a l 	 p l a n
• 		 r e v i e w 	 o f 	 i n f o rm a ti o n 	 s ec u r i ty 
through these processes and its monitoring 
of the effectiveness of controls internal 
audit and risk management the committee 
is able to maintain a good understanding 
of business performance key areas of 
judgement and decisionmaking processes 
within the group 
matters considered
in 2013 the following matters were 
considered by the committee and 
where applicable by the board or 
other committees
• 		 g l o b a l 	 c o m p e t i ti v e 	 en v i r o n m en t 	 a n d	
emerging global markets
• 	 a c qui s it i o n s  d i s po s a l s
• 	 op e r a ti n g 	 c o m p a n y 	 r e v i e w s
• 	 an n u a l 	 f o rw a rd 	 p l a n
• 	 gr o u p 	 p r o d u c t 	 d e v el o p m en t
• 	 r e tu rn 	 o f 	 ca p i t a l 	 t o 	 s h a r eh o l d er s
• 	 s h a r eh o l d e r 	 r e l a ti o n s
• 	 b o a rd 	 e ffec ti v en es s
• 	 s u c c e s s i o n 	 pla nni n g
• 	 di v e r s i ty
• 	 s h a r e 	 p l a n s 	 a n d 	 s i m i l a r 	 a rr a n g em en ts
• 	 ex ec u ti v e 	 c o m p en s a ti o n 	 a n d 	 b en e fi ts
• 	 a u d i t 	 t en d e r
• 	 i n f o r m a ti o n 	 s ec u ri ty	
• 	 an ti  b r i b e ry 	 a n d 	 c o rru p ti o n	
• 	 r e p r i o r i ti s a ti o n 	 o f 	 p r i n c i p a l 	 ri s k s
• 		 i ss u e 	 o f 	 n e w 	 s a n c ti o n s  	 em b a r g o es 	 a n d	
restrictions policy
• 	 g l o b a l 	 i n s u r a n c e 	 r en e w a l
• 		 e u r o z o n e 	 s c en a ri o 	 p l a n n i n g 	 w o rk s h o p 	 –	
impact of countries leaving the eurozone
• 		 c o rp o r a t e 	 g o v ern a n c e 	 a n d 	 s i g n i fi ca n t 	
legal matters
fair balanced and 
understandable report 
and accounts
one of the key governance requirements 
is for the report and accounts to be fair 
balanced and understandable the  
coordination and review of the groupwide 
input into the annual report and accounts 
is a significant exercise performed within an 
exacting time frame which runs alongside 
the formal audit process undertaken by the 
external auditor
arriving at a position where initially the 
committee and then the board are satisfied 
with the overall fairness balance and 
clarity of the document is underpinned by 
the following
• 		 c o m p r eh en s i v e 	 g u i d a n c e 	 f o r 	 c o n tri b u t o r s	
at operational level
• 		 a 	 v eri fi ca ti o n	 p r o c es s 	 d ea l i n g 	 w i th 	 th e	
factual content of the reports
• 		 c o m p r eh en s i v e 	 r e v i e w s 	 u n d ert a k en 	 a t	
different levels in the group that aim to 
ensure consistency and overall balance
• 		 c o m p r eh en s i v e 	 r e v i e w 	 b y 	 th e 	 s en i o r	
management team
the directors’ statement on a fair balanced 
and understandable annual report and 
accounts is set out on page 63 69 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
nomination committee
role of the committee
the primary responsibilities of the committee 
are to make appropriate recommendations 
to the board for the appointment  
reappointment or replacement of directors 
keep under review the structure and 
composition of the board recommend any 
proposed changes to the board and consider 
succession planning arrangements for directors 
and more generally senior executives
in recommending appointments to the board 
the committee has regard to the overall balance 
of the skills knowledge and experience of board 
members against the current and perceived 
future requirements of the group and to the 
benefits of diversity including gender
review of 2013
following the announcement of mr vernon’s 
intention to retire we recommended the 
appointment of mr anderson as chief operating 
officer with a view to him taking over as group 
chief executive this appointment was part of 
the group’s ongoing succession planning and 
followed a comprehensive nomination process 
mr bullock advised the board that he did not 
intend to seek reelection at the agm after 
completing nine years as a nonexecutive 
director and senior independent director 
which is the maximum period of tenure for 
assured independence as set out in the code 
in consequence of mr bullock stepping down 
the committee recommended to the board 
that dr rajagopal took over as chairman of 
the remuneration committee finally the 
committee is engaged in a planned succession 
process to appoint a new independent 
nonexecutive director before the agm
kornferry whitehead mann who do not 
have any other connection with the company 
assisted with the appointment of mr anderson 
and are assisting with the appointment of the 
new independent nonexecutive director
we have given increased focus to leadership 
development through robust succession 
planning and a strengthened performance 
management culture we seek to ensure that 
we have a highperforming workforce and 
that we better identify tomorrow’s leaders 
we have a management development plan for 
those individuals demonstrating high potential 
fulfilled through our leadership academy in 
conjunction with ashridge business school 
and our “aspire” programme
the executive directors meet frequently to 
review organisational staffing requirements 
against career planning of highpotential leaders 
the most recent review of succession planning 
formed part of the strategic planning meeting 
held in june 2013
the group seeks to have directors who in 
addition to relevant technical and commercial 
expertise meet the highest standards of 
judgement critical thinking and openness 
furthermore the group recognises the 
importance of diversity at all levels of the 
company as well as on the board
we believe that the board’s perspective and 
approach is greatly enhanced through gender 
age and cultural diversity and it is our policy to 
consider overall board balance and diversity 
when appointing new directors as illustrated on 
page 62 the diverse range and nationalities of 
our board is particularly relevant given the broad 
international reach of the group 
we are committed to a target of a minimum of 
25 women on our board by 2016 this is a 
key element of our board succession plan and 
therefore we are confident that this target can 
be achieved we ensure that when vacancies 
arise women candidates for board positions are 
actively encouraged as part of the recruitment 
process board appointments are in the final 
analysis made on merit 
we will also encourage the progress of females 
in senior positions throughout the group 
and during 2013 females were appointed as 
president of spirax sarco inc in the usa and 
engineering procurement and construction 
key account manager americas we are 
also constantly improving the intake of female 
professionals to ensure a better talent pipeline 
for senior leadership roles in the future
we have offered practical support for the 
department for business innovation and skills’ 
“women on boards – ftse 250” initiative 
by nominating two females from our senior 
management team to serve as nonexecutive 
directors on other company boards
“ our main focus is on a strong 
and balanced board and senior 
management with a range of skills 
experience and diversity”
bill whiteley 
chairman nomination committee
membership and attendance
committee member attendance
number of meetings 4
wh whiteley 4
me vernon
1 
4
gr bullock 3
k rajagopal 4
ge schoolenberg 4
cg watson 4
ungroup
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how the committee spent its 
time during the year
 succession planning  40
 recruitment 30
 diversity 15
 board and committee composition 15
1
 retired 15th january 2014 
2
 appointed to the committee 16th january 2014 
2
1 spiraxsarco engineering plc annual report and accounts 2013 70
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
risk management committee
governance continued
role of the committee
the committee ensures that the group 
has operating policies and procedures 
covering everything from financial planning 
and reporting capital expenditure project 
governance sanctions and embargoes 
to human rights business continuity 
employee performance management and 
how we do business detailed policies 
and procedures are in place to ensure the 
accuracy and reliability of financial reporting 
and the preparation of consolidated financial 
statements the committee is responsible 
for risk management compliance 
and regulation
our approach and appetite 
for risk
our aim is to continue to build a 
sustainable business through consistent 
profitable growth and to provide value 
to our customers and shareholders 
creating shareholder value is the reward 
for taking acceptable risks the effective 
understanding acceptance and 
management of risk is fundamental to the 
longterm success of the group
our approach is encapsulated in the 
principles of our risk management policy
• 		 t o 	 u n d e r s t a n d 	 th e 	 n a tu r e 	 a n d 	 e xt en t 	 o f	
risks facing the group
• 		 t o 	 a c c e p t 	 a n d 	 m a n a g e 	 w i th i n 	 th e 	 b u s i n es s	
those risks which our employees have 
the skills and expertise to understand 
and leverage
• 		 t o 	 a ss ess 	 a n d 	 tr a n s fer 	 o r 	 a v o i d 	 th o s e 	 ri s k s	
which are beyond our appetite for risk
• 		 t o 	 es t a b l i s h 	 th e 	 a u th o ri ty 	 l e v el s 	 w i th i n 	 th e	
group by consideration of materiality 
at which decisions on acceptance and 
mitigation of these risks are taken
the risk review process
we have adopted an integrated approach 
to our risk management independent 
assurance and internal controls to ensure 
greater linkage across our review and 
assessment of risk internal controls and 
risk management are designed to limit 
the chance of failure to achieve corporate 
objectives independent assurance is 
provided by the external auditor and 
internal audit
the committee has accountability for 
overseeing the risk management processes 
and procedures works with the audit 
committee and reports to the board on the 
principal risks facing the group
the committee also monitors the mitigating 
actions put in place by the relevant divisions 
and group companies to address the 
identified risks
external consultants are involved in the 
review every three years with the last review 
taking place in 201 1 a review involving 
external consultants and our independent 
nonexecutive directors who take a 
strong interest in risk management will be 
conducted in 2014
at a local level each operating company is 
required to undertake a formal review of the 
risks which impact on its business at least 
twice a year the reviews are consolidated 
into groupwide risk reports which are 
maintained and reviewed by the committee 
on a regular basis
we have a robust risk management process 
in place through which we identify evaluate 
and manage the principal risks that could 
impact on the group’s performance 
the principal risks and the product of the 
2013 review are set out on pages 26 and 27 
“ we seek to understand manage 
and mitigate risks for the longterm 
success of our business”
nick anderson 
chairman risk management committee
1
 retired 15th january 2014 
2
  appointed committee chairman  
16th january 2014
membership and attendance
committee member attendance
number of meetings 2
me vernon
1
 2
nj anderson
2
 2
dj meredith 2
nh daws 2
jl whalen 2
how the committee spent its 
time during the year
 internal controls 20
 risk management framework 20
 group policies 15
 antibribery 15
 competition compliance 10
 business continuity 10
 sanctions and embargo compliance 10
ungroup
expand
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the following executives are also members of the 
committee group human resources director 
group business development director steam 
finance director divisional director – americas 
divisional director – asia pacific and general counsel 
and company secretary
1
2 71 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
regulatory disclosures risk management  
committee
internal controls
the board has overall responsibility for 
the system of internal controls and for 
reviewing its effectiveness whilst the role of 
management is to implement board policies 
on risk and control there is an ongoing 
review process for identifying and managing 
risks faced by the group which has been 
in place for 2013 and up to the date of the 
annual report and accounts the review 
covers and assesses the effectiveness 
of all material controls including financial 
operational and compliance controls and 
risk management systems this ensures 
that proper accounting records have been 
maintained financial information used within 
the business is reliable and the consolidated 
accounts preparation and financial reporting 
process comply with all relevant regulatory 
reporting requirements the system of 
internal controls is designed to manage 
rather than eliminate the risk of failure to 
achieve the business objectives
the board believes from its annual reviews 
that the system of internal controls is 
embedded in the business and regular 
review allows for assessment of new and 
changing risks in the group’s business
in pursuing these objectives internal 
controls can provide only reasonable and 
not absolute assurance against material 
misstatement or loss
as required by the uk listing authority the 
group has complied throughout the year 
and up to the date of the annual report 
and accounts with the code provisions on 
internal controls
all operating companies are required 
annually to complete selfcertification 
questionnaires regarding compliance with 
the policies procedures and minimum 
requirements for an effective system of 
internal controls
selfcertification is given by both the general 
manager and the finance manager of 
each operation
internal audit
the board has an established internal audit 
function which allows each of the group 
operating companies to be audited at 
least every three years and those judged 
to be in higher risk territories are audited 
more frequently 
all businesses acquired by the group are 
subject to internal audit within one year 
from the date of acquisition internal audit 
resource is supplemented by experienced 
qualified accounting staff from principal 
group operating companies and a 
professional auditing firm bdo international 
reports are made to the audit committee 
and the board as a whole whilst there were 
some areas for local improvement identified 
in the internal audit reports no significant 
matters were raised in the reports made in 
the operating companies audited during 
the year 
as explained by the chairman in his 
introduction to governance on page 58 
we have built on our strong anticorruption 
culture and our antibribery and corruption 
policy which includes specific policies 
and a comprehensive training programme 
called “antibriberywork” the programme 
was rolledout across the group during 
2013 at the end of the rollout over 2800 
employees will have participated we also 
ensure that all relevant new appointees 
undertake the training the training will be 
refreshed on a regular basis the group 
legal function also makes facetoface 
presentations throughout the group on 
business ethics
the committee has ensured compliance 
with centrally documented control 
procedures on such matters as capital 
expenditure information and technology 
security and legal and regulatory 
compliance we also followed up on 
compliance with our competition policy 
which was introduced in 2012 to ensure the 
group conducts its business in accordance 
with the competition laws of all the countries 
in which it operates
important developments in 
the year
our risk management approach is subject 
to continuous review and updating to 
take account of new and developing 
issues which might impact our business 
objectives the following actions have been 
undertaken during the year to address 
significant developments
• 		 c o m p l e t e d 	 th e 	 r o l l  o u t 	 a c r o s s 	 th e 	 gr o u p	
of the antibribery and corruption policy 
and “antibriberywork” programme and 
introduced a refresher programme
• 		 i n tr o d u c e d 	 a n 	 o n l i n e 	 g i fts 	 a n d 	 h o s p i t a l i ty	
register which allows us to control such 
items centrally and monitor compliance 
with the antibribery and corruption policy
• 		 th e 	 gr o u p  w i d e 	 ri s k 	 r e p o rts 	 h a v e 	 b een	
revised and a new ranking system was 
introduced to ensure that the risks are 
properly prioritised we have made sure 
that our mitigation actions remain robust 
and implemented changes to improve 
mitigation of the risks where necessary
• 		 w e 	 h a v e 	 r e v i e w e d 	 th e 	 p ri n c i p a l 	 ri s k s 	 t o	
determine whether the risks themselves 
have changed during 2013 our view of the 
changes are set out in the principal risks 
table on pages 26 and 27
• 		 th e 	 d i v er s e 	 r a n g e 	 o f 	 ec o n o m i c 	
geopolitical and accidental external global 
events has prompted the start of a review 
and updating of disaster management 
and business continuity which we are 
planning to rollout across the group 
senior managers in the emea division 
were involved in a eurozone scenario 
planning workshop externally facilitated by 
pa consulting group that considered the 
impact of countries leaving the eurozone 
the objective was to improve the group’s 
preparedness in respect of this risk 
the toolkit developed is to be deployed by 
other operating companies
• 		 w e 	 h a v e 	 p r o d u c e d 	 a n d 	 i s s u e d 	 a 	 n e w	
sanctions embargoes and restrictions 
policy and guide to ensure compliance 
with un usa and uk laws and regulations
• 		 w e 	 i n t en d 	 r o l l i n g  o u t 	 a 	 n e w 	 b eh a v i o u r a l	
based safety programme
• 		 w e 	 h a v e 	 r e v i e w e d 	 a n d 	 i m p r o v e d 	 o u r	
global insurance cover with particular 
emphasis on lower deductibles and 
higher cover levels for our growing 
international businesses
the committee’s analysis of the risks 
affecting the group are shown in the 
“bubble” diagram overleaf the size of the 
bubble shows the impact of the risk on 
the group the colour shows the priority 
of the risk and the position of the risk 
in the diagram is dictated by likelihood 
on the xaxis and control on the yaxis 
this analysis informed the determination 
of the principal risks set out on pages 
26 and 27  chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
spiraxsarco engineering plc annual report and accounts 2013 72
governance continued
risk management committee continued
7
4
2
3
1
6
5
8
no control
high level  
of control
low likelihood high likelihood
  low priority 
  medium priority 
  high priority 
 impact of the risk
key risks for spiraxsarco engineering plc
1 – economic and political instability   5 – noncompliance with health safety and environmental legislation 
2 – significant exchange rate movements  6 – defined benefit pension deficit 
3 – loss of manufacturing output at any group factory 7 – failure to respond to technological developments or customer needs 
4 – breach of regulatory requirements   8 – failure to realise acquisition objectives 
risk likelihood control and impact remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
regulatory disclosures remuneration committee 
letter of introduction
risk management  
committee
73 spiraxsarco engineering plc annual report and accounts 2013
remuneration committee letter of introduction
1 strategic report 2 governance 3 financial statements 1 strategic report 2 governance 3 financial statements
how the committee spent its 
time during the year
ungroup
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1
“ we remain committed to a remuneration 
policy that maintains the strong link 
between creating longterm shareholder 
value and the level of remuneration 
received by executive directors”
committee member attendance
number of meetings 3
gr bullock 3
k rajagopal
1
 3
ge schoolenberg 3
cg watson 3
 determining pay policy  20
 implementing pay policy 20
 directors’ contracts 20
 bonus target setting 10
 bonus achievement 10
 psp target setting 10
 psp achievement 10
membership and attendance
krishnamurthy rajagopal 
chairman remuneration committee
1
 appointed committee chairman 1st january 2014
dear shareholder
on behalf of the board i am pleased 
to present our remuneration report for 
2013 in line with the new government 
department for business innovation and 
skills reporting regulations on directors’ pay 
introduced in october 2013 this report has 
been split into three sections
• 		 a 	 s t a t e m en t 	 b y 	 th e 	 c h a i rm a n 	 o f 
the committee
• 		 a 	 p o l i c y 	 r ep o rt 	 – 	 th a t 	 d es c ri b es 	 a n d	
explains the components of the 
company’s proposed remuneration policy
• 		 an 	 a n n u a l 	 r ep o rt 	 o n 	 r em u n er a ti o n 	 – 	 th a t	
discloses how the current remuneration 
policy has been implemented during the 
year ended 31st december 2013
we will seek your support for the annual 
report on remuneration 2013 in the form 
of an advisory vote and for the policy 
report 2014 in the form of a binding vote 
at the agm on 20th may 2014 it is the 
committee’s intention that the proposed 
policy should be implemented following 
the agm 
we would like to thank shareholders for their 
support of the 2012 remuneration report 
at the agm on 9th may 2013 the advisory 
vote on the 2012 directors’ remuneration 
report received 963 of the votes in favour 
we have continued to actively seek and 
take into account the views of shareholders 
when reviewing executive director 
remuneration the committee is satisfied 
that the remuneration policy proposed in this 
report reflects the interests of shareholders 
and aligns executive director remuneration 
with company strategy while allowing the 
group to attract and retain motivated and 
talented individuals 
business performance
as noted in the chairman’s statement on 
page 4 the company made good progress 
in 2013 with group revenue up 4 and 
pretax profit up 12 contributing to 
earnings per share eps growth of 14 
and an improvement in return on capital 
employed roce to 443 over the  
threeyear period ending in 2013 the 
company delivered a total shareholder return 
tsr of 709 an 1 1  increase in the total 
dividend for the year extends our yearon
year dividend increase record to 46 years
our remuneration policy is designed to 
ensure that a significant percentage of 
executive director pay is based on the 
achievement of demanding performance 
targets and is therefore “at risk” 
maximum payout in the annual bonus 
plan and performance share plan psp 
is only available as a result of significant 
outperformance by the business 
the committee considers that the 
remuneration paid to executive directors 
in 2013 given as a single figure for each 
director on page 83 reflects the good 
progress made by the company during 
2013 as well as over the last three years
annual bonuses are based on pretax profit 
and roce targets and these targets are 
adjusted as explained in the annual report on 
remuneration 2013 on page 85 the group 
profit achievement of £1534 million was 
38 above the plan target of £147 8 million 
and the roce achieved of 443 was 9 1  
above the 406 plan target these metrics 
are after adjustment in accordance with the 
annual bonus plan rules and therefore differ 
from the figures on page 1 of the annual 
report and accounts these achievements 
resulted in a 9524 bonus award for the 
group chief executive and group finance 
director other executive directors targets 
have an additional divisional profit element 
and details of their bonus targets and level 
of achievement can be found on pages 
84 and 85 spiraxsarco engineering plc annual report and accounts 2013 74
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
remuneration committee letter of introduction continued
governance continued
continuing difficult macroeconomic 
conditions have resulted in some of the 
demanding performance targets in the psp 
not being met shares awarded in the psp 
vest based on growth of two measures 
tsr 60  and eps 40  over the threeyear 
plan period performance on the eps 
measure resulted in vesting of 7 48 of the 
shares awarded for this measure however 
a 709 increase in tsr in the three years to 
2013 was insufficient to trigger any award for 
the tsr element the shares vesting under 
both elements were therefore 2993 of 
the total shares awarded details of bonus 
and psp awards can be found on pages 
85 and 86 of this report
board changes in 2013
following mr vernon’s announcement of 
his intention to retire mr anderson was 
appointed group chief operating officer 
from 7th august 2013 and was subsequently 
appointed group chief executive following 
mr vernon’s retirement in january 2014 
in light of his new appointment the committee 
reviewed mr anderson’ s contract and 
remuneration package to ensure alignment 
with the proposed remuneration policy 
set out in this report it is the committee’s 
intention that all new appointments to the 
board or significant changes to the scale 
scope or responsibilities of existing executive 
directors will result in new contracts being 
agreed aligned with the proposed policy 
for more information see section 15 
service agreements and termination policy 
on pages 79 and 80
committee change in 2013
mr bullock stepped down as chairman of 
the committee in december 2013 but will 
stay on the committee until the agm as the 
new chairman i would like to thank gareth 
for the valuable contribution he made during 
his nine years on the committee 
our remuneration policy and 
links to strategy
the elements of executive director 
remuneration are described and explained 
in the policy table on pages 75 to 77  
the principal aims of the committee as it 
reviews and establishes remuneration policy 
are outlined below
1  to maintain a competitive remuneration 
package that will attract retain and 
motivate executive directors of the calibre 
required to meet the group’s strategic 
objectives both in the short and long term
2  to align the interests of shareholders and 
executive directors this will be achieved 
through the use of longterm incentives 
which reward tsr and eps growth 
and by requiring executive directors 
to build a significant shareholding 
themselves ensuring that they are 
directly exposed to the same gains 
or losses as all other shareholders
3  to support the achievement of the 
group’s strategic priorities to 
	 • 		 s tr en g th en 	 o u r 	 g l o b a l 	 m a rk e t 	 p o s i t i o n	
through local expertise and customer 
insight
	 • 		 d e l i v e r 	 s o l u ti o n s 	 t o 	 r e d u c e 	 en er gy 	 u s a g e	
through applications engineering and 
energy audits
	 • 		 b r o a d en 	 o u r 	 g l o b a l 	 p r es en c e 	 th r o u g h	
firsttomarket leadership in emerging 
markets
	 • 		 gr o w 	 m a rk e t 	 s h a r e 	 th r o u g h 	 i n c r ea s e d	
market penetration and our onestop 
shop customer approach
	 • 		 g en e r a t e 	 c o n s i s t en t 	 o r g a n i c	
growth through providing increased 
customer value
	 • 		 op er a t e 	 s u s t a i n a b l y 	 th r o u g h 	 g o o d	
corporate governance financial 
health employee wellbeing 
community engagement and 
environmental stewardship
  for more details of the alignment between 
strategy and remuneration and the 
description of performance measures and 
relevant targets see the policy table on 
pages 75 to 77 
4  to align executive director remuneration 
with financial and nonfinancial key 
performance indicators kpis for more 
details see the description of performance 
measures and relevant targets on pages 
75 to 77 
5  to ensure that superior awards are only 
paid for exceptional performance against 
challenging targets 
base salary is reviewed annually and 
takes into account the scale scope and 
responsibilities of executive director roles 
the skills and experience of individuals 
wider workforce comparisons and market 
benchmarking within a defined external 
comparator group
the annual bonus plan and psp reward 
financial performance both absolute and 
relative to ensure that there is clear and 
demonstrable pay for performance
in order to further align executive director 
interests with those of shareholders under 
the proposed remuneration policy executive 
directors will be required to defer any bonus 
over 60 of base salary into shares until 
the shareholding guidelines have been 
met executive directors are expected to 
accumulate over a period of up to five years 
a shareholding in the company worth at 
least 100 of base salary and to maintain 
this level of shareholding while remaining on 
the board
the committee believes that the current 
remuneration policy implemented during 
2013 and the proposed policy to apply if 
approved following the agm outlined in 
this remuneration report offer a fair and 
competitive package for executive directors 
rewarding performance while supporting the 
interests of shareholders
changes for 2014
the current macroeconomic conditions 
and challenges mentioned in the chairman’s 
statement have led the committee to 
review the terms of the psp award for 
next year in particular to increase focus 
on earnings growth in present economic 
circumstances the proportion of the award 
based on eps targets has been increased 
to 60 compared with 40 at present 
and the proportion based on tsr reduced 
correspondingly to 40 in addition the 
comparator group has been changed to the 
ftse 350 industrial goods and services 
supersector reflecting the current makeup 
of the company and providing a larger 
comparator group to reduce the effect 
of a few volatile performers affecting the 
group’s relative tsr rating either positively 
or negatively 
k rajagopal 
chairman remuneration committee 
compliance statement
we have prepared this remuneration report 
in accordance with the relevant sections of 
the companies act 2006 and the large 
and mediumsized companies and groups 
accounts and reports amendment 
regulations 2013 annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures remuneration policy 
report 2014
remuneration committee 
letter of introduction
75 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration policy report 2014
11 remuneration policy
the table below summarises the remuneration policy which will take effect if approved from the agm to be held on 20th may 2014
element purpose and link to 
strategy
operation performance 
measures
maximum potential 
value
fixed elements of executive director remuneration
base salary to enable the group 
to attract retain 
and motivate high
performing executive 
directors of the calibre 
required to meet the 
group’s strategic 
objectives 
 reviewed annually by the committee taking into account
–  scale scope and complexity of the role
–  skills and experience of the individual
–  wider workforce comparisons
–  market benchmarking within a defined external comparator 
group the committee uses this information with caution 
given the limited number of direct comparators and to avoid 
remuneration inflation as a result of benchmarking exercises 
with no corresponding improvement in performance
the committee considers the impact of any base salary 
increase on the total remuneration package
 reviews take into 
account company and 
individual performance
 o r d i na r i l y  s a la r y 
increases will not 
exceed the average 
increase awarded to 
other group employees 
the maximum value 
of any annual increase 
in executive director 
salaries will be capped 
at country of residence 
inflation plus 5  
the committee may 
award increases above 
this level subject to a 
maximum of country of 
residence inflation plus 
10 in circumstances 
such as i where a new 
recruit or promoted 
executive director’s 
salary has been set lower 
than the market level for 
such a role or ii where 
there is a significant 
increase in the size and 
responsibilities of the 
executive director’s role
pension to offer market 
competitive levels of 
pension and benefit
to attract and retain 
individuals with the 
personal attributes 
skills and experience 
required to deliver 
group strategy
for eligible executive directors who joined the uk company 
before 2001 the company provides a uk defined benefits 
pension scheme db scheme or cash alternative allowance
for uk nationals who joined the uk company after 2001 
the company provides a defined contribution pension 
arrangement dc plan andor contributions to a private 
pension andor a cash allowance
executive directors who have transferred internally from 
overseas may continue to participate in home country 
pension arrangements andor receive a cash allowance
na for db scheme as per 
actuarial value
for all other 
arrangements the 
total contribution to all 
pension arrangements 
will comprise no more 
than 25 of base salary
no element other than 
base salary is 
pensionable
common 
benefits
to provide market 
competitive benefits
to enable the executive 
directors to undertake 
their roles through 
ensuring their wellbeing 
and security
the company provides common benefits including
–  company car and associated running costs or cash 
alternative allowance
– private health insurance
– telecommunications and computer equipment
– life assurance
– longterm disability insurance
na the aggregate maximum 
cash value of providing 
all common benefits will 
not exceed 20 of base 
salary  spiraxsarco engineering plc annual report and accounts 2013 76
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
remuneration policy report 2014 continued
governance continued
element purpose and link to 
strategy
operation performance 
measures
maximum potential 
value
variable elements of executive director remuneration
mobility  
related 
benefits
to ensure that 
executive directors 
who have relocated 
nationally or 
internationally are 
compensated for 
costs incurred
the company will pay all reasonable expenses for the executive 
director to relocate on appointment costs will primarily be 
dependent on geographical location and family size 
the company will pay all reasonable expenses for repatriation 
of the executive director and hisher family to the original home 
country at the end of their assignment andor employment
executive directors are personally responsible for all taxes and 
social charges incurred in the home and host locations as a 
result of their appointment to ensure that executive directors 
who relocate internationally are able to fulfil their tax obligations 
in the home and host countries the company will pay for 
reasonable tax advice and filing support in relation to work
related income for international executive directors
executive directors are reimbursed under a tax treaty 
adjustment for any double tax they might be liable for as a 
result of being subject to home country and host country 
taxation typically for days worked in the home location 
executive directors are not entitled to tax equalisation
na based on individual 
circumstances 
and subject to 
written agreement
maximum values will 
not exceed the normal 
market practice of 
companies of a similar 
size and nature at the 
time of relocation
annual 
bonus
to incentivise and 
reward performance 
against selected kpis 
which are directly linked 
to business strategy
 t o r e c o g ni se 
performance through 
variable remuneration 
and enable the 
company to flexibly 
control its cost base 
and react to events and 
market circumstances
to ensure a significant 
proportion of executive 
director remuneration 
is directly linked to 
business performance
measures targets and their relative weightings are reviewed 
regularly by the committee to ensure continuing alignment 
with strategic objectives and will be detailed in the relevant 
annual report on remuneration in 2012 and 2013 the target 
was 60 and the maximum was 100 of base salary
bonus is based largely or entirely on the achievement of 
challenging financial performance measures which have 
been selected to ensure the company is focused on its 
strategic objectives
bonus is delivered in cash executive directors must use 
that part of the bonus over 60 of base salary net of tax to 
buy shares until the shareholding guidelines have been met 
purchase to be made within 12 months of bonus receipt
 bonus is subject to clawback for up to three years following 
payment circumstances include financial misstatement 
erroneous calculations determining bonus payments or gross 
misconduct 
the committee can adjust some performance targets to 
reflect certain nonoperating items such as the amortisation 
of acquisitionrelated intangible assets and exceptional 
reorganisational costs and to reflect the inclusion of 
associate companies these adjustments are mechanical 
rather than discretionary
subject to the 
committee’s 
judgement 
performance measures 
and their respective 
targets are set at a 
group or divisional 
level depending 
on the executive 
director’s role
 any measure can 
be incorporated at 
the committee’s 
discretion provided 
it is clearly aligned to 
the group’s strategic 
objectives subject to 
the requirement that 
financial measures will 
account for a minimum 
of 90 of bonus 
opportunity with up to 
10 being available for 
sustainability or other 
strategic measures 
the weighting of each 
component will be 
chosen specifically to 
reflect the executive 
director’s role 
threshold 0 of salary
 target 75 of salary 
60 in 2014
maximum 125 
of salary 100 in 2014
 or such lower sum 
as determined by the 
committee  77 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures remuneration policy 
report 2014
element purpose and link to 
strategy
operation performance 
measures
maximum potential 
value
variable elements of executive director remuneration
performance 
share plan 
psp
 to incentivise and 
reward executive 
directors for delivery 
against longterm 
group performance
 to align executive 
directors’ interests to 
those of shareholders
to drive sustainable 
company 
performance
 to retain key 
executive talent
the committee makes an annual conditional award of shares 
to each executive director annual participation is subject to 
committee approval 
 measures targets and their relative weightings are reviewed 
regularly by the committee to ensure continuing alignment 
with strategic objectives and will be detailed in the relevant 
annual report on remuneration
 performance is measured over a threeyear period starting 
at the beginning of the financial year in which awards 
are granted
 share awards made from 2012 are subject to clawback for 
up to three years following award circumstances include 
financial misstatement erroneous calculations determining 
bonus payments or gross misconduct
dividends are not payable on psp awards prior to vesting
vesting is currently 
based on two 
performance 
measures which have 
been chosen as they 
are clearly aligned with 
our strategic objectives
–  t s r
–  eps growth
 the committee will 
review performance 
to ensure outcomes 
under the psp are fair 
and reasonable
 nor ma l ci r c um s t a n c e s  
100 of salary
 e x c e p t i ona l 
circumstances up to 
150 of salary
employee 
share 
ownership 
plan esop
 to offer all eligible 
ukbased employees 
the opportunity to build 
a shareholding in a 
taxefficient way
 to align executive 
director interests to 
those of shareholders
eligible uk executive directors are entitled to participate in an 
hmrc approved share incentive plan known as the esop 
whilst not currently operated if in the future employee share 
plans are offered outside the uk eligible executive directors 
will be entitled to participate on the same basis as all other 
eligible employees
awards granted under the esop are not subject to clawback
the esop operates over a five year period
na maximum annual 
investment subject to 
hmrc limits or such 
lower sum as determined 
by the board
 potential 11 matching 
share award from 
the company and 
dividend shares can 
be reinvested
if the esop or an 
approved subplan is 
offered outside the uk 
executive directors 
will be subject to the 
same limitations as all 
other participants
share 
ownership 
guidelines
 t o p r ov i d e 
alignment with 
shareholder interests
following the date of appointment to the board executive 
directors are required to accumulate over a maximum period 
of five years a shareholding in the company worth at least 
100 of base salary and to maintain this level of shareholding 
whilst the executive director remains on the board 
na na
chairman and nonexecutive directors
fees to attract and retain 
highcalibre individuals 
with appropriate 
experience or industry
related skills by offering 
market competitive 
fee levels
the chairman is paid a single fee for all responsibilities 
the nonexecutive directors are paid a basic fee the 
chairmen of the main board committees and the senior 
independent director are paid an additional fee to reflect their 
extra responsibilities
fees for the chairman and the nonexecutive directors are 
reviewed annually by the board with reference to any change 
in the time commitment required uk market levels and the 
average base salary increase across the wider workforce
 the chairman and the nonexecutive directors do not 
participate in any annual bonus or incentive plans pension 
schemes healthcare arrangements the company’s psp 
or esop 
the company repays the reasonable expenses that the 
chairman and the nonexecutive directors incur in carrying 
out their duties as directors
na the aggregate value 
of fees paid to the 
chairman and 
nonexecutive directors 
will not exceed £750000 
as set out in the articles 
of association spiraxsarco engineering plc annual report and accounts 2013 78
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
remuneration policy report 2014 continued
12 notes to the policy table
12 i outstanding incentive awards
details of outstanding incentive awards granted to executive directors prior to the policy coming into force including awards granted in 2013 
and details of the performance targets are set out on pages 84 to 87 of the annual report on remuneration 2013
all incentive awards granted prior to this policy coming into force will continue on their existing terms including the exercise of discretion 
to amend such awards
12 ii remuneration policy for other employees
the company’s approach to annual salary reviews is consistent across the group with consideration given to the scope of the role level of 
experience responsibility individual performance and market pay levels the most senior managers in the business approximately 80 people 
globally participate in bonus arrangements with similar targets measures and relative weightings to the executive directors target and 
maximum potential values are lower and determined by the grade of the manager’s role performance targets are based on an appropriate 
combination of group divisional and local operating company financial measures contractual terms and benefits for the wider workforce 
are subject to local employment legislation and best practice
12 iii measure selection and the target setting process
measures are selected taking into account the key strategic priorities of the company shareholder expectations and factors that sit within 
an individual’s span of control
targets are set with reference to internal and external forecasts to ensure that they are realistic yet sufficiently stretching an appropriate mix 
of long and shortterm targets will be used informed by the nature of the measure
13 external directorships
directors are permitted to hold external directorships in order to broaden their experience to the benefit of the company such appointments 
are subject to approval by the board and the director may retain any fees paid in respect of such directorships the board ensures 
compliance by directors with code provision b3
mr vernon served as a nonexecutive director at senior plc during 2013 for which he received and retained total fees of £40400
14 approach to recruitment and promotion remuneration
when appointing external hires or when promoting executives or an executive director internally the committee will continue to act in the 
best interests of shareholders when determining remuneration in line with the stated policy the main elements of the remuneration policy 
for executive director appointments are
• 		 b a s e 	 s a l a ry 	 w i l l 	 b e 	 s e t 	 o n 	 a p p o i n tm en t 	 t a ki n g 	 i n t o 	 a c c o u n t 	 th e 	 f a c t o r s 	 s e t 	 o u t 	 i n 	 th e 	 p o l i c y 	 t a b l e  	 b u t 	 a l s o 	 th e 	 i n d i v i d u a l ’ s 	 e xp eri en c e 	
depending on an individual’s prior experience the committee may set salary below market norms with the intention that it is realigned over 
time typically two to three years subject to performance in the role in this situation the committee is permitted to exceed the “normal” rate 
of annual salary increase set out in the policy table
• 		 on  g o i n g 	 a n n u a l 	 i n c en t i v e 	 p a y 	 o p p o rtu n i ty 	 w i l l 	 n o t 	 e x c ee d 	 2 7 5  	 o f 	 s a l a ry  	 i n 	 l i n e 	 w i th 	 th e 	 m ax i m u m s 	 s t a t e d 	 i n 	 th e 	 p o l i c y 	 t a b l e 	  u p 	 t o 	 1 2 5 	
of salary for annual bonus and an award of up to 150 of salary under the psp in the year of appointment an offcycle award under the 
psp may be made by the committee to ensure an immediate alignment of individual interests
• 		 i n 	 a d d i ti o n 	 t o 	 th e 	 s t a n d a rd 	 e l e m en ts 	 o f 	 r e m u n e r a ti o n  	 o n 	 th e 	 a p p o i n tm en t 	 o f 	 a n 	 e xt ern a l 	 ca n d i d a t e  	 th e 	 c o m m i tt ee 	 r es erv es 	 th e 	 ri g h t 	 t o	
buyout incentive awards that the individual has foregone by accepting the appointment if appropriate the terms of such awards would 
be informed by the amounts being forfeited and the associated terms for example the extent to which the outstanding awards were subject 
to performance the vehicles and the associated time horizons it is the intention of the committee that on an “expected” basis the value 
of the awards being made would not exceed those being forfeited awards would be made either through the existing share plans or in 
accordance with the relevant provisions contained within the listing rules
• 		 wh en 	 a n 	 i n t ern a l 	 a p p o i n tm en t 	 t o 	 th e 	 b o a rd 	 i s 	 m a d e  	 a n y 	 p r e e x i s ti n g 	 o b l i g a ti o n s 	 m a y 	 b e 	 h o n o u r e d 	 b y 	 th e 	 c o m m i tt ee 	 a n d 	 p a ym en t 	 w i l l	
be permitted under this remuneration policy 
• 	 f o r 	 ex ec u ti v e 	 di r ec t o r 	 i n t e rn a l 	 p r o m o ti o n s  	 s a l a ry 	 w i l l 	 b e 	 c a p p e d 	 a t 	 th a t 	 o f 	 th e 	 i n c u m b en t 	 gr o u p 	 c h i e f 	 ex ec u ti v e 
the committee shall have discretion to grant oneoff cash or sharebased awards to executive directors pursuant to the listing rules 
the committee will exercise this discretion only in exceptional circumstances where it determines that such an award is necessary to secure 
the recruitment or retention of an executive director and where the committee determines that it is in the best interests of the company 
to do so any oneoff award will be subject to a maximum of 100 of salary and will be performance related in such circumstances the 
company will disclose a full explanation of the detail and rationale for the oneoff award the committee does not expect to have to make any 
oneoff awards as a matter of course and this power has been included in the policy to cater for any exceptional and genuinely unforeseen 
circumstances such as a grant to a key individual where it is vital to retain them in the business
details of the remuneration for any new chairman or executive director appointed to the board will be disclosed on a timely basis on the 
group’s website wwwspiraxsarcoengineeringcom 79 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures remuneration policy 
report 2014
15 service agreements and termination policy
the company’s policy on service agreements and termination arrangements for executive directors is set out below service agreements 
are designed to reflect the interests of the company as well as the individual concerned executive directors’ service agreements are kept 
at the company’s headquarters in cheltenham
in accordance with the code and guidelines issued by institutional investors executive directors have service agreements that are terminable 
by either the company or the executive director on 12 months’ notice in the event of termination or resignation and subject to business 
reasons the company would not necessarily hold the executive director to his or her full notice period all directors are subject to election 
if newly appointed in the year or reelection at the agm
service agreements set out restrictions on the ability of the executive director to participate in businesses competing with those of the group 
or to entice or solicit away from the group any senior employees or to solicitdeal with clients of the group or interfere with supply in the 
12 months following the cessation of employment 
salary pension and benefits are included in the agreements and are treated as described in the policy table on pages 75 to 77  there is 
no contractual entitlement to payment of an annual bonus or granting of an award under the psp  until individual participation level of award 
measures and targets have been set for a particular year
the chairman and nonexecutive directors do not have service agreements but serve the company under letters of appointment for an 
initial period of three years subject to annual reelection at the agm appointments may be terminated by the company or individual with 
one month’s notice 
group chief executive and new appointments from 1st january 2013
the details of the service agreements of the group chief executive and for new appointments to the board are outlined below the group 
chief executives service agreement has been updated to reflect latest best practice in the event of a material change in role function or 
responsibilities executive directors’ agreements will be reviewed and will be expected to be updated to meet the requirements outlined below
notice period 12 months by the executive director and 12 months by the company
termination no payment if executive director commits a repudiatory breach of the service agreement or for gross misconduct or in certain 
circumstances
no additional termination payment if notice worked
if notice only part workedpart on garden leave payment in respect of unexpired period of notice
otherwise 12 months’ base salary only  
company discretion to pay in lieu of notice in lump sum or monthly except within 12 months of a change of control when a lump sum 
will be paid
if paid monthly payment will be reduced by the value of any salary fees and benefits excluding longterm incentives earned in new 
paid employment in that period 
no automatic entitlement to payments under the annual bonus or psp  see page 80
garden leave clause
robust posttermination restrictions on confidentiality noncompete nonsolicitation and noninterference with customers or 
suppliers
service agreements may be terminated without notice and without payment of compensation on the occurrence of certain events 
such as gross misconduct or financial misstatement
clawback bonus payments and psp awards are subject to clawback for up to three years following award 
circumstances include financial misstatement erroneous calculations determining bonus payments or gross misconduct
executive directors’ legacy agreements
within the legacy agreements of executive directors termination of agreements is subject to a 12 month notice period where payment is 
made in lieu of notice on termination the payment of a sum in respect of lost future bonus opportunity based on an average of the preceding 
three years’ bonus payments is subject to the committee’s discretion with the power to reduce the amount to reflect performance on the 
part of the executive director which is considered by the committee to be unsatisfactory on termination of such an executive director’s 
service agreement the committee will take into account the departing executive director’s need to mitigate his or her loss when determining 
the amount of bonus payment will only be made at the discretion of the committee after taking into account individual performance in order 
to ensure that there will be no “payments for failure” in any event payments will be subject to clawback provisions 
executive directors’ service agreements may be terminated without notice and without payment of compensation on the occurrence of 
certain events such as termination for gross misconduct or financial misstatement  chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
spiraxsarco engineering plc annual report and accounts 2013 80
governance continued
remuneration policy report 2014 continued
while the executive directors’ service agreements include a provision to deal with termination on a change of control in the event of an 
offer being made shareholders have discretion to accept the offer or not the decision to recommend acceptance or not is a matter for 
the board and the committee is of the clear view that the change of control provision within the executive directors’ service agreements 
would have no influence on the voting pattern of those executive directors executive directors’ legacy agreements are summarised in the 
table below
notice period 12 months by the executive director and 12 months by the company
termination no payment if executive director commits a repudiatory breach of the service agreement or for gross misconduct or in certain 
circumstances
no additional termination payment if notice worked 
if notice only part workedpart on garden leave payment in respect of unexpired period of notice
otherwise 12 months’ base salary the value of other benefits plus the cost of pension credits or contributions for the period plus the 
average of the prior three years’ annual bonus payments with committee discretion to reduce the amount of the bonus that would 
otherwise be calculated to reflect performance on the part of the executive director that is considered by the committee to be below 
the required standards provided that termination by the company does not occur within 12 months of a change of control
committee discretion to pay in lump sum or monthly except within 12 months of a change of control when a lump sum will be paid
if paid monthly payment will be reduced by the value of any salary fees and benefits excluding longterm incentives earned in new 
paid employment in that period 
no automatic entitlement to payments under the current annual bonus or psp  see below
garden leave clause
robust posttermination restrictions on confidentiality noncompete nonsolicitation and noninterference with customers or 
suppliers 
clawback bonus payments and psp awards are subject to clawback for up to three years following award
circumstances include financial misstatement erroneous calculations determining bonus payments or gross misconduct
 
treatment of leavers under the incentive plans
whilst it is not an entitlement it is expected that where an executive director is a “good leaver” ie where the cessation of employment is 
due to death disability redundancy retirement or the company business in which heshe works being disposed of where the ending of 
employment is instigated by the company and is not for cause payments will be made under the annual bonus plan if performance targets 
are met subject to and in accordance with the plan rules if the executive director is not a “good leaver” it is expected that no bonus will 
be paid
the treatment of leavers under the psp is determined in accordance with the shareholder approved psp rules any awards granted within 
six months prior to termination or the giving or receiving of notice will lapse any awards granted six months or longer prior to termination of 
employment but prior to the end of the performance period will lapse unless the executive director is considered to be a “good leaver”
in the case of a “good leaver” the award will vest on the termination date or the normal vesting date at the committee’s discretion this is 
subject to the satisfaction of the performance targets at that date and a prorata reduction in the number of shares to take account of the 
shortening of the performance period 
for awards granted on or after 1st march 2012 if the executive director is a “good leaver” where the ending of employment is not for cause 
the number of shares vested may be reduced including to zero by the committee in its absolute discretion  
if an executive director ceases employment or notice is given on or after the end of the performance period but prior to the date on which 
the committee has determined the extent to which the award has vested if the executive director is a “good leaver” hisher award will be 
preserved and will be treated in the same way as if hisher employment had continued whereas if the executive director is not a “good 
leaver” hisher award will lapse on the earlier of hisher cessation of employment and the giving of notice
change of control
bonus if termination occurs within 12 months of a change of control the executive director is entitled to i a lump sum payment in lieu of 
notice and ii receive a full bonus payment calculated by reference to the average of the preceding three years’ bonus payments without any 
reduction for performance
psp the rules provide that in the event of a change of control outstanding sharebased awards will vest to the extent that performance 
targets are met at the date of the event any such vesting would generally be on a time prorated basis the committee may at its discretion 
increase the level of vesting if it believes that exceptional circumstances warrant such treatment  remuneration committee 
letter of introduction
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures remuneration policy 
report 2014
81 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
maximum
target
threshold
£00m £20m
100 0 0
61 28 12
40 30 30
£062m
£038m
£096m
£10m
mr daws executive director emea
maximum
target
threshold
£00m £20m
100 0 0
62 11
40
£070m
£107m
£043m
£10m
27
30 30
mr meredith finance director
maximum
target
threshold
£00m £20m
100 0 0
65 25 10
44
£063m
£093m
£041m
£10m
28 28
mr whalen executive director wmpg
maximum
target
threshold
£00m £10m £20m
100 0 0
60 28
40 30 30
£101m
£156m
£061m
12
mr anderson group chief executive
total remuneration by performance scenario
  fixed    annual bonus   psp
16 illustrations of application of the remuneration policy
under the remuneration policy a significant portion of remuneration is variable and depends on the company’s performance below we 
illustrate how the total pay opportunity for the executive directors varies under three performance scenarios maximum on target and 
below threshold 
the scenarios informed by the current application of our pay policy are defined as follows
element
fixed pay benefits and esop fixed pay and esop does not vary with performance and comprises
– base salary effective 1st january 2014
 – benefits value based on 2013 disclosure
– pension value db 2013 as reported cash allowance rate applied to 2014 salary
 – esop participation of up to £1500 11 matching shares for eligible executive directors
percentage of base salary
below threshold on target maximum
annual bonus  of salary 0 60 100
psp
1
  of salary at award 0 25 100
1
  a level of 25 vesting for “on target” performance is equivalent to threshold performance under the psp  which the committee believes to be a fair assumption 
for on target performance given the approach taken to setting performance targets chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
spiraxsarco engineering plc annual report and accounts 2013 82
governance continued
remuneration policy report 2014 continued
17 statement of consideration of employment conditions elsewhere in the group
when determining the remuneration of executive directors the committee considers the pay of employees across the group when 
conducting the annual salary review the average base salary increase awarded to the uk workforce and senior managers across 
the group provides a key reference point when determining levels of increase for executive director remuneration the remuneration policy 
was drawn up by the committee without the need for any consultation with employees
the committee also determines the principles and policy of remuneration which shall apply to the group’s senior managers the responsibility 
for determining precise compensation packages that meet local practice and performance targets lies with the group chief executive and 
the responsible executive director
to ensure consistency in remuneration policy across the group and to encourage a performance culture senior managers participate in the 
psp  the board believes that share ownership is an effective way of aligning the interests of managers and shareholders and to strengthen 
the development of the business
18 statement of consideration of shareholder views
in developing and reviewing the company’s remuneration policy for executive directors and other senior executives the committee seeks 
and takes into account the range of views of shareholders the committee chairman actively engages with institutional shareholders when 
appropriate and takes into account their views when reviewing and implementing the company’s remuneration policy
the committee considers shareholder feedback received in relation to the agm each year and guidance from shareholder representative 
bodies more generally this feedback plus any additional feedback received during the year at meetings with shareholders is considered 
as part of the company’s annual review of remuneration policy at the agm in 2013 the advisory vote on the 2012 directors’ remuneration 
report received 963 in favour 
the views of shareholders have been helpful and constructive and assisted in the development of a proforma executive director 
service agreement which has been applied to mr anderson on his appointment as group chief executive and which will apply to all new 
appointments specifically in relation to the termination arrangements the revised service agreement restricts any termination payment to 
12 months’ base pay this applies to the new group chief executive service agreement and in the event of a material change in the role 
function or responsibilities existing executive directors’ service agreements will be reviewed and changed to meet the new standard 83 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
remuneration policy 
report 2014
annual report on remuneration 2013 
this section sets out the directors’ remuneration for the financial year ended 31st december 2013
the following information has been audited by kpmg audit plc
– single total figure of remuneration
– pension
– scheme interests awarded between 1st january 2013 and 31st december 2013
– payments to past directors
– loss of office payments
– directors’ shareholdings
21 single total figure of remuneration audited
salaryfees benefits annual bonus pspoptions
1
pension esop
2
total
2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013
executive directors
me vernon
£490000 £500000 £44002 £236863 £155280 £476200 £577742 £229806 £135644 £150281 na na £1402668 £1593 150
nj anderson
3
£206829 £287669 £9950 £12815 £61573 £273947 na £77846 £51707 £71917 na £2050 £330059 £726244
dj meredith
£298000 £307000 £18981 £19519 £94436 £292387 £359055 £140332 £103480 £96340 £1630 £2079 £875582 £857657
nh daws
£274000 £280000 £17298 £17627 £76939 £259075 £315060 £122247 £240360 £70000 £1630 £2079 £925287 £751028
jl whalen
3 4
£195580 £250955 £20813 £25909 £70780 £198054 £51580 £81971 £48835 £105261 na na £387588 £662150
nonexecutive directors
wh whiteley £140000 £143000 na na na na na na na na na na £140000 £143000
gr bullock £54000 £55000 na na na na na na na na na na £54000 £55000
k rajagopal £43500 £44500 na na na na na na na na na na £43500 £44500
ge schoolenberg
3
£18125 £44500 na na na na na na na na na na £18125 £44500
cg watson £52000 £53000 na na na na na na na na na na £52000 £53000
1
  all executive directors received psp awards with the exception of mr whalen who received share options
2
  matching shares awarded during year
3
  2012 remuneration calculated from date of appointment to the board
4
  mr whalen is paid in us dollars all elements of his remuneration are shown in £ sterling as this is the presentation currency of the annual report and accounts
salaryfees
the following table sets out the 2013 base salary increase for each of the executive directors compared to 2012
executive directors 2013 2012 increase
me vernon £500000 £490000 20
nj anderson from 1st january to 6th august 2013 £266000 £260000 23
nj anderson from 7th august to 31st december 2013 £320000 – –
dj meredith £307 000 £298000 30
nh daws £280000 £274000 22
jl whalen £250955 £245860 20
the increases for the executive directors were similar to the average increase for uk employees for 2013 and also took into account market 
positioning company and individual performance and returns to shareholders over the period
mr anderson’s salary increased on 7th august 2013 following his appointment as chief operating officer
the following table sets out the 2013 fees for the chairman and nonexecutive directors pay for the chairman and nonexecutive directors 
does not vary with performance
chairman and nonexecutive directors basic fees additional fees total fees
wh whiteley £143000 £0 £143000
gr bullock
1
£44500 £10500 £55000
k rajagopal £44500 £0 £44500
ge schoolenberg £44500 £0 £44500
cg watson
2
£44500 £8500 £53000
1
  mr bullock received £2000 in respect of his duties as senior independent director and £8500 in respect of his role as chairman of the remuneration committee 
2
  mr watson received £8500 in respect of his role as chairman of the audit committee spiraxsarco engineering plc annual report and accounts 2013 84
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
benefits excluding pension
me vernon nj anderson dj meredith nh daws jl whalen
company car and associated running costs 
or cash alternative allowance
£22632 £12409 £18432 £16776 £15929
private health insurance £406 £406 £406 £406 £9980
telecommunications and computer equipment £713 £0 £681 £445 £0
mobility related benefits 
– tax treaty adjustment payment 
   not tax equalisation see page 76
£24433 na na na na
– repatriation oneoff payment
1
£188679 na na na na
– tax advice
2
£8200 na na na £14050
life assurance
2
£855 £490 £507 £525 £428
longterm disability insurance
2
£7185 £1110 £1185 £1081 £965
1
  contractual repatriation payment of £100000 grossed up for tax
2
  not taxable therefore not included in single total figure of remuneration
pension
full details of the pension benefits are set out at section 22 on pages 87 and 88
annual bonus
executive directors participate in the annual bonus plan the annual bonus plan rewards executive directors for financial performance both 
at group level and where appropriate for the division for which they are responsible targets are reviewed annually to ensure continuing 
alignment with strategy bonus levels are determined following the yearend by the committee based on performance against targets 
bonus is payable entirely in cash for the financial year ended 31st december 2013
any bonus payment is based entirely on the achievement of challenging financial measures which have been chosen as they are clearly 
aligned with the company’s strategy the mix of performance measures is tailored to the specific role of the executive director see below
group roles
group operating profit 65  group roce 35
divisional roles – steam specialties
group operating profit 35  group roce 35  divisional operating profit 30
divisional role – watsonmarlow
group operating profit 15  group roce 35  divisional operating profit 50
the above performance measures are adjusted to reflect certain nonoperating items including the amortisation of acquisitionrelated 
intangible assets and exceptional reorganisational costs and to reflect the inclusion of our associate company in india
bonus payments are subject to clawback for up to three years following payment circumstances include financial misstatement erroneous 
calculations determining bonus payments or gross misconduct
the table below sets out the performance measures that each of the executive director’s bonus awards were subject to
executive directors 2013 measures
me vernon
nj anderson from 7th august to 31st december 2013
dj meredith
group operating profit 65
group roce 35
nj anderson from 1st january to 6th august 2013
nh daws
group operating profit 35
group roce 35
divisional operating profit 30
jl whalen group operating profit 15
group roce 35
divisional operating profit 50 85 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
achievement of target performance results in a bonus of 60 of salary increasing to 100 of salary for maximum performance
2013 was a good year for the group which delivered earnings growth maintained a strong operating profit margin and increased dividends 
to shareholders the annual bonus payments to executive directors ranged between 7892 and 9524 of target
the annual bonus has stretching targets that the committee determines each year for the executive directors in order to incentivise above 
target performance
the table below summarises the achieved performance in 2013 in respect of each of the measures used in the determination of annual 
bonus together with an indication of actual performance relative to target
performance assessment in 2013
actual 
performance
1
below target target above target maximum
group operating profit £1534m 
group roce 443 
asia pacific and supply operating profit £615m 
emea operating profit £458m 
watsonmarlow operating profit £416m 
1
  to comply with the annual bonus plan rules these metrics use the actual adjusted operating profit of £151626000 and include the profit of our associate company in 
india of £1891000 less a charge of £145000 in respect of the impairment of acquisitionrelated intangible assets on disposal of the hvac business of eirdata
as a result of this performance in 2013 the following bonuses were achieved
bonus achieved bonus  of salary
me vernon £476200 9524
nj anderson
1
£273947 9523
dj meredith £292387 9524
nh daws
2
£259075 9114
jl whalen £198054 7892
1
  mr anderson received £151202 in respect of the period from 1st january to 31st july 2013 and £122745 in respect of the period from 1st august to 31st december 
2013 following his appointment as chief operating officer
2
  mr daws received £170203 in respect of the period from 1st january 2013 to 31st august 2013 as director asia pacific and supply and £88872 in respect of the 
period from 1st september 2013 to 31st december 2013 as director emea
group operating profit  roce 
the following graph provides a fiveyear summary of bonus outcomes against the performance of group operating profit and roce 
this illustrates the strong historical alignment between pay and performance
in accordance with the share ownership guidelines mr anderson and mr whalen will use that part of their 2013 annual bonus over 60 of 
base salary net of tax to buy shares within 12 months of receipt of bonus
2013
2012
2011
2010
2009
444
394
411
421
333
151626
136245
133960
119125
89938
actual bonus percentage of salary 
0 10 20 30 40 50 60 70 80 90 100
group operating profit £
roce
actual bonus  of salary group measures
1
1
  calculated in accordance with the metrics on pages 84 and 85 spiraxsarco engineering plc annual report and accounts 2013 86
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
spiraxsarco performance share plan psp
the committee makes an annual conditional award of shares to each executive director under the psp  prior to award the committee 
reviews the performance targets for each measure to ensure they remain sufficiently stretching for financial measures this includes a review 
of analysts’ forecasts
in normal circumstances the maximum award under the psp is 100 of base salary but in exceptional circumstances this may be 
increased to 150 of base salary vesting is based on two performance measures which have been chosen as they are aligned with 
our strategy
– tsr performance relative to a comparator group
– aggregate eps relative to target aggregate eps
performance is measured over a threeyear period
clawback provisions apply for psp awards made from 2012 onwards
psp awards vesting over 2011 – 2013
in 201 1 the executive directors excluding mr whalen received share awards under the psp  with vesting subject to eps growth and 
relative tsr performance the diagrams below set out details of the performance measures and targets that applied along with the actual 
performance during the period 1st january 201 1 to 31st december 2013
aggregate eps performance 40 of psp award
over the threeyear period to 31st december 2013 the company 
delivered aggregate adjusted eps of 3820p adjusted eps was 
1032p in 2010 restated for ias 19r and so this equated to growth 
of approximately 109 per annum over the three years
performance payout
threshold 3541p 25
maximum 3961p 100
actual 3820p 748
eps is derived from the audited annual report and accounts for 
the relevant financial year but adjusted to exclude any nonoperating 
items shown separately on the face of the company’s profit and 
loss account
relative tsr performance 60 of psp award
over the threeyear period to 31st december 2013 the company 
delivered a tsr of 709 this fell below the median of the 
comparator group
performance payout
threshold median 25
maximum upper quartile 100
actual 467 00
the comparator group for the purpose of measuring relative 
tsr performance comprises 24 similar companies namely 
bae systems bodycote chemring group cobham domino 
printing sciences fenner halma imi laird meggitt melrose 
industries morgan advanced material qinetiq group renishaw 
rexam rollsroyce holdings rotork senior smith ds smiths 
group spectris ultra electronics hdg vesuvius and weir group 
charter international were removed following their acquisition by 
colfax corporation in january 2012
in respect of the 201 1 psp awards actual performance for the combined relative tsr and aggregate eps resulted in 2993 of 
shares vesting
award vested lapsed value on vesting
1
me vernon 25093 7510 17583 £229806
nj anderson 8500 2544 5956 £77846
dj meredith 15323 4586 10737 £140332
nh daws 13347 3995 9352 £122247
jl whalen na na na na
shares subject to eps vesting
aggregate eps pence
100
75
50
25
0
300 325 350 375 400 425 450
shares subject to tsr vesting
relative tsr performance
100
75
50
25
0
0 25 50 75 100
1
  based on share price on date of vesting 30600p 87 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
spiraxsarco engineering plc share option schemes
in 2010 mr whalen received share options with vesting subject to an increase in eps of more than 9 greater than the increase in the uk 
rpi over the three year period from 1st january 2010 to 31st december 2012 the auditor confirmed the performance measure had been 
met and the 7 500 share options became exercisable on 26th march 2013 the value of the share options on that date was £202050 based 
on a share price of 26940p
in respect of the 201 1 grant if the performance measure is met the options will be become exercisable on 18th march 2014
spiraxsarco engineering plc employee share ownership plan esop
executive directors excluding mr vernon and mr whalen who are usa citizens are eligible to participate in an hmrc approved share 
incentive plan known as the esop  the maximum annual investment in shares is £1500 per executive director which can be matched by the 
company on a oneforone basis for each share that is purchased by an executive director and dividend shares can be reinvested
no shares acquired under the esop are subject to performance measures as the aim of the esop is to encourage increased shareholding in 
the company by all eligible uk employees
22 pension audited
directors’ pensions
mr vernon and mr whalen are members of the spirax sarco inc defined benefit plan the benefit paid under normal retirement from the 
usa defined benefit plan is a single life annuity equal to the number of years of service multiplied by the sum of 10 of pensionable salary up 
to social security covered compensation plus 145 of pensionable salary in excess of social security covered compensation final average 
salary is the average of the highest pensionable pay for any five consecutive years prior to retirement up to a ceiling both mr vernon’s and 
mr whalen’s final average salary is higher than the salary ceiling as at 31st december 2013
mr vernon’s and mr whalen’s defined benefit plan arrangements are as follows 
age attained at 
311213
accrued pension 
at 311212 
accrued pension 
at 311213 
change in accrued 
pension during the 
year
change in accrued 
pension during the 
year
1
change in the 
value
2
 of accrued 
pension over the 
year net of 
inflation
1
 and 
director’s own 
contributions
3
me vernon 60 £18791 £20796 £2005 £1782 £35640
jl whalen 57 £41816 £43851 £2035 £1540 £30800
1
  net of inflation at a rate of 12 per annum
2
  this year the value of pension has been calculated based on a factor of 20 in line with that required under the disclosure regulations  
3
  this is a noncontributory plan so mr vernon and mr whalen paid zero contributions into the plan over the year
the following additional information is provided
•	 death in service a spouse’s pension equal to onehalf of the member’s pension based on pensionable service to the date of death is 
payable after payment of the pension commences the accrued pension shown has no attaching spouse’s pension however at retirement 
there is an option to reduce the member’s pension to provide for a spouse’s pension after death 
•	 early retirement rights after leaving the service of the company both members have the right to draw their accrued pension at any time 
after their 65th birthday with no reduction both members have the right to commence their pension earlier if they meet the age and service 
requirements with the pension being reduced the annual reductions for early retirement are 3 for each year from age 65 to age 60 and 
5 for each year from age 60 to earliest retirement age 
•	pension increases the pension has no guaranteed increases spirax sarco inc has the discretion to provide increases 
•	 other discretionary benefits additionally mr vernon benefited from an amount in lieu of contributions to a uk dc plan the total amount 
made by the group was £1 14641 mr whalen benefited from company contributions to a usa defined contribution pension plan and 
to a 401k plan the total amount made by the group was £7 4461 this amount exceeded the 25 of base salary cap in 2013 due to an 
adjustment for underpayment in 2012
mr meredith is a member of an hmrc registered contributory db scheme the spiraxsarco executives retirement benefits scheme 
the benefit paid under normal retirement is a pension based on 160th of final pensionable salary for each year of pensionable service to  
31st march 201 1 and 180th of final pensionable salary for each year of pensionable service after 31st march 201 1 with final pensionable 
salary defined as basic annual salary over the last 12 months of service mr meredith accrues prorata additional service at a rate which gives 
a further two and a half years of service at age 62½ based on 160th accrual at retirement he is entitled to commute a proportion of his 
pension for a taxfree cash lump sum payment within hmrc limits  spiraxsarco engineering plc annual report and accounts 2013 88
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
details of mr meredith’s pension are as follows
age attained at 
311213
accrued pension 
at 311212 
accrued pension 
at 311213 
change in accrued 
pension during the 
year
change in accrued 
pension during the 
year
1
change in the 
value
2
 of accrued 
pension over the 
year net of 
inflation
1
 and 
director’s own 
contributions
3
dj meredith 54 £140434 £149003 £8569 £4817 £96340
 
1
  net of inflation at a rate of 27 per annum
2
  this year the value of pension has been calculated based on a factor of 20 in line with that required under the disclosure regulations    
3
  mr meredith paid zero contributions into the db scheme over the year having elected in 2011 to reduce the accrual rate from 160th to 180th
the following additional information relating to mr meredith’s pension is provided 
•	 	 d ea th 	 i n 	 s e rv i c e  	 a 	 s p o u s e ’ s 	 p en s i o n 	 e q u a l 	 t o 	 o n e h a l f 	 o f 	 p en s i o n  	 b a s e d 	 o n 	 p en s i o n a b l e 	 s erv i c e 	 t o 	 th e 	 d a t e 	 o f 	 d ea th  	 i s 	 p a y a b l e 	
on death after payment of the pension commences a spouse’s pension of onehalf of pension entitlement at the date of death ignoring 
commutation and any early retirement actuarial reduction is payable in addition mr meredith’s pension is guaranteed to be paid for five 
years from retirement 
•	 early retirement rights mr meredith may retire on an actuarially reduced pension on early retirement with the company’s consent 
provided he has attained age 55 no consent is required for retirement on or after age 60 and no early retirement reduction is applied to 
the scale pension on retirement at or after age 60 
•	 pension increases in payment pensions are subject to annual increases in line with the annual rise in the rpi subject to a maximum of 5 
per annum the trustees and the company have the discretion to apply a greater increase
•	 oth e r 	 d i s c r e ti o n a ry 	 b en e fi ts 	 th e r e 	 a r e 	 c u r r en tl y 	 n o 	 d i s c r e ti o n a ry 	 p r a c ti c es 	 w h i c h 	 a p p l y 	 t o 	 m r 	 m er e d i th ’ s 	 p en s i o n 	 b en e fi ts 
mr daws became a deferred member of an hmrc registered contributory db scheme the spiraxsarco executives retirement benefits 
scheme with effect from 31st december 2012 and is therefore no longer accruing any pension benefits within the db scheme in lieu of 
pension benefits mr daws now receives 25 of his basic salary which in the year to 31st december 2013 amounted to £70000
mr anderson receives 25 of his basic salary in lieu of pension benefits which in the year to 31st december 2013 amounted to £71917 
23 scheme interests awarded during the financial year audited
spiraxsarco performance share plan psp
all awards were granted under the psp as a contingent right to receive shares with the face value calculated as a percentage 100 of base 
salary using the share price at date of award 26150p awards were made on 8th march 2013 details of the performance conditions and 
associated levels of vesting are set out on page 89
executive director psp award face value £
last day 
of the 
performance 
period
vesting at 
threshold 
performance
me vernon 19120 shares £499988 150114 25
nj anderson 10172 shares £265998 311215 25
dj meredith 117 40 shares £307 001 311215 25
nh daws 10707 shares £279988 311215 25
jl whalen 9560 shares £249994 311215 25 89 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
in respect of the psp awards made to executive directors in 2013 vesting is dependent on the following tsr and eps 
performance measures
relative tsr performance 60 of psp award
performance payout
threshold median 25
maximum upper quartile 100
the comparator group for the purpose of measuring relative tsr performance comprises 26 similar companies based on the same selection 
criteria as previous awards since 201 1 laird has been removed and dialight oxford instruments and rpc group have been added
aggregate eps performance 40 of psp award
performance payout
threshold rpi 3 cagr 25
maximum rpi 9 cagr 100
eps is as defined in previous years
spiraxsarco engineering plc employee share ownership plan esop
mr meredith mr daws and mr anderson are participants in the hmrc approved esop  during the year ended 31st december 2013  
mr meredith and mr daws each purchased 72 partnership shares and were each awarded 72 matching shares and 86 dividend shares 
mr anderson purchased 71 partnership shares and was awarded 71 matching shares
24 payments to past directors audited
there have been no payments to former directors during the year ended 31st december 2013
25 payments for loss of office audited
during the year ended 31st december 2013 there have been no payments made to directors for loss of office
26 statement of directors’ shareholding and share interests audited
progress towards share ownership guideline
the following chart sets out the executive directors’ progress towards the company’s share ownership guidelines which require executive 
directors to hold shares in the company with a value of not less than 100 of base salary the value of the shareholding is taken at 
31st december 2013 as a percentage of 2013 base salary
me vernon
nj anderson
dj meredith
nh daws
jl whalen
0 100 200 300 400 500
482
447
182
31
81
share ownership guideline is 100 of base salary spiraxsarco engineering plc annual report and accounts 2013 90
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
outstanding share interests
the following table summarises the total interests of the directors in shares of the company as at 31st december 2013 these cover 
beneficial and conditional interests no director had any dealing in the shares of the company between 31st december 2013 and  
5th march 2014
beneficial
1
psp awards
2
share option 
schemes
3
esop shares
4
total 
311213
total 
050314
5
or date of retirement if earlier
6

wh whiteley 11443 na na na 11443 11443
me vernon 80549 67242 na na 147791 147791
nj anderson 3018 30305 na 142 33465 27509
dj meredith 45882 41118 na 5748 92748 82011
nh daws 17003 37 112 na 1616 55731 46379
jl whalen 6777 15543 7500
7
na 29820 29820
gr bullock 1203 na na na 1203 1203
k rajagopal 1925 na na na 1925 1925
ge schoolenberg 962 na na na                962 962
cg watson 2537 na na na 2537 2537
1
 shares include any owned by connected persons
2
 subject to the performance measures as set out on page 91
3
 subject to the performance measures as set out below
4
 not subject to performance measures
5
  the reduction in shareholding at 5th march 2014 for mr anderson mr meredith and mr daws is as a result of 2993 of the 2011 psp award vesting and the 
balance of the award therefore lapsing full details are set out on page 86
6
 mr vernon retired on 15th january 2014
7
 options over 7 500 shares will become exercisable subject to satisfaction of the performance measure set out below
spiraxsarco engineering plc share option schemes option schemes
only mr whalen has interests under the option schemes summarised below
no options were granted to executive directors during the financial year ended 31st december 2013 and no options held by executive 
directors lapsed during the year the options held by mr whalen were granted before his appointment to the board the performance 
measure requires an increase in eps of more than 9 greater than the increase in the uk rpi over the three year period from 1st january in 
the year the grant was made
if the performance measure is not met at the end of the three year performance period the option will lapse the auditor will confirm whether 
the performance measure has been met there are no interests to disclose in relation to the other executive directors
the midmarket price of the shares on 31st december 2013 was 29900p during the period from 1st january 2013 to 31st december 2013 
the midmarket share price ranged between 22400p and 30900p
balance 
010113 granted exercised lapsed
balance 
311213
option 
price p
2013 gain 
arising on 
exercise 
£
date from 
which first 
exercisable
expiry 
date
jl whalen 7500 0 7500 0 0 13690 120450 260313 260320
7500 0 0 0 7500 18730 – 180314 180321
total 15000 0 7500 0 7500 120450 91 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
spiraxsarco performance share plan psp
the interests of executive directors in the psp are set out below
date of award
balance 
010113
vested
050313
1
lapsed
050313
1
awarded 
080313
56
balance
311213 260310
1
180311
2 
010911
3
90312
4
me vernon 31332 25093 – 23029 79454 23362 7970 19120 67242
nj anderson – – 8500 11633 20133 – – 10172 30305
dj meredith 19472 15323 – 14055 48850 14519 4953 11740 41118
nh daws 17086 13347 – 13058 43491 12740 4346 10707 37 112
jl whalen – – – 5983 5983 – – 9560 15543
further details of the psp awards which vested in the year ended 31st december 2013 are set out below
1
  the midmarket price of the shares on 26th march 2010 was 13900p 746 of the psp awards vested on 5th march 2013 as the performance measures applicable 
to those psp awards were partly met during the performance period 1st january 2010 to 31st december 2012 the eps performance of the company was above 
the maximum target and the tsr performance ranked the company at the 61st percentile resulting in 58 of this element of the psp award vesting the psp awards 
vested in the form of nil cost options and the midmarket price of the shares on 5th march 2013 was 24730p
balance 
050313 exercised
balance 
311213
2013 gain 
arising on 
exercise 
£
date from 
which first 
exercisable
expiry 
date
me vernon 23362 23362 0 609461 050313 150114
dj meredith 14519 14519 0 416022 050313 050320
nh daws 12740 0 12740 – 050313 050320
2
  the midmarket price of the shares on 18th march 2011 was 18603p the period over which performance measures are measured is 1st january 201 1 to  
31st december 2013 details of the performance measures attached to these psp awards are set out on page 86 of this report
3
  the midmarket price of the shares on 1st september 2011 was 18450p the period over which performance measures are measured is 1st january 2011 to  
31st december 2013 details of the performance measures attached to the psp award granted to mr anderson are set out in note 2 above
4
  the midmarket price of the shares on 9th march 2012 was 21060p the period over which performance measures are measured is 1st january 2012 to  
31st december 2014 there are two performance measures governing vesting of this psp award 60 of the psp award is subject to a tsr performance measure 
which requires the company to rank at median relative to a comparator group of 25 companies for 25 of this portion of the psp award to vest increasing to full 
vesting for ranking at the upper quartile 40 of the psp award is subject to an eps performance measure which requires growth of rpi 3 cagr per annum for 
25 of this portion of the psp award to vest increasing to full vesting for growth of rpi 9 cagr per annum
5
  the midmarket price of the shares on 8th march 2013 was 26150p this was applied in determining the number of shares subject to the psp awards granted on  
8th march 2013 the period over which performance measures are measured is 1st january 2013 to 31st december 2015 details of the performance measures 
attached to these psp awards are set out on pages 88 and 89 of this report
6
  the 2011 and 2013 tsr comparator groups are set out on pages 86 and 89 of this report the peer group for 2012 is the same as 2013 apart from dialight included 
from 2013 and charter charter have since been removed from the group following their acquisition by colfax corporation in january 2012
spiraxsarco engineering plc employee share ownership plan esop
the interests of eligible executive directors are set out below  
balance 
010113
balance 
030613 
after share 
consolidation
partnership 
shares 
purchased
1
matching 
shares 
awarded
1
dividend 
shares 
awarded
2
shares 
sold
balance 
311213
period of 
qualifying 
conditions
3
nj anderson 0 0 71 71 0 0 142 3 years
dj meredith
2
5731 5518 72 72 86 0 5748 3 years
nh daws
2
5731 5518 72 72 86 4132 1616 3 years
1
  partnership shares were purchased at a price of 2100333p and matching shares were awarded on 8th october 2013 the midmarket price of the shares on that  
date was 2887 0p
2
  51 dividend shares were awarded on 17th may 2013 on which date the midmarket price of the shares was 28010p 35 dividend shares were awarded on  
8th november 2013 on which date the midmarket price of the shares was 29140p no dividend shares were awarded on 3rd july 2013
3
  partnership shares are not subject to qualifying conditions no matching shares or dividend shares were released from the esop or forfeited during the year ended 
31st december 2013 spiraxsarco engineering plc annual report and accounts 2013 92
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
27 directors’ service agreements and letters of appointment
chairman and nonexecutive directors
the chairman and nonexecutive directors have letters of appointment with the company for a period of three years subject to annual  
reelection at the agm appointments may be terminated by the company or individual with one month’s notice the appointment letters for 
the chairman and nonexecutive directors provide that no compensation is payable on termination other than accrued fees and expenses
directors’ terms of service
the tables below set out the dates on which each director was initially appointed their latest service agreement or letter of appointment and 
their notice period all directors are subject to election if newly appointed in the year or reelection at the next agm
executive directors’ service agreements 
executive directors
original 
appointment date current agreement expiry date notice period
me vernon
1
0107 06 090512 150114 12 months
nj anderson 150312 131213 160126 12 months
dj meredith 190692 170812 180824 12 months
nh daws 010603 250912 0107 27 12 months
jl whalen 150312 170412 280521 12 months
1
  mr vernon retired on 15th january 2014
nonexecutive directors’ letters of appointment
chairman and nonexecutive directors
original
appointment date letter expiry date notice period
wh whiteley 2607 02 150512 300615 1 month
gr bullock 020505 150512 200514 1 month
k rajagopal 100209 151211 090215 1 month
ge schoolenberg 010812 1207 12 310715 1 month
cg watson 170709 150512 160715 1 month
28 tsr performance graph
the graph demonstrates the growth in value of a £100 investment in the company compared to the ftse 350 industrial goods and services 
supersector over the last five years this comparison is chosen as it is the supersector within which the company is classified and it is a 
broad equity market index including companies of a similar size complexity and sector
dec 2008 dec 2009 dec 2010 dec 2011 dec 2012
spirax sarco ftse 350 industrial goods and services
value of hypothetical £100 holding
source datastream
dec 2013
£100
£150
£200
£250
£300
£350
£400 93 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
historical fiveyear tsr performance
the table below shows the historic levels of the group chief executive’s pay single figure of total remuneration and annual variable and psp 
awards as a percentage of maximum
single figure of annual 
remuneration
annual variable 
pay awarded as 
a percentage of 
maximum
value of vested 
psp awards as 
a percentage of 
maximum
2013 £1593150 9524 2993
2012 £1402668 3169 7460
2011 £1516798 8008 10000
2010 £1720765 10000 10000
2009 £1092229 3700 10000
29 percentage change in remuneration of the group chief executive
the following table provides a summary of the 2013 increase in base salary benefits and bonus for the group chief executive compared to 
the average increase for the general employee population across the group in the same period 
2013 increase 2012 increase
salary
group chief executive 20 43
general employee population 21 27
benefits
group chief executive
12
95 925
general employee population 21 27
bonus
group chief executive 2077 590
general employee population 2430 230
1
  excludes oneoff repatriation payment made in 2013
2
  2012 includes tax treaty adjustment payment of £20976 not made in 2011
210 relative importance of spend on pay
the table below demonstrates the relative importance of total remuneration spend relative to total employee numbers profit before tax and 
dividends payable in respect of the year
2013 2012 change
total pay spend £232m £228m 20
headcount 4782 4706 16
profit before tax £124m £128m 174
dividends payable £44m £41m 75
special dividend payable na £78m na
211 statement of implementation of remuneration policy in 2014
base salaries effective january 2014
an average 3 1 increase for all executive directors in 2014 with the exception of mr anderson whose salary increased by 484 following 
his appointment as group chief executive and mr vernon whose salary did not increase due to his retirement on 15th january 2014
base salaries
– me vernon  £500000 00
– nj anderson  £475000 484
– dj meredith  £317 000 33
– nh daws  £288000 29
– jl whalen  £258599 30
with the exception of mr anderson this is similar to the average increase for the broader uk employee population of some 30 and takes 
into consideration the other factors noted spiraxsarco engineering plc annual report and accounts 2013 94
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
annual report on remuneration 2013 continued 
fees effective january 2014
the chairman’s fee has been increased by 49 and the nonexecutive directors’ base fee by 34 in 2014
base fees
– chairman £150000
– nonexecutive directors’ base fee £46000
additional fees
– senior independent director £2000
– auditremuneration committee chairmen £8500
benefits
no change
annual bonus
no change has been made to the maximum opportunity under the annual bonus plan the performance measures and their respective 
weightings also remain unchanged 
bonus targets for the current year 2014 are not disclosed because they are considered by the board to be commercially sensitive 
the targets will be retrospectively reported in the annual report on remuneration 2014 
spiraxsarco performance share plan psp
the weighting of the tsr and eps performance measures will be changed to 40  60 for 2014 to place greater emphasis on delivering 
strong eps performance in the context of the current economic environment the committee also agreed to change the comparator group 
for the 2014 psp award in respect of the tsr element to the full ftse 350 industrial goods and services supersector to reduce volatility 
over the longterm this provides the group with a more credible tool with which to motivate and incentivise senior management while still 
clearly aligning executive directors remuneration to shareholder interests based on standard statistical modelling this change has a  
noncash cost impact of £143000 over three years in respect of the executive directors’ 2014 award
pensions
no change
spiraxsarco engineering plc employee share ownership plan esop
if enacted the finance act 2014 will increase the maximum permitted annual investment into partnership shares to £1800 with a 
corresponding increase in the number of matching shares that may be awarded
212 consideration by the directors of matters relating to directors’ remuneration
operation of the remuneration committee in 2013
membership and attendance
each of the committee members is an independent nonexecutive director and thus brings independence to consideration of all aspects 
of board remuneration and the application of professional advice to matters relating to remuneration
during 2013 the committee was chaired by mr bullock and the members comprised dr rajagopal dr schoolenberg and mr watson 
all of whom are independent nonexecutive directors
in 2013 the committee met three times and all members attended each meeting
advisers to the committee
during 2013 the committee sought advice and information from mr whiteley the chairman mr vernon the group chief executive and  
mr richardson the group human resources director none of the invitees participated in any discussions regarding their own remuneration 
or fees the general counsel and company secretary acts as secretary to the committee
in addition the committee received external advice from towers watson towers watson were appointed by the committee and provided 
material advice to the committee on various matters such as executive remuneration levels and structure performance updates in respect 
of the psp  the new directors’ remuneration report the impact of the special dividend on outstanding share awards and attendance at 
committee meetings towers watson’s fees in respect of these services totalled £52000 in 2013 in addition towers watson work with 
management on other matters relating to remuneration with the approval of the committee a separate advisory team within towers watson 
provides support and advice to management on pensions and other employee benefit related matters the committee is of the opinion that 
the advice received is objective and independent given that towers watson are a signatory to the remuneration consultants group code 
of conduct the manner in which advice is delivered and the separate teams that advise management more generally
herbert smith freehills llp is appointed by the company to provide advice to the company which is available to the committee in relation 
to executive directors’ service agreements and share plans legal fees relate to advice provided to the company and not the committee 
and are charged on a timecost basis herbert smith freehills llp also provides general legal advice to the company 95 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures annual report on 
remuneration 2013
213 statement of voting at general meeting
at the agm in 2013 shareholders approved the remuneration report for the year ended 31st december 2012 the table below shows the 
result in respect of the resolution which required a simple majority ie 50 of the votes to be cast to be in favour in order for the resolution 
to be passed
votes for  votes against  votes withheld
58666351 963 2237992 37 16186
approval
this remuneration report has been approved by the board of directors of spiraxsarco engineering plc and signed on its behalf by
k rajagopal 
chairman remuneration committee 
5th march 2014 spiraxsarco engineering plc annual report and accounts 2013 96
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
regulatory disclosures
principal activities
spirax sarco is a multinational engineering 
group tightly focused on its two niche 
businesses of steam system specialties 
and peristaltic pumps an overview of our 
principal activities by business is given on 
page 5 of the strategic report
future development
an indication of likely future developments in 
the group is given in the strategic report
review of the business
on pages 24 25 and 44 to 47 you will find a 
review of the development and performance 
of the group during the year including 
details of its financial performance and key 
performance indicators a description of risk 
management and the principal risks facing 
the business is on pages 26 and 27 
constructive use of agm 
and 2014 agm
shareholders are encouraged to attend our 
agm and those who are unable to attend 
are encouraged to vote using the proxy card 
mailed to them
in 2013 513 of the proxy votes received 
were lodged electronically through the 
crest system
the chairman and other board members 
answer questions raised by shareholders 
on a resolution by resolution basis 
shareholders are then invited to vote on 
the resolutions on the same basis by way 
of a polled vote the results are announced 
instantaneously using the equiniti “vote 
now” polling system and via the group’s 
website wwwspiraxsarcoengineeringcom 
and the london stock exchange 
following the agm shareholders are invited 
to view our steam technology centre
the notice of meeting convening the agm 
to be held on tuesday 20th may 2014 and 
an explanation of the resolutions sought are 
set out in the enclosed circular
substantial shareholdings
the voting rights in the table below have 
been notified to the company under the 
requirements of the uk listing authority’s 
disclosure rules and transparency rules 
dtr 5 which represent 3 or more of the 
voting rights attached to issued shares 
in the company as at 28th february 
2014 and 31st december 2013 so far 
as can be ascertained the holdings are 
beneficially held
results
the group’s results for the year have 
been prepared in accordance with the 
international financial reporting standards 
as adopted by the european union 
they are set out in the consolidated income 
statement which appears on page 104
dividend
the directors are proposing the payment of 
a final dividend of 410p 2012 37 0p which 
together with the interim dividend of 180p 
2012 160p makes a total distribution for 
the year of 590p 2012 530p if approved 
at the agm the final dividend will be paid 
on 30th may 2014 to shareholders on the 
register at the close of business on  
2nd may 2014
directors’ interests
the interests of the directors in the share 
capital of spiraxsarco engineering plc as at 
31st december 2013 are set out on page 90
substantial shareholdings as at 311213 as at 280214
number of 
ordinary shares
 of issued  
share capital
number of  
ordinary shares
 of issued  
share capital
blackrock investment management uk ltd 11407254 1511 11414642 1511
sprucegrove investment management ltd 3801540 503 3788170 502
schroder investment management ltd 2738453 363 2661353 352
baillie gifford  co 2428109 322 2380855 315
“ complying with laws and regulations 
in the countries in which we operate is 
at the heart of our values good legal 
practice sustains our business for the 
benefit of our shareholders”
andy robson 
general counsel and company secretary
governance continued 97 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
statement of  
directors’ responsibilities
risk management  
committee
regulatory disclosures
directors’ and officers’ 
insurance 
the company provides directors’ and 
officers’ insurance for board members 
directors of the group’s operating 
companies and senior officers
the company has also provided each 
director with an indemnity to the extent 
permitted by law in respect of the liabilities 
incurred as a result of their holding office as 
a director of the company
appointment and 
replacement of directors
the appointment and replacement of 
directors is governed by the company’s 
articles of association the code the 
companies act 2006 and related legislation 
as previously announced mr vernon retired 
as group chief executive on  
15th january 2014 and mr bullock will 
retire as nonexecutive director and senior 
independent director following the agm 
in order to comply with the code all 
directors with the exception of mr bullock 
will seek reelection at the agm and will 
do so thereafter on an annual basis at 
each future agm we are also expecting to 
appoint a new independent nonexecutive 
director before the agm
conflicts
under the companies act 2006 and 
the provisions of the company’s articles 
of association the board is required to 
consider potential conflicts of interest 
the company has established formal 
procedures for the disclosure and review of 
any conflicts or potential conflicts of interest 
which the directors may have and for the 
authorisation of such matters of conflict by 
the board to this end the board considers 
and if appropriate authorises any conflicts 
or potential conflicts of interest as they arise 
and reviews any such authorisation annually 
new directors are required to declare any 
conflicts or potential conflicts of interest to 
the board at the first board meeting after 
his or her appointment the board believes 
that the procedures established to deal with 
conflicts of interest are operating effectively
articles of association
the company’s articles of association 
are available from companies house 
in the uk or by writing to the general 
counsel and company secretary at the 
group’s registered office in cheltenham 
amendments to the articles of association 
can only be made by means of a special 
resolution at a general meeting of the 
shareholders of the company
share capital
as at 28th february 2014 there were no 
treasury shares held by the company 
details of shares issued during the year are 
set out in note 23 on page 127 
as at 31st december 2013 the company’s 
share capital was made up of ordinary 
shares which each carry one vote at general 
meetings of the company except as set out 
in the articles of association or in applicable 
legislation there are no restrictions on the 
transfer of shares in the company and there 
are no restrictions on the voting rights in the 
company’s shares
the company is not aware of any 
agreements entered into between any 
shareholders in the company which restrict 
the transfer of shares or the exercise of any 
voting rights attached to the shares
powers of the directors and 
purchase of own shares
subject to the provisions of the articles of 
association the directors may exercise all 
the powers of the company a shareholder’s 
authority for the purchase by the company 
of a maximum of 10 of its own shares was 
in existence during the year however the 
company did not purchase any of its shares 
during that time this authority expires at 
the forthcoming agm and it is proposed 
that a similar authority be approved 
the total number of shares in issue as at 
31st december 2013 was 75509562
in november 2013 the company instructed 
computershare trustees jersey limited 
as trustee of the spiraxsarco engineering 
employee benefit trust to purchase 
150000 shares to satisfy awards under 
the psp  at 31st december 2013 135486 
of these shares were held in the employee 
benefit trust
significant contracts
the company is not a party to any 
significant agreements that take effect alter 
or terminate upon a change of control of the 
company following a takeover bid
there are provisions in the executive 
directors’ service agreements which 
state that following a takeover or change 
of control if the executive director’s 
employment is terminated then both salary
benefits and a sum in respect of lost future 
bonus opportunity become payable as a 
lump sum
the strategic report contains all the 
information required to comply with section 
414c of the companies act 2006 and there 
are no contractual arrangements that need 
to be disclosed which are essential to the 
business of the group
disclosure of information to 
auditor
as at the date of the approval of this annual 
report and accounts as far as each 
director is aware there is no relevant audit 
information of which the company’s auditor 
is unaware
each director has taken all such steps as he 
or she ought to have taken as a director in 
order to make himselfherself aware of any 
relevant audit information and to establish 
that the company’s auditor is aware of that 
information for these purposes relevant 
audit information as defined by section 
4183 of the companies act 2006 means 
information needed by the company’s 
auditor in connection with preparing their 
report set out on pages 100 to 102
auditor
the company’s auditor for 2013 was 
kpmg audit plc following a tender 
process as set out in the audit committee 
report resolutions will be proposed at the 
2014 agm to appoint deloitte llp as the 
company’s auditor and to authorise the 
directors to determine their remuneration spiraxsarco engineering plc annual report and accounts 2013 98
chairman’s introduction board of directors corporate governance report audit committee nomination committee our governance
governance continued
regulatory disclosures continued
research and development
the group continues to devote significant 
resources to the development and the 
updating and expansion of its range of 
products in order to remain at the forefront 
of its world markets the group steam 
specialties rd function which is based 
in cheltenham is tasked with improving 
the group’s pipeline of new products 
decreasing the time to launch expanding 
the group’s addressable market and 
realising additional sales further information 
on the expenditure on rd is contained in 
note 1 on page 1 1 1 the amount of rd 
expenditure capitalised and the amount 
amortised in the year are given in note 13 
on pages 120 and 121
treasury and foreign 
exchange
the group has in place appropriate 
treasury policies and procedures which 
are approved by the board the treasury 
function manages interest rates for both 
borrowings and cash deposits for the 
group and is also responsible for ensuring 
there is sufficient headroom against any 
banking covenants contained within its 
credit facilities and for ensuring there are 
appropriate facilities available to meet the 
group’s strategic plans
in order to mitigate and manage exchange 
rate risk the group routinely enters into 
forward contracts and continues to monitor 
exchange rate risk in respect of foreign 
currency exposures
all these treasury policies and procedures 
are regularly monitored and reviewed 
it is the group’s policy not to undertake 
speculative transactions which create 
additional exposures over and above those 
arising from normal trading activity
political donations
there were no political donations made 
during the year 2012 nil
greenhouse gas emissions
details of our greenhouse gas emissions 
can be found on page 54 of the 
sustainability report
going concern
the group’s business activities together 
with the main trends and factors likely to 
affect its future development performance 
and position and the financial position of 
the group its cash flows liquidity position 
and borrowing facilities are set out in 
the financial review on pages 44 to 47  
in addition note 31 on page 141 includes the 
group’s objectives policies and processes 
for managing its capital its financial risk 
management objectives its financial 
instruments and hedging activities its 
exposures to credit risk and liquidity risk
the group has considerable financial 
resources together with contracts with a 
diverse range of customers and suppliers 
across different geographic areas and 
industries no one customer accounts 
for more than 1 of group turnover as a 
consequence the directors believe that the 
group is well placed to manage its business 
risks successfully despite the current 
uncertain economic outlook
the directors having made appropriate 
enquiries consider that the company 
and the group have adequate resources 
to continue in operational existence and 
that the directors intend to do so for at 
least one year from the date the financial 
statements were signed and that therefore 
it is appropriate to adopt the going concern 
basis in preparing the annual report 
and accounts
pages 96 to 98 form the directors’ report for 
the purposes of the companies act 2006
the strategic report and the directors’ 
report were approved by the board on 
5th march 2014
a j robson 
general counsel and company 
secretary 
5th march 2014 
spiraxsarco engineering plc 
registered no 596337
interactive annual report 
and accounts
our interactive annual report and accounts 
are available on the groups website 
wwwspiraxsarcoengineeringcom under 
the investor relations section the annual 
report and accounts are fully searchable 
and downloadable 99 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
remuneration committee 
letter of introduction
remuneration policy 
report 2014
annual report on 
remuneration 2013
risk management  
committee
statement of  
directors’ responsibilities
regulatory disclosures
statement of directors’ responsibilities
the directors are responsible for preparing 
the annual report and accounts and 
the group and parent company financial 
statements in accordance with applicable 
law and regulations
company law requires the directors to 
prepare group and parent company 
financial statements for each financial 
year under that law they are required to 
prepare the group financial statements in 
accordance with ifrss as adopted by the 
eu and applicable law and have elected 
to prepare the parent company financial 
statements on the same basis
under company law the directors must not 
approve the financial statements unless they 
are satisfied that they give a true and fair 
view of the state of affairs of the group and 
parent company and of their profit or loss for 
that period in preparing each of the group 
and parent company financial statements 
the directors are required to
• 		 s e l ec t 	 s u i t a b l e 	 a c c o u n ti n g 	 p o l i c i es 	 a n d	
then apply them consistently
• 		 m a k e 	 j u d g em en ts 	 a n d 	 es ti m a t es 	 th a t 	 a r e	
reasonable and prudent
• 	 	 s t a t e 	 w h e th e r 	 th e y 	 h a v e 	 b e e n 	 p r e p a r e d 	 i n	
accordance with ifrs as adopted by the eu
• 		 p r e p a r e 	 th e 	 fi na n c i a l 	 s t a t e m en ts 	 o n	
the going concern basis unless it is 
inappropriate to presume that the group 
and the parent company will continue 
in business
the directors are responsible for keeping 
adequate accounting records that are 
sufficient to show and explain the parent 
company’s transactions and disclose with 
reasonable accuracy at any time the financial 
position of the parent company and enable 
them to ensure that its financial statements 
comply with the companies act 2006
they have general responsibility for taking 
such steps as are reasonably open to 
them to safeguard the assets of the group 
and to prevent and detect fraud and 
other irregularities
under applicable law and regulations the 
directors are also responsible for preparing a 
corporate governance report remuneration 
report and regulatory disclosures that 
comply with that law and those regulations
the directors are responsible for the 
maintenance and integrity of the 
corporate and financial information 
included on the group’s website 
wwwspiraxsarcoengineeringcom 
legislation in the uk governing the 
preparation and dissemination of financial 
statements may differ from legislation in 
other jurisdictions
cautionary statement
all statements other than statements of 
historical fact included in this document 
including without limitation those regarding 
the financial condition results operations 
and businesses of spiraxsarco engineering 
plc and its strategy plans and objectives 
and the markets and economies in which it 
operates are forwardlooking statements 
these forwardlooking statements which 
reflect management’s assumptions made 
on the basis of information available to it 
at this time involve known and unknown 
risks uncertainties and other important 
factors which could cause the actual 
results performance or achievements of 
spiraxsarco engineering plc or the markets 
and economies in which we operate to 
be materially different from future results 
performance or achievements expressed or 
implied by such forwardlooking statements 
spiraxsarco engineering plc and its 
directors accept no liability to third parties 
in respect of this report save as would arise 
under english law
accordingly any liability to a person who 
has demonstrated reliance on any untrue or 
misleading statement or omission shall be 
determined in accordance with schedule 
10a of the financial services and markets 
act 2000 it should be noted that schedule 
10a contains limits on the liability of the 
directors of spiraxsarco engineering plc 
so that their liability is solely to spiraxsarco 
engineering plc
responsibility statement
we confirm that to the best of 
our knowledge
• 		 th e 	 fi na n c i a l 	 s t a t em en ts  	 p r ep a r e d 	 i n	
accordance with the applicable set of 
accounting standards give a true and 
fair view of the assets liabilities financial 
position and profit or loss of the company 
and the undertakings included in the 
consolidation taken as a whole and 
• 		 th e 	 m a n a g em en t 	 r e p o rt 	 i n c l u d es 	 a	
fair review of the development and 
performance of the business and 
the position of the company and the 
undertakings included in the consolidation 
taken as a whole together with a 
description of the principal risks that 
they face
signed by 
d j meredith 
finance director 
on behalf of the board of directors 
5th march 2014
“ our annual report and accounts 
give a true and fair view of the state of 
affairs of the group”
board of directors 100 spiraxsarco engineering plc annual report and accounts 2013
independent auditor’s report
financial statements
to the members of spiraxsarco engineering plc only
opinions and conclusions arising from our audit 
1 our opinion on the financial statements is unmodified 
we have audited the financial statements of spiraxsarco engineering plc for the year ended 31 december 2013 set out on pages 103 to 147  
in our opinion 
•	 	 th e 	 fi na n c i a l 	 s t a t em en ts 	 g i v e 	 a 	 tru e 	 a n d 	 f a i r 	 v i e w 	 o f 	 th e 	 s t a t e 	 o f 	 th e 	 gr o u p ’ s 	 a n d 	 o f 	 th e 	 p a r en t 	 c o m p a n y ’ s 	 a ff a i r s 	 a s 	 a t 	 3 1 	 d ec em b er 	 2 0 1 3	
and of the group’s profit for the year then ended 
•	 	 th e 	 gr o u p 	 fi na n c i a l 	 s t a t e m en ts 	 h a v e 	 b een 	 p r o p e r l y 	 p r e p a r e d 	 i n 	 a c c o rd a n c e 	 w i th 	 i n t ern a ti o n a l 	 f i n a n c i a l 	 r e p o rti n g 	 s t a n d a rd s 	 a s 	 a d o p t e d	
by the european union ifrss as adopted by the eu 
•	 	 th e 	 p a r en t 	 c o m p a n y 	 fi na n c i a l 	 s t a t e m en ts 	 h a v e 	 b een 	 p r o p erl y 	 p r ep a r e d 	 i n 	 a c c o r d a n c e 	 w i th 	 i f r s s 	 a s 	 a d o p t e d 	 b y 	 th e 	 e u 	 a n d 	 a s 	 a p p l i e d 	 i n	
accordance with the provisions of the companies act 2006 and 
•	 	 th e 	 fi na n c i a l 	 s t a t em en ts 	 h a v e 	 b een 	 p r e p a r e d 	 i n 	 a c c o rd a n c e 	 w i th 	 th e 	 r e q u i r em en ts 	 o f 	 th e 	 c o m p a n i es 	 a c t 	 2 006 	 a n d  	 a s 	 r eg a rd s 	 th e 	 gr o u p	
financial statements article 4 of the ias regulation 
2 our assessment of risks of material misstatement 
in arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect on our audit 
were as follows 
goodwill £458 million 
refer to page 67 audit committee report of the governance section of the annual report and accounts pages 109 1 1 1 accounting policy 
and pages 120 to 123 financial disclosures 
•	 	 the risk – due to the inherent uncertainty involved in forecasting and discounting future cash flows which support the carrying value of 
goodwill this is one of the key judgemental areas in our audit there is an increased risk of impairment for i the goodwill balances that 
arose in recent acquisitions and ii for amounts allocated to components of the group that have experienced trading difficulties in recent 
years with operations in europe being of most concern given the downturn in performance in prior periods 
•	 	 our response – our audit procedures included among others testing the integrity of the key assumptions applied by the group in 
particular those relating to future revenue growth and discount rates we utilised our own valuation specialists to assist us in comparing 
the group’s discount rate assumption to riskadjusted market rates the growth rates were compared to the approved budgets which 
represent the group’s forecasts of expected future performance as well as to our own assessments based on our knowledge of the 
business the historical performance of the business and our view on market conditions we reperformed the group’s sensitivity analysis 
and having ascertained the extent of change in the key assumptions that either individually or collectively would be required for goodwill to 
be impaired and the circumstances that could result in those changes considered the likelihood of such a set of circumstances arising 
  we also assessed whether the group’s disclosures about the sensitivity of the outcome of the impairment assessment to changes in key 
assumptions properly reflected the risks inherent in the valuations and the requirements of accounting standards 
tax payable £169 million and uk deferred tax asset £142 million 
refer to page 67 audit committee report of the governance section of the annual report and accounts pages 109 1 13 accounting policy 
and pages 1 18 125 to 126 financial disclosures 
•	 	 the risk – the group operates in many tax jurisdictions and must comply with complex rules with regard to corporate taxation in 
particular in the area of transfer pricing there is judgement involved in assessing the amount of exposures from challenges by local tax 
authorities as well as the recoverability of deferred tax assets in particular those arising from tax losses in the uk trading entity due to the 
inherent uncertainty in assessing future taxable profits 
•	 	 our response – our procedures in this area included utilising our global tax specialists to assist us in evaluating the group’s assessment 
of tax exposures appraising the likely outcome of tax treatments and inspecting correspondence with the tax authorities to assess the 
reasonableness of the tax provisions made 
  the deferred tax asset arising from tax losses in the uk trading entity results principally from temporary deficit reduction contributions into 
the main uk pension schemes we assessed the recoverability of this asset through stress testing the financial forecasts of the uk trading 
entity we tested the integrity of the key assumptions applied in the forecasts such as future revenue growth and profit margins and made 
our own assessments in relation to the future performance of the uk trading entity 
  we also considered the adequacy of the group’s disclosures in respect of deferred tax and uncertain tax positions  101 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
opinions and conclusions arising from our audit continued 
development costs £28 million capitalised in the year and software costs £52 million capitalised in the year 
refer to page 67 audit committee report of the governance section of the annual report and accounts pages 109 1 1 1 accounting policy 
and pages 120 to 121 financial disclosures 
•	 	 the risk – development costs and software costs are expensed unless they meet specific criteria in accounting standards in which case 
they are capitalised the assessment of whether or not development and software related costs meet the criteria regarding the required 
degree of confidence in the technical feasibility and commerciality of each project is inherently judgemental and therefore there is a risk 
that costs may be inappropriately capitalised and profit for the period overstated 
•	 	 our response – our audit work included an evaluation of the adequacy of the group’s policies for capitalisation of development and 
software related costs against the requirements of the relevant accounting standards we examined the nature of capitalised development 
and software related costs and tested a sample of these costs compared to the requirements of those accounting standards in relation 
to capitalised development costs we stress tested through discussion with the group’s technical department the technical feasibility of 
completing each project and their commercial prospects we also considered the adequacy of the group’s disclosures about the degree 
of judgement involved in determining the carrying amount of these assets 
3 our application of materiality and an overview of the scope of our audit 
the materiality for the group financial statements as a whole was set at £105m this has been determined with reference to a benchmark 
of group profit before taxation of which it represents 7 which we consider to be one of the principal considerations for members of the 
company in assessing the financial performance of the group 
we agreed with the audit committee to report to it all corrected and uncorrected misstatements we identified through our audit with a value 
in excess of £04m in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds 
the group is characterised by a diverse geographic footprint represented by a large number of medium and small sized operations 
audits for group reporting purposes were performed by the group audit team at the key reporting component in the uk and by component 
audit teams in the following countries uk us two components italy two components china france south korea argentina germany 
two components russia singapore taiwan brazil australia and spain these audits covered 7 4 of total group revenue 72 of group 
profit before taxation and 79 of total group assets analytical procedures were performed by a component audit team in italy and by the 
group audit team for the group components in canada japan and the netherlands the analytical procedures covered 4 of total group 
revenue 4 of group profit before taxation and 4 of total group assets the remaining 22 of group revenue 24 of group profit before 
tax and 17 of group total assets are represented by 33 components none of which represented individually more than 2 of total group 
revenue group profit before tax or group total assets statutory audits are performed at the majority of these components but generally 
these are completed after the date of this report we took account of the prior year audits of these entities in assessing the risk that a material 
misstatement could arise 
the audits undertaken for group reporting purposes at the key reporting components of the group were all performed to materiality levels set 
by or agreed with the group audit team these materiality levels were set individually for each component and ranged from £0 1m to £32m 
detailed audit instructions were sent to all the auditors in these locations these instructions covered the significant audit areas that should be 
covered by these audits which included the relevant risks of material misstatement detailed above and set out the information required to be 
reported back to the group audit team the group audit team visited the key reporting component in person or attended telephone meetings with 
the auditors at the following countries uk one component not audited by the group audit team us two components china and south korea 
4 our opinion on other matters prescribed by the companies act 2006 is unmodified 
in our opinion 
•	 	 th e 	 p a rt 	 o f 	 th e 	 an n u a l 	 r e p o rt 	 o n 	 r em u n e r a ti o n 	 t o 	 b e 	 a u d i t e d 	 h a s 	 b een 	 p r o p erl y 	 p r ep a r e d 	 i n 	 a c c o rd a n c e 	 w i th 	 th e 	 c o m p a n i es 	 a c t 	 2 006 	
•	 	 th e 	 i n f o rm a ti o n 	 g i v en 	 i n 	 th e 	 s tr a t eg i c 	 r ep o rt 	 a n d 	 th e 	 di r ec t o r s ’ 	 r ep o rt 	 f o r 	 th e 	 fi na n c i a l 	 y ea r 	 f o r 	 w h i c h 	 th e 	 fi na n c i a l 	 s t a t em en ts 	 a r e 	 p r ep a r e d	
is consistent with the financial statements and 
•	 	 th e 	 i n f o rm a ti o n 	 g i v en 	 i n 	 th e 	 g o v e rn a n c e 	 r e p o rt 	 s e t 	 o u t 	 o n 	 p a g es 	 7 0 	 t o 	 7 2 	 w i th 	 r es p ec t 	 t o 	 i n t ern a l 	 c o n tr o l 	 a n d 	 ri s k 	 m a n a g em en t 	 s y s t em s 	 i n	
relation to financial reporting processes and on page 97 with respect to share capital structures is consistent with the financial statements 
5 we have nothing to report in respect of the matters on which we are required to report by exception 
under isas uk and ireland we are required to report to you if based on the knowledge we acquired during our audit we have identified 
other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements a material 
misstatement of fact or that is otherwise misleading 
in particular we are required to report to you if 
•	 	 w e 		 h a v e 	 i d en ti fi e d	 m a t e r i a l 	 i n c o n s i s t en c i es 	 b e tw een 	 th e 	 kn o w l e d g e 	 w e 	 a c q u i r e d 	 d u ri n g 	 o u r 	 a u d i t 	 a n d 	 th e 	 di r ec t o r s ’ 	 s t a t em en t 	 th a t	
they consider that the annual report and financial statements taken as a whole is fair balanced and understandable and provides the 
information necessary for shareholders to assess the group’s performance business model and strategy or 
•	 	 th e 	 a u d i t 	 c o m m i tt ee 	 r e p o rt 	 o f 	 th e 	 g o v e rn a n c e 	 s ec ti o n 	 o f 	 th e 	 an n u a l 	 r ep o rt 	 a n d 	 a c c o u n ts 	 d o es 	 n o t 	 a p p r o p ri a t el y 	 a d d r es s 	 m a tt er s	
communicated by us to the audit committee  102 spiraxsarco engineering plc annual report and accounts 2013
opinions and conclusions arising from our audit continued
under the companies act 2006 we are required to report to you if in our opinion 
•	 	 a d e q u a t e 	 a c c o u n ti n g 	 r ec o rd s 	 h a v e 	 n o t 	 b een 	 k ep t 	 b y 	 th e 	 p a r en t 	 c o m p a n y  	 o r 	 r e tu rn s 	 a d e q u a t e 	 f o r 	 o u r 	 a u d i t 	 h a v e 	 n o t 	 b een 	 r ec ei v e d 	 fr o m	
branches not visited by us or 
•	 	 th e 	 p a r en t 	 c o m p a n y 	 fi na n c i a l 	 s t a t e m en ts 	 a n d 	 th e 	 p a rt 	 o f 	 th e 	 an n u a l 	 r e p o rt 	 o n 	 r e m u n er a ti o n 	 t o 	 b e 	 a u d i t e d 	 a r e 	 n o t 	 i n 	 a g r eem en t 	 w i th 	 th e	
accounting records and returns or 
•	 	 c e rt a i n 	 d i s c l o s u r es 	 o f 	 di r ec t o r s ’ 	 r e m u n e r a ti o n 	 s p ec i fi e d	 b y 	 l a w 	 a r e 	 n o t 	 m a d e  	 o r	
•	 	 w e 	 h a v e 	 n o t 	 r ec ei v e d 	 a l l 	 th e 	 i n f o r m a ti o n 	 a n d 	 e x p l a n a ti o n s 	 w e 	 r e q u i r e 	 f o r 	 o u r 	 a u d i t  	 o r	
•	 	 a 	 c o r p o r a t e 	 g o v ern a n c e 	 s t a t e m en t 	 h a s 	 n o t 	 b een 	 p r e p a r e d 	 b y 	 th e 	 c o m p a n y 	
under the listing rules we are required to review 
•	 	 th e 	 di r ec t o r s ’ 	 s t a t em en t  	 s e t 	 o u t 	 o n 	 p a g e 	 9 8  	 i n 	 r e l a t i o n 	 t o 	 g o i n g 	 c o n c ern  	 a n d	
•	 	 th e 	 p a rt 	 o f 	 th e 	 c o rp o r a t e 	 g o v e rn a n c e 	 s t a t e m en t 	 o n 	 p a g es 	 6 2 – 6 3 	 r el a ti n g 	 t o 	 th e 	 c o m p a n y ’ s 	 c o m p l i a n c e 	 w i th 	 th e 	 n i n e 	 p r o v i s i o n s 	 o f 	 th e	
2010 uk corporate governance code specified for our review 
we have nothing to report in respect of the above responsibilities 
scope of report and responsibilities 
as explained more fully in the directors’ responsibilities statement set out on page 99 the directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view a description of the scope of an audit of financial statements is 
provided on the financial reporting council’s website at wwwfrcorgukauditscopeukprivate this report is made solely to the company’s 
members as a body and is subject to important explanations and disclaimers regarding our responsibilities published on our website at 
wwwkpmgcomukauditscopeukco2013a which are incorporated into this report as if set out in full and should be read to provide an 
understanding of the purpose of this report the work we have undertaken and the basis of our opinions 
john cain senior statutory auditor  
for and on behalf of kpmg audit plc statutory auditor  
chartered accountants  
15 canada square
london
e14 5gl
5th march 2014
financial statements continued
independent auditor’s report continued
to the members of spiraxsarco engineering plc only 1 strategic report 2 governance 3 financial statements
103 spiraxsarco engineering plc annual report and accounts 2013
statements of financial position
at 31st december 2013
the group parent company
notes
2013
£000
2012
£000
2013
£000
2012
£000
assets
non–current assets
property plant and equipment 12 174218 174836 – –
goodwill 13 45765 45855 – –
other intangible assets 13 44594 43711 – –
prepayments 162 223 – –
loans to subsidiaries 14 – – 39157 64155
investment in subsidiaries 15 – – 160671 48657
investment in associate 16 7039 7702 220 220
deferred tax assets 17 34472 40699 936 824
306250 313026 200984 113856
current assets
inventories 18 104164 103690 – –
trade receivables 145380 145686 – –
due from subsidiaries – – 157546 143748
other current assets 19 19880 16188 1643 255
taxation recoverable 3709 1317 – –
bank deposits 28 32901 – – –
cash and cash equivalents 28 84417 99832 – 4261
390451 366713 159189 148264
total assets 696701 679739 360173 262120
equity and liabilities
current liabilities
trade and other payables 20 86108 90469 2234 810
bank overdrafts 28 1809 387 1465 –
short–term borrowing 28 39338 7 000 34000 7 000
current portion of long–term borrowings 28 298 7168 – –
current tax payable 16927 12399 – –
144480 117423 37699 7810
net current assets 245971 249290 121490 140454
non–current liabilities
long–term borrowings 28 59473 33601 55000 27500
deferred tax liabilities 17 15853 17003 428 –
post–retirement benefits 27 72043 72663 2141 56
provisions 22 720 991 – –
long–term payables 598 1509 – –
due to subsidiaries – – 8300 23941
148687 125767 61587 51497
total liabilities 293167 243190 99286 59307
net assets 2 403534 436549 260887 202813
equity
share capital 23 19568 19536 19568 19536
share premium account 59954 56172 59954 56172
other reserves 23 11474 28098 4768 6969
retained earnings 311737 331945 176597 120136
equity shareholders’ funds 402733 435751 260887 202813
non–controlling interest 801 798 – –
total equity 403534 436549 260887 202813
total equity and liabilities 696701 679739 360173 262120
these accounts were approved by the board of directors on 5th march 2014 and signed on its behalf by
directors
n j anderson d j meredith spiraxsarco engineering plc annual report and accounts 2013 104
financial statements continued
consolidated income statement
for the year ended 31st december 2013
restated
notes
adjusted
2013
£000
adjustments
2013
£000
total
2013
£000
adjusted
2012
£000
adjustments
2012
£000
total
2012
£000
revenue 2 689388 – 689388 661723 – 661723
operating costs 3 537762 4586 542348 525478 10531 536009
operating profit 2 151626 4586 147040 136245 10531 125714
financial expenses 4268 – 4268 4442 – 4442
financial income 1968 – 1968 1272 – 1272
5 2300 – 2300 3170 – 3170
share of profit of associate 1730 756 974 1873 324 1549
profit before taxation 6 151056 5342 145714 134948 10855 124093
taxation 8 44542 1148 43394 39511 3060 36451
profit for the period 106514 4194 102320 95437 7795 87642
attributable to
equity shareholders 106298 4194 102104 95233 7795 87438
non–controlling interest 216 – 216 204 – 204
profit for the period 106514 4194 102320 95437 7795 87642
earnings per share 10
basic earnings per share 1388p 1334p 1222p 1122p
diluted earnings per share 1378p 1324p 1208p 1109p
dividends 11
dividends per share 590p 530p
special dividend per share – 1000p
dividends paid during the year
per share 1550p 502p
adjusted figures exclude certain non–operational items as detailed in note 2 all amounts relate to continuing operations
the notes on pages 109 to 147 form an integral part of the accounts

  2012 figures have been restated to comply with ias 19r see note 1 1 strategic report 2 governance 3 financial statements
105 spiraxsarco engineering plc annual report and accounts 2013
consolidated statement of comprehensive income
for the year ended 31st december 2013 
the group
2013
£000
2012
£000
profit for the year 102320 87642
items that will not be reclassified to profit or loss
remeasurement loss on post–retirement benefits 2866 8259
deferred tax on remeasurement loss on post–retirement benefits 1074 1510
3940 6749
items that may be reclassified subsequently to profit or loss
foreign exchange translation differences 12875 11312
non–controlling interest foreign exchange translation differences 49 20
profit on cash flow hedges net of tax 48 2
12876 11290
total comprehensive income for the year 85504 69603
attributable to
equity shareholders 85337 69379
non–controlling interest 167 224
total comprehensive income for the year 85504 69603

  2012 figures have been restated to comply with ias 19r see note 1
consolidated statement of changes in equity
for the year ended 31st december 2013
the group
share
capital
£000
share
premium
account
£000
other
reserves
£000
retained
earnings
£000
equity
shareholders’
funds
£000
non
controlling
interest
£000
total
equity
£000
balance at 1st january 2013 19536 56172 28098 331945 435751 798 436549 
profit for the year – – – 102104 102104 216 102320 
other comprehensive 
expense income
foreign exchange 
translation differences – – 12875 – 12875 49 12924
remeasurement loss on post 
retirement benefits – – – 2866 2866 – 2866
deferred tax on remeasurement 
loss on postretirement benefits – – – 1074 1074 – 1074
profit on cash flow hedges
reserve – – 48 – 48 – 48 
total other comprehensive
expense for the year – – 12827 3940 16767 49 16816
total comprehensive income for
the year – – 12827 98164 85337 167 85504
contributions by and distributions
to owners of the company
dividends paid – – – 120792 120792 164 120956
equity settled share plans net of tax – – – 2420 2420 – 2420 
issue of share capital 66 3782 – – 3848 – 3848 
employee benefit trust shares 34 – 3797 – 3831 – 3831
balance at 31st december 2013 19568 59954 11474 311737 402733 801 403534
other reserves represent the group’s translation cash flow hedge and capital redemption reserves see note 23  spiraxsarco engineering plc annual report and accounts 2013 106
financial statements continued
consolidated statement of changes in equity
for the year ended 31st december 2012
the group
share
capital
£000
share
premium
account
£000
other
reserves
£000
retained
earnings
£000
equity
shareholders’
funds
£000
non 
controlling
interest
£000
total
equity
£000
balance at 1st january 2012 19418 52262 39408 288243 399331 789 400120 
profit for the year – – – 87438 87438 204 87642 
other comprehensive  
expenseincome
foreign exchange translation
differences – – 11312 – 11312 20 11292
remeasurement loss on post
retirement benefits – – – 8259 8259 – 8259
deferred tax on remeasurement 
loss on postretirement benefits – – – 1510 1510 – 1510 
profit on cash flow hedges
reserve – – 2 – 2 – 2 
total other comprehensive
 expenseincome for the year – – 11310 6749 18059 20 18039
total comprehensive expense
income for the year – – 11310 80689 69379 224 69603 
contributions by and distributions
to owners of the company
dividends paid – – – 39126 39126 215 39341
equity settled share plans net of tax – – – 2139 2139 – 2139 
issue of share capital 118 3910 – – 4028 – 4028 
balance at 31st december 2012 19536 56172 28098 331945 435751 798 436549 
2012 figures have been restated to comply with ias 19r see note 1 1 strategic report 2 governance 3 financial statements
107 spiraxsarco engineering plc annual report and accounts 2013
statement of changes in equity
for the year ended 31st december 2013
parent company
share
capital
£000
share
premium
account
£000
other  
reserves
£000
retained
earnings
£000
total
equity
£000
balance at 1st january 2013 19536 56172 6969 120136 202813 
profit for the year – – – 174934 174934 
other comprehensive expense income
remeasurement gain on postretirement benefits – – – 431 431 
deferred tax on remeasurement gain on 
postretirement benefits – – – 86 86
total other comprehensive income for the year – – – 345 345 
total comprehensive income for the year – – – 175279 175279 
contributions by and distributions to owners of the company
dividends paid – – – 120792 120792
equity settled share plans net of tax – – – 1974 1974 
issue of share capital 66 3782 – – 3848 
employee benefit trust shares 34 – 3797 – 3831
investment in subsidiaries in relation to share options granted – – 1596 – 1596 
balance at 31st december 2013 19568 59954 4768 176597 260887 
statement of changes in equity
for the year ended 31st december 2012
parent company
share
capital
£000
share
premium
account
£000
other  
reserves
£000
retained
earnings
£000
total
equity
£000
balance at 1st january 2012 19418 52262 6201 145456 223337 
profit for the year – – – 12691 12691 
other comprehensive expense income
remeasurement loss on postretirement benefits – – – 252 252
deferred tax on remeasurement loss on 
postretirement benefits – – – 58 58 
total other comprehensive expense for the year – – – 194 194
total comprehensive income for the year – – – 12497 12497 
contributions by and distributions to owners of the company
dividends paid – – – 39126 39126
equity settled share plans net of tax – – – 1309 1309 
issue of share capital 118 3910 – – 4028 
investment in subsidiaries in relation to share options granted – – 768 – 768 
balance at 31st december 2012 19536 56172 6969 120136 202813 
2012 figures have been restated to comply with ias 19r see note 1
other reserves represent the parent company’s sharebased payments capital redemption and employee benefit trust reserves  
see note 23 spiraxsarco engineering plc annual report and accounts 2013 108
financial statements continued
cash flow statements
for the year ended 31st december 2013
the group parent company
notes
2013
£000
2012
£000
2013
£000
2012
£000
cash flows from operating activities
profit before taxation 145714 124093 178962 12773
depreciation amortisation and impairment 26678 24971 – –
dividends received – – 186059 17954
share of profit of associates 974 1549 – –
equity settled share plans 3315 2815 1974 1309
net finance incomeexpense 2300 3170 836 929
operating cash flow before changes in working capital
and provisions 177033 153500 5959 4801
change in trade and other receivables 8704 8020 1388 213
change in amounts due from subsidiaries – – 13984 3978
change in amounts due to subsidiaries – – 17786 22214
change in inventories 3573 8631 – –
change in provisions and postretirement benefits 6985 6974 2423 2306
change in trade and other payables 3309 181 1424 473
cash generated from operations 161080 146956 40116 10443
interest paid 1551 1478 186 803
income taxes paid 42318 37941 – 1864
net cash from operating activities 117211 107537 40302 7776
cash flows from investing activities
purchase of property plant and equipment 20451 23384 – –
proceeds from sale of property plant and equipment 1777 2720 – –
purchase of software and other intangibles 5240 6116 – –
development expenditure capitalised 2779 2911 – –
acquisition of businesses 5601 4501 – –
bank deposits 32901 – – –
interest received 1968 1272 1652 1702
dividends received 964 1454 99798 17954
net cash used in investing activities 62263 31466 101450 19656
cash flows from financing activities
proceeds from issue of share capital 3848 4028 3848 4028
employee benefit trust share purchase 4430 – 4430 –
repaid borrowings 4383 26468 500 15573
new borrowings 57506 29537 55000 27500
change in finance lease liabilities 28 353 1267 – –
dividends paid including minorities 120956 39341 120792 39126
net cash used in financing activities 68768 30977 66874 23171
net change in cash and cash equivalents 13820 45094 5726 4261
cash and cash equivalents at beginning of period 99445 55978 4261 –
exchange movement 28 3017 1627 – –
cash and cash equivalents at end of period 82608 99445 1465 4261
bank deposits 28 32901 – – –
borrowings and finance leases 28 99109 47769 89000 34500
net cash 28 16400 51676 90465 30239
2012 figures have been restated to comply with ias 19r see note 1 1 strategic report 2 governance 3 financial statements
109 spiraxsarco engineering plc annual report and accounts 2013
notes to the accounts
1 accounting policies
basis of preparation 
the parent company and consolidated accounts have been prepared in accordance with international financial reporting standards ifrs 
issued by the international accounting standards board iasb that have been adopted by the european union eu 
the preparation of accounts in conformity with ifrs requires the directors to make judgements estimates and assumptions that affect the 
application of policies and reported amounts of assets and liabilities income and expenses the estimates and associated assumptions are 
based on historical experiences and various other factors that are believed to be reasonable under the circumstances the results of which 
form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources 
actual results may differ from these estimates as further explained below the most significant effect on the financial statements from 
accounting policies requiring judgement are in the areas of capitalisation of research and development rd and software goodwill taxation 
and pensions 
the major judgements made in respect of rd are those in assessing whether an intangible asset arises from the development phase of a 
product development project ie 
i  the technical feasibility of completing the product so it will be ready for sale 
ii  the market for the product and the future sales that the product will generate 
iii  assessing the costs directly attributable to the individual product during its development 
the group has a very wide product range and the general nature of product development is that of a number of modest sized projects 
the value of capitalised development costs is disclosed in note 13 
the judgements made in respect of capitalising software costs are those in assessing whether future economic benefits will be generated by 
the asset and the useful life of the asset more detail on the useful life is given in the intangible assets accounting policy on page 1 1 1 below
the judgements made in respect of goodwill are those relating to the key assumptions used to assess the value in use in the annual 
impairment tests more detail about these key assumptions is disclosed in note 13
the judgements made in respect of taxation are those in assessing the amount of exposure to challenges from tax authorities with regard 
to liabilities in relation to corporate and indirect taxation judgement is also required in assessing the recoverability of deferred tax assets 
more detail is given in the taxation accounting policy on page 1 13 below 
the judgements made in respect of pensions are those in assessing the assumptions chosen to calculate the net obligation in respect of 
defined benefit pensions more detail is given in the employee benefits accounting policy on page 1 12 below 
the estimates and underlying assumptions are reviewed on an ongoing basis revisions to accounting estimates are recognised in the 
period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision 
affects both current and future periods 
the group has considerable financial resources together with a diverse range of products and customers across wide geographic areas and 
industries as a consequence the directors believe that the group is well placed to manage its business risks successfully 
further information on the group’s business activities performance and position together with the financial position of the group its capital 
structure and cash flow are included in the business review and financial review on pages 28 to 47  in addition note 31 to the financial 
statements discloses details of the group’s financial risk management and credit facilities 
the consolidated accounts are presented in pounds sterling which is the company’s functional currency rounded to the nearest thousand 
with effect from 1st january 2013 the group has adopted ias 19 revised 201 1 employee benefits which introduces a number of changes 
to accounting for defined benefit plans the key change that impacts the group is the change in assumption on the expected return on plan 
assets the requirement to use the expected return on plan assets has been replaced with a requirement to recognise interest on plan assets 
by using the discount rate used to measure the defined benefit obligation financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 110
notes to the accounts continued
1 accounting policies continued 
the impact of this change in accounting policy on the current and prior year financial statements which have been restated is as follows
consolidated income statement
2013
£000
2012
£000
financial income 3822 3559
taxation 866 956
profit for the period 2956 2603
consolidated statement of comprehensive income
2013
£000
2012
£000
actuarial loss on postretirement benefits 3822 3559
deferred tax on actuarial loss on postretirement benefits 866 956
total comprehensive income for the period 2956 2603
earnings per share 2013 2012
basic 39p 34p
diluted 38p 33p 
an additional cost in 2012 of £1 14000 for administrative and investment expenses under ias 19 revised 201 1 has not been recognised due 
to materiality
there has been no change to previously reported retained earnings balance sheet amounts or cash flows other than consequential 
adjustments to the analysis of operating cash flows
the group has adopted ifrs 13 fair value measurement which lays out the framework for determining the measurement of fair value and 
the disclosure of information relating to fair value and the disclosure of information relating to fair value measurement ifrs 13 does not 
materially affect any fair value measurement of the group’s assets or liabilities with changes being limited to presentation and disclosure and 
therefore has no effect on the group’s financial position or performance
the group has also adopted ias 1 amendment presentation of financial statements which changes the grouping of items presented in 
the consolidated statement of comprehensive income so that items which may be reclassified to profit and loss in the future are presented 
separately from items that will never be reclassified the amendment affects presentation only and has no impact on the group’s financial 
position or performance
in addition with effect from 1st january 2013 the group has implemented ias 28 amendment investments in associates and ifrs 10 
consolidated financial statements the adoption of these standards has had no material impact on the group’s financial performance or 
position and there has been no requirement to restate prior year comparatives
a number of standards amendments and interpretations have been issued and endorsed by the eu but are not yet effective and accordingly 
the group has not yet adopted the cumulative impact of these standards is not expected to be significant 
basis of accounting
 i   s u b s idi a r ie s 
the group accounts include the results of the company and all its subsidiary undertakings subsidiaries are entities controlled by the 
group control exists when the group has the power directly or indirectly to govern the financial and operating policies of an entity so as 
to obtain benefits from its activities in assessing control potential voting rights that presently are exercisable or convertible are taken into 
account the accounts of subsidiaries are included in the consolidated accounts from the date that control commences until the date 
that control ceases 
 i i  a s s o c iat e s 
associates are those entities for which the group has significant influence but not control over the financial and operating policies 
the accounts include the group’s share of the total recognised income and expense of associates on an equity accounted basis from 
the date that significant influence commences until the date that significant influence ceases 
iii  transactions eliminated on consolidation 
intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in 
preparing the accounts unrealised gains arising from transactions with associates are eliminated to the extent of the group’s interest in 
the entity 
 i v  co m p a n y 
under section 408 of the companies act 2006 the company is exempt from the requirement to present its own income statement  1 strategic report 2 governance 3 financial statements
111 spiraxsarco engineering plc annual report and accounts 2013
1 accounting policies continued
foreign currency
 i  o n c ons o l i d at i on 
the assets and liabilities of foreign operations are translated into sterling at exchange rates ruling at the balance sheet date 
the revenues expenses and cash flows of foreign operations are translated into sterling at average rates of exchange ruling during the 
year where the notes to the group accounts include tables reconciling movements between opening and closing balances assets and 
liabilities are translated at balance sheet rates and revenue and expenses are translated at average rates with the exchange differences 
arising being disclosed separately 
exchange differences arising from the translation of the net investment in foreign operations are taken to a separate translation reserve within 
equity they are recycled and recognised in the income statement upon disposal of the operation in respect of all foreign operations any 
differences that have arisen before 1st january 2004 the date of transition to ifrs are not presented as a separate component of equity 
ii  foreign currency transactions 
transactions in foreign currencies are translated to the respective currencies of the group entities at the foreign exchange rate at the 
date of the transaction monetary assets and liabilities at the balance sheet date denominated in a currency other than the functional 
currency of the entity are translated at the foreign exchange rate ruling at that date foreign exchange differences arising on translation 
are recognised in the income statement nonmonetary assets and liabilities that are measured in terms of historical cost in a foreign 
currency are translated using the exchange rate at the date of the transaction nonmonetary assets and liabilities denominated in foreign 
currencies that are stated at fair value are translated at foreign exchange rates ruling at the dates fair value was determined 
cash flow hedges 
where a derivative financial instrument is designated as a hedge of the variability in cash flows of a highly probable forecasted transaction 
the effective part of any gain or loss on the derivative financial instrument is recognised in other comprehensive income and presented in the 
cash flow hedge reserve the associated gain or loss is removed from equity and recognised in the income statement in the period in which 
the transaction to which it relates occurs 
property plant and equipment 
items of property plant and equipment are stated at cost or deemed cost less accumulated depreciation 
certain items of property plant and equipment that had been revalued to fair value prior to 1st january 2004 the date of transition to ifrs 
are measured on the basis of deemed cost being the revalued amount at the date of that revaluation 
depreciation is charged to the income statement on a straightline basis at rates which write down the value of assets to their residual values 
over their estimated useful lives land is not depreciated the principal rates are as follows 
freehold buildings 15 office equipment 125333
plant and machinery 10125 motor vehicles 20
office furniture and fittings 10 tooling and patterns 10
the depreciation rates are reassessed annually
intangible assets 
i   go o d wi l l 
all business combinations after 1st january 2004 are accounted for by applying the acquisition method goodwill represents the 
difference between the cost of the acquisition and the fair value of the net identifiable assets acquired goodwill is stated at cost less any 
accumulated impairment losses goodwill is allocated to cashgenerating units and is not amortised but is tested annually for impairment 
see note 13 for more detail in respect of acquisitions prior to 1st january 2004 goodwill is included on the basis of its deemed cost 
which represents the amount recorded under previous uk generally accepted accounting practice gaap 
 i i   r d  
expenditure on rd is charged to the income statement in the period in which it is incurred except that development expenditure 
is capitalised where the development costs relate to new or substantially improved products that are subsequently to be released 
for sale and will generate future economic benefits the expenditure capitalised includes staff costs and related expenses 
capitalised development expenditure is stated at cost less accumulated amortisation see below and any impairment losses 
iii  other intangible assets 
intangible assets other than goodwill that are acquired by the group are stated at cost less accumulated amortisation see below and 
any impairment losses annual impairment tests are performed on acquired intangible assets by comparing the carrying value with the 
recoverable amount being the higher of the fair value less cost to sell and value in use discounted at an appropriate discount rate of 
future cash flows in respect of intangible assets for the relevant cash generating unit more detail is given in note 13 
 i v   a m or t is at i on  
amortisation is charged to the income statement on a straightline basis over the estimated useful lives of intangible assets other 
than goodwill from the date they are available for use goodwill is tested for impairment annually the principal amortisation rates are 
as follows 
capitalised development costs 20 manufacturing designs and core technology 10
erp systems and software 12520 non compete undertakings 2050
brand names and trademarks 1020 spiraxsarco engineering plc annual report and accounts 2013 112
financial statements continued
notes to the accounts continued
1 accounting policies continued 
inventories 
inventories are measured at the lower of cost and net realisable value the cost of inventories includes expenditure incurred in acquiring 
the inventories production or conversion costs and other costs in bringing them to their existing location and condition in the case of 
manufactured inventories and work in progress cost includes an appropriate share of production overheads based on normal operating 
capacity cost also includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases 
of inventories 
cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits with an original maturity usually of three months or less 
bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a component 
of cash and cash equivalents for the purpose of the cash flow statements 
going concern
the statement on the going concern assumption is included within corporate governance on page 98 
employee benefits
i  defined contribution plans 
obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred 
ii  defined benefit plans 
the costs of providing pensions under defined benefit schemes are calculated in accordance with the advice of qualified actuaries and 
spread over the period during which benefit is expected to be derived from the employees’ services the group’s net obligation in respect 
of defined benefit pensions is calculated separately for each plan by estimating the amount of future benefit that employees have earned 
in return for their service in the current and prior periods past service costs are recognised straight away that benefit is discounted at 
rates reflecting the yields on aa credit rated corporate bonds that have maturity dates approximating the terms of the group’s obligations 
to determine its present value pension scheme assets are measured at fair value at the balance sheet date actuarial gains and losses 
differences between the expected and actual returns and the effect of changes in actuarial assumptions are recognised in the statement 
of comprehensive income in the year they arise any scheme surplus to the extent it is considered recoverable or deficit is recognised in 
full in the balance sheet 
  the cost of other postemployment liabilities are calculated in a similar way to defined benefit pension schemes and spread over the 
period which benefit is expected to be derived from the employees’ services in accordance with the advice of qualified actuaries 
iii  employee share plans 
incentives in the form of shares are provided to employees under share option and share award schemes the fair value of these options 
and awards at their date of grant is charged to the income statement over the relevant vesting periods with a corresponding increase in 
equity the value of the charge is adjusted to reflect expected and actual levels of options and share awards vesting 
iv  longterm share incentive plans 
the fair value of awards is measured at the date of grant and the cost spread over the vesting period the amount recognised as an 
expense is not adjusted to reflect market based performance conditions but is adjusted for nonmarket based performance conditions 
revenue 
revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been 
transferred to the buyer which is typically on delivery for service contracts revenue is recognised at the point of customer acceptance 
revenue from projects is recognised as income in proportion to the stage of completion of the transaction at the balance sheet date 
judgements can be required to assess the stage of completion although in the vast majority of projects the position is relatively easy to 
identify projects where a stage of completion assessment is needed typically involve the sale of products installation and commissioning 
which are usually separately identified elements in the project order 
no revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or associated costs or there is the 
possibility of return of the goods no revenue is recognised if there is significant continuing management involvement with the goods 
as soon as the outcome of a project or service contract can be estimated reliably revenue and expenses are recognised in the income 
statement in proportion to the stage of completion of the project or service contract an expected loss on a project or service contract is 
recognised immediately in the income statement  1 strategic report 2 governance 3 financial statements
113 spiraxsarco engineering plc annual report and accounts 2013
1 accounting policies continued 
leases 
 i  o p e r at i n g l e ase s 
payments made under operating leases are charged to the income statement on a straightline basis over the term of the lease 
 i i  f i na n c e l e ase s  
leases where the group assumes substantially all of the risks and rewards of ownership are classified as finance leases as if the asset 
had been purchased outright assets acquired under finance leases are recognised as assets of the group and the capital and interest 
elements of the leasing commitments are shown as obligations in creditors depreciation is charged on a consistent basis with similar 
owned assets or over the lease term if shorter the interest element of the lease payment is charged to the income statement on a basis 
which produces a consistent rate of charge over the period of the liability 
taxation 
the tax charge comprises current and deferred tax income tax expense is recognised in the income statement unless it relates to items 
recognised directly in equity or in other comprehensive income when it is also recognised in equity or other comprehensive income 
respectively current tax is the expected tax payable on the profit for the year and any adjustments in respect of previous years using tax 
rates enacted or substantively enacted at the reporting date deferred tax is recognised using the balance sheet liability method providing for 
temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the accounts deferred tax assets 
are recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised deferred tax 
is provided using rates of tax that have been enacted or substantively enacted at the balance sheet date or the date that the temporary 
differences are expected to reverse deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer 
probable that the related tax benefit will be realised 
share capital and repurchased shares
when share capital recognised as equity is repurchased the amount of the consideration paid including directly attributable costs is 
recognised as a deduction from equity repurchased shares are classified as treasury shares or placed in an employee benefit trust and are 
presented as a deduction from total equity 
share options granted to subsidiary employees
the parent company grants share options over its own ordinary shares directly to employees of subsidiary companies these employees 
provide services to the subsidiary companies the cost of these shares is not recharged and therefore the fair value of the share options 
granted is recognised as a capital contribution to the subsidiary companies this is accounted for as an increase in investments with a 
corresponding increase in a nondistributable component of equity  spiraxsarco engineering plc annual report and accounts 2013 114
financial statements continued
notes to the accounts continued
2 segmental reporting
as required by ifrs 8 operating segments the following segmental information is presented in a consistent format with management 
information considered by the board 
analysis by location of operation 
2013
gross
revenue
£000
intersegment
revenue
£000
revenue
£000
total
operating
profit
£000
adjusted
operating
profit
£000
adjusted
operating
margin

europe middle east  africa 286551 42240 244311 47057 48205 197
asia pacific 187916 5142 182774 48033 48033 263
americas 138676 6642 132034 24243 26119 198
steam specialties business 613143 54024 559119 119333 122357 219
watsonmarlow 130325 56 130269 37940 39502 303
corporate expenses 10233 10233
743468 54080 689388 147040 151626 220
intra group 54080 54080
total 689388 – 689388 147040 151626 220
analysis by location of operation 
2012
gross
revenue
£000
intersegment
revenue
£000
revenue
£000
total
operating
profit
£000
adjusted
operating
profit
£000
adjusted
operating
margin

europe middle east  africa 272342 39509 232833 29951 36691 158
asia pacific 170548 3645 166903 43816 43933 263
americas 143040 5524 137516 24398 26249 191
steam specialties business 585930 48678 537 252 98165 106873 199
watsonmarlow 124958 487 124471 34975 36798 296
corporate expenses 7426 7426
710888 49165 661723 125714 136245 206
intra group 49165 49165
total 661723 – 661723 125714 136245 206
net revenue generated by group companies based in the usa is £108937 000 2012 £1 14472000 in china is £76807 000 
2012 £66045000 in the uk £71438000 2012 £64281000 and the rest of the world £432206000 2012 £416925000
the total operating profit for the period includes nonoperational items as analysed below
2013
amortisation 
and 
impairment
of acquisition
related
intangible
assets
£000
acquisition
and disposal
costs
£000
total
£000
europe middle east  africa 629 519 1148
asia pacific – – –
americas 1780 96 1876
steam specialties business 2409 615 3024
watsonmarlow 1562 – 1562
3971 615 4586
an impairment of £145000 in acquisition related intangible assets was incurred on the disposal of the hvac business of eirdata 
environmental services ltd in ireland 1 strategic report 2 governance 3 financial statements
115 spiraxsarco engineering plc annual report and accounts 2013
2 segmental reporting continued
2012
exceptional
restructuring
costs
£000
release of
deferred
consideration
accrual on
acquisition
£000
amortisation
of acquisition
related
intangible
assets
£000
acquisition
and disposal
costs
£000
total
£000
europe middle east  africa 6667 647 488 232 6740
asia pacific 117 – – – 117
americas 203 – 1624 24 1851
steam specialties business 6987 647 2112 256 8708
watsonmarlow 205 – 1618 – 1823
7192 647 3730 256 10531
the exceptional restructuring costs primarily in europe related to cost reduction actions to reduce the underlying cost base in markets 
experiencing persistently difficult economic conditions
share of profit of associates 2013
adjusted
£000
2013
total
£000
2012
adjusted
£000
2012
total
£000
europe middle east  africa 205 663 – –
asia pacific 1935 1637 1873 1549
americas – – – –
steam specialties business 1730 974 1873 1549
watsonmarlow – – – –
1730 974 1873 1549
net financing income and expense
2013
£000
2012
£000
europe middle east  africa 1848 2085
asia pacific 796 514
americas 418 530
steam specialties business 1470 2101
watsonmarlow 51 207
corporate 779 862
2300 3170
net assets 2013
assets
£000
liabilities
£000
2012
assets
£000
liabilities
£000
europe middle east  africa 215933 96942 216461 98547
asia pacific 119704 22038 115314 20430
americas 102575 25278 108264 30841
watsonmarlow 102989 15210 97852 15814
541201 159468 537891 165632
liabilities 159468 165632
deferred tax 18619 23696
current tax payable 13218 11082
net cash 16400 51676
net assets 403534 436549
noncurrent assets in the uk were £103589000 2012 £84 188000 spiraxsarco engineering plc annual report and accounts 2013 116
financial statements continued
notes to the accounts continued
2 segmental reporting continued
capital additions and depreciation 
amortisation and impairment
2013 2012
capital
additions
£000
depreciation
amortisation
and
impairment
£000
capital
additions
£000
depreciation
amortisation
and
impairment
£000
europe middle east  africa 10532 11859 16609 10067
asia pacific 6602 4707 7363 4251
americas 6770 5912 7224 5872
watsonmarlow 7323 4200 5360 4781
31227 26678 36556 24971
capital additions include property plant and equipment of £21835000 2012 £24607 000 and other intangible assets of £9392000 
2012 £1 1949000 of which £1373000 2012 £2406000 relates to acquired intangibles from acquisitions in the period capital additions 
split between the uk and rest of the world are uk £12 154000 2012 £16328000 rest of the world £19073000 2012 £20228000 
depreciation amortisation and impairment includes the profit on disposal of fixed assets of £467 000 2012 £273000
3 operating costs
2013
adjusted
£000
total
£000
2012
adjusted
£000
total
£000
change in stocks of finished goods and work in progress 364 364 7088 7088
raw materials and consumables 179574 179574 173477 173477
staff costs note 4 232449 232449 220761 227953
depreciation amortisation and impairment 22707 26678 21241 24971
other operating charges 103396 104011 102911 102520
537762 542348 525478 536009
total depreciation and amortisation includes amortisation of acquisitionrelated intangible assets of £3826000 2012 £3730000 
operating costs include exchange difference benefits of £375000 2012 £1031000 cost other operating charges include acquisition 
and disposal costs of £615000 2012 £256000 1 strategic report 2 governance 3 financial statements
117 spiraxsarco engineering plc annual report and accounts 2013
4 staff costs and numbers
the aggregate payroll costs of persons employed by the group were as follows
2013
£000
2012
£000
wages and salaries 184152 183031
social security costs 32713 30898
other pension costs 15584 14024
232449 227953
the average number of persons employed by the group including directors during the year was as follows
2013 2012
united kingdom 1315 1292
overseas 3410 3414
4725 4706
5 net financing income and expense
2013
£000
2012
£000
financial expenses
bank and other borrowing interest payable 1551 1478
net interest on pension scheme liabilities 2717 2964
4268 4442
financial income
bank interest receivable 1968 1272
1968 1272
net financing expense 2300 3170
net pension scheme financial expense 2717 2964
net bank interest 417 206
net financing expense 2300 3170
2012 figures have been restated to comply with ias 19r see note 1
6 profit before taxation
profit before taxation is shown after charging
2013
£000
2012
£000
depreciation of tangible fixed assets held under finance leases 298 106
hire of plant and machinery 221 672
other operating leases 5146 4765
rd 8860 8990
auditor’s remuneration
2013
£000
2012
£000
audit of these financial statements 126 127
amounts receivable by the company’s auditor and its associates in respect of
audit of financial statements of subsidiaries of the company 943 1082
audit related assurance services 85 54
taxation compliance services 207 289
other tax advisory services 288 122
all other services 194 113
1843 1787 financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 118
notes to the accounts continued
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 shortterm benefits postretirement benefits and share plans and longterm share incentive plans are shown 
in the annual report on remuneration 2013 on pages 83 to 95 the sharebased payments charge comprises a charge in relation to the 
performance share plan and the employee share ownership plan as described in note 27 on page 135
2013
£000
2012
£000
salaries and shortterm benefits 3821 2338
postretirement benefits 387 476
sharebased payments 722 558
total 4930 3372
8 taxation
2013
£000
2012
£000
analysis of charge in period
uk corporation tax
current tax on income for the period 1538 750
adjustments in respect of prior periods 136 621
1674 1371
double taxation relief 1538 750
136 621
foreign tax
current tax on income for the period 40169 38018
adjustments in respect of prior periods 989 455
39180 37563
total current tax charge 39316 38184
deferred tax – uk 2127 1873
deferred tax – foreign 1951 140
tax on profit on ordinary activities 43394 36451
reconciliation of effective tax rate
2013
£000
2012
£000
profit before tax 145714 124093
tax using the uk corporation tax rate of 2325 2012 245 33879 30403
effect of higherlower overseas tax rates 8131 5533
associated companies 382 379
nondeductible expenditure 1833 1666
overprovided in prior years 761 687
other reconciling items 694 85
total tax in income statement 43394 36451
2012 figures have been restated to comply with ias 19r see note 1
the group’s tax charge in future years is likely to be affected by the proportion of profits arising and the effective tax rates in the various 
territories in which the group operates
the uk corporation tax charge is calculated after deducting tax allowable deficit reduction cash contributions to the uk post retirement 
benefit schemes of £7 302000 2012 £7 500000 covering all employees in the uk defined benefit schemes
reductions in the uk corporation tax from 26 to 24 effective from 1st april 2012 and to 23 effective 1st april 2013 were substantively 
enacted on 26th march 2012 and 3rd july 2012 respectively further reductions to 21 effective from 1st april 2014 and 20 effective 
from 1st april 2015 were substantively enacted on 2nd july 2013 this will reduce the company’s future current tax charge accordingly 
the deferred tax asset at 31st december 2013 has been calculated based on the rate of 20 substantively enacted at the balance 
sheet date
no uk tax after double tax relief for underlying tax is expected to be payable on the future remittance of the retained earnings of 
overseas subsidiaries 1 strategic report 2 governance 3 financial statements
119 spiraxsarco engineering plc annual report and accounts 2013
9 profit for the financial year attributable to shareholders
profit dealt with in the accounts of spiraxsarco engineering plc was £1 7 4934000 2012 £12497 000 dividends from subsidiary undertakings 
of £186059000 2012 £16500000 and dividends from associate companies of £964000 2012 £1454000 are included in this amount
10 earnings per share
2013 2012
profit attributable to equity shareholders £000 102104 87438
weighted average shares in issue 76566689 77905832
dilution 549341 913544
diluted weighted average shares in issue 77116030 78819376
basic earnings per share 1334p 1122p
diluted earnings per share 1324p 1109p
adjusted profit attributable to equity shareholders £000 106298 95233
basic adjusted earnings per share 1388p 1222p
diluted adjusted earnings per share 1378p 1208p
the dilution is in respect of unexercised share options and the performance share plan
2012 figures have been restated to comply with ias 19r see note 1
11 dividends
2013
£000
2012
£000
amounts paid in the year
final dividend for the year ended 31st december 2012 of 37 0p 201 1 342p per share 28942 26640
special dividend for the year ended 31st december 2012 of 1000p 201 1 nil per share 78260 –
interim dividend for the year ended 31st december 2013 of 180p 2012 160p per share 13590 12486
120792 39126
amounts arising in respect of the year
interim dividend for the year ended 31st december 2013 of 180p 2012 160p per share 13590 12486
proposed final dividend for the year ended 31st december 2013 of 410p 2012 37 0p per share 30903 28893
no proposed special dividend for the year ended 31st december 2013 2012 1000p per share – 78090
44493 119469
12 property plant and equipment
the group
land and buildings
plant and
machinery
£000
fixtures
fittings
tools and
equipment
£000
total
£000
freehold
£000
leasehold
£000
cost or deemed cost 
at 1st january 2013 107 470 18468 141901 64593 332432
exchange adjustments 2149 63 1795 846 4727
105321 18531 140106 63747 327705
additions 4941 1696 8114 7084 21835
disposals 68 82 5041 2442 7633
at 31st december 2013 110194 20145 143179 68389 341907
depreciation 
at 1st january 2013 20270 1308 92771 43247 157 596
exchange adjustments 346 79 962 671 2058
19924 1229 91809 42576 155538
charged in year 1600 1114 9708 6378 18800
disposals 53 61 4431 2104 6649
at 31st december 2013 21471 2282 97086 46850 167689
net book value
at 31st december 2013 88723 17863 46093 21539 174218 financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 120
notes to the accounts continued
12 property plant and equipment continued
the group
land and buildings
plant and
machinery
£000
fixtures
fittings
tools and
equipment
£000
total
£000
freehold
£000
leasehold
£000
cost or deemed cost 
at 1st january 2012 106533 17996 143563 63718 331810
exchange adjustments 1871 588 2737 1234 6430
104662 17408 140826 62484 325380
additions 4385 1239 10556 8427 24607
disposals 1577 179 9481 6318 17 555
at 31st december 2012 107470 18468 141901 64593 332432
depreciation 
at 1st january 2012 19187 827 92126 45022 157162
exchange adjustments 347 7 1137 836 2327
18840 820 90989 44186 154835
charged in year 1835 552 10245 5213 17845
disposals 405 64 8463 6152 15084
at 31st december 2012 20270 1308 92771 43247 157596
net book value
at 31st december 2012 87200 17160 49130 21346 174836
included in the above are finance leases with a net book value of £1068000 2012 £1421000
13 goodwill and other intangible assets
the group
acquired
intangibles
£000
development
£000
software
and other
intangibles
£000
total
intangibles
£000
goodwill
£000
cost or valuation
at 1st january 2013 39201 18438 31706 89345 46834
exchange and other adjustments 489 123 293 905 612
38712 18315 31413 88440 46222
additions 1373 2779 5240 9392 828
disposals – – 196 196 324
at 31st december 2013 40085 21094 36457 97636 46726
amortisation 
at 1st january 2013 14552 11279 19803 45634 979
exchange adjustments 638 104 127 869 18
13914 11175 19676 44765 961
amortisation and impairment 3971 2005 2369 8345 –
disposals – – 68 68 –
at 31st december 2013 17885 13180 21977 53042 961
net book value
at 31st december 2013 22200 7914 14480 44594 45765 1 strategic report 2 governance 3 financial statements
121 spiraxsarco engineering plc annual report and accounts 2013
13 goodwill and other intangible assets continued
the group
acquired
intangibles
£000
development
£000
software
and other
intangibles
£000
total
intangibles
£000
goodwill
£000
cost or valuation
at 1st january 2012 38932 16079 25740 80751 46374
exchange adjustments 2137 261 423 2821 783
36795 15818 25317 77930 45591
additions 2406 2892 6651 11949 1243
disposals – 272 262 534 –
at 31st december 2012 39201 18438 31706 89345 46834
amortisation 
at 1st january 2012 12608 9794 18446 40848 1027
exchange adjustments 1786 131 277 2194 48
10822 9663 18169 38654 979
amortisation 3730 1794 1875 7399 –
disposals – 178 241 419 –
at 31st december 2012 14552 11279 19803 45634 979
net book value
at 31st december 2012 24649 7159 11903 43711 45855
development
all capitalised development costs arise from internal product development
acquired intangibles
the disclosure by class of acquired intangible assets is shown in the tables below
the group
customer
relationships
£000
brand names
and 
trademarks
£000
manufacturing
designs and
core 
technology
£000
noncompete
undertakings
and other
£000
total acquired
intangibles
£000
cost or valuation
at 1st january 2013 24088 6474 5662 2977 39201
exchange and other adjustments 337 61 55 36 489
23751 6413 5607 2941 38712
additions 662 – – 711 1373
disposalsimpairment – – – – –
at 31st december 2013 24413 6413 5607 3652 40085
amortisation 
at 1st january 2013 6651 3047 2574 2280 14552
exchange adjustments 267 149 130 92 638
6384 2898 2444 2188 13914
amortisation and impairment 2178 941 561 291 3971
disposals – – – – –
at 31st december 2013 8562 3839 3005 2479 17885
net book value
at 31st december 2013 15851 2574 2602 1173 22200 financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 122
notes to the accounts continued
13 goodwill and other intangible assets continued
the group
customer
relationships
£000
brand names
and trademarks
£000
manufacturing
designs and
core technology
£000
noncompete
undertakings
and other
£000
total acquired
intangibles
£000
cost or valuation
at 1st january 2012 24066 6831 5656 2379 38932
exchange and other adjustments 1348 357 324 108 2137
22718 6474 5332 2271 36795
additions 1370 – 330 706 2406
disposalsimpairment – – – – –
at 31st december 2012 24088 6474 5662 2977 39201
amortisation 
at 1st january 2012 6324 2552 1955 1777 12608
exchange adjustments 906 315 298 267 1786
5418 2237 1657 1510 10822
amortisation and impairment 1233 810 917 770 3730
disposals – – – – –
at 31st december 2012 6651 3047 2574 2280 14552
net book value
at 31st december 2012 17437 3427 3088 697 24649
impairment
in accordance with the requirements of ias 36 impairment of assets goodwill is allocated to the group’s cashgenerating units or groups of 
cashgenerating units that are expected to benefit from the synergies of the business combination that gave rise to the goodwill as analysed 
in the table below
2013
goodwill
£000
2012
goodwill
£000
spiraxsarco mexicana 8636 8874
flexicon as denmark 7 888 7691
masosine 7062 6890
spirax sarco inc usa 3098 3155
m  m product unit 3046 2971
alitea product unit 2596 2614
uk supply product unit 1977 1929
spirax inter valf turkey 1576 1803
spiraxsarco s a s france 1334 1301
watsonmarlow south africa 872 1098
other cashgenerating units 7680 7529
45765 45855 1 strategic report 2 governance 3 financial statements
123 spiraxsarco engineering plc annual report and accounts 2013
13 goodwill and other intangible assets continued
the goodwill balance has been tested for annual impairment on the following basis
•	 	 th e 	 ca rry i n g 	 v a l u es 	 o f 	 g o o d w i l l 	 h a v e 	 b een 	 a ss ess e d 	 b y 	 r e fer en c e 	 t o 	 v a l u e 	 i n 	 u s e  	 th es e 	 h a v e 	 b een 	 es ti m a t e d 	 u s i n g 	 ca s h 	 fl ow s 	 b a s e d 	 o n	
forecast information for the next financial year and in the case of recent acquisitions on detailed five year forecasts this information has 
been approved by the board
•	 	 th e 	 k e y 	 a s s u m p ti o n s 	 o n 	 w h i c h 	 th e 	 i m p a i r m en t 	 t es ts 	 a r e 	 b a s e d 	 a r e 	 th e 	 d i s c o u n t 	 a n d 	 g r o wth 	 r a t es 	 a n d 	 th e 	 f o r eca s t 	 ca s h 	 fl ow s
•	 	 p r e t ax 	 d i s c o u n t 	 r a t es 	 r a n g e 	 fr o m 	 1 0 1 4  	  2 0 1 2  	 1 0 1 3  
•	 	 gr o wth 	 r a t es 	 v a ry 	 b e tw een 	 2  5 6  5  	 d ep en d i n g 	 o n 	 d e t a i l e d 	 f o r eca s ts 	  2 0 1 2  	 3  1 0  
•	 	 n o 	 i m p a i rm en ts 	 w er e 	 i d en ti fi e d	 a s 	 a 	 r es u l t 	 o f 	 th i s 	 e x e r c i s e 
•	 	 lo n g  t erm 	 g r o wth 	 r a t es 	 a r e 	 s e t 	 u s i n g 	 i m f 	 f o r ec a s ts 
the principal value in use assumptions for the three largest cashgenerating units were as follows
cashgenerating unit
pretax  
discount rate
longterm 
growth rate
recoverable 
 amount 
£000
spiraxsarco mexicana 130 65 62367
flexicon as denmark 125 35 57042
masosine 140 30 56223
sensitivity analysis shows that if longterm revenue growth assumptions are lowered by 1 and pretax discount rates raised by 
1 no impairment would arise
14 loans to subsidiaries
parent company
2013
£000
2012
£000
cost
at 1st january 65197 75198
repaymentloans 24998 10001
at 31st december 40199 65197
amounts written off
at 1st january and 31st december 1042 1042
net book value 
at 31st december 39157 64155 financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 124
notes to the accounts continued
15 investment in subsidiaries
parent company
2013
£000
2012
£000
cost
at 1st january 49651 48883
share options issued to subsidiary company employees 1596 768
new investment 110418 –
at 31st december 161665 49651
amounts written off
at 1st january and 31st december 994 994
net book value 
at 31st december 160671 48657
investments are stated at cost less provisions for any impairment in value
details relating to subsidiary undertakings are given on the inside back cover except where stated all classes of shares were 100 owned 
by the group at 31st december 2013 the country of incorporation of the principal group companies is the same as the country of operation 
with the exception of companies operating in the united kingdom which are incorporated in great britain all are in the fluid control business 
except spiraxsarco investments ltd spiraxsarco overseas ltd spiraxsarco america ltd sarco international corp watsonmarlow 
bredel holdings bv spiraxsarco engineering sl spiraxsarco engineering bv spiraxsarco germany holdings gmbh spiraxsarco 
netherlands holdings cooperative wa spiraxsarco italy holdings srl and spiraxsarco investments bv which are investment holding 
companies during 2013 the investment in the group’s german and benelux subsidiaries was transferred between group companies 
resulting in an increase in the parent company investment of £1 10418000 there was no impact on the group financial statements
16 investment in associate
the group
2013
£000
2012
£000
cost of investment 4194 3194
share of retained profit 2845 4508
7039 7702
summarised aggregated financial information total businesses
revenue 23593 22379
profit for the period 2786 3802
assets 13676 14324
liabilities 2759 3309
details of the group’s associate at 31st december 2013 are as follows
name of associate
country of incorporation 
and operation
proportion of ownership interest 
and voting power held
principal 
activity
spiraxmarshall ltd india 493 manufacturing 
and selling
econotherm uk ltd uk 300 manufacturing 
and selling 1 strategic report 2 governance 3 financial statements
125 spiraxsarco engineering plc annual report and accounts 2013
17 deferred tax assets and liabilities
recognised deferred tax assets and liabilities
deferred tax assets and liabilities are attributable to the following 
the group
assets liabilities net
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
accelerated capital allowances 1467 1855 5280 5433 3813 3578
provisions 5566 5299 430 185 5136 5114
losses 2770 4470 8 36 2762 4434
inventory 1698 3017 636 1658 1062 1359
pensions 20248 23854 2255 2374 17993 21480
other temporary differences 2723 2204 7244 7 317 4521 5113
tax assetsliabilities 34472 40699 15853 17003 18619 23696
movement in deferred tax during the year 
2013
the group
1st january
2013
£000
recognised in 
income
£000
recognised
in oci
£000
recognised in 
equity
£000
acquisitions
£000
31st december
2013
£000
accelerated capital allowances 3578 235 – – – 3813
provisions 5114 56 34 – – 5136
losses 4434 1719 47 – – 2762
inventory 1359 311 14 – – 1062
pensions 21480 2413 1074 – – 17993
other temporary differences 5113 544 16 117 53 4521
23696 4078 1063 117 53 18619
movement in deferred tax during the year 
2012
the group
1st january
2012
£000
recognised in 
income
£000
recognised
in oci
£000
recognised in 
equity
£000
acquisitions
£000
31st december
2012
£000
accelerated capital allowances 4615 1040 3 3578
provisions 4570 550 6 5114
losses 3275 1108 51 4434
inventory 1323 35 1 1359
pensions 20660 690 1510 21480
other temporary differences 5737 310 50 1011 27 5113
19476 1733 1503 1011 27 23696
2012 figures have been restated to comply with ias 19r see note 1 spiraxsarco engineering plc annual report and accounts 2013 126
financial statements continued
notes to the accounts continued
17 deferred tax assets and liabilities continued
movement in deferred tax during the year  
2013
parent company
1st january
2013
£000
recognised
in income
£000
recognised
in oci
£000
recognised
in equity
£000
31st december
2013
£000
other temporary differences asset 824 100 – 12 936
pensions liability – 342 86 – 428
824 242 86 12 508
movement in deferred tax during the year 
2012
parent company
1st january
2012
£000
recognised
in income
£000
recognised
in oci
£000
recognised
in equity
£000
31st december
2012
£000
other temporary differences asset 54 806 58 94 824
54 806 58 94 824
18 inventories
the group
2013
£000
2012
£000
raw materials and consumables 35759 35650
work in progress 15622 17308
finished goods and goods for resale 52783 50732
104164 103690 
19 other current assets
the group parent company
2013
£000
2012
£000
2013
£000
2012
£000
other receivables 11480 8877 – –
prepayments and accrued income 8400 7311 1643 255
19880 16188 1643 255
20 trade and other payables
the group parent company
2013
£000
2012
£000
2013
£000
2012
£000
trade payables 30135 27529 – –
bills of exchange payable 190 221 – –
social security 4384 4190 – –
other payables 24443 30285 87 347
accruals 26956 28244 2147 463
86108 90469 2234 810 1 strategic report 2 governance 3 financial statements
127 spiraxsarco engineering plc annual report and accounts 2013
21 obligations under finance leases
the group
minimum lease payments present value lease payment
2013
£000
2012
£000
2013
£000
2012
£000
amount payable
within 1 year 315 541 298 510
1–5 years inclusive 814 966 770 911
after 5 years – – – –
1129 1507 1068 1421
less future finance charges 61 86 – –
1068 1421 1068 1421
22 provisions
the group
warranty and other provisions
2013
£000
2012
£000
provisions at 1st january 991 1509
exchange adjustments 112 70
1103 1439
utilised in the year 383 448
provisions at 31st december 720 991
provisions include noncurrent product warranties charged against profit from operations that are expected to be incurred in the next 
three years
23 called up share capital and reserves
the group parent company
2013
£000
2012
£000
2013
£000
2012
£000
ordinary shares of 25 
25

26
p 2012 25p each
authorised 1 15555590 2012 120000000 30000 30000 30000 30000
allotted called up and fully paid 7537 4081 2012 78089826 19568 19536 19568 19536
on 3rd june 2013 a share consolidation replaced every 27 ordinary shares of 250p each with 26 new ordinary shares of 25 
25

26
p each 
the share consolidation ensured that following payment of the special dividend of 1000p per share shareholders held the same proportion of 
the company’s total share capital
313267 shares with a nominal value of £79856 were issued pursuant to the spiraxsarco engineering share schemes for a consideration of 
£3848000 received by the company
in november 2013 the parent company purchased 150000 shares representing 02 of called up share capital with a nominal value of 
£38942 for consideration of £4404509 the shares were placed in an employee benefit trust to be used in connection with the group’s 
employee share schemes
at 31st december 2013 130481 shares were held in an employee benefit trust and available for use in connection with the group’s 
employee share schemes
17 4 senior employees of the group have been granted options on ordinary shares under the share option scheme and performance share 
plan details in note 27
other reserves in the consolidated statement of changes in equity on page 105 are made up as follows
the group
1st january
2013
£’000
change 
in year
£’000
31st december
2013
£000
translation reserve 26617 12875 13742
cash flow hedge reserve 351 48 303
capital redemption reserve 1832 – 1832
employee benefit trust reserve – 3797 3797
total other reserves 28098 16624 11474 spiraxsarco engineering plc annual report and accounts 2013 128
financial statements continued
notes to the accounts continued
23 called up share capital and reserves continued
parent company
1st january
2013
£000
change 
in year
£000
31st december
2013
£000
sharebased payments reserve 5137 1596 6733
capital redemption reserve 1832 – 1832
employee benefit trust reserve – 3797 3797
total other reserves 6969 2201 4768
translation reserve
the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of 
foreign subsidiaries including gains or losses on net investment hedges
cash flow hedge reserve
the reserve records the 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 group’s own shares
24 return on capital employed
the group
2013
£000
2012
£000
capital employed
property plant and equipment 174218 174836
prepayments 162 223
inventories 104164 103690
trade receivables 145380 145686
other current assets 19880 16188
tax recoverable 3709 1317
trade and other payables 86108 90469
current tax payable 16927 12399
capital employed 344478 339072
average capital employed 341775 345812
operating profit 147040 125714
adjustments note 2 4586 10531
adjusted operating profit 151626 136245
return on capital employed 444 394
25 capital commitments
the group parent company
2013
£000
2012
£000
2013
£000
2012
£000
capital expenditure contracted for but not provided 1217 1883 – –
26 operating lease obligations
the group
2013
£000
2012
£000
commitments under noncancellable leases due as follows
within 1 year 4412 4471
1–5 years inclusive 9513 9783
after 5 years 641 282
14566 14536
operating leases are primarily in respect of property plant and equipment 1 strategic report 2 governance 3 financial statements
129 spiraxsarco engineering plc annual report and accounts 2013
27 employee benefits
retirement benefit obligations – the group
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
defined contribution arrangements
the majority of the retirement benefit arrangements operated by the group are of a defined contribution structure where the employer 
contribution and resulting income statement charge is fixed at a set level or is a set percentage of employee’s pay contributions made to 
defined contribution schemes and charged to the income statement totalled £7 373000 2012 £6832000 in the uk following the closure 
of the defined benefit schemes to new entrants the main scheme for new employees is a defined contribution scheme
defined benefit arrangements
the group operates several funded defined retirement benefit schemes where the benefits are based on employees’ length of service 
whilst the group’s primary schemes are in the uk it also operates other material benefit schemes in the us as well as less material schemes 
elsewhere in funded arrangements the assets of defined benefit schemes are held in separate trusteeadministered funds or similar 
structures in the countries concerned
uk defined benefit arrangements
the defined benefit schemes in the uk account for approximately 66 of the group’s net balance sheet liability for defined retirement benefit 
schemes spirax sarco operates three uk schemes the spirax sarco employees pension fund the spirax sarco executives retirement 
benefits scheme and the watson marlow pension fund these are all final salary pension schemes the uk schemes are closed to new 
members but are open to future accrual there is a mix of different inflationdependent pension increases in payment and deferment which 
vary from member to member according to their membership history and which scheme they are a member of all three schemes have 
been setup under uk law and are governed by a trustee committee which is responsible for the scheme’s investments administration 
and management a funding valuation is carried out for the trustees of each scheme every three years by an independent firm of actuaries 
depending on the outcome of that valuation a schedule of future contributions is negotiated with spirax sarco further information on the 
contribution commitments is shown in the financial review on pages 46 to 47 
us defined benefit schemes
the group operates a pension scheme in the us which is open to new entrants and defines the pension in terms of the highest average 
pensionable pay for any five consecutive years prior to retirement no pension increases in payment and deferment are offered by this 
scheme it also operates a postretirement medical plan in the us which is unfunded as is typical for these plans
principal risks
the pension schemes create a number of risk exposures annual increases on 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 including the impact of inflation 
on future salary increases 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 r liability measurement 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 about the future inflation and salary growth levels and the assumptions made about life expectation 
the dbo and service cost are also very sensitive to the ias 19 r discount rate which determines the discounted value of the projected benefit 
payments the discount rate depends on market yields on highquality corporate bonds investment strategies are set with funding rather than 
ias 19 r considerations in mind and do not seek to provide a specific hedge against the ias 19 r measurement of dbo as a result the 
difference between the market value of the assets and the ias 19 r dbo may be volatile
sensitivity analysis to changes in discount rate and inflation are included on page 132
with effect from 1st january 2013 the group has adopted ias 19 revised 201 1 it differs from the previous adopted standard ias 19 revised 
2008 in that discount rates that are used to calculate the interest cost on the defined benefit obligation are used to calculate the expected 
return on assets the 2012 comparative figures have therefore been restated in compliance with ias 19 revised 201 1 resulting in the expected 
return on assets being £3559000 lower at £12418000 more detail is given in note 1
the financial assumptions used at 31st december were
assumptions weighted by value of liabilities  per annum
uk pensions
overseas pensions
and medical
2013 2012 2013 2012
rate of increase in salaries 40 36 33 33
rate of increase in pensions 31 28 17 17
rate of price inflation 34 29 23 23
discount rate 45 46 45 37
medical trend rate 50 50 spiraxsarco engineering plc annual report and accounts 2013 130
financial statements continued
notes to the accounts continued
27 employee benefits continued
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
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
equities 142603 161735 20613 20076 163216 181811
bonds 74710 76448 8678 9311 83388 85760
other 60834 11485 6393 1547 67227 13031
total market value in aggregate 278147 249668 35684 30934 313831 280602
the actual return on plan assets was £309 million 2012 £260 million
the amounts recognised in the consolidated balance sheet are determined as follows
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
fair value of schemes’ assets 278147 249668 35684 30934 313831 280602
present value of funded schemes’ liabilities 322929 288566 45739 47879 368668 336445
deficit in the funded schemes 44782 38898 10055 16945 54837 55843
present value of unfunded schemes’ liabilities – – 17206 16820 17206 16820
retirement benefit liability recognised in the
balance sheet 44782 38898 27261 33765 72043 72663
related deferred tax asset 8956 9335 9037 10924 17993 20259
net pension liability 35826 29563 18224 22841 54050 52404
the movements in the defined benefit obligation dbo recognised in the balance sheet during the year were
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
defined benefit obligation at beginning of year 288566 262590 64699 60737 353265 323327
current service cost 5859 5426 2352 1766 8211 7192
interest cost 12917 12884 2441 2498 15358 15382
contributions by members 633 650 – – 633 650
remeasurement lossgain 25433 16773 5189 4921 20244 21694
actual benefit payments 9835 9846 2431 2784 12266 12630
experience lossgain 644 89 1515 37 871 126
currency loss – – 442 2476 442 2476
defined benefit obligation at end of year 322929 288566 62945 64699 385874 353265
the movements in the fair value of plan assets during the year were
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
value of assets at beginning of year 249668 223846 30934 27557 280602 251403
expected return on assets 11414 11268 1227 1150 12641 12418
remeasurement gain 14714 11300 3535 2261 18249 13561
contributions paid by employer 11553 12450 3643 3990 15196 16440
contributions paid by members 633 650 – – 633 650
actual benefit payments 9835 9846 2431 2784 12266 12630
currency loss – – 1224 1240 1224 1240
value of assets at end of year 278147 249668 35684 30934 313831 280602
the estimated employer contributions to be made in 2014 are £16681000 1 strategic report 2 governance 3 financial statements
131 spiraxsarco engineering plc annual report and accounts 2013
27 employee benefits continued
the history of experience adjustments is as follows
2013
£000
2012
£000
2011
£000
2010
£000
2009
£000
defined benefit obligation at end of year 385874 353265 323327 303338 284910
fair value of schemes’ assets 313831 280602 251402 239910 211147
retirement benefit liability recognised in the balance sheet 72043 72663 71925 63428 73763
experience adjustment on schemes’ liabilities 871 126 5797 984 1695
as a percentage of schemes’ liabilities 02 00 18 03 06
experience adjustment on schemes’ assets 18249 13561 12041 10454 26012
as a percentage of schemes’ assets 58 48 48 44 123
the expense recognised in the group income statement was as follows
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
current service cost 5859 5426 2352 1766 8211 7192
net interest on schemes’ liabilities 1503 1616 1214 1348 2717 2964
total expense recognised in income
statement 7362 7042 3566 3114 10928 10156
the expense is recognised in the following line items in the group income statement
2013
£000
2012
£000
operating costs 8211 7192
net financial expenses 2717 2964
total expense recognised in income statement 10928 10156
statement of comprehensive income oci
uk pensions
overseas pensions
and medical total
2013
£000
2012
£000
2013
£000
2012
£000
2013
£000
2012
£000
remeasurement amount recognised in oci 10075 5562 7209 2697 2866 8259
deferred tax on remeasurement amount 
recognised in oci 2015 981 3089 529 1074 1510
cumulative loss recognised in oci at
beginning of year 49892 45311 13399 11231 63291 56542
cumulative loss recognised in oci at end
of year 57952 49892 9279 13399 67231 63291 spiraxsarco engineering plc annual report and accounts 2013 132
financial statements continued
notes to the accounts continued
27 employee benefits continued
sensitivity analysis
the effect on the defined benefit obligation at 31st december 2013 of an increase or decrease in key assumptions is as follows
uk pensions
£’000
overseas 
pensions
and medical
total
£000
increasedecrease in pension deficit
discount rate assumption being 025 higher 14000 2000 16000
discount rate assumption being 025 lower 19000 2000 21000
inflation assumption being 025 higher 12000 1000 13000
inflation assumption being 025 lower 12000 1000 13000
the average age of active participants in the uk schemes at 31st december 2013 was 51 years and in the overseas schemes 49 years
pension plans – parent company
the parent company is accounting for pension costs in accordance with international accounting standard 19
the disclosures shown here are in respect of the parent company’s defined benefit obligations other plans operated by the parent 
company were defined contribution plans
the total expense relating to the parent company’s defined contribution pension plans in the current year was £49351 2012 £29 163
the postretirement mortality assumptions in respect of the parent company defined benefit scheme follows the saps light tables with 
improvements based on the 2009 cmi core projections with a 15 longterm trend this basis gives a life expectancy of 24 years and 
26 years respectively for a male and female currently aged 65 these figures reflect the generally recognised trend of increased longevity 
these assumptions are regularly reviewed in light of scheme specific experience and more widely available statistics
with effect from 1st january 2013 the parent company has adopted ias 19 revised 201 1 it differs from the previous adopted standard ias 
19 revised 2008 in that discount rates that are used to calculate the interest cost on the defined benefit obligation are used to calculate the 
expected return on assets the 2012 comparative figures have therefore been restated in compliance with ias 19 revised 201 1 resulting in the 
expected return on assets being £539000 lower at £2246000 more detail is given in note 1
the financial assumptions used at 31st december were
assumptions weighted
by value of liabilities
 per annum
uk pensions
2013 2012
rate of increase in salaries 39 36
rate of increase in pensions 31 28
rate of price inflation 34 29
discount rate 45 46
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 1 strategic report 2 governance 3 financial statements
133 spiraxsarco engineering plc annual report and accounts 2013
27 employee benefits continued
uk pensions
2013
£000
2012
£000
equities 25232 31686
bonds 14522 14799
other 14026 3109
total market value in aggregate 53780 49594
the actual return on plan assets was £49 million 2012 £45 million 
the amounts recognised in the consolidated statement of financial position are determined as follows
uk pensions
2013
£000
2012
£000
fair value of scheme’s assets 53780 49594
present value of funded scheme’s liabilities 51639 49650
retirement benefit assetliability recognised in the statement of financial position 2141 56
related deferred tax 428 13
net pension assetliability 1713 43
the movements in the defined benefit obligation dbo recognised in the statement of financial position during the year were
uk pensions
2013
£000
2012
£000
defined benefit obligation at beginning of year 49650 47200
current service cost 248 329
interest cost 2197 2305
contributions from members 10 10
remeasurement loss 2768 1996
actual benefit payments 2740 2196
experience lossgain 494 6
defined benefit obligation at end of year 51639 49650 spiraxsarco engineering plc annual report and accounts 2013 134
financial statements continued
notes to the accounts continued
27 employee benefits continued
the movements in the fair value of plan assets during the year were
uk pensions
2013
£000
2012
£000
value of assets at beginning of year 49594 44745
expected return on assets 2239 2246
remeasurement gainloss 2705 2250
contributions paid by employer 1972 2539
contributions from members 10 10
actual benefit payments 2740 2196
value of assets at end of year 53780 49594
the estimated employer contributions to be made in 2014 are £224000
the history of experience adjustments is as follows
2013
£000
2012
£000
2011
£000
2010
£000
2009
£000
defined benefit obligation at end of year 51639 49650 47200 52594 51000
fair value of scheme’s assets 53780 49594 44745 45055 39793
retirement benefit liability recognised in the balance sheet 2141 56 2455 7539 11207
experience adjustment on scheme’s liabilities 494 6 7357 1 32
as a percentage of scheme’s liabilities 10 00 156 00 01
experience adjustment on scheme’s assets 2705 2250 2579 2320 4611
as a percentage of scheme’s assets 50 45 58 51 116
the expense recognised in the parent company income statement was as follows
uk pensions
2013
£000
2012
£000
current service cost 248 329
net interest on scheme’s assetsliabilities 42 59
total income recognised in income statement 206 388
statement of comprehensive income oci
uk pensions
2013
£000
2012
£000
remeasurement lossgain recognised in oci 431 252
deferred tax on remeasurement amount recognised in oci 86 58
cumulative loss recognised in oci at beginning of year 13072 13266
cumulative loss recognised in oci at end of year 13417 13072 1 strategic report 2 governance 3 financial statements
135 spiraxsarco engineering plc annual report and accounts 2013
27 employee benefits continued
sharebased payments – the group
disclosures of the sharebased payments offered to employees are set out below more detail on each scheme is given in the annual report 
on remuneration on pages 83 to 95 the charge to the income statement in respect of sharebased payments is made up as follows
2013
£000
2012
£000
share option scheme 564 805
performance share plan 1974 1272
employee share ownership plan 777 738
total expense recognised in income statement 3315 2815
share option scheme 
the group operates equity settled share option schemes for employees awards are determined by the remuneration committee 
whose objective is to align the interests of employees with those of shareholders by giving an incentive linked to added shareholder value 
options are subject to performance conditions which if met make the options exercisable between the third and tenth anniversary of the date 
of grant for options granted from 1995 to 2001 the performance condition is an increase in eps of more than 6 greater than the increase 
in the uk retail price index over a consecutive threeyear period between grant and ten years from date of grant from and including the 
2002 options the increase in eps was revised to 9 greater than the increase in the uk retail price index over a threeyear consecutive 
period and from 2007 the performance condition needs to be met over the threeyear period from 1st january prior to the date of the grant 
if the condition is not met at the end of the three year period the option will lapse
the share options granted have been measured by towers watson using the present economic value pev valuation methodology 
the relevant disclosures in respect of the share option scheme grants are set out below no options were granted in 2013 or 2012
2009
grant
2010
grant
2011
grant
grant date 1 1th march 26th march 18th march
exercise price 7650p 13660p 18730p
number of employees 70 75 87
shares under option 223500 290000 350000
vesting period 3 years 3 years 3 years
expected volatility 25 25 25
riskfree interest rate 25 35 31
expected dividend yield 35 25 25
fair value 1455p 3417p 4429p
the number and weighted average exercise prices of share options are as follows
option exercise price
outstanding at
start of year
granted during 
year
exercised 
during year
lapsed during 
year
outstanding at 
end of year
2003 grant 3945p 15000 – 15000 – –
2004 grant 5419p 18000 – – – 18000
2005 grant 686p 34090 – 5655 – 28435
2006 grant 960p 30650 – – – 30650
2007 grant 10196p 59756 – 5181 – 54575
2008 grant 9590p 72523 – 19955 – 52568
2009 grant 7650p 59000 – 15500 – 43500
2010 grant 13660p 265500 – 125500 – 140000
201 1 grant 18730p 344500 – 9000 – 335500
899019 – 195791 – 703228
weighted average exercise price £1393 £1197 £1447
weighted average contractual life remaining 57 years
performance conditions in respect of all exercisable shares have been met the number of shares exercisable at 31st december 2013 is 
703228 2012 554519 the weighted average share price during the period was £2657 2012 £2096 spiraxsarco engineering plc annual report and accounts 2013 136
financial statements continued
notes to the accounts continued
27 employee benefits continued
 performance share plan 
awards under the performance share plan are made to executive directors and other senior managers and take the form of contingent 
rights to acquire shares subject to the satisfaction of a performance target to the extent that they vest awards may be satisfied in cash in 
shares or an option over shares for awards granted up to 2007 the performance target is based on the company’s total shareholder return 
tsr relative to the tsr of other companies included in the ftse allshare industrial engineering sector over a threeyear performance 
period where awards will vest on a sliding scale all shares within an award will vest if the company’s tsr is at or above the upper quartile 
25 will vest if the tsr is at the median and the number of shares that will vest will be calculated prorata on a straight line basis between 
25 and 100 if the company’s tsr falls between the median and the upper quartile no shares will vest if the company’s tsr is below 
the median the performance criteria for awards from 2008 onwards are split into two separate parts the vesting of the first part amounting 
to 60 of the award is based on the existing tsr measure the vesting of the second part amounting to 40 of the award is subject to 
achievement of a target based on aggregate eps over a threeyear performance period for the 2008 to 2010 awards 25 will vest if the 
compound growth in eps is equal to 5 and 100 will vest if the compound growth in eps is equal to or exceeds 1 1 there is prorata 
vesting for actual growth between these rates for awards made in 201 1 onwards 25 will vest if the compound growth in eps is equal to 
the growth in the uk retail price index plus 3 and 100 will vest if the compound growth in eps is equal to or exceeds the growth in the 
uk retail price index plus 9 there is prorata vesting for actual growth between these rates
shares awarded under the performance share plan have been valued by towers watson using the monte carlo simulation valuation 
methodology the relevant disclosures in respect of the performance share plan grants are set out below
2009
grant
2010
grant
2011
grant
2012
grant
2013
grant
grant date 1 1th march 26th march 18th march 9th march 8th march
mid market share price at grant date 7650p 13660p 18730p 21060p 26150p
number of employees 5 5 5 89 105
shares under scheme 128146 99983 78588 179980 168708
vesting period 3 years 3 years 3 years 3 years 3 years
probability of vesting 691 695 692 665 625
fair value 5286p 9494p 12961p 14005p 16344p
employee share ownership plan 
uk employees are eligible to participate in the employee share ownership plan esop the aim of the esop is to encourage increased 
shareholding in the company by all uk employees and so there are no performance conditions employees are invited to join the esop 
when an offer is made each year individuals save for 12 months during the accumulation period and subscribe for shares at the lower of the 
price at the beginning and the end of the accumulation period under hmrc rules the company provides a matching share for each share 
purchased by the individual
shares issued under the esop have been measured by towers watson using the present economic value pev valuation methodology 
the relevant disclosures in respect of the employee share ownership plans are set out below
2009
grant
2010
grant
2011
grant
2012
grant
2013
grant
grant date 1st october 1st october 1st october 1st october 1st october
exercise price 10397p 18087p 18320p 21003p 30180p
number of employees 944 955 1012 1017 1015
shares under scheme 69788 41584 45327 41703 29610
vesting period 3 years 3 years 3 years 3 years 3 years
expected volatility 250 250 250 25 25
risk free interest rate 06 06 06 02 04
expected dividend yield 35 25 25 25 25
fair value 10937p 19226p 19346p 22285p 32081p
the accumulation period for the 2013 esop ends in september 2014 therefore some figures are projections 1 strategic report 2 governance 3 financial statements
137 spiraxsarco engineering plc annual report and accounts 2013
27 employee benefits continued
sharebased payments – parent company
disclosures of the sharebased payments offered to employees of the parent company are set out below the description and operation of 
each scheme is the same as outlined in the group disclosure set out above
 share option scheme 
the equity settled share options issued to employees of the parent company are charged in the parent company’s income statement 
the relevant disclosures in respect of the share option scheme grants are set out below no options were granted in 2013 or 2012
2009
grant
2010
grant
2011
grant
grant date 1 1th march 26th march 18th march
exercise price 7650p 13660p 18730p
number of employees 1 1 5
shares under option 2500 4000 19000
vesting period 3 years 3 years 3 years
expected volatility 25 25 25
riskfree interest rate 25 35 31
expected dividend yield 35 25 25
fair value 1455p 3417p 4429p
fair value 19226p 19346p 22285p
the number and weighted average exercise prices of share options are as follows
outstanding
at start of year
granted
during year
exercised 
during year
lapsed
during year
outstanding at 
end of year
2005 grant 686p 1862 – – – 1862
2007 grant 10196p 2131 – – – 2131
2008 grant 959p 3078 – 1850 – 1228
2009 grant 7650p 2500 – – – 2500
2010 grant 13660p 4000 – – – 4000
201 1 grant 18730p 19000 – – – 19000
32571 – 1850 – 30721
weighted average exercise price £1516 £959 £1549
weighted average contractual life remaining 61 years
performance conditions in respect of all exercisable shares have been met the number of shares exercisable at 31st december 2013 is 
30721 2012 13571
 performance share plan 
the relevant disclosures in respect of the performance share plan grants are set out below
2009
grant
2010
grant
2011
grant
2012
grant
2013
grant
grant date 1 1th march 26th march 18th march 9th march 8th march
mid market share price at grant date 7650p 13660p 18730p 21060p 26150p
number of employees 5 5 5 9 12
shares under scheme 128146 99983 78588 84230 69174
vesting period 3 years 3 years 3 years 3 years 3 years
probability of vesting 691 695 692 665 625
fair value 5286p 9494p 12961p 14005p 16344p spiraxsarco engineering plc annual report and accounts 2013 138
financial statements continued
notes to the accounts continued
28 analysis of changes in net cash
the group
at 1st
january
2013
£000
cash flow
£000
exchange
movement
£000
at 31st
december
2013
£000
current portion of longterm borrowings 7168 298
noncurrent portion of longterm borrowings 33601 59473
shortterm borrowings 7 000 39338
total borrowings 47769 99109
comprising
borrowings 46348 53123 1430 98041
finance leases 1421 353 – 1068
47769 52770 1430 99109
cash and cash equivalents 99832 12406 3009 84417
bank overdrafts 387 1414 8 1809
net cash and cash equivalents 99445 13820 3017 82608
bank deposits – 32901 – 32901
net cash 51676 33689 1587 16400
the present value of finance lease payments are shown in note 21 on page 127 
29 related party transactions
the group
2013
£000
2012
£000
sales to associated companies 569 567
dividends from associated companies 964 1454
amounts due from associated companies at 31st december 52 47
parent company
2013
£000
2012
£000
dividends received from subsidiaries 186059 16500
dividends received from associates 964 1454
loans and amounts due from subsidiaries at 31st december 157546 143748
amounts due to subsidiaries at 31st december 8526 23941 1 strategic report 2 governance 3 financial statements
139 spiraxsarco engineering plc annual report and accounts 2013
30 purchase of businesses
2013
                                               acquisitions
book value
£000
fair value adj
£000
fair value
£000
noncurrent assets
intangibles – 1373 1373
total assets – 1373 1373
current liabilities
deferred tax – 53 53
total liabilities – 53 53
total net assets – 1320 1320
goodwill – – 828
total – – 2148
satisfied by
cash paid – – 473
deferred consideration – – 1675
– – 2148
cash outflow for acquired businesses in the cash flow statements page 108
cash consideration for the current year and deferred consideration on prior years’ acquisitions 5601
net cash outflow 5601
1  the acquisition of the business and assets of the steam specialties business pt petrolog mym based in indonesia was completed on 
30th august 2013 the acquisition method of accounting has been used fixed consideration of £1675000 will be paid over the next 
five years separately identified intangibles are recorded as part of the fair value adjustment the goodwill recognised represents the 
opportunity to take direct control of the sale of the group’s product and services in the indonesian market no deferred tax liability has 
been created in respect of intangible assets acquired because tax relief will be available over the assets’ useful life
2  the acquisition of the distribution rights of watsonmarlow bredel products in austria and sweden was made on 1st october 2013 
the acquisition method of accounting has been used consideration of £473000 was paid on completion separately identified 
intangibles are recorded as part of the fair value adjustment the goodwill recognised represents the opportunity to sell a wider range of 
the group’s existing products to the acquired customer base to fully utilise the group’s applications expertise to expand sales  spiraxsarco engineering plc annual report and accounts 2013 140
financial statements continued
notes to the accounts continued
30 purchase of businesses continued
2012
acquisitions
book value
£000
fair value adj
£000
fair value
£000
noncurrent assets
intangibles – 2406 2406
– 2406 2406
current assets
inventories 324 – 324
324 – 324
total assets 324 2406 2730
current liabilities
deferred tax – 27 27
total liabilities – 27 27
total net assets 324 2379 2703
goodwill – – 1243
total – – 3946
satisfied by
cash paid – – 2439
deferred consideration – – 1507
3946
cash outflow for acquired businesses in the cash flow statements page 108
cash consideration for the current year and deferred consideration on prior years’ acquisitions 4501
net cash outflow 4501
1  the acquisition of the desuperheater business from uk based transvac systems ltd was completed on 24th july 2012 the acquisition 
method of accounting has been used consideration of £595000 was paid during 2012 following completion separately identified 
intangibles are recorded as part of the fair value adjustment the goodwill recognised represents the opportunity to accelerate the growth 
in sales of desuperheaters around the group by capitalising on transvac’s expertise in this area no deferred tax liability has been created 
in respect of intangible assets acquired because tax relief will be available over the assets useful life
2  the acquisition of the distribution rights of watsonmarlow bredel products in denmark and poland was made on 1st october 2012 
the acquisition method of accounting has been used consideration of £214000 was paid on completion separately identified 
intangibles are recorded as part of the fair value adjustment the goodwill recognised represents the opportunity to sell a wider range of 
the group’s existing products to the acquired customer base to fully utilise the group’s applications expertise to expand sales
3  the acquisition of the business and certain assets of the steam specialty business termodinámica based in chile was completed on 
14th december 2012 the acquisition method of accounting has been used consideration of £1631000 was paid on completion the 
balance will be paid over the next 12 months subject to certain performance conditions being met separately identified intangibles are 
recorded as part of the fair value adjustment the goodwill recognised represents the opportunity to take direct control of the sale of the 
group’s products and services in the important chilean market no deferred tax liability has been created in respect of intangible assets 
acquired because tax relief will be available over the assets’ useful life 1 strategic report 2 governance 3 financial statements
141 spiraxsarco engineering plc annual report and accounts 2013
31 derivatives and other financial instruments
the group does not enter into significant derivative transactions the group’s principal financial instruments comprise bank loans cash and 
shortterm deposits the main purpose of these financial instruments is to raise finance for the group’s operations the group has various 
other financial instruments such as trade debtors and trade creditors which arise directly from its operations it is and has been throughout 
the period under review the group’s policy that no trading in financial instruments shall be undertaken
the main risks arising from the group’s financial instruments are credit risk interest rate risk liquidity risk and foreign currency risk the board 
reviews and agrees policies for managing each of these risks and they are summarised below these policies have remained fundamentally 
unchanged since the beginning of 2000
credit risk
the group sells products and services to customers around the world and its customer base is extremely varied in size and industry sector 
the group operates credit control policies to assess customers’ credit ratings and provides for any debt that is identified as noncollectable
interest rate risk
the group borrows in desired currencies at both fixed and floating rates of interest as appropriate to the purposes of the borrowing
liquidity risk
the group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts loans and finance 
leases as appropriate
foreign currency risk
the group has operations around the world and therefore its balance sheet can be affected significantly by movements in the rate of 
exchange between sterling and various other currencies particularly the us dollar and euro the group seeks to mitigate the effect of this 
structural currency exposure by borrowing in these currencies where appropriate while maintaining a low cost of debt
the group also has transactional currency exposures principally as a result of trading between group companies such exposures arise from 
sales or purchases by an operating unit in currencies other than the unit’s functional currency net cash flows between any two currencies of 
less than £1 million per annum would not usually be considered sufficiently material to warrant forward cover forward cover is not taken out 
more than 24 months in advance or for more than 90 of the next 12 months’ and 60 of the following 12 months’ forecast exposure
fair values
the following table compares amounts and fair values of the group’s financial assets and liabilities   
2013 2012
carrying
value
£000
fair
value
£000
carrying
value
£000
fair
value
£000
financial assets
cash and cash equivalents 84417  84417  99832  99832 
bank deposits 32901  32901 – –
trade and other receivables 156860  156860  154563  154563 
 274178  274178  254395  254395 
2013 2012
carrying
value
£000
fair
value
£000
carrying
value
£000
fair
value
£000
financial liabilities
bank loans 98041  98041  46348  46348 
finance lease obligations 1068  1132  1421  1506 
bank overdrafts 1809  1809  387  387 
trade payables 30135  30135  27529  27529 
other payables 25041  25041 31794 31794 
 156094 156158 107 479 107564 
there are no other assets or liabilities measured at fair value on a recurring or nonrecurring basis for which fair value is disclosed  
   spiraxsarco engineering plc annual report and accounts 2013 142
financial statements continued
notes to the accounts continued
31 derivatives and other financial instruments continued
interest rate risk profile of financial liabilities
the interest rate profile of the financial liabilities of the group as at 31st december was as follows
2013
the group
total
£000
fixed rate
financial
liabilities
£000
floating rate
financial
liabilities
£000
financial
liabilities on
which no
interest is paid
£000
euro 17071 – 331 16740
us dollar 3994 – – 3994
sterling 100829 1068 90465 9296
other 34200 – 9054 25146
156094 1068 99850 55176
2012
the group
total
£000
fixed rate
financial
liabilities
£000
floating rate
financial
liabilities
£000
financial
liabilities on
which no
interest is paid
£000
euro 17052 72 387 16593
us dollar 1841 – – 1841
sterling 43093 1348 34500 7245
other 45493 – 11849 33644
107479 1420 46736 59323
2013
the parent
total
£000
fixed rate
financial
liabilities
£000
floating rate
financial
liabilities
£000
financial
liabilities on
which no
interest is paid
£000
sterling 90552 – 90465 87
90552 – 90465 87
2012
the parent
total
£000
fixed rate
financial
liabilities
£000
floating rate
financial
liabilities
£000
financial
liabilities on
which no
interest is paid
£000
sterling 34847 – 34500 347
34847 – 34500 347
the benchmark rates for the floating rate financial liabilities are libor 1 strategic report 2 governance 3 financial statements
143 spiraxsarco engineering plc annual report and accounts 2013
31 derivatives and other financial instruments continued
terms and debt repayment schedule
the terms and conditions of outstanding loans were as follows
currency
nominal
interest rate
year
of maturity
2013
carrying value
£000
2012
carrying value
£000
unsecured bank facility € 218 2013 – 75
unsecured bank facility € 255 2014 318 312
unsecured bank facility won 471 20142017 3604 4655
unsecured bank facility yen 093 2014 4308 5336
unsecured bank facility £ 115 2014 4000 7 000
secured bank facility £ 132 2015 30000 –
secured bank facility £ 060 2014 30000 –
unsecured bank facility £ 185 2014 1465 –
unsecured bank facility trl 051 2014 13 –
unsecured bank facility € 104 2014 13 –
secured bank facility £ 177 2015 25000 27500
unsecured bank facility rand 740 2017 1129 1857
finance leases rmb – 20122016 – 5
finance leases € 410 20122015 – 75
finance leases £ – 20142016 1068 1341
100918 48156
the £55 million bank facilities maturing in 2015 are secured on the assets of various group companies covenant tests are performed twice 
annually at 30th june and 31st december the directors have prepared an analysis and conclude that the covenants are met
the £30 million bank facility maturing in 2014 is secured by the bank deposits of another group company
interest rate risk profile of financial assets
the interest rate profile of the financial assets of the group as at 31st december 2013 was as follows
2013
the group
total
£000
floating rate
financial assets
£000
financial assets on which
no interest is earned
£000
sterling 15101 – 15101
euro 55957 13981 41976
us dollar 27008 268 26740
rmb 67966 50068 17898
other 108146 25898 82248
274178 90215 183963
2012
the group
total
£000
floating rate
financial assets
£000
financial assets on which
no interest is earned
£000
sterling 18024 4536 13488
euro 50305 4682 45623
us dollar 40602 17404 23198
rmb 43938 29406 14532
other 101526 24819 76707
254395 80847 173548 spiraxsarco engineering plc annual report and accounts 2013 144
financial statements continued
notes to the accounts continued
31 derivatives and other financial instruments continued 
2013
the parent
total
£000
floating rate
financial assets
£000
financial assets on which
no interest is earned
£000
sterling 1643 – 1643
other – – –
1643 – 1643
2012
the parent
total
£000
floating rate
financial assets
£000
financial assets on which
no interest is earned
£000
sterling 4261 4261 –
other – – –
4261 4261 –
financial assets on which no interest is earned comprise trade and other receivables and cash at bank and in hand
floating rate financial assets comprise cash placed on money market deposit mainly at call and three month rates the average rate of 
interest received on sterling deposits during the year was nil 2012 06
currency exposures
as explained above the group’s objectives in managing the currency exposures arising from its net investment overseas in other words its 
structural currency exposures are to maintain a low cost of debt while partially hedging against currency depreciation all gains and losses 
arising from these structural currency exposures are dealt with in the statement of total comprehensive income
transactional or nonstructural exposures give rise to net currency gains and losses that are recognised in the income statement 
such exposures include the monetary assets and monetary liabilities in the group balance sheet that are not denominated in the operating 
or “functional” currency of the operating unit involved at 31st december 2013 the currency exposures in respect of the euro was a net 
monetary liability of £706000 2012 net monetary liability £543000 and in respect of the us dollar a net monetary liability of £696000 
2012 £7 961000
at 31st december 2013 the percentage of debt to net assets excluding debt was 008 2012 065 for the euro and nil 2012 nil for the 
us dollar
maturity of financial liabilities
the group’s financial liabilities at 31st december 2013 mature in the following periods
2013
the group
trade and 
other
payables
£000
overdrafts
£000
shortterm
borrowings
£000
finance
leases
£000
longterm
borrowings
£000
total
£000
in six months or less or on demand 54578 1814 39487 149 693 96721
in more than six months but no more than 12 – – – 149 346 495
in more than one year but no more than two 114 – – 298 56653 57065
in more than two years but no more than three 109 – – 298 906 1313
in more than three years but no more than four 104 – – 174 516 794
in more than four years but no more than five 99 – – – – 99
in more than five years 94 – – – – 94
total contractual cash flows 55098 1814 39487 1068 59114 156581
balance sheet values 55176 1809 39338 1068 58703 156094 1 strategic report 2 governance 3 financial statements
145 spiraxsarco engineering plc annual report and accounts 2013
31 derivatives and other financial instruments continued 
2012
the group
trade and other
payables
£000
overdrafts
£000
shortterm
borrowings
£000
finance
leases
£000
longterm
borrowings
£000
total
£000
in six months or less or on demand 57814 391 7005 210 6113 71533
in more than six months but no more than 12 – – – 300 770 1070
in more than one year but no more than two – – – 316 1610 1926
in more than two years but no more than three – – – 300 31194 31494
in more than three years but no more than four – – – 295 1392 1687
in more than four years but no more than five – – – – 518 518
in more than five years – – – – – –
total contractual cash flows 57814 391 7005 1421 41597 108228
balance sheet values 59323 387 7000 1421 39348 107479
2013
the parent
trade and 
other
payables
£000
overdrafts
£000
shortterm
borrowings
£000
finance
leases
£000
longterm
borrowings
£000
total
£000
in six months or less or on demand 87 1465 34000 – – 35552
in more than six months but no more than 12 – – – – – –
in more than one year but no more than two – – – – 55000 55000
in more than two years but no more than three – – – – – –
in more than three years but no more than four – – – – – –
in more than four years but no more than five – – – – – –
in more than five years – – – – – –
total contractual cash flows 87 1465 34000 – 55000 90552
balance sheet values 87 1465 34000 – 55000 90552
2012
the parent
trade and other
payables
£000
overdrafts
£000
shortterm
borrowings
£000
finance
leases
£000
longterm
borrowings
£000
total
£000
in six months or less or on demand 347 – 7005 – – 7352
in more than six months but no more than 12 – – – – – –
in more than one year but no more than two – – – – 28968 28968
in more than two years but no more than three – – – – – –
in more than three years but no more than four – – – – – –
in more than four years but no more than five – – – – – –
in more than five years – – – – – –
total contractual cash flows 347 – 7005 – 28968 36320
balance sheet values 347 – 7000 – 27500 34847
cash flow hedge
the group uses forward currency contracts to manage its exposure to movements in foreign exchange rates the forward contracts are 
designated as hedging instruments in a cash flow hedging relationship at 31st december 2013 the group had contracts outstanding to 
purchase £1004000 with euros and £931000 with us dollars the fair values at the end of the reporting period were £1887 000 
2012 £1558000 the fair value of cash flow hedges falls into the level 2 category of the fair value hierarchy in accordance with ifrs 7  financial statements continued
spiraxsarco engineering plc annual report and accounts 2013 146
notes to the accounts continued
31 derivatives and other financial instruments continued 
borrowing facilities
the group has various borrowing facilities available to it the undrawn committed facilities available at 31st december in respect of which all 
conditions precedent had been met at that date were as follows
the group
2013
£000
2012
£000
expiring in one year or less 11577 14555
expiring in more than two years but no more than three 18535 12500
30112 27055
the parent
2013
£000
2012
£000
expiring in one year or less 6000 8000
expiring in more than two years but no more than three 18535 12500
24535 20500
fair values of financial assets and financial liabilities
fair values of financial assets and liabilities at 31st december 2013 are not materially different from book values due to their size or the fact 
that they were at shortterm rates of interest fair values have been assessed as follows
•	 	 d e ri v a ti v es
 forward exchange contracts are marked to market using yearend exchange rates
•	 	 i n t e r es t  b ea ri n g 	 l o a n s 	 a n d 	 b o r r o w i n g s
  fair value is calculated based on discounted expected future principal and interest cash flows
•	 	 f i n a n c e 	 l ea s e 	 l i a b i l i ti es
  the fair value is estimated as the present value of future cash flows discounted at market interest rates for homogeneous lease 
agreements the estimated fair values reflect change in interest rates
•	 	 t r a d e 	 a n d 	 o th er 	 r ec ei v a b l es p a y a b l es
  for receivablespayables with a remaining life of less than one year the notional amount is deemed to reflect the fair value
sensitivity analysis
in managing interest rate and currency risks the group aims to reduce the impact of shortterm fluctuations on the group’s earnings 
over the longer term however permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings
at the yearend borrowings totalled £100918000 2012 £48 156000 at 31st december 2013 it is estimated that a general increase of one 
percentage point in interest rates would reduce the group’s profit after tax and equity by approximately £700000 2012 £250000 
for the year ended 31st december 2013 it is estimated that a decrease of one percentage point in the value of sterling weighted in relation 
to the group’s profit and trading flows would have increased the group’s profit before tax by approximately £2000000 2012 £1800000 
the effect can be very different between years due to the weighting of different currency movements forward exchange contracts have 
been included in this calculation 1 strategic report 2 governance 3 financial statements
147 spiraxsarco engineering plc annual report and accounts 2013
31 derivatives and other financial instruments continued
the credit risk profile of trade receivables
the ageing of trade receivables at the reporting date was
gross
2013
£000
impairment
2013
£000
gross
2012
£000
impairment
2012
£000
not past due date 100132 28 110322 214
0 – 30 days past due date 23653 52 18193 280
30 days – one year past due date 23814 2139 21885 4220
more than one year 6792 6792 4840 4840
154391 9011 155240 9554
based on past experience the group believes no further impairment allowance is required for receivables that are past their due date 
other than trade receivables there are no financial assets that are past their due date at 31st december 2013
the movement in the allowance for impairment in respect of trade receivables during the year was as follows
2013
£000
2012
£000
balance at 1st january 9554 8950
movement in impairment 543 604
balance at 31st december 9011 9554 spiraxsarco engineering plc annual report and accounts 2013 148
financial statements continued
financial summary 2004–2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2004
6894
6617
6500
5897
5187
5023
4173
3842
3491
3160
3258
ifrs basis
revenue £m
1516
1362
1340
1191
899
857
687
623
553
480
511
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2004
ifrs basis
operating profit adjusted £m
prepared under ifrs
2004 
£000
2004 
£000
2005 
£000
2006 
£000
2007 
£000
revenue 325833 315991 349100 384249 417 317
operating profit 51100 47956 55170 61941 68336
operating profit adjusted – 47956 55345 62291 68720
operating profit margin adjusted 157 152 159 162 165
profit before taxation 50836 48704 56959 65344 72163
profit before taxation adjusted – 48704 57134 65694 72796
profit after taxation 33682 32442 38187 44066 49190
dividends in respect of the year 16102 16196 18318 20038 22754
net assets 182013 166286 198246 199722 242965
earnings per share basic 434p 431p 500p 577p 647p
earnings per share adjusted – 431p 502p 581p 655p
dividends in respect of the year per share 214p 214p 238p 265p 299p
special dividend per share – – – – –
return on capital employed note 24 310 272 304 322 336
  the results for 2004 to 2013 have been prepared under international financial reporting standards prior year figures are shown as originally reported including 2004 for 
reference adjusted items exclude nonoperating items see note 2 on pages 114 to 115
†
  the results for 2012 have been restated to reflect ias 19r see note 1 on page 109 1 strategic report 2 governance 3 financial statements
149 spiraxsarco engineering plc annual report and accounts 2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
590
530
490
430
361
333
299
265
238
214
250
1000
special dividend
earnings per share adjusted p dividends per share p
†
 2012 restated for ias 19r
1388
1222
1248
1095
822
834
655
581
502
431
434
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2004
ifrs basis
†
prepared under ifrs
2008 
£000
2009 
£000
2010 
£000
2011 
£000
2012
†
 
£000
2013 
£000
revenue 502316 518705 589746 649991 661723 689388
operating profit 81028 76522 121396 129498 125714 147040
operating profit adjusted 85669 89938 119125 133960 136245 151626
operating profit margin adjusted 171 173 202 206 206 220
profit before taxation 85162 76415 123493 132341 124093 145714
profit before taxation adjusted 90146 90196 121613 137169 134948 151056
profit after taxation 59788 53091 86654 93238 87642 102320
dividends in respect of the year 25668 27569 52624 38072 119469 44493
net assets 296006 307364 379524 400120 436549 403534
earnings per share basic 780p 696p 1125p 1200p 1122p 1334p
earnings per share adjusted 834p 822p 1095p 1248p 1222p 1388p
dividends in respect of the year per share 333p 361p 430p 490p 530p 590p
special dividend per share – – 250p – 1000p –
return on capital employed note 24 355 333 421 411 394 444
prepared under ifrs
2004 
£000
2004 
£000
2005 
£000
2006 
£000
2007 
£000
revenue 325833 315991 349100 384249 417 317
operating profit 51100 47956 55170 61941 68336
operating profit adjusted – 47956 55345 62291 68720
operating profit margin adjusted 157 152 159 162 165
profit before taxation 50836 48704 56959 65344 72163
profit before taxation adjusted – 48704 57134 65694 72796
profit after taxation 33682 32442 38187 44066 49190
dividends in respect of the year 16102 16196 18318 20038 22754
net assets 182013 166286 198246 199722 242965
earnings per share basic 434p 431p 500p 577p 647p
earnings per share adjusted – 431p 502p 581p 655p
dividends in respect of the year per share 214p 214p 238p 265p 299p
special dividend per share – – – – –
return on capital employed note 24 310 272 304 322 336
  the results for 2004 to 2013 have been prepared under international financial reporting standards prior year figures are shown as originally reported including 2004 for 
reference adjusted items exclude nonoperating items see note 2 on pages 114 to 115
†
  the results for 2012 have been restated to reflect ias 19r see note 1 on page 109 spiraxsarco engineering plc annual report and accounts 2013 150
spirax sarco worldwide
steam specialties
emea
belgium
spiraxsarco n v
czech republic
spirax sarco spol sro
denmark
spiraxsarco ltd branch
finland
spirax oy
france
spiraxsarco sas
germany
spiraxsarco gmbh
hygromatik gmbh
spiraxsarco germany holdings gmbh
ireland
spiraxsarco ltd branch
italy
spiraxsarco srl
m  m international srl
colima srl
spiraxsarco italy holdings srl
middle east
spirax sarco middle east
netherlands
spiraxsarco engineering bv
spiraxsarco investments bv
spiraxsarco netherlands bv
spiraxsarco netherlands holdings 
coöperatieve wa
norway
spiraxsarco as
poland
spirax sarco sp zoo
portugal
spirax sarco equip ind lda
 
emea continued
russia
spiraxsarco engineering llc
south africa
spiraxsarco south africa pty ltd
spain
spirax sarco sa
spiraxsarco engineering sl
sweden
spiraxsarco ab
switzerland
spiraxsarco ag
turkey
spirax inter valf sanayi ve ticaret
ltd sirketi
united kingdom
spiraxsarco ltd
spiraxsarco america ltd
spiraxsarco investments ltd
spiraxsarco overseas ltd
 
americas
argentina
spirax sarco sa
brazil
spirax sarco ind e com ltda
canada
spirax sarco canada ltd
chile
spiraxsarco chile ltda
mexico
spiraxsarco mexicana sapi de cv
usa
spiraxsarco inc
sarco international corp
asia pacific
australia
spiraxsarco pty ltd
china
spirax sarco engineering china ltd
india
spiraxmarshall ltd 493
spiraxsarco india private ltd
indonesia
pt spiraxsarco indonesia
japan
spiraxsarco ltd branch
malaysia
spiraxsarco sdn bhd
new zealand
spirax sarco ltd
philippines
spiraxsarco philippines inc
singapore
spiraxsarco private ltd
south korea
spiraxsarco korea ltd 97 5
taiwan
spirax sarco co ltd
thailand
spirax sarco thailand ltd 151 spiraxsarco engineering plc annual report and accounts 2013
watsonmarlow 
pumps group
austria
watson marlow austria gmbh
argentina
watsonmarlow argentina operating 
via spirax sarco sa
australia
watsonmarlow pty ltd
belgium
watsonmarlow n v
brazil
watsonmarlow bredel ind
e com de bombas ltda
china
watsonmarlow china operating 
via spirax sarco engineering china ltd
denmark
watsonmarlow flexicon as
france
watsonmarlow sas
germany
watsonmarlow gmbh
india
watsonmarlow india private ltd
italy
watsonmarlow srl
malaysia
watsonmarlow malaysia operating 
via spiraxsarco sdn bhd
mexico
watsonmarlow s de rl de c v
watsonmarlow 
pumps group continued
netherlands
watsonmarlow bredel bv
watsonmarlow bredel holdings bv
watsonmarlow bv
new zealand
watsonmarlow ltd
poland
watsonmarlow sp zoo
russia
watsonmarlow llc
singapore
watsonmarlow pte ltd
south africa
watsonmarlow bredel s a pty ltd
south korea
watsonmarlow korea operating via 
spiraxsarco korea ltd
sweden
wm alitea a b
switzerland
watsonmarlow ltd branch
united kingdom
watsonmarlow ltd
bio pure technology ltd
usa
watson marlow inc spiraxsarco engineering plc annual report and accounts 2013 152
officers and advisers
secretary and registered office
mr a j robson
general counsel and company secretary
spiraxsarco engineering plc
charlton house
cirencester road
cheltenham
gloucestershire
gl53 8er
telephone 01242 521361
facsimile 01242 581470
email companysecretaryukspiraxsarcocom
website  wwwspiraxsarcoengineeringcom
auditor
kpmg audit plc to 20th may 2014 
deloitte llp from 20th may 2014
joint financial advisers
bank of america merrill lynch 
rothschild
bankers
barclays bank plc
corporate brokers
bank of america merrill lynch
registrars
equiniti
aspect house 
spencer road lancing 
west sussex bn99 6da
telephone 0871 384 2349 uk 
or 44 0121 415 7047 overseas
    calls to this number cost 8p per minute plus network extras 
lines open 830 am to 530 pm monday to friday
wwwshareviewcouk
solicitors
herbert smith freehills llp
allen  overy llp
important dates
annual general meeting  20th may 2014
final dividend

ordinary shares quoted exdividend 30th april 2014
record date for final dividend  2nd may 2014
final dividend payable  30th may 2014
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charlton house
cirencester road
cheltenham
gloucestershire
gl53 8er uk
wwwspiraxsarcoengineeringcom


Summary:
 spiraxsarco engineering plc annual report and accounts 2013 30
welcome to our 
2013 report
chairman’s  
statement
our
structure
our
marketplace
our business
model
our business
model in action
our
strategy
our
kpis
about us
strategic report continued
group chief executive’s report
“ group sales increased to £6894 million 
with organic sales growth of nearly 
4 our focus remains on creating our 
own growth opportunities through the 
implementation of our growth strategy”
nick anderson 
group chief executive
key highlights
•	organic sales grew by nearly 35 
in the steam specialties business 
and by 4 for the watsonmarlow 
pumps business
•	operating profit increased by 11 
to £1516 million and at constant 
exchange rates operating profit 
was ahead 10
•	sales in emerging markets 
expanded to 42 of group 
revenue and emerging markets 
accounted for 45 of group 
operating profit in 2013
•	group operating profit margin 
reached a record 220
introduction
this is a truly exceptional company with 
many fundamental strengths the success 
and strong performance during recent 
years despite a challenging global 
economic environment demonstrates that 
our strategy robust business model and 
talented organisation delivers superior value 
to our shareholders as i take over as group 
chief executive my priority is to continue 
to leverage our strengths and build on this 
solid base
the skills and applications knowledge of 
our people especially our direct sales and 
service engineers is central to our ability 
to provide customers with solutions to 
their energy efficiency productivity quality 
and sustainability issues we manage the 
business for the long term and continually 
invest in widening our addressable markets 
expanding our market penetration and 
extending our geographic presence 
especially into newly emerging markets 
our focus on solution selling underpins 
our growth in both emerging and 
developed markets
in recent years we have improved processes 
and significantly increased our investment in 
research and development resources which 
is central to our ability to expand the size of 
our addressable market i would expect new 
products to make an increasing contribution 
to sales growth in the future
we have increased regional manufacturing 
to enhance local availability of an unrivalled 
range of products improving customer 
service and supporting sales growth we will 
look to increase supply chain effectiveness 
by optimising our global distribution network 
and leveraging manufacturing efficiencies
global environment
global industrial production provides a 
reasonable indicator for the conditions in 
our markets we entered 2013 with very low 
rates of industrial production growth that 
had been progressively slowing through 
the previous year the first half of 2013 
saw a continuation of this trend but with 
some acceleration in growth through the 
second half of the year for the full year 
growth in industrial production was overall 
broadly the same as the prior year’s growth 
the outlook for 2014 however is a little 
more positive we have a robust and resilient 
business model but we are not immune 
from economic swings which our markets 
can lag by up to nine months although our 
focus remains on creating our own growth 
opportunities through the implementation of 
our growth strategy
market conditions remained weak across 
most of europe with overall industrial 
production flat yearonyear although 
with recent indications of improvement in 
market conditions towards the end of the 
year markets in north america remained 
challenging and in developed markets 
generally project activity was slow with lower 
demand for higher value energy saving and 
process efficiency improvement projects 
routine maintenance spending by customers 
was modestly higher
emerging market conditions were 
mixed with stable growth in china and 
improvement in parts of southeast asia and 
eastern europe in latin america there was 
an improving trend in economic conditions 
entering 2013 which flattened in the second 
half currency pressures in argentina 
erupted in early 2014 with a knockon 
effect in a number of other emerging 
market currencies creating a degree of 
market uncertainty
progress in 2013
group sales increased by over 4 from 
£6617 million to £6894 million organic 
sales growth was nearly 4 for the year 
repeating the growth achieved in the first 
half year growth was led by asia pacific  31 spiraxsarco engineering plc annual report and accounts 2013
1 strategic report 2 governance 3 financial statements
our  
risks
emea asia  
pacific
americas watsonmarlow financial  
review
sustainability 
report
group chief 
executive’s report
group performance  
at a glance
with china continuing its strong progress 
followed by watsonmarlow modest sales 
growth was achieved in emea despite the 
difficult economic background and sales 
in the americas were marginally lower due 
to north america mitigated by growth in 
latin america overall sales in emerging 
markets expanded to 42 of group revenue 
from 40 in 2012 favourable currency 
movements at the half year were steadily 
eroded by the strengthening of sterling and 
weakness in a number of emerging market 
currencies particularly in the fourth quarter 
of 2013 if current exchange rates prevail 
through 2014 sales would be reduced 
by around 5 on translation into sterling 
versus 2013
in the steam specialties business organic 
sales grew by nearly 35 sales of our 
traditional condensate management 
products were higher with increased sales 
of traps and valves which reflected the 
solid underlying demand from the core 
maintenance and operating expenditures 
of our customers in general demand 
for higher value energy saving and plant 
improvement projects has been soft 
metering sales increased nicely driven 
by the introduction of innovative and 
technologically advanced products over the 
past two years with particular success in 
emea and asia pacific sales of controls 
products grew well with progress in all 
regions and energy services also did well 
following the exceptionally strong growth 
in heat exchange packages in 2012 the non
repeat of several large projects meant that 
heat exchange package sales were down 
in 2013
rd in the steam specialties business 
continued to benefit from the higher level 
of investment and resource in recent years 
which was maintained through 2013 as 
well as the improvement in processes and 
techniques focus was directed onto fewer 
higher incremental sales value opportunities 
where we can best leverage new product 
sales we expect that the investment and 
improvements will generate an increasing 
contribution to future sales growth from 
new products
in the watsonmarlow pumps business 
organic sales grew 4 with a particularly 
tough second half comparison due to 
several large nonrepeating wastewater 
treatment and mining projects shipped in 
the second half of the prior year there was 
particularly good progress in europe where 
an increase in the direct sales channel and 
greater focus through further sectorisation 
of the sales teams delivered solid growth 
new products contributed strongly with 
the new qdos pump making a particular 
impact the higher level of rd resource 
in watsonmarlow has been maintained 
with innovative new products that continue 
to expand the performance envelope 
that increases the addressable market 
displacing other pump types
the group has added resource and 
intensified the search for suitable acquisition 
candidates focusing on expanding our 
addressable markets through new products 
and technologies direct market access and 
complementary businesses our strong 
balance sheet and debt capacity provides 
us with considerable flexibility
we achieved a good increase in operating 
profit of 1 1 from £1362 million to 
£1516 million using constant exchange 
rates operating profit was ahead 10 
following the exaggerated seasonal bias 
in 2012 of profits to the second half year 
of 4357  2013 returned to a more normal 
pattern of 4555 emerging markets 
accounted for 45 of group operating 
profit in 2013 in line with the prior 
year this reflects the significant profit 
improvement achieved in the developed 
markets of europe
the group operating profit margin jumped 
from 206 to a record 220 the cost 
of raw materials and components was 
broadly flat reflecting subdued world 
metals prices plus our ongoing initiatives 
to improve the operation of our supply 
chain we fully realised the benefits from the 
greater focus on price management and 
margin as well as from the restructuring 
of our european sales companies that 
delivered a yearonyear cost reduction of 
£35 million profits rebounded from the 
low levels in the prior year in our european 
steam specialties manufacturing operations 
in europe particularly in the uk where we 
achieved further efficiency improvements 
from the consolidated site we continue to 
invest in geographic expansion and market 
penetration in emerging markets which 
remains a strategic priority
market outlook
we have an outstanding business 
model and over recent years have made 
significant and farreaching improvements 
to our performance through a time of 
great economic uncertainty this has been 
achieved whilst at the same time investing 
heavily in our manufacturing capability 
and capacity in our rd resources and 
processes in our people development and 
in our expanding network of direct sales and 
service engineers
our markets are heavily influenced by 
the level of industrial production we are 
not immune from economic tides but 
our business is resilient having a high 
proportion of sales drawn from customers’ 
maintenance and operating budgets and 
with less exposure to the capital cycle 
our focus is on our strategic actions to 
outperform our markets and we are well 
positioned to leverage the investments 
we have made to achieve growth and 
improvements in our business