who we are 
we are a multinational industrial engineering 
group with two focused niche businesses  
that are the world leaders spirax sarco for 
steam specialties and watsonmarlow for 
peristaltic pumps
what we do 
we assist our customers to achieve 
environmentally friendly solutions for  
process efficiency improvements energy 
savings and plant health safety and 
regulatory compliance
our principal objective 
our prime financial objective is to provide 
enhanced value to shareholders through 
consistent growth in earnings and dividends 
per share we have proudly achieved this 
objective for over 40 years
01 our performance at a glance
02 chairman’s statement
04 an interview with mark vernon ceo
10 business review
18  financial review
22 corporate social responsibility
30 board of directors
33 directors’ report
35 corporate governance
39 the directors’ remuneration report
46 statement of directors’ responsibilities
47 report of the independent auditor
48 balance sheets
49 group income statement
50 group statement of comprehensive income
50 statements of changes in equity
52  cash flow statements
53 notes to the accounts
82 financial summary 2000 – 2009
84 officers and advisers
spiraxsarco engineering plc 
charlton house  
cirencester road 
cheltenham 
gloucestershire  
gl53 8er uk
wwwspiraxsarcoengineeringcom
spiraxsarco engineering plc annual report and accounts 2009
spiraxsarco engineering plc annual report and accounts 2009
a quality business 
sharpening our edge who we are 
we are a multinational industrial engineering 
group with two focused niche businesses  
that are the world leaders spirax sarco for 
steam specialties and watsonmarlow for 
peristaltic pumps
what we do 
we assist our customers to achieve 
environmentally friendly solutions for  
process efficiency improvements energy 
savings and plant health safety and 
regulatory compliance
our principal objective 
our prime financial objective is to provide 
enhanced value to shareholders through 
consistent growth in earnings and dividends 
per share we have proudly achieved this 
objective for over 40 years
01 our performance at a glance
02 chairman’s statement
04 an interview with mark vernon ceo
10 business review
18  financial review
22 corporate social responsibility
30 board of directors
33 directors’ report
35 corporate governance
39 the directors’ remuneration report
46 statement of directors’ responsibilities
47 report of the independent auditor
48 balance sheets
49 group income statement
50 group statement of comprehensive income
50 statements of changes in equity
52  cash flow statements
53 notes to the accounts
82 financial summary 2000 – 2009
84 officers and advisers
spiraxsarco engineering plc 
charlton house  
cirencester road 
cheltenham 
gloucestershire  
gl53 8er uk
wwwspiraxsarcoengineeringcom
spiraxsarco engineering plc annual report and accounts 2009
spiraxsarco engineering plc annual report and accounts 2009
a quality business 
sharpening our edge group
at a glance
emea what we do
what we do
americas asia pacific
group operating profit group revenue spirax sarco 
£4349m
watsonmarlow 
£838m
spirax sarco 
£726m
watsonmarlow 
£223m
spirax sarco 
emea 
£2255m
spirax sarco 
americas 
£1046m
spirax sarco 
asia pacific 
£1047m
watsonmarlow 
£838m
revenue by business
percentage of group revenue
84
revenue
£4349m 
operating profit
£726m
operating profit margin
167
percentage of group revenue
16
revenue
£838m
operating profit
£223m
operating profit margin
266
spirax sarco is the global leader in the supply of engineered 
solutions for the efficient design maintenance and operation  
of 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 as well as our extensive 
global presence spirax sarco is uniquely positioned to provide  
a broad range of environmentallyfriendly engineered solutions  
to the many industries using steam
our customers face a variety of challenges including high energy 
costs pressure to improve the efficiency and capacity of existing 
processes and the need to comply with increasingly stringent 
health safety and environmental legislation our direct sales force 
is trained at length in product application system performance 
and 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 all of this creates  
a compelling and attractive onestop approach for our customers 
watsonmarlow is the global leader in peristaltic pumping and 
specialises not only in the design and manufacture of the most 
advanced peristaltic pumps but also in the application of those 
pumps to customers’ processes our peristaltic pumps are ideal 
for difficult pumping applications they are highly accurate and 
controllable and virtually maintenancefree making them a very 
reliable and costeffective solution 
operating a maketoorder manufacturing system and 
uniquely extruding our own pump tubing we have the leading 
position in the supply of peristaltic pumps to the biotechnology 
pharmaceuticals wastewater treatment mining and food 
industries the peristaltic pumping market is a small part of the 
global pump market but it is one of the fastest growing segments
highlights of the year
difficult market conditions •	
favourable exchange benefits from •	
13 weaker sterling against the euro
good performance from large •	
operations in france germany  
and italy
improved demand and sales in russia •	
in h2 after a very slow start in h1
difficult year in the domestic uk market •	
but good project wins in december
reduced volumes at our manufacturing •	
plants contributed to profit decline
headcount down 8 •	
highlights of the year
end markets stabilised and improving •	
favourable benefits from the strong  •	
us dollar
good q1 project orders in the  •	
us contributed to h2 shipments 
good underlying project activity in •	
pharmaceuticals and biotechnology
strong sales growth in asia •	
increased demand for  •	
flexicon products
sales declined at bredel from difficult •	
mining and general industrial markets
highlights of the year
end markets stabilised in h2 but •	
continuing weakness in canada
favourable exchange benefits  •	
from 19 weaker sterling against  
the us dollar 
good trading margin of 132  •	
versus 119 in 2008 
profit increase from 2008 closure  •	
of ultrapure
lower profits in brazil from strong •	
currency impacting export market 
customers
headcount down 13 •	
masosine acquisition integration •	
proceeding well
headcount down 2 •	
highlights of the year
market conditions mixed but improving •	
favourable exchange benefits from •	
21 stronger renminbi
strong shipments in q4 from backlog •	
added new sales people in china •	
prefabricated heat exchange  •	
package sales up 30
significant improvement in japan •	
trading profit from fx benefit
headcount down 3 •	
revenue
£2255m 
revenue
£1046m
revenue
£1047m
operating profit operating profit margin
£356m 158
operating profit operating profit margin
£139m 132
operating profit operating profit margin
£23 1m 221
spirax sarco worldwide
emea
belgium
spiraxsarco nv 
czech republic
spirax sarco spol s ro
denmark
spiraxsarco ltd branch
finland
spirax oy
france
spiraxsarco sas
germany
spiraxsarco gmbh
hygromatik gmbh
ireland
eirdata environmental services ltd
italy
spiraxsarco srl
m  m international srl
ampe srl
colima srl
netherlands
spiraxsarco engineering bv 
spiraxsarco investments bv 
norway
spiraxsarco as
poland
spirax sarco sp z oo
portugal
spirax sarco equip ind lda
russia
spiraxsarco engineering llc
south africa
spiraxsarco south africa pty ltd
spain
spirax sarco sa
spiraxsarco engineering sl
m  m iberica sl 67
sweden
spiraxsarco ab
switzerland
spiraxsarco ag
turkey
spirax inter valf sanayi ve ticaret 
limited şirketi
united kingdom
spiraxsarco ltd
spiraxsarco investments ltd
spiraxsarco overseas ltd
americas
argentina
spirax sarco sa
brazil
spirax sarco ind e com ltda
canada
spirax sarco canada ltd
mexico
spiraxsarco mexicana sa 49
usa
spirax sarco inc
sarco international corp
asia pacific
australia
spiraxsarco pty ltd
china
spirax sarco engineering china ltd
india
spiraxmarshall ltd 493
japan
spiraxsarco ltd branch
malaysia
spiraxsarco sdn bhd
new zealand
spirax sarco ltd
singapore
spiraxsarco private ltd
south korea
spiraxsarco korea ltd 975
t aiwan
spirax sarco co ltd
thailand
spirax sarco thailand ltd
belgium
watsonmarlow nv 
brazil
watsonmarlow bredel ind e com  
de bombas
denmark
as watsonmarlow alitea
watsonmarlow flexicon as
france
watsonmarlow sas
germany
watsonmarlow gmbh
italy
watsonmarlow srl
mexico
watsonmarlow s de rl de cv
netherlands
bredel hose pumps bv 
watsonmarlow bredel holdings bv 
watsonmarlow bv 
south africa
watsonmarlow bredel sa pty ltd
sweden
wm alitea ab
switzerland
watsonmarlow ltd branch
united kingdom
watsonmarlow ltd
usa
watsonmarlow inc
steam specialties watsonmarlow pumps
designed by luminouscouk  
financial statements typeset by db designs  
printed by severnprint on revive pure white silk a recycled 
paper produced using 100 recycled waste at a mill 
that has been awarded the iso140001 certificate for 
environmental management the pulp is bleached using a 
totally chlorine free process
europe middle east and africa group
at a glance
emea what we do
what we do
americas asia pacific
group operating profit group revenue spirax sarco 
£4349m
watsonmarlow 
£838m
spirax sarco 
£726m
watsonmarlow 
£223m
spirax sarco 
emea 
£2255m
spirax sarco 
americas 
£1046m
spirax sarco 
asia pacific 
£1047m
watsonmarlow 
£838m
revenue by business
percentage of group revenue
84
revenue
£4349m 
operating profit
£726m
operating profit margin
167
percentage of group revenue
16
revenue
£838m
operating profit
£223m
operating profit margin
266
spirax sarco is the global leader in the supply of engineered 
solutions for the efficient design maintenance and operation  
of 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 as well as our extensive 
global presence spirax sarco is uniquely positioned to provide  
a broad range of environmentallyfriendly engineered solutions  
to the many industries using steam
our customers face a variety of challenges including high energy 
costs pressure to improve the efficiency and capacity of existing 
processes and the need to comply with increasingly stringent 
health safety and environmental legislation our direct sales force 
is trained at length in product application system performance 
and 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 all of this creates  
a compelling and attractive onestop approach for our customers 
watsonmarlow is the global leader in peristaltic pumping and 
specialises not only in the design and manufacture of the most 
advanced peristaltic pumps but also in the application of those 
pumps to customers’ processes our peristaltic pumps are ideal 
for difficult pumping applications they are highly accurate and 
controllable and virtually maintenancefree making them a very 
reliable and costeffective solution 
operating a maketoorder manufacturing system and 
uniquely extruding our own pump tubing we have the leading 
position in the supply of peristaltic pumps to the biotechnology 
pharmaceuticals wastewater treatment mining and food 
industries the peristaltic pumping market is a small part of the 
global pump market but it is one of the fastest growing segments
highlights of the year
difficult market conditions •	
favourable exchange benefits from •	
13 weaker sterling against the euro
good performance from large •	
operations in france germany  
and italy
improved demand and sales in russia •	
in h2 after a very slow start in h1
difficult year in the domestic uk market •	
but good project wins in december
reduced volumes at our manufacturing •	
plants contributed to profit decline
headcount down 8 •	
highlights of the year
end markets stabilised and improving •	
favourable benefits from the strong  •	
us dollar
good q1 project orders in the  •	
us contributed to h2 shipments 
good underlying project activity in •	
pharmaceuticals and biotechnology
strong sales growth in asia •	
increased demand for  •	
flexicon products
sales declined at bredel from difficult •	
mining and general industrial markets
highlights of the year
end markets stabilised in h2 but •	
continuing weakness in canada
favourable exchange benefits  •	
from 19 weaker sterling against  
the us dollar 
good trading margin of 132  •	
versus 119 in 2008 
profit increase from 2008 closure  •	
of ultrapure
lower profits in brazil from strong •	
currency impacting export market 
customers
headcount down 13 •	
masosine acquisition integration •	
proceeding well
headcount down 2 •	
highlights of the year
market conditions mixed but improving •	
favourable exchange benefits from •	
21 stronger renminbi
strong shipments in q4 from backlog •	
added new sales people in china •	
prefabricated heat exchange  •	
package sales up 30
significant improvement in japan •	
trading profit from fx benefit
headcount down 3 •	
revenue
£2255m 
revenue
£1046m
revenue
£1047m
operating profit operating profit margin
£356m 158
operating profit operating profit margin
£139m 132
operating profit operating profit margin
£23 1m 221
spirax sarco worldwide
emea
belgium
spiraxsarco nv 
czech republic
spirax sarco spol s ro
denmark
spiraxsarco ltd branch
finland
spirax oy
france
spiraxsarco sas
germany
spiraxsarco gmbh
hygromatik gmbh
ireland
eirdata environmental services ltd
italy
spiraxsarco srl
m  m international srl
ampe srl
colima srl
netherlands
spiraxsarco engineering bv 
spiraxsarco investments bv 
norway
spiraxsarco as
poland
spirax sarco sp z oo
portugal
spirax sarco equip ind lda
russia
spiraxsarco engineering llc
south africa
spiraxsarco south africa pty ltd
spain
spirax sarco sa
spiraxsarco engineering sl
m  m iberica sl 67
sweden
spiraxsarco ab
switzerland
spiraxsarco ag
turkey
spirax inter valf sanayi ve ticaret 
limited şirketi
united kingdom
spiraxsarco ltd
spiraxsarco investments ltd
spiraxsarco overseas ltd
americas
argentina
spirax sarco sa
brazil
spirax sarco ind e com ltda
canada
spirax sarco canada ltd
mexico
spiraxsarco mexicana sa 49
usa
spirax sarco inc
sarco international corp
asia pacific
australia
spiraxsarco pty ltd
china
spirax sarco engineering china ltd
india
spiraxmarshall ltd 493
japan
spiraxsarco ltd branch
malaysia
spiraxsarco sdn bhd
new zealand
spirax sarco ltd
singapore
spiraxsarco private ltd
south korea
spiraxsarco korea ltd 975
t aiwan
spirax sarco co ltd
thailand
spirax sarco thailand ltd
belgium
watsonmarlow nv 
brazil
watsonmarlow bredel ind e com  
de bombas
denmark
as watsonmarlow alitea
watsonmarlow flexicon as
france
watsonmarlow sas
germany
watsonmarlow gmbh
italy
watsonmarlow srl
mexico
watsonmarlow s de rl de cv
netherlands
bredel hose pumps bv 
watsonmarlow bredel holdings bv 
watsonmarlow bv 
south africa
watsonmarlow bredel sa pty ltd
sweden
wm alitea ab
switzerland
watsonmarlow ltd branch
united kingdom
watsonmarlow ltd
usa
watsonmarlow inc
steam specialties watsonmarlow pumps
designed by luminouscouk  
financial statements typeset by db designs  
printed by severnprint on revive pure white silk a recycled 
paper produced using 100 recycled waste at a mill 
that has been awarded the iso140001 certificate for 
environmental management the pulp is bleached using a 
totally chlorine free process
europe middle east and africa spiraxsarco engineering plc annual report and accounts 2009 1
dividend
361p 8
highlights
•  final proposed dividend up 10 to 256p
•  dividend cover 23 times
10 year record highlights
•  8 growth pa over last ten years
revenue
£5187m 3
highlights
•  sales up 3 and down 7 at constant 
currency
•  sales performance broadly similar across all 
geographic regions and business segments
• acquisitions added less than 1 to sales
10 year record highlights
• 7 growth pa over last ten years
operating profit
£899m 5
highlights
•  adjusted operating profit up 5 and down 
12 at constant currency
•  profit increase from management actions to 
reduce costs pricing resourcing materials 
and favourable currency
•  adjusted operating profit margin increased 
to 173
• eighth year of profit margin improvement
10 year record highlights
•  8 growth pa over last ten years
our performance
at a glance
  all profit measures exclude exceptional headcount reduction costs of £114 million  
2008 £nil the amortisation of acquisitionrelated intangible assets of £24 million  
2008 £19 million of which £04 million 2008 £03 million relates to associates  
and the impairment of goodwill and intangible assets of £nil 2008 £31 million  
the tax effect on these items was £41 million 2008 £09 million
t otal 
year to 31st december 2009 2008 change
revenue £5187m £5023m 3
operating profit £765m £810m – 6
profit before taxation £764m £852m –10
earnings per share 696p 780p –11
dividends per share 361p 333p 8
adjusted 
year to 31st december 2009 2008 change
revenue £5187m £5023m 3
operating profit £899m £857m 5
operating profit  173 171 
profit before taxation £902m £901m 0
earnings per share 822p 834p –1
dividends per share 361p 333p 8
2000 £2782m
2001 £2919m
2002 £2964m
2003 £3141m
2004 £3160m
2005 £3491m
2006 £3842m
2007 £4173m
2008 £5023m
2009 £5187m
10 year record
2000 £434m
2001 £408m
2002 £427m
2003 £458m
2004 £480m
2005 £553m
2006 £623m
2007 £687m
2008 £857m
2009 £899m
10 year record
2000 180p
2001 186p
2002 193p
2003 201p
2004 214p
2005 238p
2006 265p
2007 299p
2008 333p
2009 361p
10 year record 2 spiraxsarco engineering plc annual report and accounts 2009
chairman’s statement
bill whiteley
given the challenging global 
economic environment i am 
pleased to report a good result 
for 2009 with record sales and 
profits that demonstrate the quality 
and resilience of our business 
and reflect the investments and 
improvements we have continued 
to make we generated a significant 
underlying cash inflow and the 
dividend has again been increased
sales at £5187 million were up 3 
from £5023 million in 2008 with 
improving yearonyear comparisons 
in the last few months of the year in 
all segments sales included a small 
contribution from acquisitions and a 
benefit of over 10 from favourable 
average exchange rates
adjusted operating profit at  
£899 million increased by 5 from  
£857 million in 2008 due to reduced 
headcount and costs especially in 
the second halfyear good pricing 
dynamics and the benefit of favourable 
exchange rates this was reflected in 
the trading margin that improved to 
173 2008 171 operating profit 
was ahead in all segments except 
europe middle east and africa emea
net finance charges were £25 million 
compared with net income of  
£17 million in 2008 with the 
deterioration due largely to the  
impact of a turnaround in the net 
finance income related to defined 
benefit pension funds the group’s 
share of the aftertax profits of our 
associate companies was unchanged 
at £28 million
adjusted pretax profit increased to 
£902 million 2008 £901 million 
and earnings per share were 822p 
2008 834p cost reduction actions 
included reducing the total employee 
headcount by 7 during the year and 
in december we also announced  
a reduction in our french factory 
as a result the total headcount 
reduction costs charged in 2009  
were £114 million with further efficiency 
gains expected in 2010 the pretax 
profit after charging these costs  
and including the amortisation of 
acquisitionrelated intangible assets 
was £764 million 2008 £852 million
as previously reported in october 2009 
the group completed the acquisition of 
the maso and sine business from maso 
processpumpen gmbh masosine 
for £219 million and the integration into 
watsonmarlow pumps is progressing 
well in october we also completed the 
acquisition of our turkish distributor 
inter valf for an initial consideration of 
£28 million we are pleased with the 
performance of these businesses since 
acquisition and with their small positive 
contributions to our earnings per share 
for the year
the board is recommending a 10 
increase in the final dividend of 256p 
per share payable on 21st may 2010 
to shareholders on the register at the 
close of business on 16th april 2010 
this together with the interim dividend 
of 105p per share paid in november 
2009 makes a total dividend for the 
year of 361p per share this compares 
with a total dividend of 333p per share 
last year an increase of 8 the cost 
of the interim and final dividends is 
£276 million which is covered 23 times 
by earnings no scrip alternative to the 
cash dividend is being offered spiraxsarco engineering plc annual report and accounts 2009 3
“ we have made a positive 
start to the year in the first 
two months of 2010 sales 
in constant currency have 
increased by 2 compared 
with 2009” 
mike t ownsend retired as chairman 
following the agm in may 2009 and  
we thank him for his contribution  
over his 12 years on the board as 
a nonexecutive director i have 
succeeded mike as chairman on  
1st july 2009 following seven years  
as a nonexecutive director upon  
the retirement of einar lindh at the  
end of 2008 dr krishnamurthy 
rajagopal was appointed as an 
independent nonexecutive director on  
10th february 2009 executive director 
alan black retired from the board on 
30th april 2009 mike gibbin joined 
the board as an executive director on 
1st may 2009 with responsibility for 
our supply operations and our north 
american steam business companies 
clive watson joined the board as an 
independent nonexecutive director on 
17th july 2009 and is chairman of the 
audit committee we thank our retiring 
board members and welcome the new 
members to the board
prospects
there is increasing evidence that the 
global economy has started to recover 
industrial production rates are now 
positive across most of asia and are 
improving in europe and the americas 
however in our view the economic 
upturn remains fragile and we are  
not expecting a rapid rebound in  
our markets
we have continued to invest in the 
business through the recession to 
improve manufacturing efficiency 
accelerate new product development 
and increase penetration of our 
markets in 2010 we will capture the 
fullyear benefit of last year’s cost 
reductions but will reinvest some of 
these savings to increase investment  
in the business to enhance future 
growth and margin prospects
we have made a positive start to 
the year in the first two months of 
2010 sales in constant currency have 
increased by 2 compared with 
2009 we remain vigilant and given no 
renewed weakness in our markets or 
significant negative currency impact 
we expect to make further progress  
in 2010
bill whiteley chairman
unless otherwise stated all profit measures exclude 
exceptional headcount reduction costs of £114 million 
2008 £nil the amortisation of acquisitionrelated 
intangible assets of £24 million 2008 £19 million 
of which £04 million 2008 £03 million relates to 
associates and the impairment of goodwill and  
intangible assets of £nil 2008 £31 million 4 spiraxsarco engineering plc annual report and accounts 2009
an interview with  
mark vernon
chief executive officer
sharpening  
our edge
what makes spirax sarco different
we are a niche industrial engineering group that supplies  
a very broad base of customers around the world in a  
wide range of industries we concentrate on assisting our 
customers achieve process efficiency increased production 
output energy savings and regulatory compliance we go to 
market through an extensive network of outstanding local 
sales and service engineers that are highly trained and 
singularly focused on providing the knowledge and expertise 
to understand the challenges facing steam and pump users 
our application and systems knowledge breadth of products 
and services experience and global presence all enable us 
to offer the most extensive range of engineered solutions to 
our customers the position of spirax sarco and  
watsonmarlow as world leaders is founded on our  
longheld strategy of investing for growth both organically 
and by complementary acquisitions
the group is very international we have 49 operating 
companies in 34 countries around the world our 
headquarters are based in the uk and we have sizeable 
manufacturing and selling operations on nearly every 
continent our manufacturing operations are strategically 
located in all key market regions with major facilities in the 
uk france italy usa brazil argentina and china we  
also manufacture in south africa mexico netherlands  
india germany sweden korea and denmark amongst  
our competitors we have generally been first to build a  
direct selling and trading organisation in new markets and 
within the past year we acquired our turkish distributor 
giving us a direct presence in this important country that 
boasts the world’s 16th largest economy
the resilience of our business was readily visible in the past 
year as our total sales at constant currency declined less 
than 7 as compared to falls of typically 15 to 20 or 
more for many other international industrial engineering 
businesses this resilience stems from a large portion of 
our revenues being derived from product replacements and 
spares the diverse range of industries served the breadth 
of product solutions we bring to our customers and good 
geographic distribution of sales well spread between 
developing and developed markets
we serve a very broad range of industries including foods 
brewing  distilling dairies oil refining  petrochemicals 
chemicals pharmaceuticals textiles fine chemicals mining 
printing water  wastewater treatment and many other 
general process industries we also work with hospitals and 
commercial buildings by supplying solutions for sterilisation 
space heating hot water generation and laundering it is 
important to note that no single industry represents more 
than 10 of sales and no single customer accounts for more 
than 1 of sales – in short our sales are very well spread
we have remained focused on our niche businesses and 
their development through geographic expansion new 
product developments acquisitions and expanding our 
range of products and service solutions this has enabled us 
to increase market share and to generate steady profitable 
growth for a long period of time evidenced by our excellent 
42 year dividend record although we are the market 
leader in both our businesses there remain considerable 
opportunities available to us in our fragmented markets
how does spirax sarco create value 
the spirax sarco and watsonmarlow businesses are 
anchored on the philosophy of understanding the detail 
of the customers’ processes and the ability to apply the 
properly engineered solutions t o do this we go to market 
using mostly direct sales people – about 70 of our sales 
are generated through our direct selling approach in doing 
so we form strong longterm customer relationships the 
group employs nearly 1200 direct sales and service people 
working in 56 countries in the world 
our sales people are highly skilled in both product 
applications and perhaps even more importantly in system 
understanding and troubleshooting for unique customer 
applications and industrial processes we train our sales 
engineers in our 38 training centres located around the world  spiraxsarco engineering plc annual report and accounts 2009 5
sharpening our edge  
through research and 
development
we are increasing our investment in 
research and development
our new rd centre being created in 
cheltenham will enhance our capability 
to offer customers innovative solutions 
for controlling and conditioning steam 6 spiraxsarco engineering plc annual report and accounts 2009
an interview with  
mark vernon continued
chief executive officer
sharpening our edge  
through being the best in  
our field
spirax sarco beat international 
competition to win the 2009 icheme 
innovation and excellence award in 
energy with a flash recovery energy 
management equipment freme 
system that enables customers to 
recover waste heat spiraxsarco engineering plc annual report and accounts 2009 7
most of which are equipped with live steam that facilitates 
handson training these centres are also used to train our 
customers’ technical staff 
this product and systems application knowledge combined 
with local availability of products engineered packages 
and onsite services enables our customers to achieve 
meaningful energy savings comply with increasingly 
stringent health safety and environmental regulations  
reduce emissions and achieve more efficient processes 
it is not our products alone that provide the value to our 
customers it is the application of our extensive knowledge
how is spirax sarco managing the business through this 
difficult economic period
like other industrial businesses we took early action and 
made the appropriate decisions to reduce our operating 
costs whilst needing to address the abrupt decline in 
economic activity we largely protected our global network  
of highly skilled and trained sales engineers 
as a result we reduced our workforce by 7 through  
the year most of which came as part of an announced  
5 headcount reduction in early 2009 with the balance  
coming from natural attrition throughout the year most of the 
headcount reductions were in backoffice support functions 
and manufacturing additionally our local operating company 
management teams were vigilant in controlling other operating 
costs the announced general headcount reduction was the 
first ever for spirax sarco – indicative of the unprecedented 
global economic downturn – but it was managed effectively 
by our management teams around the world 
we took steps to size our manufacturing operation in 
cheltenham not only for the decline in volume resulting  
from the global economic recession but also in anticipation  
of the volume transfer to our new manufacturing plant in 
china additionally we recently announced a reduction in  
our manufacturing footprint at châtellerault france also in  
line with our global manufacturing strategy
we continued to invest in key growth programmes for the 
future in china we selectively added sales people for the 
steam business we also invested in our watsonmarlow 
business to continue developing new markets adding  
sales people in russia and mexico we believe that our  
sales teams are well positioned to handle the eventual 
rebound in our end markets also we increased the  
amount of direct rd investment virtually the only area  
of the business that was allowed increased expenditure  
new product development is a key activity that will drive 
longerterm growth and therefore we have continued to 
invest through the downturn we have also sustained  
capital expenditure at a high level in the year as we  
invest in delivering our manufacturing strategy
what are the key business drivers and trends
our business is well spread geographically across the 
product range and over a diverse range of industries  
the following key factors have the primary influence  
on the underlying demand in our markets
global economic growth • 
industrial production and investment • 
capacity utilisation • 
energy costs • 
increasing customer outsourcing of design  • 
and maintenance
regulatory legislation eg emissions hygienic  • 
standards plant safety
looking ahead how do you plan to take the business 
forward
our business strategy remains focused on achieving  
longterm steady and profitable sales growth the industrial 
and commercial steamusing market is highly fragmented 
and although spirax sarco is the market leader we still have 
significant growth opportunities 
“ it is not our products alone that provide the 
value to our customers it is the application 
of our extensive knowledge” 8 spiraxsarco engineering plc annual report and accounts 2009
“ increasing watsonmarlow’s capability 
in offering high purity particularly in the 
biopharm sector”
an interview with  
mark vernon continued
chief executive officer
sharpening our edge  
by investing in our  
manufacturing processes
we completed the construction of a 
completely sterile £63 million silicone 
tubing extrusion plant in falmouth 
enabling watsonmarlow to offer 
high purity pumping solutions to its 
customers in the biopharm sector spiraxsarco engineering plc annual report and accounts 2009 9
we believe the underlying industry drivers are favourable for 
longterm growth for the steam business energy prices are 
at historic highs and the emphasis on reducing emissions 
is becoming increasingly important these factors provide 
a nice tailwind we are reaping the benefits of our solutions 
approach to problem solving as customers increase the 
outsourcing of design and maintenance customers are 
looking for simple singlesource transactions to solve their 
local maintenance operations product quality and capacity 
expansion issues our ability to effectively bundle a wide 
range of products and prefabricated engineered packages 
backed up by our installation and commissioning services  
is simply the best and is unmatched by any competitor  
we increasingly expand on a simple troubleshooting sales 
call to audit an entire steam system and provide a range  
of engineered solutions in a single transaction that  
customers value 
we are widening our range of products and site services  
to expand our market reach our technically expert direct 
sales force allows us to leverage our brands into new 
products and applications this increases the amount  
of plant spend that we can capture in smallscale capital 
projects and maintenance activities that are at the heart of 
our business there remains good growth potential whether 
in the developing economies of asia and south america or  
in the large and more mature markets of western europe  
and north america as we apply tailored market  
development strategies
one of our major tasks at our watsonmarlow business 
is to educate customers about the intrinsic advantages 
of peristaltic pumps so that they will increasingly be used 
to solve difficult pumping problems the product range 
is being progressively widened and developed making 
use of improved electronics and materials to broaden the 
addressable market by taking business from other pump 
types all these factors make peristaltics one of the fastest 
growing sectors of the global positive displacement pump 
market as we widen the possible applications for our 
pumps we see increasing opportunities including hygienic 
applications in pharmaceuticals biotechnology and the  
food industries 
we continue to make complementary bolton acquisitions 
to build our product portfolio introduce new technologies 
and speed access to geographic markets during 2009 
we acquired masosine a supplier of unique sinusoidal 
pumps that extends the application range of our existing 
line of watsonmarlow hygienic pumps we also acquired 
the business of our turkish distributor inter valf sanaya 
ve ticaret to build a direct presence in this important and 
developing market
how is spirax sarco sharpening its edge
the group is making a significant investment in 
modernising its manufacturing processes and facilities 
to improve efficiency and reduce operating costs we 
are midway through a fouryear £50 million capital 
investment programme having recently completed the 
new tube extrusion facility in falmouth england the new 
manufacturing plant in china will begin production late 
q2 2010 the consolidation of the three manufacturing 
facilities onto one site at our major manufacturing location in 
cheltenham england will be mostly completed by yearend 
2010 some production has already been transferred into 
the first refurbished buildings and we should see the cost 
reduction efficiency and stock reduction benefits from this 
site consolidation starting in 2011
despite the challenging market environment in 2009 we 
increased our investment in rd by over 20 and have 
begun to generate a stronger flow of new products whilst 
shortening the time to market there are a number of  
exciting new product development programmes underway  
in both the steam business and watsonmarlow and we 
expect new products to make an increasing contribution to 
sales growth we were particularly pleased to win the uk’s 
icheme 2009 ‘innovation and excellence award in energy’ 
with a packaged flash recovery energy management 
equipment system the board has approved the creation of 
a new rd development and test centre at our cheltenham 
manufacturing site that will increase our testing capability to 
much higher live steam temperatures pressures and flow 
rates – we believe this new test centre will be the world’s 
largest and most advanced facility of its type
we are taking advantage of our global purchasing power  
to consolidate purchasing volumes with fewer key suppliers 
of our cast wrought and forged metals this has resulted in 
material cost benefits in the past several years and we expect 
further benefit in 2010 to our materials and freight costs
we have developed online based tools to improve the 
technical training of our sales engineers around the world 
and speed up their development process additionally we 
are implementing information collection and sharing software 
to improve our ability to utilise application knowledge and 
provide a forum to accommodate greater knowledge sharing 
amongst work groups across our global sales network
people lie at the core of every business and we have high 
expectations of performance from our people we have 
taken steps to upgrade the quality of professional human 
resource leadership in guiding our progression to a more 
performancebased culture throughout the organisation we 
have articulated a concise set of core values and leadership 
competencies that are being implemented worldwide
 
mark vernon chief executive officer 10 spiraxsarco engineering plc annual report and accounts 2009
business review
“ t otal group sales increased by 3  
to £5187 million” 
spirax sarco helps campil  
to reduce energy 
consumption down time  
and maintenance costs
the customer
campil is based in portugal and makes 
tomato pastes at a tomato pulp plant
the challenge
the plant has several water evaporators 
that use steam to concentrate tomato 
pulp
peak loads made it difficult to achieve 
the stringent steam quality required and 
at times the boilers tripped out causing 
shut down of the entire plant 
our solution 
we provided a complete control 
sequencing and supervision system 
including steam meters control 
valves controllers modulating feed 
water controls and other equipment 
to improve steam quality all linked by 
central software supervision
results
the plant now runs efficiently with 
improved steam quality lower fuel 
consumption and reduced maintenance 
costs the expected payback period is 
two years spiraxsarco engineering plc annual report and accounts 2009 11
current environment
the abrupt decline in world economic 
activity impacted our business starting  
in late 2008 and the rate of sales decline 
accelerated until midyear 2009 since 
then market conditions in most 
geographic regions have generally 
stabilised and in recent months sales 
growth has turned positive versus the 
early months of 2009 whilst conditions 
vary considerably from market to market 
taken as a whole market conditions 
have slowly improved throughout much 
of asia south america and the usa  
but conditions in europe continue to  
be challenging
energy prices remain comparatively high 
and we are encouraged that our energy 
saving initiatives and perhaps more 
importantly the companion emissions 
reductions that are achieved through 
improved system efficiency continue  
to be of value to our customers
trading
t otal group sales increased by 3 to 
£5187 million 2008 £5023 million 
the group benefited from favourable 
movements in exchange rates sales 
at constant currency declined less than 
7 for the year  recovering from the 9 
decline reported in the 9th november 
2009 interim management statement 
covering sales yeartodate through 
october the constant currency sales 
decline was widespread across all 
geographic regions indicative of the 
wideranging impacts of the global 
economic recession acquisitions 
contributed less than 1 to sales growth 
for the spirax sarco steam business 
sales increased 2 down 8 at 
constant currency sales increased 
in both the asia pacific region and the 
americas although sales declined 
slightly in the europe middle east and 
africa emea geographic segment 
in constant currency sales declined 
across all geographies and nearly 
all product segments however we 
achieved constant currency sales 
growth in our heat exchange solutions 
business by refocusing our sales 
engineers and from winning good 
projects in china korea and italy 
watsonmarlow sales increased 11 
for the year down 1 at constant 
note 
unless otherwise stated all profit measures exclude 
exceptional headcount reduction costs of £114 million 
2008 £nil the amortisation of acquisitionrelated 
intangible assets of £24 million 2008 £19 million 
of which £04 million 2008 £03 million relates to 
associates and the impairment of goodwill and  
intangible assets of £nil 2008 £31 million 12 spiraxsarco engineering plc annual report and accounts 2009
business review continued
currency benefiting from currency 
movements and a 3 contribution  
from the acquisition of masosine in  
late august
the group’s adjusted operating profit 
was £899 million 2008 £857 million 
giving an increase of 5 in sterling 
and down 12 at constant currency 
– a very good overall result against 
the record operating profit achieved 
in 2008 the increase in operating 
profit arose from cost reductions 
pricing limited pay increases global 
resourcing of materials and favourable 
exchange rates offset by decreased 
manufacturing efficiency from lower 
volumes higher material prices in 
the first halfyear were matched by 
falling prices in the second half leaving 
material prices broadly flat for the 
year all of this resulted in the adjusted 
operating profit margin improving to 
173 from 171 in 2008
europe middle east and africa 
emea
2009 2008 change
revenue £2255m £2261m 0
operating profit £356m £392m 9
operating margin 158 173
sales were broadly unchanged at 
£2255 million down 8 at constant 
currency as deteriorating market 
conditions impacted virtually all our 
companies in the region exchange 
movements had a positive effect with 
the average sterling exchange rate 13 
weaker against the euro than in 2008 
our larger companies in italy france 
and germany did well and increased 
sales in sterling terms due to good 
daytoday maintenance activities 
and the shipment of several projects 
from backlog in italy that carried over 
from the prior year additionally after 
a slow start in the first halfyear for 
our russian company market activity 
improved markedly in the second 
halfyear and for the full year we saw 
sales growth in local currency sales in 
the uk domestic market suffered from 
a decline in spending by the national 
health service but there were some 
good project wins in december the 
decline in the global export markets 
served by many of our european oem 
customers impacted sales at several 
of our companies that depend more 
heavily on oems
shipments from our main factories in 
the uk and france fell more sharply 
early in the year due to lower demand 
from our sales operations worldwide 
as they reduced local inventories but 
improved in the second halfyear as 
market conditions stabilised
operating profit of £356 million was 
down 9 from £392 million in 2008  
at constant currency the operating 
profit was down 18 spread across 
most companies but mitigated by tight 
cost control and temporary government 
employment support measures the 
“ our larger companies in italy france and 
germany did well and increased sales in 
sterling terms”  spiraxsarco engineering plc annual report and accounts 2009 13
“ this shows our commitment 
to worldclass manufacturing 
facilities in the uk and 
confidence in our people”  
mike gibbin divisional director  
– supply and north america
sharpening our edge  
through consolidation of 
manufacturing sites
we are investing to develop a  
worldclass manufacturing and  
supply facility consolidating three  
sites in cheltenham into one unified  
site to ensure a leaner and more  
efficient operation 14 spiraxsarco engineering plc annual report and accounts 2009
‘ all sales people are assessed 
against the same standard’ 
suzanne beadnell  
project manager
sharpening our edge  
through improved sales tools
the application knowledge and 
skills of our 1200 sales and service 
engineers are central to our customer 
service an online benchmarked skills 
assessment programme creates 
tailored development plans for every 
sales engineer and we will use this to 
strengthen our market leadership spiraxsarco engineering plc annual report and accounts 2009 15
business review continued
performance in south africa improved 
markedly following the restructuring in 
late 2008 operating profit fell at our 
major factories due to lower volumes 
although this was somewhat offset  
by the cost reduction actions and  
the benefit of our global materials  
resourcing programme the operating 
margin was 158 2008 173 
the underlying headcount excluding 
acquired businesses was down 8 
across the emea segment at yearend 
2009 compared with the prior year
americas
2009 2008 change
revenue £1046m £1019m 3
operating profit £139m £121m 14
operating margin 132 119
sales in the americas increased 
modestly in sterling by 3 to  
£1046 million from £1019 million in 
2008 sales benefited from average 
sterling exchange rates weakening by 
19 against the us dollar and by 7 
against the brazilian real at constant 
currency sales declined 9 from  
2008 spread across all our operations  
in the region sales in the us did 
relatively well from stabilising market 
conditions and higher shipments 
from backlog in the second halfyear 
although market conditions have 
remained weak in canada sales in 
south america were down from the 
effects of the decline in demand from 
exportoriented customers
operating profit in the americas 
increased 14 to £139 million which 
compares with £121 million in 2008 at 
constant exchange the operating profit 
was down just 5 y earonyear 
operating profit was buoyed by 
favourable exchange transaction 
benefits on imports into the region  
cost reduction actions taken early in the 
year and the elimination of the closure 
costs of ultrapure £11 million in 2008 
and its operating losses profit declined 
in brazil from competitive pressures as  
the currency strengthened in the 
second halfyear for the region the 
operating profit margin improved to 
132 as against 119 in 2008 
headcount in the americas was down 
13 at yearend 2009 as compared 
with the prior year
asia pacific
2009 2008 change
revenue £1047m £989m 6
operating profit £231m £211m 9
operating margin 221 214
sales increased in asia pacific by 6 
to £1047 million 2008 £989 million 
favourable exchange rates had a 
positive effect on sales as the chinese 
renminbi strengthened 21 on average 
against sterling the japanese yen was 
32 stronger at constant exchange 
asia pacific sales were down 5 
market activity in the region was mixed 
although local currency sales increases 
were achieved in china korea and 
“ we have continued to increase sales 
coverage in china by adding a number  
of new sales people” 16 spiraxsarco engineering plc annual report and accounts 2009
business review continued
malaysia as expected the second  
halfyear benefited from higher 
shipments particularly in korea 
and the backlog was reduced at our 
chinese operation we have continued 
to increase sales coverage in china by 
adding a number of new sales people
the operating profit was £231 million 
which compares with £211 million in 
2008 an increase of 9 at constant 
currency operating profit declined 14 
we saw good profit gains from china 
which again produced the largest profit 
in the region and from malaysia the 
good second half in korea recovered 
the profit decline seen in the first 
halfyear our india operation reported 
as an associate achieved both a sales 
and profit increase and did well to 
improve the volume of small ticket 
maintenance purchases to replace the 
sales value of the large reliance refinery 
project shipped in the prior year the 
overall operating profit margin in asia 
pacific was therefore 221 in 2009 
2008 214 headcount in asia 
pacific was down 3 at yearend 2009 
as compared with the prior year despite 
a 7 increase in employees in china
watsonmarlow masosine 
replaces gear pumps at 
chocolate factory
the customer
kinnerton part of zetar plc is a 
confectionery specialist based in 
norfolk uk
the challenge
like many other ingredients caramel is 
very viscous when cool and kinnerton 
required pumps which would perform 
effectively in a new line for caramel 
production 
our solution
in place of the gear pumps already used 
by kinnerton in similar applications we 
recommended the masosine sps2 
sanitary pump which is part of a range 
that can handle flow rates up to 90000 
litres per hour and pressures up to  
10 bar  masosine pumps have a 
very gentle pumping action which is 
frequently used in sanitary applications 
to handle chocolate cheese curd 
yogurt concentrates yeast batter  
and stews 
results
kinnerton have now standardised  
on masosine pumps “not only 
does the sps2 handle all its pumping 
requirements without problem” says 
plant engineering supervisor phil 
barwick “once again ease of cleaning 
is very impressive even after pumping 
glucose a simple but thorough  
flushthrough is all that is required”  
this means that hygiene standards  
are consistently met spiraxsarco engineering plc annual report and accounts 2009 17
watsonmarlow
2009 2008 change
revenue £838m £754m 11
operating profit £223m £184m 21
operating margin 266 244
sales increased at watsonmarlow  
by 11 to £838 million 2008  
£754 million sales benefited from  
the weakness of sterling against the us 
dollar and were down 1 at constant 
currency the acquisition of masosine 
in late august 2009 added 3 to  
sales the geographic sales trends  
at watsonmarlow were similar to the 
steam business with sales growth 
weakest within the emea region but 
with similarly good performances from 
the french and german operations 
strong yearonyear growth in tubing 
shipments contributed positively to 
emea sales and provides a good  
base for the new tubing extrusion plant 
completed in december 2009 bredel 
product shipments were particularly 
impacted by exposure to the weaker 
mining and general industrial markets 
sales in the americas region of 
watsonmarlow benefited from several 
biopharmaceutical projects in the us 
our developing sales teams in the 
asia pacific region performed strongly 
with sales well ahead on a relatively 
small base highlighting the good 
opportunities for growth in china  
and korea in particular
the operating profit was £223 million 
which compares with £184 million in 
2008 an increase of 21 at constant 
currency operating profit was down 
3 including a small contribution from 
the masosine acquisition operating 
profit benefited from exchange 
transaction effects of weaker sterling 
and the stronger us dollar constant 
currency operating profit was nicely 
ahead in the us and in asia the 
operating profit margin was 266 
in 2009 2008 244 underlying 
headcount at watsonmarlow excluding 
acquisitions was 2 lower at yearend 
2009 as compared with the prior year 18 spiraxsarco engineering plc annual report and accounts 2009
financial review
david meredith fcma
2009 was another good performance 
against the background of a world 
economic recession we achieved 
record sales and adjusted pretax 
profit and delivered an improved 
operating profit margin and good 
cash generation
spirax sarco uses adjusted figures as 
key performance measures in addition 
to those reported under ifrs adjusted 
figures are used unless otherwise 
stated and they exclude the amortisation 
or impairment of acquisitionrelated 
intangible assets and exceptional 
headcount reduction costs including 
the associated tax effects we have 
adopted the new accounting standard 
ifrs 8 segmental reporting for 2009 
the new segmental disclosure gives 
greater visibility and is more consistent 
with management reporting the new 
segments comprise the steam 
specialties business geographically 
split into europe middle east and  
africa emea americas north and 
south america and asia pacific and 
the watsonmarlow pumps business 
restated disclosures for the full year 
2007 halfyear 2008 and full year 2008 
were published in august 2009
sales of £5187 million were a  
record and up 3 compared with  
£5023 million in the prior year  
currency movements were favourable 
and added over 10 to sales on 
translation average exchange rates  
for sterling were weaker against most 
currencies and in particular versus the 
us dollar euro and chinese renminbi 
which are important currencies for the 
group acquisitions during the year 
added less than 1 to sales 
underlying sales excluding currency 
and acquisition effects were down  
7 for the year but with improving 
yearonyear comparisons in the last 
few months of the year
adjusted operating profit of  
£899 million increased by 5 over  
the previous year profit of £857 million  
we acted early in the year to reduce 
operating costs including a reduction  
in our global workforce of 7 during 
the year largely in backoffice support 
functions and manufacturing a further 
reduction in our french manufacturing 
unit will take effect in 2010 these 
actions benefited the second half of 
2009 and we expect further benefit in 
2010 favourable currency movements 
improved the profit on translation and 
also on transaction where the group 
gained from the weakness of sterling 
against most other currencies at 
constant exchange rates the operating 
profit was down 12 the adjusted 
operating profit margin increased from 
171 to 173 despite the impact of 
lower sales volumes and some internal 
destocking by our sales companies  
that reduced the demand on our 
manufacturing plants
interest
net finance expense of £25 million 
compares with net finance income 
of £17 million in the prior year as 
expected and previously reported  
the net finance income in respect  
of defined benefit pension schemes 
deteriorated mainly due to a reduction 
in the expected return on pension fund 
assets in 2009 under ias 19 following 
the drop in pension asset values in 
2008 net bank interest deteriorated 
due to the fall in interest rates on cash 
deposits and the funding cost  
of acquisitions
associates
we have minority shareholdings in our 
operations in india and mexico which 
means that our share of the after tax 
profits is reported as associates outside 
the operating profit associates’ profit 
was overall unchanged at £28 million 
comprising an increased contribution  
in india offset by slightly lower profit  
in mexico
profit before tax
the adjusted pretax profit increased to 
£902 million 2008 £901 million the 
actions to reduce our global workforce 
necessitated a oneoff charge against 
the 2009 profit of £114 million which 
includes the cost of the recently 
announced reduction in france about 
£35 million of this charge will be a cash 
outflow in 2010 the pretax profit after 
charging these costs and including 
the amortisation of acquisitionrelated 
intangible assets was £764 million 
2008 £852 million spiraxsarco engineering plc annual report and accounts 2009 19
t axation
the tax charge excluding associates 
was 314 compared with 300 
in 2008 the increase reflects an 
unfavourable change in the mix 
of taxable profits exchange rate 
movements and the introduction of 
withholding tax in relation to dividends 
from china the tax rate in 2010 is 
expected to be broadly in line with 2009 
earnings and dividends per share
the group’s prime financial objective 
is to provide enhanced value to 
shareholders through consistent growth 
in earnings per share and dividends 
per share adjusted earnings per share 
were 822p 2008 834p earnings per 
share including exceptional headcount 
reduction costs and the amortisation 
of acquisitionrelated intangible assets 
were 696p 2008 780p
the proposed final dividend is increased 
by 10 to 256p per share which 
together with the interim dividend of 
105p per share paid in november 
2009 makes a total dividend for the 
year of 361p per share this represents 
an increase of 8 over the 333p 
per share last year and continues the 
group’s very long history of increasing 
dividends the compound annual 
growth in dividends over the last  
42 years has been 11
acquisitions
as previously reported in october 2009 
the group completed the acquisition of 
the maso and sine business from maso 
processpumpen gmbh ‘masosine’ 
based in germany for £219 million 
masosine extends the application 
range of our existing watsonmarlow 
hygienic pumps and the integration into 
watsonmarlow pumps is progressing 
well in october we also completed the 
acquisition of our turkish distributor 
inter valf based in istanbul for an initial 
consideration of £28 million we are 
pleased with the performance of these 
businesses since acquisition and with 
their small positive contributions to 
our earnings per share for the year 
intangible assets amounting to  
£148 million were recognised in 
respect of acquisitions during the year 
largely relating to masosine which 
will be amortised over the respective 
useful lives of the individual assets 
goodwill amounting to £98 million was 
also recognised amortisation of total 
acquisitionrelated intangible assets 
was £24 million 2008 £19 million  
of which £04 million 2008 £03 million 
related to associates in the prior  
year there was also an impairment  
of goodwill and intangible assets  
of £31 million
research and development
despite the economic downturn  
we have continued to invest in the 
business and increased rd spending 
by over 20 to £80 million for the year 
including capitalised development costs 
under ifrs increasing to £21 million 
2008 £15 million we plan again to 
increase our investment in 2010 to 
take advantage of the development 
opportunities available and to 
accelerate the flow of new products  
to the market
capital employed
capital employed at £2678 million 
increased by only 2 during the year 
at constant currency and excluding 
acquisitions despite the substantial 
investments in capital expenditure 
currency movements using  
yearend exchange rates lowered 
capital employed on translation by  
£120 million working capital was 
brought down by £114 million at 
constant currency and excluding 
acquisitions largely due to the 
reduction we achieved in stock levels 
which were down by 13 acquisitions  
during the year added £17 million to 
capital employed
investment in fixed assets continued 
at a historically high level and net 
capital expenditure at £326 million 
was two times depreciation significant 
investment projects included the 
completion of our new premises in 
korea and the new tubing extrusion 
plant at watsonmarlow in falmouth 
the investment in new premises  
and manufacturing plant in china  
is progressing well as is the project 
to consolidate onto one expanded 
manufacturing site in cheltenham 
 
capital employed
2009  
£’000 
2008  
£’000
property plant and equipment 135383 122897
inventories 86479 102382
trade receivables 118835 124595
prepayments and other current assetsliabilities 72861 78050
capital employed 267836 271824
intangibles and investments in associates 83177 62225
postretirement benefits 73763 73717
deferred tax 23522 19466
provisions 1441 1182
net cashborrowings 8033 17390
net assets 307364 296006
return on capital employed 
operating profit 76522 81028
acquisition intangibles amortisation and goodwill impairment 13416 4641
adjusted operating profit 89938 85669
average capital employed 269830 241093
return on capital employed 333 355
unless otherwise stated all profit measures exclude 
exceptional headcount reduction costs of £114 million 
2008 £nil the amortisation of acquisitionrelated 
intangible assets of £24 million 2008 £19 million 
of which £04 million 2008 £03 million relates to 
associates and the impairment of goodwill and  
intangible assets of £nil 2008 £31 million 20 spiraxsarco engineering plc annual report and accounts 2009
finance review continued
return on capital employed
the return on capital employed roce 
which is a key performance indicator 
declined from 355 to 333 
average capital employed using the 
average of the opening and closing 
sterling balance sheets for the year 
increased by 12 whereas adjusted 
operating profit was ahead 5 capital 
investment is planned to continue 
at a high level in 2010 and these 
investments will deliver good benefits 
in future years including scope for 
progressive reductions in stock levels
postretirement benefits
the net postretirement benefits  
liability shown on the balance sheet 
was broadly unchanged for the year  
at £738 million £532 million net of 
deferred tax but was lower than the 
£907 million net liability at the halfyear 
pension fund asset value increased 
strongly reflecting the recovery in  
equity markets and also the payment  
of special deficit reduction payments  
of £7 million however liability values 
rose by a similar amount due to an 
increase in inflation expectations  
and a fall in corporate bond yields  
that pushed up the discounted  
present value of liabilities
most of the asset and liability values 
relate to the main uk defined benefit 
pension schemes the triennial 
valuations of these schemes were 
carried out as at 31st december 2007 
and resulted in agreed additional cash 
contributions of £37 million per annum 
for up to six years that commenced in
the second half of 2008 the interim 
actuarial valuation as at 31st december 
2008 resulted in further additional cash 
contributions of £42 million per annum 
for up to 12 years that commenced in 
the second half of 2009 the interim 
actuarial valuation as at 31st december 
2009 is not yet complete but is 
expected to show a reduction in the 
deficit of the main uk schemes
cash flow
there was an excellent cash flow 
performance for the year adjusted 
operating cash flow increased to 
£1179 million 2008 £911 million 
reflecting an inflow from working  
capital with stocks reduced by 13 in 
the year t axation payments were higher 
at £299 million 2008 £221 million 
reflecting currency movements and  
the settlement of higher 2008 tax 
liabilities following the profit increase 
that year capital expenditure including 
capitalised development costs 
increased to £347 million 2008  
£265 million free cash flow was 
broadly unchanged at £377 million 
even after the cash outflow of nearly  
£8 million in respect of headcount 
reduction costs and £7 million of 
special pension contributions
dividend payments were up 7 in line 
with the increased dividends per share 
acquisitions absorbed £272 million of 
cash due largely to the purchase of 
masosine in august for £219 million 
we also acquired our turkish distributor 
inter valf in october for an initial 
consideration of £28 million
overall there was a net cash outflow  
of £118 million excluding acquisitions 
shares issued headcount reduction 
costs and special pension contributions 
there was a strong underlying cash 
inflow of £284 million 2008  
£190 million exchange gains on 
translation were £25 million which 
means we finished the year with a net 
cash balance of £80 million 2008 net  
cash £174 million
capital structure
we continue to operate with a very 
strong balance sheet in addition to the 
net cash balance the group had various 
undrawn committed borrowing facilities 
at yearend of £286 million treasury 
and currency exchange exposures are 
handled by the group treasury function 
in the uk which manages the exposures 
from our worldwide geographic spread 
this is not a profit centre and no 
speculative transactions are undertaken 
typically simple forward contracts are 
used when appropriate to match known 
cash flows the group has operations 
around the globe and therefore its 
balance sheet can be significantly 
affected by movements in exchange 
rates particularly in relation to the 
euro us dollar  chinese renminbi and 
korean won where appropriate the 
group uses local currency borrowings 
to mitigate this structural currency 
exposure consistent with maintaining 
a low cost of debt the group keeps 
the structure of its balance sheet under 
regular review
 
adjusted cash flow
2009  
£’000 
2008  
£’000
adjusted operating profit 89938 85669
depreciation and amortisation 16528 15218
equity settled share plans 1929 1519
adjusted working capital changes 9554 11353
adjusted cash from operations 117949 91053
net interest paid 736 189
income taxes paid 29877 22087
net capital expenditure including development 34654 26543
net dividends paid 24265 23189
underlying cash flow 28417 19045
exceptional headcount reduction costs 7957 –
postretirement deficit reduction payments and provisions 7072 3236
proceeds from issue of shares 1966 2812
acquisitions 27192 13939
cash flow for the year 11838 942
exchange movement 2481 2501
opening net cash 17390 15831
closing net cash at 31st december 8033 17390 spiraxsarco engineering plc annual report and accounts 2009 21
risks and uncertainties
the group has well established risk 
management processes including 
insurance cover  which are an integral 
part of the operation of our business 
and which are outlined in the corporate 
governance report on pages 35 to 38 
whilst risk can never be eliminated  
our processes allow us to identify and 
appropriately manage and mitigate risks 
and uncertainties these mainly arise 
from the inherent risks of operating a 
worldwide business largely using our 
own local sales companies to sell in 
local currency direct to enduser 
customers distributors oems and 
contractors a very wide range of 
products mostly designed and 
manufactured in our own facilities  
in a number of different countries the 
business is well spread geographically 
across tens of thousands of customers 
and across most industrial and 
commercial sectors this means that  
we do not rely excessively on any one 
customer product application or 
industrial sector 
the principal risks and uncertainties  
are strategic commercial operational 
and financial ultimately these  
affect our ability to deliver our prime 
financial objective which is to provide 
enhanced value to shareholders through  
consistent growth in earnings per  
share and dividends per share as a 
result of maintaining our world leading 
position and investing in our businesses 
for growth
strategic risks and uncertainties include 
customer relationships the competitive 
environment political and economic 
upheaval technological changes the 
regulatory and legal environment and 
investment in acquisitions these relate 
to maintaining our market and 
technological leadership including 
branding and reputation
commercial risks and uncertainties 
include issues such as product design 
and performance product liability 
competitor activity relations with 
customers and suppliers pricing and 
profit margins our employees are key 
to managing and mitigating risks and 
uncertainties and we therefore invest 
significant resources in the training  
and development of our people
operational risks and uncertainties 
include health and safety and 
environmental issues employee 
relations mitigation of and recovery 
from major disasters product quality 
and customer service we have for 
many years complied with recognised 
quality health and safety and 
environmental standards and regulations 
and have applied project management 
disciplines in our business the group’s 
approach to the health and safety of 
employees is more fully described on 
page 28 appropriate measures are 
implemented locally particularly in the 
manufacturing companies and there 
were further improvements in health and 
safety in our operations in the year the 
environmental benefits from the use of 
group products are more fully described 
on pages 23 and 24 general managers 
of operating companies are responsible 
for local compliance with the group’s 
policy and with local legislation and are 
required to report regularly
the group is committed to observing 
the highest standards of ethics in all 
its dealings with customers suppliers 
employees and all other stakeholders 
in the business the group business 
code sets out very clearly the standards 
expected of all employees and it is the 
responsibility of all managers within 
the group’s businesses both to abide 
by those standards and to ensure 
that employees for whom they are 
responsible adhere to the standards 
the chief executive writes annually to all 
general managers of group businesses 
to remind them of the importance which 
the group attaches to the code and of 
their obligations to ensure compliance 
with the code additionally general 
managers are regularly required to 
certify compliance with the code
financial risks and uncertainties include 
exchange rate exposures interest rate 
movements financial instruments 
financial irregularities and protection of 
assets including pension fund assets 
the group has a comprehensive 
t reasury policy covering many of these 
issues and defining our approach to 
minimise and mitigate such risks
“ our employees are key to managing and 
mitigating risks and uncertainties and we 
therefore invest significant resources in the 
training and development of our people” 22 spiraxsarco engineering plc annual report and accounts 2009
corporate social  
responsibility
“ the group has developed further its 
awareness of csr issues and has 
continued to make improvements 
particularly in the areas of health  
safety and environmental matters” 
southern cross hospital 
group improves steam  
quality by 7 with the help  
of spirax sarco
the customer
southern cross hospital group is 
new zealand’s largest private  
hospital network
the challenge
t o improve steam quality and upgrade 
steriliser steam reticulation systems to 
ensure full compliance with australasian 
steam dryness standards 
our solution 
spirax sarco upgraded the central 
sterile services department cssd 
system by designing and installing a 
new steam reticulation system including 
steam generation plant this feeds 
steam to the steriliser at a guaranteed 
dryness value of 97 or better 
results
final steam quality tests confirmed full 
compliance with australasian standards 
with a dryness value of 98 steriliser 
validation was completed without 
problem and the refurbished cssd  
can now operate under full load without 
affecting steam quality the elimination 
of system failures and downtime has 
boosted steriliser productivity and 
improved staff morale  spiraxsarco engineering plc annual report and accounts 2009 23
the objective of the group’s spirax 
sarco business is to provide steam 
users with energy efficient safe 
environmentally friendly and  
costeffective solutions for the use of 
steam and other related industrial fluids 
steam itself is an environmentally 
friendly medium being nontoxic and 
non flammable although system leaks 
are avoidable when they do occur 
they pollute the environment less than 
for example oil gas and refrigerants 
steam is still the prime medium used 
for power generation and for product 
processing across a significant range  
of industries
the group’s technical advice and 
expertise on the application of its 
products services and engineered 
solutions in relation to steam systems 
and services is the key to maximising 
the benefit of the products we supply
these benefits include improved 
overall boiler efficiency improved 
energy efficiency of plant processes 
reduced consumption of water and 
water treatment chemicals and lower 
production of effluent and emissions  
all of which have a significant and 
positive impact on the environment
the group has always believed that 
this significant and positive impact 
outweighs the environmental issues 
associated with the production of  
the products and in 2009 more 
work was done to measure the 
environmental benefits achieved by  
our customers in using our products 
the focus was on the energy saving 
aspect of those products which if not 
installed would result in a significant 
increase in energy consumption and 
hence co
2
 production
the results indicated a potential saving 
of 2540000 tonnes of co
2
 far in 
excess of the quantity produced in 
manufacture the methodology used 
to determine this external impact has 
been independently assessed with the 
assistance of the aea group a world 
leading energy and climate change 
consultancy the methodology remains 
unchanged but is reviewed annually 
by the group taking revised emission 
factors into account the calculation is 
based on a selected range of energy 
saving products the overall impact 
taking into account all products and 
services supplied will be higher
an example of a newer product that has 
a major impact on energy consumption 
 co
2
 production is flash recovery 
energy management equipment 
freme this is a packaged  
solution to recover valuable heat from 
flash steam and use it to preheat boiler 
water in 2009 freme was awarded 
the institute of chemical engineering’s 
‘innovation and excellence award in 
energy’ prize as “the best project or 
process to demonstrate innovation in 
renewable energy alternative energy 
sources efficient energy use or the 
development of energy production 
methods that reduce energy and  
water intensity”
the group’s product research and 
development programme has been 
assisted through collaboration with the 
uk’s carbon trust which aims to bring 
new and innovative energy saving 
solutions to customers globally 
enabling their co
2
 emissions to be  24 spiraxsarco engineering plc annual report and accounts 2009
corporate social  
responsibility continued
further reduced design engineers are 
constantly challenged to enhance the 
environmental performance of future 
products both in manufacture and 
lifetime use
many applications for watsonmarlow 
pumps are those where environmental 
improvement is the main aim these 
pumps are particularly well suited 
to applications such as wastewater 
treatment where difficult fluids must  
be handled safely and reliably
the board has continued to embrace 
and apply the general corporate 
social responsibility csr principles 
in conducting its business in a socially 
acceptable and sustainable way 
having due regard to the relationship 
of the company to its employees 
customers investors suppliers and 
society generally in particular the 
board focuses on social ethical and 
environmental see matters and  
health and safety issues 
this report follows the practice 
in recent years of illustrating the 
board’s commitment to meeting 
the requirements laid down by the 
association of british insurers and the 
reporting procedures and actions taken 
within the group in this connection 
the group has developed further its 
awareness of csr issues and has 
continued to make improvements 
particularly in the areas of health and 
safety and environmental matters 
the board achieves compliance 
with the principles of csr by the 
management of the risks concerned 
within the normal operations of the 
group such that the necessary policies 
systems and procedures are embedded 
in group practice the importance 
of involvement of employees and 
suppliers in meeting the standards 
required by the board is inherent in 
the daytoday business operations 
meeting the standards required in the 
operation of our business as it affects 
communities and customers is also 
a specific objective reflected in our 
strategic plans and annual planning 
the group’s operations are carried 
out under the group’s long standing 
business code with which general 
managers are required to certify 
compliance a copy of this is  
posted on the group website  
wwwspiraxsarcoengineeringcom  
this code formalises policies followed 
over many years by the group the 
main areas being 
•  compliance with all applicable laws 
and regulations
•  operation of the internal controls 
established by the group
•  having proper regard for all 
stakeholders in the business 
•  prohibition of bribery or corrupt 
practices 
•  commitment to fair treatment of all 
employees
•  recognition and improvement of 
all health safety and environmental 
matters 
the standards required in the practical 
management of the group are set 
out in a separate management code 
issued by the chief executive with 
which general managers and the 
finance managers in each group 
company provide written confirmation 
of compliance for each year 
the group also recognises that the 
achievement of good quality products 
and services the maintenance of  
health and safety and the achievement 
of good environmental practices are an 
integral part of running the business 
and require consideration as part of the 
daytoday operations of the group and 
are reflected in the group’s performance 
the responsibility held by board 
members for the entirety of the  
group’s operations including the 
implementation of its policies enables 
the group’s business code and group 
policies to be applied on a consistent 
basis the group’s decentralised 
structure provides for detailed local 
management of see matters by the 
general manager in each group 
company who reports to and is 
monitored by the appropriate executive 
director and regional general manager 
these reporting procedures within the  spiraxsarco engineering plc annual report and accounts 2009 25
“ the group is externally and 
internally benchmarking its 
energy performance”
group enable the executive directors 
who have direct responsibility for 
implementing policy to monitor  
report and take any appropriate  
action see training is provided for 
newly appointed directors appropriate 
to their experience knowledge and 
previous training 
as part of the risk management process 
explained on pages 37 and 38 the risks 
involved in not achieving appropriate 
see standards are assessed and any 
significant risk is monitored by the 
board following half yearly reports  
from all group companies
the group considers and applies 
appropriate policies through the 
group’s business code in the  
following areas 
i employment policies 
the group supports and applies 
the principles of human rights 
in its operations including equal 
opportunities for employees regardless 
of sex race religion age or disability 
board members and human resources 
satisfy themselves that the terms of 
employment in group companies 
worldwide are appropriate the group 
has a policy of nondiscrimination 
and does not tolerate bullying and 
or harassment in any form the 
recruitment procedures throughout 
the group avoid employment of 
underage staff care has been taken 
to provide for a culture of openness 
and honesty the group operates 
personnel policies designed to meet 
the needs of its group companies and 
employees around the world channels 
of communication appropriate to the 
local operation have been established 
to allow employees to be properly 
informed and voice their views and 
concerns recognition is given to 
individual employees’ needs and 
requirements throughout the group 
and where possible flexible working 
arrangements are considered where  
the circumstances are justified 
employees are encouraged to apply 
their skills knowledge and energy  
the group recognises the importance 
of its employees and their training as a 
competitive advantage 
the group is committed to equality 
of opportunity for all regardless of 
gender race age disability religion or 
sexual orientation this applies equally 
to recruitment and to the promotion 
development and training of people 
who are already part of the group  
the group takes seriously its 
obligations to the disabled and  
gives full and fair consideration 
to applications for new positions 
or employment from current or 
prospective employees regardless of 
any disability and having due regard  
to the individual’s particular aptitudes 
and abilities 
the group is willing to make 
reasonable adjustments to premises 
or employment arrangements if these 
substantially disadvantage a disabled 
employee or prospective employee 
every effort is made to find a suitable 
alternative job and as necessary 
training for those who are unable  
to continue in their existing role due  
to disability 
the group’s newsletter is distributed 
by electronic mail to all group 
companies monthly and is made 
available to employees individual 
group companies have either a local 
newsletter intranet site or a regular 
communication informing employees 
on the progress of their company  
the group encourages the growth  
of employee share ownership 
ii community involvement 
the group has a charitable trust  
which makes donations both to 
registered charities and in response 
to appropriate requests for support 
from bodies which are not registered 
charities both in the uk and overseas 
in the case of overseas donations the 
decision to donate is made by the 
local general manager in total in the 
uk the group donated approximately 
£86250 in 2009 to registered charities 
and other good causes including the 
national star college the county air 
ambulance the alzheimer’s society 
winston’s wish the parkinson’s 
disease society and sue ryder care 
the operating companies in the group 
are encouraged to provide support to 
local communities through company  26 spiraxsarco engineering plc annual report and accounts 2009
corporate social  
responsibility continued
group’s annual review of greenhouse gas emissions 
breakdown of scope 1 and scope 2 emissions by source 32894 tonnes co 2e
business travel scope 1 
electricity scope 2 
natural gas scope 1 
gas oil scope 1
other scope 1
spirax sarco provides 
quickheat heat exchange 
system to biopharm  
company gilead
the customer 
gilead alberta based in canada is  
a world leader in the provision of 
therapies for lifethreatening diseases 
such as hivaids and serious 
cardiovascular conditions
the challenge
the customer required a compact  
heat transfer solution for a glycol  
heating system servicing a critical air 
handling installation it was essential 
to have easy access for future 
maintenance purposes 
our solution 
in detailed discussions with the 
customer we identified fundamental 
design parameters that changed the 
initial specification making use of our 
cuttingedge 3d design technology we 
configured a packaged skidmounted 
quickheat system to meet the precise 
system requirements preassembled  
for easy installation and efficient use  
of space 
results
the customer required a competitive 
and reliable solution for this critical 
process and these needs were fully 
met spirax sarco’s total steam system 
capability enabled it to engineer a 
unique design that fully accommodated 
the complex and challenging  
operating conditions  spiraxsarco engineering plc annual report and accounts 2009 27
donations employee organised 
charitable activities donation of 
equipment no longer required and 
through provision of information 
by way of examples 
•  as part of its spend on broad based 
black economic empowerment 
spiraxsarco south africa pty ltd 
pays the school fees of children 
whose parents are employees of  
the company and who qualify for  
such assistance in addition the  
south african company has 
sponsored the expansion of a small 
contractor’s business who is used as 
a subcontractor when the company 
requires installation work to be  
carried out
•  spiraxsarco private ltd singapore 
donated the sum of us 5000 to 
the abscbn foundation sagip 
kapamilya to assist in humanitarian 
efforts to alleviate the effects of 
flooding in the philippines
•  spiraxsarco korea ltd contributes 
to local social welfare institutions 
including those helping the aged  
and supports a small group within  
the company whose purpose is 
to help a local community by for 
example delivering briquettes for 
heating to poor neighbourhoods
•  in india the local company continues 
to support a hospital it established 
many years ago making provision for 
both company employees and the 
local community both benefit from 
an established welfare programme 
based in company provided premises 
supporting community initiatives 
particularly for women and preschool 
provision for children 
•  spiraxsarco ltd continues to 
support the national star college  
in cheltenham 
•  watsonmarlow ltd is a sponsor of 
falmouth maritime museum and the 
royal cornwall polytechnic society 
a wildlife guardian of the cornwall 
wildlife trust and made charitable 
donations totalling £10000 during  
the year 
•  watsonmarlow inc usa supports 
local charities including the 
wilmington firefighters association 
and the dana farber cancer institute 
•  in the netherlands watsonmarlow 
bredel supports the annual 
international wheelchair games  
in delden
iii supplier relations 
the company policy is to use suppliers 
of goods and services which maintain 
appropriate quality standards in their 
operations suppliers must consistently 
achieve the standards required by  
iso 9001 
iv product stewardship 
information and support is given 
through appropriate technical advice to 
provide a solution to customers’ needs 
with installation and aftersales service 
being integral to the group’s business 
the proper application of products with 
due regard to environmental and safety 
considerations are dealt with in detail 
in the technical literature made freely 
available by the group  28 spiraxsarco engineering plc annual report and accounts 2009
corporate social  
responsibility continued
v corruption 
the company’s policy prohibits  
bribery or corrupt or anticompetitive 
practices in addition to provisions 
within service contracts general 
managers who head group 
companies are required to certify 
personally that all laws and regulations 
have been met in their territory 
vi health and safety 
the company has a clear attitude 
to health and safety which is that 
each operation will maintain a healthy 
and safe environment the group is 
committed to managing its activities 
around the world so as to safeguard 
the health and safety of its employees 
customers and local community 
in the first instance the general 
manager of each company has the 
responsibility for ensuring that this is 
effectively managed at the local level 
each major manufacturing site has 
its own health and safety committee 
advised by a safety officer 
general managers report the health 
and safety record of each group 
company in a standard form to the 
responsible executive director in an 
exercise coordinated and monitored 
by mr m e gibbin who is responsible 
for overseeing all health and safety 
matters in addition to the site health 
and safety committees referred to 
above a separate uk health and 
safety audit committee composed 
of uk based directors and senior 
managers meets every six months to 
verify the performance of the uk spirax 
sarco business on health and safety 
and environmental issues 
the group ensures that the necessary 
resources are available for health 
and safety training and companies 
within the group seek as necessary 
professional advice regarding the 
implementation of safety programmes 
for example in the uk spirax sarco 
has an established training programme 
which is provided to new shop floor 
employees and refresher courses are 
provided to all existing shop  
floor employees 
regular reviews are conducted to 
ensure that employees have uptodate 
knowledge of health and safety matters 
relevant to them 
in the uk spirax sarco has carried out 
various reviews and in particular has 
extended the measures for the welfare 
of employees by providing 
•  automatic external defibrillators for 
use in heart attack situations – all first 
aiders have been trained in their use 
•  training for all managers in the 
recognition and prevention of work 
related stress 
•  y early risk review of all processes and 
support functions
•  the appointment of an occupational 
health service including the regular 
attendance of an onsite health 
adviser to support managers and 
employees on health related matters 
vii environmental 
commensurate with its commitment 
to csr and in line with its strategic 
competence in energy management 
the group is proactive worldwide in 
environmental energy best practice  
an energy manager has been 
appointed to ensure group operational 
energy efficiency
the group is externally and internally 
benchmarking its energy performance 
since 2007 the group has had a policy 
of reporting its carbon footprint to the 
carbon disclosure project and has 
been awarded a carbon disclosure 
leadership index of 54 this score 
represents a slightly above average 
performance for the disclosure and 
management of energy the carbon 
disclosure reporting by industrial 
companies is a relatively new metric 
and in 2009 only 67 of companies in 
the industrial sector global 500 sp 
500 and ftse 350 published this data
the group’s annual review of the 
greenhouse gas emissions are shown 
on page 26
examples of actions to support national 
initiatives include 
•  actively participating in the uk’s first 
low carbon partnership scheme  
run by the cheltenham borough 
council spiraxsarco engineering plc annual report and accounts 2009 29
“ the company has a clear 
attitude to health and safety 
which is that each operation 
will maintain a healthy and 
safe environment” 
•  in the usa participation by spirax 
sarco inc in the us department 
of energy’s save energy new 
leadership pledge committing to 
reducing energy intensity by 25 
over ten years
as a manufacturing company 
production resources generate 65 of 
the business’s carbon footprint and are 
a target for greater efficiency examples 
of actions taken in 2009 include
•  the consolidation of three uk 
manufacturing sites to reduce 
unnecessary transportation of  
people and products features of  
the refurbished building include
 –  new roofs and wall cladding 
surpassing building regulations by 
25 – excellent thermal properties 
and skylights reduce the need for 
space heating forced ventilation  
and artificial light whilst providing  
an improved working environment  
for employees
 –  additional electricity sub metering 
which will ensure the measurement 
and management of energy usage 
and the use of spirax products  
will efficiently control steam usage 
and waste heat recycling in  
our processes
 –  a rainwater harvesting system 
which will save over 1 million litres  
of water per annum
•  watsonmarlow’s new tubing 
extrusion plant in falmouth 
completed in 2009 is the first 
breeam building research 
establishment environmental 
assessment method excellent 
industrial building in cornwall having 
been designed for sustainability and 
to have the lowest possible energy 
costs throughout its life
•  our focus on resource efficiency and 
waste reduction continues waste to 
landfill is being reduced through the 
adoption of a single waste contractor 
for cheltenham operations
•  the group’s progressive adoption 
of iso 14001 continues with the 
spirax sarco uk management team 
preparing for approval in 2010
•  all future investments now include  
an environmental consideration  
as standard
general managers of operating 
companies remain responsible for 
local compliance with the group’s 
policy and with local legislation in 
germany masosine has reduced its 
environmental impact over the past 
year by reducing water consumption  
by 17 electricity by 20 and waste 
by 22
watsonmarlow ltd in the uk and 
spiraxsarco sas in châtellerault 
france are certified to the environmental 
standard iso 14001 it is the intention 
for the whole group to be accredited to 
iso 14001 in the usa watsonmarlow 
inc complies with us osha regulations 
and strives to be environmentally 
conscious through a paper recycling 
programme and implementing energy 
efficient and green technologies 30 spiraxsarco engineering plc annual report and accounts 2009
board of directors spiraxsarco engineering plc annual report and accounts 2009 31
bill whiteley bsc fcma deng 
61 joined the group as an 
independent nonexecutive director in 
2002 and was appointed chairman in 
july 2009 until his retirement in 2008 
he was chief executive of rotork plc 
he is chairman of the nomination  
and finance committees he is a  
nonexecutive director of brammer  
plc and renishaw plc chairman of the 
british valve and actuator association 
and with effect from january 2010 
chairman of hill  smith holdings plc
mark e vernon bsc hons 
57 joined spirax sarco inc in the usa 
in 2003 as president he was appointed 
to the board in 2006 and became 
chief operating officer in 2007 he 
was appointed as chief executive 
in april 2008 he is a member of the 
nomination and finance committees 
and chairman of the risk  
management committee
gareth bullock ma 
56 joined the group as an 
independent nonexecutive director 
in 2005 he is currently a director of 
standard chartered plc but he has 
announced that he will retire from  
this position in april 2010 he is 
chairman of the remuneration 
committee a member of the audit  
and nomination committees and 
senior independent director 
neil daws ceng fimeche 
47 joined spiraxsarco limited in 
1978 he was appointed to the board  
in 2003 and is now responsible for  
asia pacific and south america  
he is a member of the risk 
management committee
mike gibbin bsc eng  
ceng imeche 
47 joined spiraxsarco limited in 
2007 as uk supply director he was 
appointed to the board in may 2009 
and is responsible for the group’s 
supply operations for north america 
and the group’s health safety and 
environmental matters he is a member 
of the risk management committee
david meredith fcma 
50 joined the group in 1988 as group 
accountant he was appointed to the 
board as finance director in 1992 he 
is also responsible for watsonmarlow 
he is a member of the finance and 
risk management committees
krishnamurthy rajagopal freng 
ceng fiet  fimech e fie fcmi 
phd 
56 joined the group as an 
independent nonexecutive director in 
february 2009 he is a member of the 
audit nomination and remuneration 
committees he is a nonexecutive 
director of w s atkins plc and 
bodycote plc he is also an audit 
commissioner he was previously an 
executive director of boc group plc
t ony scrivin
62 joined spiraxsarco limited in 
1963 he was appointed to the board 
in 2005 and is now responsible for 
operations in europe the middle east 
and africa he is a member of the risk 
management committee
clive watson b comm acc  
aca cta 
52 joined the group as an independent 
nonexecutive director in july 2009 
he is an executive director and group 
finance director of spectris plc he 
is chairman of the audit committee 
and a member of the nomination and 
remuneration committees  32 spiraxsarco engineering plc annual report and accounts 2009
governance and financial statements
contents
33 directors’ report
35 corporate governance
39 the directors’ remuneration report
46 statement of directors’ responsibilities
47 report of the independent auditor
48 balance sheets
49 group income statement
50 group statement of comprehensive income
50 statements of changes in equity
52  cash flow statements
53 notes to the accounts
82 financial summary 2000 – 2009
84 officers and advisers spiraxsarco engineering plc annual report and accounts 2009 33
the directors of spiraxsarco engineering plc have pleasure in presenting their report and the audited accounts for the year ended 
31st december 2009
results
the results of the group for the year which have been prepared in accordance with the international financial reporting standards as adopted by the 
eu are explained in the chairman’s statement and the business review and financial review on pages 2 3 and 10 to 21 and are set out in the group 
income statement on page 49
dividend
an interim cash dividend of 105p per share 2008 100p was paid in november 2009  the directors now recommend the payment of a final dividend of 
256p per share 2008 233p  if approved at the annual general meeting the final dividend will be paid on 21st may 2010 to shareholders on the register 
on 16th april 2010 the total distribution for the year will be 361p per share 2008 333p
business review
a review of the development and performance of the business of the group including the financial performance during the year the position at the end 
of year key performance indicators and a description of the principal risks and uncertainties facing the group are set out on pages 10 to 21 
the following cautionary statement applies to the business review and financial review which are set out on pages 10 to 21 and which are 
incorporated in this directors’ report by reference 
this annual report and accounts has been prepared for and only for the members of the company as a body and no other persons the company 
its directors employees agents or advisers do not accept or assume responsibility for any other purpose or to any other person to whom this 
document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed by their nature the statements 
concerning the risks and uncertainties facing the group involve uncertainty since future events and circumstances can cause results and developments 
to differ materially from those anticipated the forwardlooking statements reflect knowledge and information available at the date of preparation of 
this annual report and the company undertakes no obligation to update these forwardlooking statements nothing in this annual report should be 
construed as a profit forecast
principal activities
spirax sarco is a ukbased multinational engineering group tightly focused on its two niche businesses of steam system specialties and peristaltic pumps
spirax sarco is uniquely positioned to provide a broad range of engineered solutions to the many industries using steam with specialist knowledge 
technical expertise range of products prefabricated engineered packages and site services as well as a global spread in local markets customers are 
assisted to improve the efficiency of their process heating increase the output of the process reduce running costs most notably energy consumption 
and lower their emissions
the watsonmarlow pumps group and its brands which also include bredel alitea flexicon and masosine is the global leader in peristaltic pumping  
it manufactures and markets products and systems for widely differing market sectors  their unique action ease of use controllability and low 
maintenance make them cost and energy saving solutions to a growing range of applications 
a more detailed description of the group’s activities is set out on pages 10 to 17
board of directors
the directors of the company are those listed on pages 30 and 31 as previously announced dr k rajagopal was appointed to the board as an 
independent nonexecutive director on 10th february 2009 and mr m e gibbin was appointed to the board as an executive director on 1st may 
2009 mr c g watson was appointed to the board on 17th july 2009 as an independent nonexecutive director  in addition mr a d h black was 
an executive director until 30th april 2009 when he retired  mr m townsend was the chairman until 30th june 2009 when he too retired
in accordance with the articles of association
i following his appointment since the last meeting mr c g watson retires at the annual general meeting and being eligible offers himself for 
 reappointment as an independent nonexecutive director mr c g watson has a letter of appointment
ii mr n h daws mr d j meredith and mr m e vernon retire and being eligible offer themselves for reappointment  mr n h daws 
 mr d j meredith and mr m e vernon have service contracts determinable on 12 months’ notice
biographical details of each of the directors retiring at the forthcoming annual general meeting are set out on page 31
directors’ interests and remuneration
the interests of the directors in the share capital of spiraxsarco engineering plc as at 31st december 2009 are set out below  the number of shares over 
which directors hold options together with their remuneration is detailed in the directors’ remuneration report on pages 39 to 45
    ordinary shares of 25p each
     010109 311209 040310 
3
     or date of or date of  or date of
     appointment if retirement if retirement if
     later 
1
 earlier 
2
 earlier 
2

wh whiteley    7434  10434 10434
me vernon    14890  34615 63441
adh black 
2
    46794  59294 59294
nh daws    7906  19776 31663
me gibbin 
1
   0 4890 4890
dj meredith    43833  52507 66394
aj scrivin    22736  33380 44266
m townsend 
2
   2879  2879 2879
g bullock    1250  1250 1250
cg watson 
1
   0 0 0
k rajagopal 
1
   0 1000 1000  
1 dr k rajagopal was appointed to the board on 10th february 2009  mr m e gibbin was appointed to the board on 1st may 2009  
 mr c g watson was appointed to the board on 17th july 2009  
2 mr a d h black and mr m townsend retired from the board on 30th april 2009 and 30th june 2009 respectively
3 the increase in the executive directors’ shareholding is as a result of the vesting of the 2007 performance share plan award 
mr a d h black purchased a motor car from the company at the then current market value of £10000
directors’ report
company no 596337 employment policies
details of the group’s employment policies are set out on pages 25 to 28
annual general meeting
the notice of meeting and an explanation of resolutions 9 to 15 to be proposed at the annual general meeting are set out in the enclosed circular
share capital
the maximum number of treasury shares held by the company during the year with a nominal value of £313886 was 1255542 which represented 163 
of the called up share capital at that time
details of shares issued during the year are set out in note 24 on page 66  
as at 31st december 2009 the company’s share capital was made up of ordinary shares each carrying one vote at general meetings of the company 
save as set out in the articles of association or in applicable legislation there are no restrictions on the transfer of shares in the company 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 
the company is not party to any significant agreements that might terminate upon a change of control of the company
purchase of own shares
there was no purchase of shares by the company during the year  at 31st december 2009 the number of shares which may be purchased under the 
shareholders’ authority given at the annual general meeting in 2009 was 7603267 and the total number of shares in issue was 77238516
shareholdings of 3 or more
as at 26th february 2010 the company had an issued share capital of 77289941 shares of which 846847 shares were held in treasury of the 
76443094 ordinary shares with voting rights in issue as at this date the company received notice of material interests in 3 or more of the voting rights 
calculated on the issued share capital less the shares held in treasury
the information received is set out below
   ordinary shares 
schroders investment management ltd  7129817    933
blackrock investment management  6948139    909
baillie gifford  co  5122498    670
sprucegrove investment management ltd  4604844    602
first eagle investment management llc    3128831    409
majedie asset management    2934172    384
nfu mutual insurance society    2741815    359
legal  general investment management    2717239    355
 
financial instrument risk management
the main risks arising from the group’s financial instruments are interest rate risk liquidity risk and foreign currency risk more detail is set out in note 32 
on pages 77 to 81
statement of the policy and practice on the payment of suppliers
it is the group’s policy to meet the terms of all individual supply contracts and in the uk to make payment to suppliers at the end of the month 
following receipt of goods in view of this the group does not follow any particular prescribed code 
spiraxsarco engineering plc had no trade creditors as at 31st december 2009 and consequently creditor days have not been presented
research and development
the group continues to devote significant resources to the updating and expansion of its range of products and engineered packages in order to 
remain at the forefront of its world markets expenditure in 2009 on research and development amounted to £8018000 2008 £6529000 of which 
£2082000 2008 £1640000 is capitalised as explained in note 1 on page 54 during the year the group has taken steps to increase its research 
and development capability by the creation of a separate research and development function based in cheltenham this function is tasked with 
improving the group’s pipeline of new products and decreasing the time to launch
market value of land and buildings
in the opinion of the directors the market value of the land and buildings of the group exceeds the book value of those assets at 31st december 2009 
by approximately £12000000 2008 £12000000
group charitable and political donations
charitable donations during the year amounted to £86250 divided amongst 73 organisations 2008 £81156 there were no political donations 2008 nil
auditors 
as at the date of this report as far as each director is aware there is no relevant audit information of which the company’s auditors are unaware each 
director has taken all such steps as he should have taken as a director in order to make himself aware of any relevant audit information and to establish 
that the company’s auditors are aware of that information a resolution to reappoint the auditors kpmg audit plc will be proposed at the annual 
general meeting
going concern 
the company continues to adopt the going concern basis in preparing the annual report and accounts  more detail is set out on page 38
capital gains tax
for capital gains tax purposes the market value of the company’s ordinary shares at 31st march 1982 was 140375p
company information
further information on the company is available on the group website wwwspiraxsarcoengineeringcom
by order of the board charlton house cirencester road
wg stebbings cheltenham glos gl53 8er
company secretary and solicitor
4th march 2010
 
34 spiraxsarco engineering plc annual report and accounts 2009
directors’ report continued spiraxsarco engineering plc annual report and accounts 2009 35
compliance
corporate governance has been and remains the responsibility of the whole board this statement describes how the company applies the principles 
and complies with the provisions of the combined code on corporate governance published in june 2008 the combined code which applied to 
the company in respect of the financial year ended 31st december 2009 and is publicly available at wwwfrcorguk the listing rules of the financial 
services authority require uk listed companies to report on the manner in which they apply the combined code the board considers that subject 
to the ratio of executive and nonexecutive directors and the composition of the audit and remuneration committees from the beginning of the year 
until 9th february 2009 and from 1st july to 16th july each of which is explained below the company met the requirements of the combined code 
throughout the year ended 31st december 2009 the board assesses on an ongoing basis its practices to ensure continued compliance with the 
combined code and has allocated responsibility for compliance to appropriate directors or officers contact has been made with major shareholders 
to allow discussion of the company’s governance policy and strategy with the chairman and three major shareholders availed themselves of the 
opportunity to meet the chairman 
disclosures required under dtr 726 can be found on page 34
board composition and procedures
during the year the board comprised the nonexecutive chairman three independent nonexecutive directors including a senior independent director 
and five executive directors details of whom are set out on pages 30 and 31 during the year the positions of chairman chief executive and senior 
independent director were held by separate individuals there is a clear written division of responsibility between the chairman and the chief executive 
the ratio of executive to nonexecutive directors is currently considered to be the best structure for the company the board is responsible for the 
group’s business operations and five executive directors are present on the board in order to provide firsthand information and contributions to the 
running of the business the executive directors control the group’s devolved management structure which requires local management initiative across 
the group’s global spread of operating companies its broad product range and wide customer base board membership of the executives is key to 
the overall management of the group which employs a relatively flat management structure this also provides the nonexecutive directors with regular 
direct access to the full executive management team the company views this to be a very appropriate and successful mix appointing additional 
nonexecutive directors would make the board more cumbersome and would not add to the quality of the board’s performance the divisional 
structure will be retained with regional general managers providing support in each of the divisions
the board applies an appropriate policy in the recruitment of independent nonexecutive directors to meet the particular requirements of the board 
each of the nonexecutive directors has a letter of appointment which meets the requirements of the combined code the nonexecutive directors 
all have or have had senior executive experience and offer independent judgement on board matters the nonexecutive directors of the company 
including the chairman do not participate in any bonus share option or share ownership schemes and their appointments are nonpensionable 
the board met six times in the year to consider strategic developments and to review trading results and operational and business issues all directors 
attended all meetings either in person or by telephone in 2009 with the exception of mr c g watson who was unavailable for two meetings in 
particular the board deals with those matters reserved to it for decision details of which are posted on the group website 
wwwspiraxsarcoengineeringcom and are as follows
i accounts and audit
●  approval of preliminary and annual reports and accounts halfyearly reports and interim management statements
●  accounting policies and practices and any changes thereto the use of any offbalance sheet structures
●  acceptance of any proposed audit qualification of the accounts
●  approval of audit committee’s recommendations for appointment or removal of external auditors
ii strategic and policy considerations
●  review and approve the group’s overall corporate strategy and annual business plan
●  changes related to the company’s status as a listed company or major structural changes to the group
●  agreement of codes of ethics and business practice in light of the directors’ duty to promote the success of the company for the benefit of the 
 members as a whole and in doing so having regard amongst others to 
 – the likely consequences of any decision in the long term
 – the interests of the company’s employees
 – the need to foster the company’s business relationships with suppliers customers and others
 – the impact of the company’s operations on the community and the environment
 – the desirability of the company maintaining a reputation for high standards of business conduct and
 – the need to act fairly as between members of the company
●  appointment of or changes to principal professional advisers
●  environmental policy
●  health and safety policy
●  any matter which could reasonably be expected to have a material effect on the reputation or standing of the group
iii risk management
●  reviewing the effectiveness of risk management and internal control on an ongoing basis including receiving and reviewing regular reports on 
 internal control
●  carrying out an assessment at least annually of significant risks and effectiveness of risk management and internal control policies and reporting 
 to shareholders on such matters
●  prosecution defence or settlement of litigation arbitration or other proceedings material to the companygroup and for this purpose litigation 
 arbitration or other proceedings shall be deemed material if the proceedings are for an amount in excess of £5 million or if the penalty likely to be 
 suffered may exceed £5 million
iv transactions
●  major investment and capital projects in excess of £1 million  investments or projects in excess of £500000 sanctioned by the executive team 
 will be reported to the board
●  acquisitions and disposals of subsidiaries
●  acquisitions and disposals of other assets or liabilities above £1 million
●  material contracts which are in the ordinary course of business with a value of above £1 million
●  contracts not in the ordinary course of business 
●  contracts in which a director or other related party is interested
●  any binding commitment to enter into a material strategic alliance joint venture partnership or profit sharing arrangement
●  giving security over significant assets
v finance
●  approval of treasury policy or amendments thereto  
●  approval of any financing or currency arrangement above the limit of the finance committee
corporate governance vi regulatory requirements
●  ensuring compliance with the listing prospectus disclosure and transparency rules
●  approval of all circulars prospectuses and equivalent documents save that approval of routine documents may be delegated to a committee
●  approval of announcements concerning matters decided by the board
●  delegation of authority to issue an urgent announcement without the need to call a board meeting in order to comply with the company’s 
 regulatory obligation to announce inside information as soon as possible
●  dividend policy approval of the interim dividend and recommendation of the final dividend
●  calling general meetings of shareholders
●  setting of general group policy on charitable and political donations  
●  issue of shares or other securities other than on notice of exercise of employee share options or repurchase of shares
●  changes relating to the company’s share capital
vii directors and senior employees
●  approval of nomination committee’s recommendations on
 – board appointments and removals
 – board succession
 –  appointment of chairman and terms of engagement other than remuneration for chairman
 –  terms of engagement other than remuneration of nonexecutive directors
 –  the reappointment of any nonexecutive director at the end of the specified term of office
 – the reelection by shareholders of any director and
 –  any matters concerning the continuation in office of any director at any time
●  remuneration of nonexecutive directors 
●  terms of engagement other than remuneration package of executive directors 
●  appointment and removal of company secretary
●  board policy on the duration of contracts with directors both executive and nonexecutive
●  the procedures in place or to be put in place for the authorisation of directors’ conflict matters falling within section 175 of the companies act 
 2006 and any changes to these procedures
●  the authorisation of any conflict matter arising for any director of the company under section 175 of the companies act 2006 and the terms and 
 conditions attaching to such authorisation
●  terms of reference and membership of board committees
●  delegation of the board’s powers
●  procedure for directors in the furtherance of their duties to take independent professional advice at the company’s expense
●  assessment of which nonexecutive directors are independent
●  approval of training and development programmes for directors as relating to their duties as directors 
●  approval of performance evaluation programmes for board committees and individual directors
viii employment issues
●  major changes in the rules or funding of the pension schemes
●  major changes in employee or directors’ share schemes and major changes in the allocation of share options
all directors receive detailed board papers and reports one week prior to each board meeting there is provision for the nonexecutive directors to 
meet together without any executive directors present both with and without the chairman
all other matters not reserved to the board for decision are delegated appropriately
utilising a format created with the advice of towers perrin now towers watson the board again carried out a rigorous evaluation of board performance 
in accordance with the combined code requirements which confirmed the effective operation of the board and reflected the importance of strategic 
matters the evaluation process comprises a review conducted by the company secretary and reported to the chairman of all directors’ views on the 
operation of the board and the performance of the chairman the chairman’s and chief executive’s review of the board performance of each director the 
chairman’s review of the nonexecutive directors and the review by committee members and attendees of the operations of the audit nomination and 
remuneration committees and the performance of the chairman of each of those committees the evaluation confirmed a continued high rating for the 
board’s operations and encompassed board constitution board meetings board functionality communication and knowledge management company 
secretariat performance assessment of the chairman’s performance and the effectiveness of the board’s committees improvements are made to the 
board’s operation as a result of the evaluation 
there are procedures for individual board members to receive induction and training as appropriate and provision to solicit independent professional 
advice at the company’s expense where specific expertise is required in the course of exercising their duties all directors have access to the company 
secretary who is responsible for ensuring compliance with applicable legislative and regulatory requirements 
the company provides directors’ and officers’ insurance for board members and the directors of group companies together with senior officers 
all directors are subject to reappointment by shareholders at the first opportunity after their appointment and thereafter at intervals of no more than 
three years
conflicts
from 1st october 2008 the directors became subject to a statutory duty under the companies act 2006 to avoid a situation where they have or 
could have a direct or indirect interest that conflicts or possibly may conflict with the interests of the company directors of public companies may 
authorise conflicts and potential conflicts where appropriate if the articles of association contain a provision to this effect the company amended its 
articles of association in may 2008 to deal with amongst other things the provisions on conflicts of interest in the companies act 2006 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 conflict matters by the board in deciding whether to authorise a conflict or potential conflict the directors must have regard 
to their general duties under the companies act 2006 the authorisation of any conflict matter and the terms of authorisation may be reviewed at any 
time and will be reviewed formally by the board on an annual basis the board believes that the procedures established to deal with conflicts of interest 
are operating effectively
senior independent director
mr g bullock succeeded mr w h whiteley as the senior independent director on 1st july 2009
committees
the board delegates specific responsibility to board committees notably the audit nomination and remuneration committees in line with best 
practice the terms of reference for these committees are posted on the group website wwwspiraxsarcoengineeringcom in the period from the 
beginning of the year until 30th june 2009 the finance committee comprised mr m townsend chairman mr m e vernon and mr d j meredith 
with effect from 1st july 2009 the finance committee comprised mr w h whiteley chairman mr m e vernon and mr d j meredith the risk 
management committee is composed of the five executive directors and the company secretary
36 spiraxsarco engineering plc annual report and accounts 2009
corporate governance continued spiraxsarco engineering plc annual report and accounts 2009 37
i audit committee
from 1st january until 9th february 2009 the audit committee comprised mr w h whiteley chairman and mr g bullock from 10th february until 
30th june the committee comprised mr w h whiteley chairman mr g bullock and dr k rajagopal  from 1st july to 16th july the committee 
comprised mr g bullock and dr k rajagopal and from 17th july to 31st december 2009 the committee comprised mr c g watson chairman 
mr g bullock and dr k rajagopal  
during the periods 1st january to 9th february and 1st july to 16th july 2009 the company did not fully comply with provision c31 of the combined 
code as the audit committee comprised two independent nonexecutive directors there were three meetings of the audit committee during the year 
and all members attended all meetings with the exception of mr c g watson who was unavailable for one meeting all members are independent in 
accordance with the independence criteria set out in the combined code
a summary of the audit committee’s duties and responsibilities is set out on page 38
ii nomination committee
from 1st january until 9th february 2009 the nomination committee comprised mr m townsend chairman mr g bullock mr m e vernon and 
mr w h whiteley from 10th february until 30th june the committee comprised mr m townsend chairman mr g bullock dr k rajagopal 
mr m e vernon and mr w h whiteley  from 1st july to 16th july the committee comprised mr w h whiteley chairman mr g bullock 
dr k rajagopal and mr m e vernon and from 17th july to 31st december 2009 the committee comprised mr w h whiteley chairman 
mr g bullock dr k rajagopal and mr c g watson there were three meetings of the nomination committee and all members attended all 
meetings with the exception of dr k rajagopal who was unavailable for one meeting 
the nomination committee proposes to the board new appointments for both executive and nonexecutive directors and determines on an individual 
basis the most appropriate method of identifying suitable applicants the nomination committee arranges for the executive directors’ views to be 
assessed before an appointment decision is made the nomination committee fully followed this process in the appointment of mr c g watson as 
nonexecutive director
iii remuneration committee
from 1st january until 9th february 2009 the remuneration committee comprised mr w h whiteley chairman and mr g bullock from 
10th february until 30th june the committee comprised mr w h whiteley chairman mr g bullock and dr k rajagopal  from 1st july to 
16th july the committee comprised mr g bullock chairman and dr k rajagopal and from 17th july to 31st december 2009 the committee 
comprised mr g bullock chairman dr k rajagopal and mr c g watson
during the periods 1st january to 9th february and 1st july to 16th july 2009 the company did not fully comply with provision b21 of the combined 
code as the remuneration committee comprised two independent nonexecutive directors there were two meetings of the remuneration committee 
and all members attended both meetings all members are independent in accordance with the independence criteria set out in the combined code
in determining the remuneration paid to directors the remuneration committee was advised by towers perrin
the directors’ remuneration report presented by the board of directors is set out on pages 39 to 45 
iv risk management committee
in the period from the beginning of the year until 30th april 2009 the risk management committee comprised mr m e vernon mr a d h black 
mr n h daws mr d j meredith mr a j scrivin and mr w g stebbings  with effect from 1st may 2009 the risk management committee 
comprised mr m e vernon mr n h daws mr m e gibbin mr d j meredith mr a j scrivin and mr w g stebbings  
there were three meetings of the risk management committee and all members attended all meetings with the exception of mr m e gibbin who 
was unavailable for one meeting  prior to his appointment mr m e gibbin attended two meetings on the invitation of the committee  in addition 
to reviewing the risk management returns provided by group companies at 30th june 2009 and 31st december 2009 and reporting on the results of 
these returns to the board the committee also conducted a review of the group’s risk registers to ensure the continuing applicability and relevance of 
the registers
the terms of reference for each of the audit nomination and remuneration committees can be viewed in the corporate governance section of the 
group website wwwspiraxsarcoengineeringcom
the company secretary acts as secretary to the audit nomination and remuneration committees
shareholder relations
the group conducts regular dialogue with institutional shareholders and provides such information as is permitted within the guidelines of the listing 
rules in particular major shareholders have been approached with a view to discussing the company’s governance and strategy with the chairman 
and mr g bullock the senior independent director as required by major shareholders the senior independent director is available to listen to 
their views on any areas of concern they may have following his appointment as chairman mr w h whiteley offered major shareholders the 
opportunity of a meeting and as a result meetings were held with three major shareholders reports are made to the board of all meetings with 
major shareholders and analysts including in particular briefings after half year and final results 
the preliminary results announcement may be accessed by investors on the group website wwwspiraxsarcoengineeringcom the annual report 
and accounts is also posted on the website wwwspiraxsarcoengineeringcom 
all shareholders are invited to participate in the annual general meeting where the chairmen of the audit nomination and remuneration committees 
will be available to answer questions the results of proxy votes are declared at annual general meetings after each resolution has been dealt with on 
a show of hands details of the proxy votes received will be published on the group website wwwspiraxsarcoengineeringcom following the annual 
general meeting
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 process for identifying and managing risks faced by the group which has been in place for the 
year under review and up to the date of approval of the annual report and accounts the reviews cover and assess 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 that financial information used within the business is reliable and that 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 company has complied throughout the year and up to the date of this report with the combined code 
provisions on internal controls having established the procedures necessary to implement the guidance issued by the turnbull committee and by 
reporting in accordance with that guidance which is publicly available at wwwfrcorguk 
i risk management
the group has operated procedures for considering risks in the normal operations of the group and with regard to significant transactions strategic 
and annual planning also encompass consideration of business risks the risk management committee specifically reviews any risks facing the 
business which could give rise to a material loss 
the risk management committee carried out a review with external consultants marsh ltd of the risk register and risk management process in the 
context of the current business structure and operations with the aim of validating the risk register and the general risk management process and  identifying any additional new risks which could involve a significant risk to the group’s business this exercise was completed early in 2008 and 
consisted of a review of the risk magnitude and risk likelihood significant potential new risks were assessed and countermeasures established the 
board on marsh ltd’s advice is satisfied that the system of management for significant risks is appropriate for the group and is properly executed  
the board plans to conduct an updated externally facilitated risk review in 2010 
as part of the risk management process group companies are required to report on a six monthly basis their position with regard to implementing 
identified countermeasures to address the group’s significant business risks the six monthly returns are assessed by the risk management committee 
and the results of that assessment are reported by the company secretary to the board the risk management committee carries out an annual 
review of the business risks the board monitors the system of reporting and its effectiveness as a whole and reviews the assessments made by the 
risk management committee and any recommendations for improvements to the process 
in the uk the operation of the incident management team which deals with the situation immediately after any major incident was reviewed and the 
team strengthened spirax sarco inc in the usa has successfully completed its business continuity planning exercise
ii financial
the finance committee of the board considers financing and investment decisions concerning the group including the giving of guarantees and 
indemnities and monitors policy and control mechanisms for managing treasury risk within the limits laid down by the board 
financial reporting systems include comprehensive annual plans approved by the board and monthly reporting of actual results with appropriate 
comparisons against plan and previous year’s results forecast operating results for the year are regularly updated capital investment is subject to 
approval under a clear policy this includes annual plans appropriate authorisation detailed investment appraisal postinvestment review and due 
diligence requirements where businesses are being acquired forward currency contracts are implemented centrally under the control of the group 
treasury function
iii operational
all group 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 the operation 
iv audit committee
the audit committee considers the appropriateness and effectiveness of the group’s internal controls policies and procedures and the outcome of the 
external audit for the year the committee also reviewed the outcome of internal audit reports during the year its meetings are normally attended by 
the finance director the external auditors and at the invitation of the committee the chairman there is provision for the committee to confer with the 
auditors without the attendance of executive directors the audit committee reviews the independence of the external auditors on an annual basis 
the committee considers in detail reports prepared by the auditors in relation to the final accounts and accounting practices and developments it also 
considers reports and explanations provided by the finance director 
the board has approved terms of reference for the audit committee meeting the requirements of the combined code the audit committee’s 
responsibilities include
●  monitoring the integrity of the accounts and in particular reviewing the group’s internal controls risk management framework and internal 
 audit reports 
●  reviewing the scope and results of the auditors’ work their independence and objectivity particularly relating to the provision of additional 
 services to the company and audit fee 
●  recommending the appointment reappointment or removal of external auditors and 
●  reviewing the accounting policies and practices of the company and at the end of the annual audit cycle assessing the effectiveness of the 
 audit process 
the audit committee reviewed and noted compliance with the good practice list of matters established by the audit committee institute in all material 
matters
v nonaudit services
a policy on nonaudit services provided by the auditors in line with professional practice has been established and approved by the audit committee 
the external auditors have undertaken nonaudit work in regard to taxation and acquisition due diligence and the fees paid by the company for it are 
set out in note 6 on page 59 the scope and extent of nonaudit work undertaken by the company’s auditors is carefully controlled in line with the 
written terms provided by the company to the auditors with the objective of avoiding impact on their independence and objectivity in particular the 
auditors are prohibited from providing services in relation to valuations recruitment dispute resolution and accounting services the audit committee 
monitors the scope of the auditors’ work and specific approval from the committee chairman or the full audit committee is required for fees over 
established thresholds
vi whistle blowing
if any employee in the group has reasonable grounds for believing that the group business code or management code is being breached by any 
person or group of people and does not feel able to voice the matter with his or her manager he or she is able to contact the company secretary in 
cheltenham with full details the company secretary will ensure that a the circumstances are properly investigated and b the employment of the 
person contacting the company secretary will be protected appropriately
internal audit
following a review in 2006 the board established an enhanced internal audit function which allows each of the group companies to be audited at least 
every four years 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 companies and a professional auditing firm bdo stoy hayward llp  
reports are made to the audit committee and the board as a whole no significant matters were raised in the reports made in the 11 operating 
companies audited during the year
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 business review and financial review on pages 10 to 
21  in addition note 32 on pages 77 to 81 to the financial statements includes the group’s objectives policies and processes for managing its capital its 
financial risk management objectives details of its financial instruments and hedging activities and 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 
after making enquiries and after conducting a formal review of the group’s financial resources at their march board meeting the directors have a 
reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future 
accordingly they continue to adopt the going concern basis in preparing the annual report and accounts
directors’ responsibilities
the statement of directors’ responsibilities is set out on page 46
38 spiraxsarco engineering plc annual report and accounts 2009
corporate governance continued spiraxsarco engineering plc annual report and accounts 2009 39
the board presents the following report on directors’ remuneration and the work and responsibilities of the remuneration committee
remuneration committee
this committee has been established for many years and operates under terms of reference agreed by the board and which can be found on the 
group website wwwspiraxsarcoengineeringcom 
from 1st january until 9th february 2009 the committee comprised mr w h whiteley chairman and mr g bullock from 10th february until 
30th june the committee comprised mr w h whiteley chairman mr g bullock and dr k rajagopal  from 1st july to 16th july the committee 
comprised mr g bullock chairman and dr k rajagopal and from 17th july to 31st december 2009 the committee comprised mr g bullock 
chairman dr k rajagopal and mr c g watson each committee member is an independent nonexecutive director they bring independence to all 
aspects of board remuneration and in the application of professional advice to matters of remuneration 
the committee is responsible for determining on behalf of the board the company’s remuneration policy the employment conditions and 
remuneration packages comprising salary and benefits of individual executive directors and the fees for the chairman the committee also administers 
and determines the grant of options under the group’s share option schemes for senior employees and administers and determines the grants of 
awards under the performance share plan 
the committee obtains independent professional advice from towers perrin now towers watson to ensure that the company’s remuneration policy 
is appropriate and competitive towers perrin was appointed by the committee and has not provided other services to the company during the year  
the chairman mr m townsend up to 30th june 2009 and mr w h whiteley since that date and mr m e vernon the chief executive attend 
meetings at the invitation of the committee to provide information requested by it however the invitees do not participate in any discussions involving 
their own remuneration the company secretary acts as secretary to the committee 
the committee consulted with towers perrin in arriving at the remuneration packages paid to directors during 2009  
the company has throughout the year complied with the provisions of the combined code with regard to directors’ remuneration the committee has 
given full consideration to the combined code in establishing the remuneration policy and packages for directors
policy on executive directors’ remuneration
the company’s policy is to reward directors competitively and on the broad principle that their remuneration should be comparable with remuneration 
in other similar public companies further the total remuneration package is designed in a way which is appropriate and necessary to attract retain 
and motivate directors of the calibre required to achieve the company’s strategic objectives it is anticipated that this policy will continue to govern the 
company’s approach to executive directors’ remuneration in subsequent financial years 
in order to align the interests of directors and shareholders the committee has structured the total remuneration package to provide a material 
performancerelated element through the annual bonus and the group’s performance share plan 
the structure of the directors’ remuneration package has been established subject to appropriate modifications for many years and has regard to pay 
and conditions elsewhere in the group 
the company’s policy on directors’ remuneration and the structure of their remuneration package are kept under review to ensure the directors’ overall 
package remains competitive and shareholders will be informed of any resulting change the remuneration package comprises
basic salary
the committee obtained independent professional advice from towers perrin using published information for comparable public companies salaries 
are reviewed annually as at 1st january taking into account the experience responsibility and performance of the individual
benefits
the company operates company car life assurance and private health insurance schemes in which the executive directors are eligible to participate 
these benefits are reviewed annually to ensure they remain comparable with benefits provided by other similar public companies and to ensure they are 
purchased by the company at a competitive market rate
annual bonus
the company operates a nonpensionable annual bonus scheme for executive directors the bonus is determined as a percentage of salary for 2009 
maximum available bonus remained at 100 of salary as in prior years 
the bonus was made up as follows
i  a component of up to 65 of salary was determined on a sliding scale by reference to the operating profit of the group including the group’s  
 associate companies in india and mexico and
ii  a component of up to 35 of salary was determined on a sliding scale by reference to the return on capital employed roce
the application of the above formula resulted in a bonus equal to 37 of salary being payable to all executive directors in respect of the group’s 2009 
performance the auditors confirmed the calculation was made in line with the rules 
for 2010 the committee plans to base the bonus for mr m e vernon and mr d j meredith on the same two measures with the same relative weight 
as in 2009 and the maximum bonus payable will remain a sum equal to 100 of base salary for mr n h daws mr m e gibbin and mr a j scrivin 
the maximum profit component of the bonus will be split so that 35 of salary will be paid based on group operating profit and 30 of salary will be 
paid based on their respective divisional profit performances for a total maximum bonus of 65 of salary based on the profit component
the committee has offered to executive directors in a uk defined benefit scheme a cash alternative to pension contributions equal to 25 of 
pensionable salary the level of this cash alternative was confirmed by watson wyatt llc now towers watson the cost of the alternative to the 
company would be no greater than the cost of the pension contributions the cash alternative has not so far been adopted by any of the executive 
directors in the scheme
 
the directors’ remuneration report options
spiraxsarco engineering 1992 uk and global share option schemes
spiraxsarco engineering approved and global share option schemes
the company operates share option schemes administered by the committee which determines the grant of options under the schemes usually 
once per year these are designed to align the longer term interests of participants with those of shareholders by giving an incentive linked to added 
shareholder value following the introduction of the performance share plan in 2005 it is intended that ordinarily executive directors will be granted 
awards under that plan rather than be granted options 
executive directors senior executives and management hold options granted in previous years and it is currently intended that options will continue 
to be granted to senior executives and management options granted to each director from 1997 are subject to a performance condition which is 
described below
performance condition for share option schemes
in accordance with market practice options granted are normally specified to be exercisable between three and ten years from the date of grant 
and for grants from 1997 only if a specified performance condition is satisfied in line with the then established market practice the performance 
condition for options granted from 1997 up to 2001 requires an increase in earnings per share eps of more than 6 greater than the increase in the 
uk retail prices index over a period of three consecutive years between grant and ten years from grant for options granted from and including 2002 
the performance condition requires an increase in eps of more than 9 greater than the increase in the uk retail prices index over a period of three 
consecutive years between grant and ten years from grant for grants from and including 2005 the performance condition will ordinarily need to be 
met over the threeyear period from the 1st january prior to the date of grant in order for the option to become exercisable if the condition is not met 
at the end of the threeyear period the option will lapse the same performance condition applies to each director the performance condition chosen 
was considered appropriate because it ensured increases in the eps were achieved having taken account of uk inflation the auditors are asked 
to confirm whether the performance condition has been met the method of assessment is considered appropriate to confirm compliance with the 
condition the performance condition requires a comparison with a factor external to the company namely the growth in the uk retail prices index over 
the performance period 
details of total share options outstanding are set out in note 24 on page 66 the above performance conditions apply to other relevant options granted 
to all other participants in the share option schemes
spiraxsarco performance share plan psp
the psp for executive directors senior executives and management was adopted at the 2005 annual general meeting following the introduction 
of this psp no further option grants have been made to executive directors details of options that were awarded prior to this and which remain 
outstanding are provided on page 43 
the psp allows for awards to be made each year with a market value of up to 150 of base salary although in practice the market value of awards 
has been limited in previous years to 100 of base salary the market value of awards made to executive directors in 2009 was  limited to 75 
of base salary details are set out on pages 43 and 44 awards take the form of contingent rights to acquire shares subject to the satisfaction of 
performance targets to the extent they vest awards may be satisfied in cash in shares or an option over shares at the discretion of the company 
the performance target applied to awards granted in 2006 2007 and 2008 was based on the company’s total shareholder return tsr relative 
to the tsr of other companies included in the ftse allshare industrial engineering index over the threeyear periods commencing with effect from 
1st january 2006 1st january 2007 and 1st january 2008 for awards made in 2009 the committee decided to amend the comparator group of 
companies against which the company’s tsr would be measured to encompass a group of the 27 companies within the overall industrial goods and 
services super sector of ftse 350 tsr was chosen as the measure of performance as the committee felt that this achieved an appropriate alignment 
of the interests of the directors with those of the company’s shareholders for full vesting the company’s tsr must be at or above the upper quartile 
with 25 of the shares subject to an award vesting if the company’s tsr is at the median relative to the comparator group awards vest on a straight 
line prorata basis between median and upper quartile performance in respect of the awards made in 2007 the company’s relative tsr performance 
resulted in 100 of the awards vesting
following a review of the operation of the psp and the market competitiveness of awards the committee decided in 2008 to adopt a second 
performance measure to determine vesting under the psp  although relative tsr was retained as one of the measures to determine the vesting of part 
of the award a second separate element of the award was based upon eps growth the decision to adopt eps as a specific measure to determine 
the vesting of part of the future awards was a reflection of the importance the company gives to continuing growth in earnings
specifically for awards made in 2009 the award was split into two separate parts amounting to 60 and 40 of award respectively 
the vesting of each part of the overall award will be subject to the satisfaction of separate performance targets as follows
i vesting of the first part amounting to 45 of salary will be based on the tsr measure as described above and
ii vesting of the second part amounting to 30 of salary will be subject to achievement of a target based on aggregate eps over the whole of the 
 threeyear performance period with growth measured relative to eps in the year prior to that in which the award is made for the awards made in 
 2009 25 of this element of the award will vest if the compound annual growth in eps over the threeyear period 2009 to 2011 is equal to 5 
 and 100 of the award will vest if the compound annual growth in eps is equal to or exceeds 11 there will be prorata vesting for actual growth 
 between these two rates 
no award will vest if the company’s tsr is below the median tsr calculations are performed by towers perrin the method of assessment is 
considered appropriate to confirm compliance with the condition
the committee reviews the measures annually and is maintaining the same measures and the same performance standards for awards made in 2010 
the auditors are asked to confirm whether the eps performance condition has been met  the method of assessment is considered appropriate to 
confirm compliance with the condition
 
40 spiraxsarco engineering plc annual report and accounts 2009
the directors’ remuneration report  
continued spiraxsarco engineering plc employee share ownership plan the plan
the executive directors with the exception of mr m e vernon participate in the plan as described on page 44 participation in the plan is open to all 
eligible uk employees no employee’s entitlement under the plan is subject to performance conditions as the aim of the plan is to encourage increased 
shareholding in the company by all eligible uk employees 
there are no other longterm incentives or sharebased arrangements provided to directors
share ownership policy
it is the policy of the board of spiraxsarco engineering plc that executive directors should have a significant shareholding in the company the board 
expects that executive directors will accumulate following appointment to the board a shareholding equivalent to at least 100 of basic salary and 
should retain a shareholding of at least this amount whilst remaining on the board 
t o achieve this level of share ownership the board expects that executive directors will retain shares acquired under the company’ s sharebased incentive 
schemes after sales of such shares as are needed to settle relevant tax and national insurance charges until the required level of shareholding is achieved any 
shares held in trust for an executive director or in the name of a connected person eg spouse will be considered as part of an executive director’ s shareholding 
the board will exercise discretion in implementing this policy where the personal circumstances of an individual executive director make that appropriate 
the policy does not require any shareholdings by nonexecutive directors
pensions
the uk executive directors other than mr m e vernon and mr m e gibbin are members of an hmrcregistered noncontributory defined benefit 
pension scheme based on 160th of pensionable salary for each year of pensionable service up to 31st march 2010 the maximum pension is two
thirds of pensionable salary mr n h daws and mr d j meredith accrue prorata additional service at a rate which gives a further two and a half years 
of service at age 62
1
⁄2 although their normal retirement age is 65 the same provision applied to mr a d h black who retired on 30th april 2009 this 
additional service provision does not apply to mr m e vernon mr m e gibbin and mr a j scrivin who have a normal retirement age of 65
in april 2010 the terms of the defined benefit pension scheme will change in that the scheme will no longer be noncontributory the change allows 
members to choose to
i continue to build up future benefits as previously in return for sharing some of the cost by way of making member contributions  under this option 
 members retain the 160th rate of accrual and contribute 3 of their pensionable salary from 1st april 2010 to 31st march 2011 and then 6 of 
 their pensionable salary from 1st april 2011 onwards or
ii build up future benefits at a lower rate of 180th accrual without having to make contributions 
the uk scheme also provides lump sum deathinservice benefit of four times pensionable salary and spouses’ pensions are payable where death 
occurs in service or in retirement 
mr m e vernon in addition to membership of the spirax sarco inc defined benefit scheme has a defined contributions pension scheme as set out 
on page 45 in total pension contributions at the rate of 25 of pensionable pay were payable from 12th june 2007 a lump sum deathinservice 
benefit of four times salary is also provided for mr m e vernon 
mr m e gibbin has a defined contributions pension scheme as set out on page 45 from 1st january 2009 to 30th april 2009 contributions at the 
rate of 10 of pensionable pay were payable increasing to 25 of pensionable pay with effect from 1st may 2009 a lump sum deathinservice 
benefit of four times salary is also provided for mr m e gibbin
nonexecutive directors
the remuneration of nonexecutive directors is approved by the full board within the limits set out in the company’s articles of association their 
remuneration reflects the amount of time spent on the company’s business the nonexecutive directors do not participate in the bonus share option 
or share ownership schemes and do not participate in the performance share plan nonexecutive directors’ appointments are nonpensionable
service contracts
the committee applies a policy on directors’ contracts reflecting established practice and reviews the content from timetotime on professional advice 
the executive directors have rolling service contracts with no fixed expiry dates which are subject to 12 months’ notice
 date of contract notice period
me vernon  101208  12 months 
adh black 
1
  181098  12 months 
nh daws  280503  12 months 
me gibbin  170409  12 months 
dj meredith   301292  12 months 
aj scrivin 150305 12 months
1 mr a d h black retired from the board on 30th april 2009 no compensation for loss of office was made on his retirement
the service contract of mr m e vernon was amended on 4th march 2009  pursuant to the amendment the company agreed to pay on behalf of 
mr m e vernon any uk or us tax liabilities which arise on his earnings under his service contract over and above the amount of uk tax liabilities 
which would have been payable had mr m e vernon only been liable to pay uk tax on such earnings  the company also agreed to pay the 
reasonable costs incurred by mr m e vernon of obtaining full tax advice in respect of his employment with the company for the duration of his 
employment and save in certain bad leaver circumstances for a period of two years after termination of employment
termination payments reflect the circumstances leading to termination of employment and excessive compensation will not be paid professional advice 
will be obtained by the committee to ensure legal obligations and good practice are followed 
executive directors’ contracts may be terminated without notice and without payment of compensation on the occurrence of certain events such as 
gross misconduct if however the company were to terminate an executive director’s contract without cause and without due notice it would pay a 
sum equal to the value of the salary and benefits to be received during the notice period but taking into account the director’s duty to mitigate his loss 
any rights to pensions would be dealt with under the rules of the pension scheme applicable to the director and any rights under the company’s share 
plans would be dealt with in accordance with the rules of each plan 
spiraxsarco engineering plc annual report and accounts 2009 41 the executive directors’ contracts contain no provisions regarding material nonstatutory redundancy payments rights to compensation on change of 
control of the company or entitlement to early retirement benefits
the nonexecutive directors including the chairman mr w h whiteley do not have service contracts they have appointment letters for threeyear 
periods and reappointment is not automatic  no compensation for loss of office is payable to nonexecutive directors under their appointment letters
 date of appointment letter notice period
wh whiteley  040309  1 month 
g bullock  050308  1 month 
k rajagopal 210109  1 month
m townsend 
1
  110406  1 month
cg watson  160709  1 month
1 mr m townsend retired from the board on 30th june 2009  no compensation for loss of office was made on his retirement
policy on senior executive remuneration
the committee determines the philosophy principles and policy of remuneration which shall apply to the group’s senior executives the responsibility 
for determining the precise package to meet local practice and performance lies with the chief executive and the responsible executive director
total shareholder return
the performance graph illustrated shows the company’s total 
cumulative shareholder return for the fiveyear period ended 
31st december 2009 compared with the total cumulative 
shareholder return for the ftse 350 industrial goods and 
services super sector this comparison is selected as being 
the most appropriate sector for the company’s operations
information subject to audit
the auditors are required to report on the information contained in the remaining sections of the report
directors’ emoluments
no directors have waived or agreed to waive in future any emoluments
  basic benefits 
1
 annual  total emoluments
  salary  performance  excluding pension
  fees  related 2009 2008
    bonus total total
  £ £ £ £ £
wh whiteley 
2
  88500 – – 88500 52000
me vernon  420000 17514 155400 592914 676010
adh black 
4
  78333 4602 28983 111918 435163 
nh daws  229000 13066 84730 326796 419277
me gibbin 
3
  126000 4641 46620 177261 – 
dj meredith  261000 16991 96570 374561 485321
aj scrivin  229000 12057 84730 325787 414205
g bullock 
2
  44000 – – 44000 36000 
k rajagopal 
2 3
 
  35169 – – 35169 –
m townsend 
2 4
  50000 – – 50000 100000
cg watson 
2 3
  22949 – – 22949 –
  1583951  68871  497033  2149855  2617976
1 benefits arising from employment by the company relate mainly to the provision of a company car private health insurance and provision of 
 telecommunications equipment
2 nonexecutive director
3  dr k rajagopal and mr c g watson were appointed to the board on 10th february 2009 and 17th july 2009 respectively and their emoluments in 
 the above table for 2009 were calculated from these dates
 mr m e gibbin was appointed to the board on 1st may 2009 and his emoluments in the above table are calculated from this date total emoluments 
 for the full year 2009 were £227650
4 mr a d h black and mr m townsend retired from the board on 30th april 2009 and 30th june 2009 respectively  no compensation for loss of 
 office was made on their retirements
the directors’ remuneration report  
continued
42 spiraxsarco engineering plc annual report and accounts 2009
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long term incentives
i  spiraxsarco engineering 1992 uk and global share option schemes 
 spiraxsarco engineering approved and global share option schemes
the interests of directors are set out below
      010109 exercised 311209 exercise date from expiry
       in year
 
2
 or date of  price per which date
 
4
  appoi appointment if  retiremen t  share
 3
 exercisable
 4
 
     
1
 no no no pence  
me vernon   – – – – – –
   – – –
adh black 
5
    – – – – – –
   – – – 
nh daws  a 20000 – 20000 5419 250307 250314
  b 15000 – 15000 3945 140306 140313
   35000 – 35000
me gibbin 
6
   b 6000 – 6000 9590 120311 120318
   6000 – 6000 
dj meredith  a 15000 15000 0 – – –
  a 17500 – 17500 4360 220305 220312
  a 20000 – 20000 3945 140306 140313
  a 20000 – 20000 5419 250307 250314
   72500 15000 57500
aj scrivin  b 7000 – 7000 3945 140306 160612
  b 7000 – 7000 5419 250307 160612
   14000 – 14000
1  options shown on line a relate to options granted to members of the board whereas options shown on line b relate to options granted to 
 individuals prior to their appointment to the board
2  2009 option mid market 2009  2008
  options exercise price on the gain arising  gain arising
  exercised price date options on exercise on exercise 
    exercised  
  no pence pence £ £
 me vernon – – – – 18396
 adh black 
5
 – – – – –
 nh daws – – – – –
 me gibbin – – – – –
 dj meredith 15000 5250 10470 78300 –
 aj scrivin  – – – – –
 aggregate of gains arising on exercise    78300 18396
3  these are the exercise prices for ordinary shares under option at 31st december 2009 the exercise prices for all options shown are lower than the 
 midmarket price of the company’s ordinary shares on 31st december 2009 
4  these are the ranges of dates between which options may be exercised
5 mr a d h black retired from the board on 30th april 2009
6 mr m e gibbin was appointed to the board on 1st may 2009
no options were granted to directors during the year and no options held by directors lapsed during the year
the midmarket price of the ordinary shares on 31st december 2009 was 1240p during the period from 1st january 2009 to 31st december 2009 the 
ordinary midmarket share price ranged between 758p and 1309p
the performance conditions are described on page 40
some amendments were made to the rules of the schemes during the financial year as part of a general review and update of the rules including to 
take account of legislative changes
ii performance share plan
the interests of directors are set out below
  date of award total total 
   awards awards
  240306
1
 260307
2
 100907
3
 
120308
4
 as at  vested
1
 expired awarded as at 
      010109   110309
5
 311209
          or date of 
          retirement if 
          earlier
 
6

me vernon  12567 11288 17538 36757 78150 12567 0 41176 106759
adh black 
6
 12500 12416 0 23461 48377 12500 0 0 35877
nh daws 11375 11887 0 22627 45889 11375 0 22450 56964
me gibbin 
7
 0 0 0 0 0 0 0 16482 16482
dj meredith 14000 13887 0 26068 53955 14000 0 25588 65543
aj scrivin 10250 10886 0 22627 43763 10250 0 22450 55963 1 the midmarket price of the shares on 24th march 2006 was 9725p  100 of the award has vested as the performance conditions applicable 
 to that award were met namely that the tsr performance of the company during the period 1st january 2006 to 31st december 2008 placed 
 the company within the upper quartile of the tsr performance of the companies in the ft250 allshare industrial engineering index over the 
 performance period the award vested on 4th march 2009 and the midmarket price of the shares on that date was 8080p
2  the midmarket price of the shares on 26th march 2007 was 10200p  the period over which performance conditions are measured is 
 1st january 2007 to 31st december 2009
3  the midmarket price of the shares on 10th september 2007 was 10130p the period over which performance conditions are measured is 
 1st january 2007 to 31st december 2009
4  the midmarket price of the shares on 12th march 2008 was 9945p the period over which performance conditions are measured is 
 1st january 2008 to 31st december 2010
5 the midmarket price on 10th march 2009 was 7650p this was applied in determining the number of shares subject to the award granted on 
 11th march 2009 the midmarket price of the shares on that date was 7580p the period over which performance conditions are measured is 
 1st january 2009 to 31st december 2011 
6  mr a d h black retired from the board on 30th april 2009  100 of the awards made on 26th march 2007 and 12th march 2008 have vested 
 as the performance conditions applicable at that date were met  the 2007 award was reduced by applying a factor of 2836 due to the shortened 
 performance period of 28 months from 1st january 2007 to 30th april 2009  the 2008 award was reduced by applying a factor of 1636 due to 
 the shortened performance period of 16 months from 1st january 2008 to 30th april 2009 the awards vested on 8th may 2009 and the 
 midmarket price of the shares on that date was 8620p  mr a d h black requested that the awards be satisfied in shares mr a d h black 
 sold sufficient shares to cover the basic rate tax and national insurance liability and retained the remaining shares as follows 
   date of award date of award shares vested shares sold
   260307 120308
   12416 23461 20084 6563
7   mr m e gibbin was appointed to the board on 1st may 2009
the performance conditions are described on page 40
iii spiraxsarco engineering plc employee share ownership plan the plan
the company operates the plan in which all the executive directors with the exception of mr m e vernon are eligible to participate on the same 
basis as all other eligible uk employees for the plan period the individual director’s contributions are limited to a maximum of £1500 per annum 
under hmrc rules the trustee of the plan provides a matching share for each share purchased under the plan on behalf of the director which is the 
same basis as for other participating employees dividends paid on the partnership and matching shares up to a maximum of £1500 per tax year are 
reinvested and held by the trustee as dividend shares matching shares and dividend shares may generally only be released three years after they were 
purchased by the trustee
  interest at partnership matching dividend interest at period of
  010109 shares shares shares 311209 qualifying
  or date of purchased
 
2
 awarded
 
2
 awarded
 
3
 or date of conditions
 
5
  
appointment
    
retirement
  
if later
 
 1

   
 if earlier
 
 4

adh black 
4
 4253 0 0 0 4253 3 years
nh daws  4365 165 165 165 4860 3 years
me gibbin 
1
 0 165 165 3 333 3 years
dj meredith 4365 165 165 165 4860 3 years
aj scrivin 1621 165 165 64 2015 3 years
 
1  mr m e gibbin was appointed to the board on 1st may 2009 
2  partnership shares were purchased at a price of 9088p and matching shares were awarded on 8th october 2009 the midmarket price of the 
 shares on that date was 11180p 
3 289 dividend shares were awarded on 18th may 2009 on which date the midmarket price of the shares was 8335p and 108 dividend shares  
 were awarded on 6th november 2009 on which date the midmarket price of the shares was 11140p
4  mr a d h black retired from the board on 30th april 2009 the midmarket price of the shares on that date was 8585p
5  partnership shares are not subject to qualifying conditions in accordance with the rules of the plan matching shares and dividend shares were 
 released to mr a d h black following his retirement no other matching shares or dividend shares were released from the plan or forfeited during 
 the year
 
directors’ pensions
the uk executive directors other than mr m e vernon and mr m e gibbin are members of uk defined benefit pension arrangements  
mr m e vernon is a member of a defined benefit scheme provided by spirax sarco inc  mr m e gibbin is a member of the uk defined contributions 
pension scheme  the following information is consistent with the presentation used last year and sets out the disclosures under the stock exchange 
listing rules and the companies act 2006
the directors’ remuneration report  
continued
44 spiraxsarco engineering plc annual report and accounts 2009    age accrued accrued change in change in transfer transfer transfer change in 
   attained pension pension accrued accrued value of value of value of total
   at at at pension pension change in accrued accrued transfer
   311209 311208 311209 during during accrued pension at pension at value
      the year the year
 
1
 pension
 
1
  311208 311209
    £pa £pa £pa £pa £ £ £ £
adh black 
23
 52 80388 83434 3046 1120 28664 926000 1364000 438000
nh daws  47 94248 104118 9870 7612 96004 883000 1263000 380000
dj meredith  50 101372 110600 9228 6799 95643 1095000 1515000 420000
aj scrivin  62 144667 152667 8000 4534 89769 2287000 2730000 443000
1 net of deferred revaluation at a rate of 24 per annum
2 benefits shown net of pensions sharing order currently worth £28897 per annum 
3  mr a d h black retired on 30th april 2009 and is now receiving pension payments
the following is additional information relating to uk executive directors’ pensions
i  dependant’s pension
on the death of a director in service a spouse’s pension equal to onehalf of the director’s pension based on pensionable service to the date of death 
is payable on the death of a director after payment of the pension commences a spouse’s pension of onehalf of the director’s pension entitlement at 
the date of death ignoring commutation and any early retirement actuarial reduction is payable in addition directors’ pensions are guaranteed to be 
paid for five years from retirement
ii  early retirement rights
after leaving the service of the company a director has the right to draw his accrued pension at any time after his 60th birthday with no reduction with 
the exception of mr a j scrivin
iii   pension increases
pensions are subject to annual increases in line with the annual rise in the retail prices index subject to a maximum of 5 per annum the trustees and 
the company have the discretion to apply a greater increase 
iv   other discretionary benefits
there are no discretionary practices which are taken into account in calculating transfer values on leaving service 
mr m e vernon’s defined benefit pension arrangements are as follows
  age accrued accrued change in change in transfer transfer transfer change in 
  attained pension pension accrued accrued value of value of value of total
  at at at pension pension change in accrued accrued transfer
  311209 311208 311209 during the during the accrued pension at pension at value
     year year
 
1
 pension
 
1
 311208 311209
   £pa £pa £pa £pa £ £ £ £
me vernon 56 11049 12078 1029 1171 9260 82388 95509 13121
1  net of inflation at a rate of  13 per annum
the following is additional information relating to mr m e vernon’s pension
i dependant’s pension
on the death of mr m e vernon in service a spouse’s pension equal to onehalf of his 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 
mr m e vernon has the option to reduce his own pension to provide for a spouse’s pension after death
ii early retirement rights
after leaving the service of the company mr m e vernon has the right to draw his accrued pension at any time after his 65th birthday with no 
reduction 
mr m e vernon has the right to commence his pension upon retirement for which he now meets 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
iii pension increases
the pension has no guaranteed increases spirax sarco inc has the discretion to provide increases
iv other discretionary benefits
additionally mr m e vernon benefited from contributions made into a uk defined contributions pension scheme the total contributions made by the 
group were £96833
the following is additional information relating to mr m e gibbin’s pension
i  dependant’s pension
on the death of mr m e gibbin in service the total plan value of his uk defined contributions pension scheme will become payable 
ii other discretionary benefits 
mr m e gibbin benefited from contributions made into a uk defined contributions pension scheme the total contributions made by the group were 
£21008
signed by
g bullock  chairman of remuneration committee
on behalf of the board
spiraxsarco engineering plc annual report and accounts 2009 45 statement of directors’ responsibilities 
in respect of the annual report 
and accounts
the directors are responsible for preparing the annual report 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
● select suitable accounting policies and then apply them consistently
● make judgements and estimates that are reasonable and prudent
● state whether they have been prepared in accordance with ifrs as adopted by the eu
● prepare the financial statements on 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 directors’ report directors’ remuneration report and 
corporate governance statement 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 company’s website 
wwwspiraxsarcoengineeringcom legislation in the uk governing the preparation and dissemination of financial statements may differ from legislation 
in other jurisdictions
responsibility statement
we confirm that to the best of our knowledge
 
1 the financial statements prepared in 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
2 the business review and financial review which are incorporated into the directors’ report include 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 and uncertainties that they face
signed on behalf of the board
dj meredith  
finance director
4th march 2010
46 spiraxsarco engineering plc annual report and accounts 2009 to the members of spiraxsarco engineering plc
we have audited the financial statements of spiraxsarco engineering plc for the year ended 31 december 2009 set out on pages 48 to 81 the 
financial reporting framework that has been applied in their preparation is applicable law and international financial reporting standards ifrss as 
adopted by the eu and as regards the parent company financial statements as applied in accordance with the provisions of the companies act 2006
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 of the companies act 2006 our audit 
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors report 
and for no other purpose to the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the company and the 
company’s members as a body for our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the directors’ responsibilities statement set out on page 46 the directors are responsible for the preparation of the financial 
statements and for being satisfied that they give a true and fair view our responsibility is to audit the financial statements in accordance with applicable 
law and international standards on auditing uk and ireland those standards require us to comply with the auditing practices board’s apb’s ethical 
standards for auditors
scope of the audit of the financial statements
a description of the scope of an audit of financial statements is provided on the apb’s website at httpwwwfrcorgukapbscopeukp
opinion on financial statements
in our opinion
•  the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 december 2009 and of 
 the group’s profit for the year then ended
•  the group financial statements have been properly prepared in accordance with ifrss as adopted by the eu
•  the parent company financial statements have been properly prepared in accordance with ifrss as adopted by the eu and as applied in 
 accordance with the provisions of the companies act 2006 and
•  the financial statements have been prepared in accordance with the requirements of the companies act 2006 and as regards the group financial 
 statements article 4 of the ias regulation
opinion on other matters prescribed by the companies act 2006
in our opinion
•  the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the companies act 2006
•  the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial 
 statements and
•  information given in the corporate governance statement set out on pages 35 to 38 with respect to internal control and risk management systems 
 in relation to financial reporting processes and about share capital structures is consistent with the financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you if in our opinion
•  adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been received from branches 
 not visited by us or
•  the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the 
 accounting records and returns or
•  certain disclosures of directors’ remuneration specified by law are not made or
•  we have not received all the information and explanations we require for our audit or
•  a corporate governance statement has not been prepared by the company
under the listing rules we are required to review
•  the directors’ statement set out on page 34 in relation to going concern and
•  the part of the corporate governance statement on pages 35 to 38 relating to the company’s compliance with the nine provisions of the june 2008 
 combined code specified for our review
john d cain senior statutory auditor
for and on behalf of kpmg audit plc statutory auditor 
chartered accountants
london
4th march 2010
spiraxsarco engineering plc annual report and accounts 2009 47
report of the independent auditor  the group   parent company 
  2009  2008  2009  2008
 notes     £000     £000      £000     £000 
assets
noncurrent assets
property plant and equipment 12 135383 122897  
goodwill 13 38150 29908  
other intangible assets 13 35233 22921  
prepayments  1124 900  
loans to subsidiaries 14   31368 27674
investment in subsidiaries 15   46567 47846
investment in associates 16 9794 9396 220 220
deferred tax 17 38181 33180 450 156
   257865 219202 78605 75896
current assets
inventories 18 86479 102382  
trade receivables  118835 124595  
due from subsidiaries    61963 45816
other current assets 19 11592 12874 50 97
taxation recoverable  1896 1118 823 
cash and cash equivalents 29 62194 54140 12740 7984
   280996 295109 75576 53897
total assets  538861 514311 154181 129793
equity and liabilities
current liabilities
trade and other payables 20 79335 81010 1287 1992
bank overdrafts 29 559 2045  
short term borrowing 29 9284 9008  
current portion of long term borrowings 29 63 176  
current tax payable 21 8138 11932  615
   97379 104171 1287 2607
net current assets  183617 190938 74289 51290
noncurrent liabilities
long term borrowings 29 44255 25521  
deferred tax 17 14659 13714  
postretirement benefits 28 73763 73717 11207 11266
provisions 23 1441 1182  
due to subsidiaries    941 941
   134118 114134 12148 12207
total liabilities  231497 218305 13435 14814
net assets 2 307364 296006 140746 114979
equity
share capital 24 19310 19307 19310 19307
share premium account  47601 47559 47601 47559
other reserves  43327 56802 4879 4206
retained earnings  196481 171645 68956 43907
equity attributable to equity holders of the parent  306719 295313 140746 114979
minority interest  645 693  
total equity  307364 296006 140746 114979
total equity and liabilities  538861 514311 154181 129793
these accounts were approved by the board of directors on 4th march 2010 and signed on its behalf by
directors 
me vernon            dj meredith
48 spiraxsarco engineering plc annual report and accounts 2009
balance sheets
at 31st december 2009 spiraxsarco engineering plc annual report and accounts 2009 49
   before    before  
   adjustment  adjustment total adjustment adjustment total
   2009 2009 2009 2008 2008 2008
  notes £000 £000 £000 £000 £000 £000
revenue 2 518705  518705 502316  502316
operating costs 3 428767 13416 442183 416647 4641 421288
operating profit 2 89938 13416 76522 85669 4641 81028
financial expenses  16072  16072 14805  14805
financial income  13558  13558 16541  16541
  5 2514  2514 1736  1736
share of profit of associates  2772 365 2407 2741 343 2398
profit before taxation 6 90196 13781 76415 90146 4984 85162
taxation 8 27472 4148 23324 26257 883 25374
profit for the period  62724 9633 53091 63889 4101 59788
attributable to
equity holders of the parent  62596 9633 52963 63648 4101 59547
minority interest  128  128 241  241
profit for the period  62724 9633 53091 63889 4101 59788
earnings per share 10
basic earnings per share    696p   780p
diluted earnings per share    693p   777p
dividends 11
dividends per share    361p   333p
dividends paid during the year per share    338p   316p
 adjustments in 2009 relate to exceptional headcount reduction costs and amortisation of acquisitionrelated intangibles see note 2 
in 2008 adjustments include amortisation of acquisitionrelated intangibles and impairment of goodwill and intangible assets see note 
2 earnings per share before these adjustments are shown in note 10
all amounts relate to continuing operations
the notes on pages 53 to 81 form an integral part of the accounts
group income statement
for the year ended 31st december 2009 group statement of 
comprehensive income  
for the year ended 31st december 2009 
   the group 
    2009    2008
    £000     £000
profit for the period   53091 59788
actuarial loss on postretirement benefits   7800 50088
deferred tax on actuarial loss on postretirement benefits   2106 17708
foreign exchange translation differences   14051 51521
gainloss on cash flow hedges   576 438
total comprehensive income for the period   33922 78491
attributable to
equity holders of the parent   33794 78250
minority interest   128 241
total comprehensive income for the period   33922 78491
group
  share  cash flow capital   
 share premium translation  hedge redemption retained  total
 capital account reserve    reserve reserve earnings    equity 
 £000 £000 £000      £000 £000 £000     £000 
balance at 1st january 2009 19307 47559 55371 401 1832 171645 295313
total comprehensive income for the period   14051 576  47269 33794
dividends paid      25733 25733
equity settled share plans net of tax      1379 1379
issue of share capital 3 42     45
treasury shares reissued      3711 3711
loss on the reissue of treasury shares      1790 1790
equity attributable to equity holders
  of the parent 19310 47601 41320 175 1832 196481 306719        
for the year ended 31st december 2008
group
  share  cash flow capital   
 share premium translation  hedge redemption retained  total
 capital account reserve    reserve reserve earnings    equity 
 £000 £000 £000      £000 £000 £000     £000 
balance at 1st january 2008 19299 47267 3850 37 1832 169866 242151
total comprehensive income for the period   51521 438  27167 78250
dividends paid      24159 24159
equity settled share plans net of tax      1645 1645
issue of share capital 8 292     300
treasury shares purchased      6762 6762
treasury shares reissued      7679 7679
loss on the reissue of treasury shares      3791 3791
equity attributable to equity holders
  of the parent 19307 47559 55371 401 1832 171645 295313          
statements of changes in equity  
for the year ended 31st december 2009 
50 spiraxsarco engineering plc annual report and accounts 2009 spiraxsarco engineering plc annual report and accounts 2009  51
parent company 
  share share share capital retained  total
  capital premium based redemption earnings equity
   account payments    reserve      
  £000 £000 £000      £000 £000     £000 
balance at 1st january 2009  19307 47559 2374 1832 43907 114979
total comprehensive income for the period      48492 48492
dividends paid      25733 25733
equity settled share plans net of tax      369 369
issue of new share capital  3 42    45
treasury shares reissued      3711 3711
loss on the reissue of treasury shares      1790 1790
investment in subsidiaries in relation
  to share options granted    673   673
balance at 31st december 2009  19310 47601 3047 1832 68956 140746    
statements of changes in equity
continued  
for the year ended 31st december 2009 
for the year ended 31st december 2008
parent company
  share share share capital retained  total
  capital premium based redemption earnings equity
   account payments    reserve      
  £000 £000 £000      £000 £000     £000 
balance at 1st january 2008  19299 47267 1583 1832 22058 92039
total comprehensive income for the period      48882 48882
dividends paid      24159 24159
issue of new share capital  8 292    300
treasury shares purchased      6762 6762
treasury shares reissued      7679 7679
loss on the reissue of treasury shares      3791 3791
investment in subsidiaries in relation
  to share options granted    791   791
balance at 31st december 2008  19307 47559 2374 1832 43907 114979     52 spiraxsarco engineering plc annual report and accounts 2009
  the group parent company 
   2009     2008 2009     2008
  notes    £000      £000 £000      £000
cash flows from operating activities
profit before taxation  76415 85162 47359 61235
depreciation and amortisation  18550 19859  
dividends received    50343 63239
share of profit of associates  2407 2398  
equity settled share plans  1929 1519 513 624
net finance expense  2514 1736 341 1424
exchange adjustments    594 79
operating cash flow before changes in working capital 
and provisions   97001 102406 3406 2883
change in trade and other receivables  74 4029 46 95
change in amounts due from subsidiaries    19453 36795
change in inventories  11057 12143  
change in provisions and postretirement benefits  7072 3236 1840 789
change in trade and other payables  2008 4819 338 491
cash generated from operations  102920 87817 24315 39881
interest paid  1366 1480 22 45
income taxes paid  29877 22087  99
net cash from operating activities  71677 64250 24337 39827
cash flows from investing activities
purchase of property plant and equipment  33397 22881  
proceeds from sale of property plant and equipment  1898 879  
purchase of software and other intangibles  1056 2999  
development expenditure capitalised  2099 1542  
acquisition of businesses  27192 13939 1952 
interest received  630 1291 565 850
dividends received  1498 1063 50343 63239
net cash used in investing activities  59718 38128 52860 64089
cash flows from financing activities
proceeds from issue of share capital  45 62 45 62
proceeds from reissue of treasury shares  1921 3888 1921 3888
treasury shares purchased   6762  6762
proceeds from borrowings 29 20614 9396  
payment of finance lease liabilities 29 67 66  
dividends paid including minorities  25763 24252 25733 24159
net cash used in financing activities  3250 17734 23767 26971
net increase in cash and cash equivalents 29 8709 8388 4756 2709
cash and cash equivalents at beginning of period  52095 37857 7984 10693
exchange movement  831 5850  
cash and cash equivalents at end of period 29 61635 52095 12740 7984
borrowings and finance leases  53602 34705  
net cash 29 8033 17390 12740 7984
 the cash flow statement for 1999 has been restated for cash and overdrafts net debt is unchanged
cash ﬂow statements
for the year ended 31st december 2009  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 the most significant effect on the financial 
statements from accounting policies requiring judgement are in the areas of research and development and revenue
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 key areas where estimates have been used and assumptions applied are in 
provisions impairment testing of goodwill and in assessing the defined benefit pension scheme liabilities
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 
despite the current uncertain economic outlook
further information on the groups 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 finance review on pages 10 to 21 in addition note 32 to the 
financial statements discloses details of the groups financial risk management and credit facilities 
amendments to ias 1 presentation of financial statements and ifrs 8 operating segments were adopted in the period ias 1 has 
resulted in format changes to the primary statements and ifrs 8 has resulted in a change in segmental analysis which is further 
described in note 2
the following adopted ifrs were available for early application but have not been applied by the group in these accounts
● amendment to ifrs 3 business combinations and ias 27 consolidated and separate financial statements
 the revised standards introduce changes to acquisition accounting notably in respect of treatment of acquisition costs step 
 and partial acquisitions minority interests and contingent consideration
the consolidated accounts are presented in pounds sterling which is the companys functional currency rounded to the 
nearest thousand  
basis of accounting
i subsidiaries
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
ii associates
associates are those entities for which the group has significant influence but not control over the financial and operating policies 
the accounts include the groups 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 groups 
interest in the entity
iv company
under section 408 of the companies act 2006 the company is exempt from the requirement to present its own income statement
notes to the accounts
spiraxsarco engineering plc annual report and accounts 2009 53 notes to the accounts continued
54 spiraxsarco engineering plc annual report and accounts 2009
1 accounting policies continued
foreign currency
i on consolidation
the assets and liabilities of foreign operations are translated into sterling at exchange rates ruling at the balance sheet date the 
revenues and expenses of foreign operations are translated into sterling at average rates of exchange ruling during the year
exchange differences arising from the translation of the net investment in foreign operations are taken to a seperate 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 directly in equity 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
hedge of net investment in foreign operations
the portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an 
effective hedge is recognised directly in a separate translation reserve within equity the ineffective portion is recognised immediately in 
the income statement
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 furniture and fittings  10  motor vehicles  20
plant and machinery  10  125 office equipment  125  333 tooling and patterns  10
the depreciation rates are reassessed annually
intangible assets
i goodwill
all business combinations after 1st january 2004 are accounted for by applying the purchase 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 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 gaap 
ii research and development
expenditure on research and development 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 iv amortisation
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 and intangible assets are tested for impairment annually the principal 
amortisation rates are as follows
capitalised development costs 20  manufacturing designs and
erp systems and software 125  20     core technology   10
customer relationships 20  non compete undertaking 50
brand names and trademarks 10  20
inventories
inventories are valued at the lower of cost including overheads where appropriate and estimated net realisable value provision is 
made for slowmoving and obsolete items based on an assessment of technological and market developments and on an analysis of 
usage
cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less bank overdrafts 
that are repayable on demand and form an integral part of the groups cash management are included as a component of cash and 
cash equivalents for the purpose of the of cash flow statements
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 groups 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 that benefit is discounted at rates reflecting the yields on 
aa credit rated corporate bonds that have maturity dates approximating the terms of the groups 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 vesting
iv long term 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 revenue from projects or service contracts is recognised as income in proportion to the stage of completion 
of the transaction at the balance sheet date the stage of completion is assessed depending on the specific circumstances of each 
case 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
leases
i operating leases
payments made under operating leases are charged to the income statement on a straightline basis over the term of the lease
ii finance leases
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 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
spiraxsarco engineering plc annual report and accounts 2009 55 notes to the accounts continued
56 spiraxsarco engineering plc annual report and accounts 2009
1 accounting policies continued
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 when it is also recognised in equity 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
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 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
2 segmental reporting
as a result of the introduction of ifrs 8 operating segments which introduced a management approach to segment reporting the 
groups segments have been changed to disclose information that is more consistent with management reporting all 2008 figures 
previously presented in old segmental format have been restated to reflect the new presentation
analysis by location of operation
2009     total before before
  gross intersegment  operating adjustment adjustment
  revenue revenue revenue profit operating profit operating margin
  £000 £000     £000     £000     £000    
europe middle east  africa   257736  32232  225504  25848  35623  158 
americas   109911  5301  104610  11974  13854  132 
asia pacific   107475  2733  104742  22691  23099  221
steam specialties business  475122  40266  434856  60513  72576  167
watsonmarlow pumps business    84008  159  83849  20964  22317  266
corporate expenses         4955  4955
  559130  40425  518705  76522  89938  173
intra group   40425 40425  
net revenue   518705  –  518705  76522  89938  173
2008     total before before
  gross intersegment  operating adjustment adjustment
  revenue revenue revenue profit operating profit operating margin
  £000 £000     £000     £000     £000    
europe middle east  africa   260638  34547  226091  38880  39180  173 
americas   108015  6102  101913  8840  12119  119 
asia pacific   102829  3898  98931  21136  21136  214
steam specialties business  471482  44547  426935  68856  72435  170
watsonmarlow pumps business   75448  67  75381  17347  18409  244
corporate expenses         5175  5175
  546930  44614  502316  81028  85669  171
intra group   44614 44614  
net revenue   502316  –  502316  81028  85669  171
net revenue split between the uk and rest of the world is uk £59755000 2008 £62768000 rest of the world £458950000 
2008 £439548000 the total operating profit for each period is after charging the expenses analysed below43993 153661 80800 85252 
2009
         exceptional amortisation of total
         headcount acquisitionrelated  
         reduction costs intangible assets 
             £000     £000    £000
europe middle east  africa       9142  633  9775 
americas       1741  138  1879 
asia pacific      409  –  409
steam specialties business      11292  771  12063
watsonmarlow pumps business       102  1251  1353
     11394 2022 13416
2008     impairment of amortisation of total
     goodwill  acquisitionrelated 
     intangible assets intangible assets 
         £000     £000    £000
europe middle east  africa       –  300  300 
americas       3100  179  3279 
asia pacific      –  –  –
steam specialties business      3100  479  3579
watsonmarlow pumps business      –  1062  1062
     3100 1541 4641
share of profit of associates
    2009 2009 2008 2008
    before total before total
    adjustment  adjustment 
    £000     £000     £000    £000
europe middle east  africa     –  –  –  – 
americas     763  763  851  851 
asia pacific     2009 1644  1890  1547
steam specialties business    2772  2407  2741  2398
watsonmarlow pumps business      – –  –  –
    2772 2407 2741 2398
net financing income and expense
      2009 2008
      £000     £000
europe middle east  africa       1452  525 
americas       192  679 
asia pacific       475  180
steam specialties business      2119 1024
watsonmarlow pumps business      94 306
corporate       301  406
      2514 1736
net assets
    2009  2008 
    assets liabilities assets liabilities
    £000     £000     £000    £000
europe middle east  africa     194394  105487  202333  107634
americas     65703  21400  72558  25600 
asia pacific     86724  14373  81437  11694 
watsonmarlow pumps business    89769 13279 69545  10981
    436590 154539 425873  155909
liabilities    154539    155909  
deferred tax     23522    19466  
current tax payable     6242    10814  
net cash     8033   17390  
net assets    307364  296006 
spiraxsarco engineering plc annual report and accounts 2009 57 notes to the accounts continued
58 spiraxsarco engineering plc annual report and accounts 2009
2 segmental reporting continued
capital additions and depreciation and amortisation
    2009 depreciation 2008 
    capital and capital depreciation and
    additions amortisation additions amortisation
    £000     £000     £000    £000
europe middle east  africa     17597  9652  15283  10920
americas     2879  2839  4218  5594 
asia pacific     11595  2261  8928  1960 
watsonmarlow pumps business    20045 3798 15540  1385
    52116 18550 43969 19859
capital additions include property plant and equipment of £33824000 2008 £27296000 and other intangible assets of 
£18292000 2008 £16673000 of which £15143000 2008 £11853000 relates to acquired intangibles from acquisitions in 
the period capital additions split between the uk and rest of the world are uk £13490000 2008 £11559000 rest of the world 
£38626000 2008 £32410000
3 operating costs
   2009 2008 
   £000 £000
change in stocks of finished    
  goods and work in progress       5491 6341
raw materials and consumables    144801 153939
staff costs note 4          191393 173792  
depreciation and amortisation             18550 19859
other operating charges       81948 80039  
   442183 421288 
staff costs include exceptional headcount reduction costs of £11394000 2008 £nil 
depreciation and amortisation includes amortisation of acquisitionrelated intangible assets of £2022000 2008 £1541000 
goodwill and intangible asset impairment of £nil 2008 £3100000 and amortisation of capitalised development costs of £1274000 
2008 £1104000
4 staff costs and numbers 
the aggregate payroll costs of persons employed by the group were as follows
   2009 2008
   £000 £000
wages and salaries          152092 138094   
social security costs         26058 23495   
other pension costs           13243 12203   
   191393 173792   
the average number of persons employed by the group including directors during the year was as follows    
   2009 2008 
   number number 
united kingdom                    1168 1205 
overseas                      3209 3213
     4377 4418
 
5 net financing income and expense
   2009 2008
   £000 £000 
financial expenses
bank and other borrowing interest payable   1369 1480
interest on pension scheme liabilities   14703 13325
   16072 14805 financial income
bank interest receivable   631 1291
expected return on pension scheme assets   12927 15250
   13558 16541
net financing incomeexpense   2514 1736
net pension scheme financial income   1776 1925
net bank interest   738 189
net financing incomeexpense   2514 1736
6 profit before taxation 
profit before taxation is shown after charging 
   2009  2008
   £000    £000 
depreciation of tangible fixed assets held under finance leases  71 175
hire of plant and machinery                                  553 598
other operating leases    4472 3762
research and development                           5936 4889
auditors remuneration   £000    £000
fees payable to the companys auditor for the audit of the companys annual accounts  148 144
fees payable to the companys auditor and its associates for other services
the audit of the companys subsidiaries pursuant to legislation   1040 903
tax services                           402 363
other services                           173 97
   1763 1507
7 directors’ emoluments
details of directors’ emoluments share plans and long term share incentive plan and pension benefits are shown in the directors’ 
remuneration report on pages 39 to 45 directors represent the key management personnel of the group under the terms of  
ias 24 related party disclosures
8 taxation 
     2009  2008
     £000  £000 
analysis of charge in period
uk corporation tax
current tax on income for the period    18932 20350
adjustments in respect of prior periods    102 434
     18830 19916
double taxation relief    18593  16493
     237 3423
foreign tax   
current tax on income for the period    25796 20730
adjustments in respect of prior periods    7 –
     25789 20730
total current tax charge    26026 24153
deferred tax  uk    111 536
deferred tax  foreign    2813 1757
tax on profit on ordinary activities    23324 25374
reconciliation of effective tax rate
   2009 2008
   £000 £000
profit before tax   76415 85162
tax using the uk corporation tax rate of 28 2008 285   21396 24271
effect of higherlower overseas tax rates   1451 184
associated companies   674 683
nondeductible expenditure   1248 918
overprovided in prior years   109 1151
other reconciling items   12 2203
total tax in income statement   23324 25374
spiraxsarco engineering plc annual report and accounts 2009 59 notes to the accounts continued
60 spiraxsarco engineering plc annual report and accounts 2009
8 taxation continued
factors that may affect the future tax charges
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 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 
taxation recognised directly in equity
   2009 2008
   £000 £000
relating to
equity settled transactions   550 460
on actuarial gains and losses   2106 17708
   1556 17248
9 profit for the financial year attributable to shareholders
profit dealt with in the accounts of spiraxsarco engineering plc was £48586000 2008 £61464296 included in this amount are 
dividends from subsidiary undertakings of £49500000 2008 £62900000 
10 earnings per share 
    2009 2008
    £000 £000 
profit attributable to equity holders of the parent   52963 59547
weighted average shares in issue   76132486 76359740
dilution   242642 303354
diluted weighted average shares in issue   76375128 76663094
basic earnings per share   696p 780p
diluted earnings per share   693p 777p
adjusted profit attributable to equity holders of the parent   62596 63648
basic adjusted earnings per share   822p 834p
the dilution is in respect of unexercised share options and the performance share plan
11 dividends
    2009 2008
    £000 £000 
amounts paid in the year
final dividend for the year ended 31st december 2008
  of 233p 2007 216p per share   17720 16485
interim dividend for the year ended 31st december 2009
  of 105p 2008 100p per share   8013 7674
    25733 24159
     
amounts arising in respect of the year
interim dividend for the year ended 31st december 2009
  of 105p 2008 100p per share   8013 7674
proposed final dividend for the year ended 31st december 2009
  of 256p 2008 233p per share   19556 17994
    27569 25668
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a 
liability in these accounts 12 property plant and equipment
                                                  the group                
       land and buildings   fixtures 
      fittings  
     plant and   tools and 
   freehold leasehold machinery equipment total 
   £000     £000     £000     £000    £000 
cost or deemed cost  
at 1st january 2008   60567 1166 102844 48666 213243
exchange adjustments   11303 507 15271 7013 34094
   71870 1673 118115 55679 247337
additions   6916 3739 12388 4253 27296
disposals   46 37 4260 4720 9063
at 31st december 2008   78740 5375 126243 55212 265570
depreciation  
at 1st january 2008   11833 247 68344 38886 119310 
exchange adjustments   2597 83 8709 5451 16840
   14430 330 77053 44337 136150
charged in year   1385 64 9506 3850 14805
disposals   46 25 3549 4662 8282
at 31st december 2008   15769 369 83010 43525 142673
net book value  
at 31st december 2008   62971 5006 43233 11687 122897
   
cost or deemed cost  
at 1st january 2009   78740 5375 126243 55212 265570
exchange adjustments   2997 567 5365 2564 11493
   75743 4808 120878 52648 254077
additions   11362 8692 8632 5138 33824
disposals   1052 9 4338 3610 9009
at 31st december 2009   86053 13491 125172 54176 278892
depreciation  
at 1st january 2009   15769 369 83010 43525 142673 
exchange adjustments   569 22 3203 2084 5878
   15200 347 79807 41441 136795
charged in year   1349 80 9102 3328 13859
disposals   54 3 3624 3464 7145
at 31st december 2009   16495 424 85285 41305 143509
net book value  
at 31st december 2009   69558 13067 39887 12871 135383
included in the above are finance leases with a net book value of £465542 2008 £590542
included in additions are £703000 2008 £274000 of assets acquired on purchase of businesses
13 goodwill and other intangible assets
                                                   the group                
   acquired  software and   total 
   intangibles development other intangibles intangibles goodwill 
   £000     £000     £000     £000    £000
cost or valuation
at 1st january 2008   2935 7440 15710 26085 18697
exchange adjustments   774 695 2464 3933 4862
   3709 8135 18174 30018 23559
additions   11853 1640 3180 16673 10002
disposalsimpairment   – – 44 44 3653
at 31st december 2008   15562 9775 21310 46647 29908
amortisation  
at 1st january 2008   903 4209 11310 16422 – 
exchange adjustments   210 311 1887 2408 –
   1113 4520 13197 18830 –
charged in year   1889 1166 1884 4939 –
disposals   – – 43 43 –
at 31st december 2008   3002 5686 15038 23726 –
net book value  
at 31st december 2008   12560 4089 6272 22921 29908
spiraxsarco engineering plc annual report and accounts 2009 61 notes to the accounts continued
62 spiraxsarco engineering plc annual report and accounts 2009
13 goodwill and other intangible assets 
                                                   the group                
   acquired  software and   total 
   intangibles development other intangibles intangibles goodwill 
   £000     £000     £000     £000    £000 
cost or valuation
at 1st january 2009   15562 9775 21310 46647 29908
exchange adjustments   838 278 864 1980 1615
   14724 9497 20446 44667 28293
additions   15143 2082 1067 18292 9857
disposalsimpairment   – – 45 45 –
at 31st december 2009   29867 11579 21468 62914 38150
amortisation  
at 1st january 2009   3002 5686 15038 23726 – 
exchange adjustments   149 147 484 780 –
   2853 5539 14554 22946
charged in year   2030 1269 1481 4780 –
disposals   – – 45 45 –
at 31st december 2009   4883 6808 15990 27681 –
net book value  
at 31st december 2009   24984 4771 5478 35233 38150
impairment
in accordance with the requirements of ias 36 impairment of assets goodwill is allocated to the groups cash generating units or 
groups of cash generating 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
    2009 2008
    goodwill goodwill
    £000 £000 
flexicon as denmark   8222 8913
masosine   7457 –
m  m product unit   3243 3558
spirax sarco inc usa   3168 3515
alitea product unit   2570 2607
uk supply product unit   2100 2304
spirax intervalf turkey   2070 –
spiraxsarco sas france   1417 1551
watsonmarlow south africa   1263 1130
mitech product unit   1135 1016
other cashgenerating units   5505 5314
    38150 29908 
the goodwill balance has been tested for annual impairment on the following basis
● the carrying values of goodwill have been assessed by reference to value in use these have been estimated using cash flows 
 based on forecast information for the next financial year which has been approved by the board and in the case of recent 
 acquisitions on detailed annual forecasts 
● the key assumptions on which the impairment tests are based are the discount and growth rates and the forecast cash flows 
● pretax discount rates range from 1325  
● growth rates vary between 15 depending on detailed forecasts these rates of growth are conservative when compared to the 
 annualised profit growth of the group over the last few years 
● no impairments were identified as a result of this exercise
the principal value in use assumptions for the flexicon as denmark goodwill balance were as follows
● annual monetary growth of 5
● pretax discount rate of 13 
the principal value in use assumptions for the masosine goodwill balance were as follows 
● long term revenue growth of 2535 
● pretax discount rate of 18
as expected there is little headroom in the case of recently acquired businesses which have not yet had time to develop under the 
management of the group the businesses are performing in accordance with expectations and the key assumptions used above are 
appropriate at the yearend as an indication of the headroom limits the impairment charge that would be required if the discount rate 
were increased by 1 is £900000 and that required if longterm revenue growth were decreased by 1 is £700000 14 loans to subsidiaries
                  parent company 
    2009 2008
    £000 £000 
cost 
at 1st january   28716 17055
exchange adjustments   595 79
    29311 17134
loans   3099 11582
at 31st december                     32410 28716
amounts written off 
at 1st january and 31st december   1042 1042
net book value 
at 31st december                      31368 27674
15 investment in subsidiaries
                  parent company 
    2009 2008
    £000 £000 
cost 
at 1st january   48840 48049
share options issued to subsidiary company employees   673 791
holding transferred to other group company   1952
at 31st december                     47561 48840
amounts written off 
at 1st january and 31st december   994 994
net book value 
at 31st december                      46567 47846
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 2009 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 eirdata 
environmental services ltd is incorporated in the republic of ireland all are in the fluid control business except spiraxsarco investments 
ltd spiraxsarco overseas ltd sarco international corp watsonmarlow bredel holdings bv  spiraxsarco engineering sl  
spiraxsarco engineering bv  and spiraxsarco investments bv  which are investment holding companies
16 investment in associates
  the group
    2009 2008
    £000 £000
cost of investment    5212 5212
share of total equity    4582 4184
    9794 9396
summarised aggregated financial information total business
revenue    25863 25281
profit for the period    5634 5574
assets    17612 16346
liabilities    4469 4750
details of the group’s associates at 31st december 2009 are as follows
name of associate   country of proportion of principal  
   incorporation ownership activity
   and operation interest and
    voting power held
spiraxmarshall ltd   india 493 manufacturing and selling
spiraxsarco mexicana sa   mexico 490 manufacturing and selling
spiraxsarco engineering plc annual report and accounts 2009 63 notes to the accounts continued
64 spiraxsarco engineering plc annual report and accounts 2009
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 
  2009 2008 2009 2008 2009 2008 
  £000 £000     £000     £000     £000    £000 
accelerated capital allowances  1561 214 5505 4137 3944 3923
provisions  9033 5827 375 33 8658 5794
losses  1151 2221 – – 1151 2221
inventory  933 611 1505 1984 572 1373
pensions  22596 23269 2363 2798 20233 20471
other temporary differences  2907 1038 4911 4762 2004 3724
tax assetsliabilities  38181 33180 14659 13714 23522 19466
movement in deferred tax during the year
2008
 the group                
    1 january  recognised recognised 31 december
    2008 in income in equity 2008 
    £000     £000     £000    £000 
accelerated capital allowances    2711 269 943 3923
provisions    4607 721 466 5794
losses    810 1348 63 2221
inventory    1208 265 430 1373
pensions    2798 923 18596 20471
other temporary differences    944 2363 417 3724
    3352 1221 17335 19466
2009
 the group                
    1 january recognised recognised 31 december
    2009 in income in equity 2009 
    £000     £000     £000    £000 
accelerated capital allowances    3923 153 132 3944
provisions    5794 3059 195 8658
losses    2221 1066 4 1151
inventory    1373 546 255 572
pensions    20471 2305 2067 20233
other temporary differences    3724 2621 901 2004
    19466 2702 1354 23522
amounts recognised in equity include items arising from acquisitions
movement in deferred tax during the year
2008
 parent company  
    1 january recognised recognised 31 december
    2008 in income in equity 2008 
    £000     £000     £000    £000 
other temporary differences    433 42 235 156
    433 42 235 156
2009
 parent company  
    1 january recognised recognised 31 december
    2009 in income in equity 2009 
    £000     £000     £000    £000 
other temporary differences    156 232 62 450
    156 232 62 450 18 inventories 
 the group
    2009 2008
    £000 £000 
raw materials and consumables    30476 38321
work in progress    14063 16213
finished goods and goods for resale    41940 47848
    86479 102382
19 other current assets   
                     the group parent company 
    2009    2008  2009   2008
    £000    £000   £000    £000 
other receivables                          6834 7334 – – 
prepayments and accrued income    4758 5540 50 97 
    11592 12874 50 97
20 trade and other payables
                     the group parent company 
    2009    2008  2009   2008
    £000    £000   £000    £000 
trade payables                    25510 28686 – –
bills of exchange payable                 774 2364 – –      
social security                      3831 4051 – –
other payables                     22543 21035 318 256 
accruals                        26677 24874 969 1736 
    79335 81010 1287 1992
21 current tax payable 
                     the group parent company 
    2009    2008  2009   2008
    £000    £000   £000    £000 
uk corporation tax     327 1136 – 615
foreign tax payable                         7811 10796 – – 
     8138 11932 – 615
22 obligations under finance leases 
     the group
 minimum  present value
 lease payments lease payments
    2009   2008 2009   2008
    £000   £000 £000    £000 
amount payable
within 1 year     69 98 50 67
15 years inclusive    215 269 191 221
after 5 years     – 19 – 19
     284 386 241 307
add future finance charges      43 79
minimum lease payments    284 386 284 386
less due for settlement in 1 year      50 67
due for settlement in 1 year      234 319
spiraxsarco engineering plc annual report and accounts 2009 65 notes to the accounts continued
66 spiraxsarco engineering plc annual report and accounts 2009
23 provisions
 the group
 warranty
 and other     
 provisions
    2009 2008
    £000    £000 
provisions at 1st january    1182 1343
exchange adjustments     66 147
    1116 1490
net charge for the year                – –
increase in the year                325 308
provisions at 31st december        1441 1182
24 called up share capital
          the group     parent company
    2009 2008 2009 2008
     £000 £000 £000 £000 
ordinary shares of 25p each 
authorised 120000000                  30000 30000 30000 30000
allotted called up and fully paid 77238516 2008 77227516     19310 19307 19310 19307 
11000 shares were issued  pursuant to the spiraxsarco engineering share option schemes for a consideration of £44774 received 
by the company
at 31st december 846847 treasury shares were available for use in connection with the groups employee share schemes
directors and 125 other senior employees and former employees of the group have been granted options to purchase 1419345 
ordinary shares with an aggregate nominal value of £354836 note 28
25 return on capital employed
 the group
    2009 2008
    £000      £000
capital employed       
property plant and equipment    135383 122897
prepayments    1124 900
inventories    86479 102382
trade receivables    118835 124595
other current assets    11592 12874
tax recoverable    1896 1118
trade and other payables    79335 81010
current tax payable    8138 11932
capital employed    267836 271824
average capital employed    269830 241093
operating profit    76522 81028
exceptional headcount reduction and amortisation and impairment 
of acquisitionrelated intangibles     13416 4641
    89938 85669
return on capital employed    333 355      26 capital commitments
 the group     parent company
    2009      2008 2009     2008
    £000      £000  £000      £000
capital expenditure contracted for but not provided   3456 3615 – –      
27 operating lease obligations 
 the group
    2009 2008
    £000 £000 
commitments under noncancellable leases due as follows 
within 1 year                               3168 2846 
15 years inclusive                            4851 4673    
after 5 years                             1063 884   
    9082 8403
operating leases are primarily in respect of property plant and equipment
28 employee benefits
pension plans  the group
the group is accounting for pension costs in accordance with international accounting standard 19
the disclosures shown here are in respect of the group’s defined benefit obligations other plans operated by the group 
were either defined contribution plans or were deemed immaterial for the purposes of ias 19 reporting
the total expense relating to the group’s defined contribution pension plans in the current year was £5215000 
2008 £4485000
of the defined benefit plans the plans in the uk and usa hold most of the liability the postretirement mortality assumptions in 
respect of these plans may therefore be considered material the uk schemes assume that postretirement mortality follows the pa00 
series tables with medium cohort improvements subject to minimum improvements of 1 per annum and depending on a members 
year of birth an adjustment is then made for each plan to reflect the profile of membership this basis gives a life expectancy of 
20 years and 22 years respectively for a male and female currently aged 65 these figures reflect the generally recognised trend of 
increased longevity the usa schemes use the rp2000 mortality table with aa scale projected through 2010 life expectancy under 
this table is 19 years and 21 years respectively for a male and female currently aged 65 these assumptions are regularly reviewed in 
light of scheme specific experience and more widely available statistics
the financial assumptions used at 31st december were      
 assumptions weighted by value of liabilities
  per annum
    uk pensions overseas pensions
     and medical
   2009 2008 2009 2008
rate of increase in salaries   40 41 35 37
rate of increase in pensions   34 31 18 20
rate of price inflation   35 30 26 27
discount rate   57 63 56 62
medical trend rate     50 50
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      
 assumptions weighted by value of assets
  per annum
    uk pensions overseas pensions
     and medical
   2009 2008 2009 2008
expected rate of return on assets weighted average   76 76 73 75
equities    84 84 82 82
bonds    49 51 52 51
other    57 65 38 49
spiraxsarco engineering plc annual report and accounts 2009 67 28 employee benefits continued
the market value of the schemes’ assets which are not intended to be realised in the short term and may be subject to significant change 
before they are realised at 31st december 2009 were       
  
  uk pensions overseas pensions  total
   and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
equities  144239  112461  17279  12616  161518  125077
bonds  35719  28702  5231  6555  40950  35257 
other  5189  6653  3490  3455  8679  10108 
total market value in aggregate 185147  147816  26000  22626  211147  170442
the actual return on plan assets was £389 million 2008 £451 million loss    
   
the effect of an increase of one percentage point and the effect of a decrease of one percentage point in the assumed medical trend 
rates is as follows     
  overseas  total
 1 1 1 1
 increase decrease increase decrease
 £000 £000 £000 £000
aggregate of service cost  interest cost components of     
  postretirement medical plans 4  3 4  3
accumulated postemployment benefit obligation for 
  medical costs 19  16 19  16
the amounts recognised in the consolidated balance sheet are determined as follows 
  uk pensions overseas pensions total
    and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
fair value of schemes’ assets 185147  147816  26000  22626  211147  170442 
present value of funded schemes’ 
  liabilities 234657 194890 35592 33447 270249 228337
deficit in the funded schemes 49510 47074 9592 10821 59102 57895
present value of unfunded schemes’ 
  liabilities – – 14661 15822 14661 15822
retirement benefit liability recognised 
  in the balance sheet 49510 47074 24253 26643 73763 73717
related deferred tax asset 13863  13181  6653  11347  20516  24528 
net pension liability 35647 33893 17600 15296 53247 49189
     
notes to the accounts continued
68 spiraxsarco engineering plc annual report and accounts 2009  the movements in the defined benefit obligation dbo recognised in the balance sheet during the year were    
     
  uk pensions overseas pensions total
    and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
defined benefit obligation at beginning 
  of year 194890 192612 49269 37441 244159 230053
current service cost 5738 6422 2180 1579 7918 8001
interest cost 11994 11189 2672 2642 14666 13831
contributions by members 114 102  – –  114 102 
actuarial gainloss 29536 18978 2196 702 31732 19680
actual benefit payments 8558  6605  2793  2675   11351  9280 
settlement curtailment –  –  101  1508  101  1508 
experience gainloss 943  10148  752  992  1695  11140 
currency gainloss –  –  4124 11500  4124 11500 
defined benefit obligation at end of year 234657 194890 50253 49269 284910 244159
       
the movements in the fair value of plan assets during the year were
     
  uk pensions overseas pensions total
    and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
value of assets at beginning of year 147816  184588 22626  23932  170442  208520 
expected return on assets 11361  13438  1541  2272 12902  15710 
actuarial gainloss 22761  51249  3251  9522 26012  60771 
contributions paid by employer 11653  7542  3118  2971    14771  10513 
contributions paid by members 114  102  –  –  114 102 
actual benefit payments 8558 6605 2793 2675 11351 9280
settlement curtailment –  –  –  1616 –  1616
currency gainloss –  –  1743  7264 1743  7264
value of assets at end of year 185147  147816  26000  22626 211147  170442 
       
the estimated employer contributions to be made in 2010 are £15189000
the history of experience adjustments is as follows    
   2009 2008 2007 2006
   £000 £000 £000 £000
defined benefit obligation at end of year   284910 244159 230053 228274
fair value of schemes’ assets   211147 170442 208520  198682
retirement benefit liability recognised in the balance sheet  73763 73717 21533 29592
experience adjustment on schemes liabilities   1695 11140 6913 481
as a percentage of schemes’ liabilities   06 46 30 02
experience adjustment on schemes’ assets   26012 60771 11095  2663
as a percentage of schemes’ assets   123 357 53 13
      
the expense recognised in the income statement was as follows 
   
  uk pensions overseas pensions  total
    and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
current service cost 5738 6422 2186 1296 7924 7718
settlement curtailment
  and termination benefits –  – 104  –  104  – 
interest on schemes’ liabilities 11994 11189 2709 2136 14703 13325
expected return on schemes’ assets 11361  13438 1566 1812 12927  15250  
total expense recognised in 
  income statement 6371 4173 3433 1620 9804 5793
     
spiraxsarco engineering plc annual report and accounts 2009 69 28 employee benefits continued
the expense is recognised in the following line items in the income statement     
     2009 2008
     £000 £000
operating costs     8028 7718
financial expenses     14703 13325
financial income     12927  15250 
total expense recognised in income statement      9804 5793
     
statement of comprehensive income  oci    
  uk pensions overseas pensions  total
    and medical  
 2009 2008 2009 2008 2009 2008
 £000 £000 £000 £000 £000 £000
actuarial loss recognised in oci 7718 42419 82 7669 7800 50088
deferred tax on actuarial amount 
  recognised in oci 2161 11565 55 6143 2106 17708
cumulative loss recognised in oci 
  at beginning of year 34620 3766 3258 1732 37878 5498
cumulative loss recognised in oci 
  at end of year 40177 34620 3395 3258 43572 37878
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 £91894 
2008 £94143
the postretirement mortality assumptions in respect of the parent company defined benefit scheme follows the pa00 series tables 
with medium cohort improvements subject to minimum improvements of 1 per annum and depending on a members year of birth 
this basis gives a life expectancy of 20 years and 22 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
the financial assumptions used at 31st december were    
                                                                                             assumptions weighted by value of liabilities
       per annum
     uk pensions
     2009 2008
rate of increase in salaries     45 45
rate of increase in pensions     34 31
rate of price inflation     35 30
discount rate     57 63
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      
                                                                                              assumptions weighted by value of liabilities
     per annum
    uk pensions
     2009 2008
expected rate of return on assets weighted average     76 76
equities      84 84
bonds      49 51
other      57 65
notes to the accounts continued
70 spiraxsarco engineering plc annual report and accounts 2009 the market value of the schemes assets which are not intended to be realised in the short term and may be subject to significant 
change before they are realised at 31st december 2009 were      
      uk pensions 
     2009 2008
     £000 £000
equities      30823 24001
bonds      7748 6439
other      1222 1494
total market value in aggregate     39793 31934
the actual return on plan assets was £71 million 2008 £81 million loss
the amounts recognised in the consolidated balance sheet are determined as follows 
      uk pensions 
     2009 2008
     £000 £000
fair value of schemes assets     39793  31934
present value of funded schemes liabilities      51000 43200
retirement benefit liabilityasset recognised in the balance sheet     11207 11266
related deferred tax     –  – 
net pension liabilityasset     11207 11266
     
the movements in the defined benefit obligation dbo recognised in the balance sheet during the year were   
          uk pensions 
         2009 2008
         £000 £000
defined benefit obligation at beginning of year      43200 40700
current service cost     806 949
interest cost     2641 2323
change in assumptions on dbo     6200 2300
actual benefit payments     1815  2656 
experience lossgain     32 4184
defined benefit obligation at end of year     51000 43200
      
the movements in the fair value of plan assets during the year were      
           
          uk pensions 
         2009 2008
         £000 £000
value of assets at beginning of year     31934 41238
expected return on assets     2439 2942
actuarial lossgain     4611 11031
contributions paid by employer     2624 1441
actual benefit payments     1815  2656 
value of assets at end of year     39793 31934
      
the estimated employer contributions to be made in 2010 are £3473000
the history of experience adjustments is as follows    
   2009 2008 2007 2006
   £000 £000 £000 £000
defined benefit obligation at end of year   51000 43200 40700 41319
fair value of schemes assets   39793 31934  41238  38223
retirement benefit assetliability recognised in the balance sheet  11207 11266 538 3096
experience adjustment on schemes liabilities   32 4184 32 115
as a percentage of schemes liabilities   01 97 01 03
experience adjustment on schemes assets   4611 11031 2366  459
as a percentage of schemes assets   116 345 57 12
      
spiraxsarco engineering plc annual report and accounts 2009 71 28 employee benefits continued
the expense recognised in the income statement was as follows      
      uk pensions 
     2009 2008
     £000 £000
current service cost     806 949
interest on schemes’ liabilities     2641 2323
expected return on schemes’ assets     2439  2942 
total expense recognised in income statement      1008 330
      
statement of comprehensive income oci     
          uk pensions 
         2009 2008
         £000 £000
actuarial loss recognised in oci     1557 12915
deferred tax on actuarial amount recognised in oci    – –
cumulative loss recognised in oci at beginning of year    14829 1914
cumulative loss recognised in oci at end of year     16386 14829
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 
directors remuneration report on pages 39 to 45 the charge to the income statement in respect of sharebased payments is made 
up as follows
  2009 2008
  £000 £000
share option scheme  686 809
performance share plan  500 605
employee share ownership plan  743 691
total expense recognised in income statement  1929 2105
a 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 prices index over a consecutive three year 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 three year consecutive period and from 2007 the performance condition needs to be met over the three year 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 llp  actuaries and consultants using the present economic value 
pev valuation methodology the relevant disclosures in respect of the share option scheme grants are set out below
 2005 2006 2007 2008 2009
 grant  grant  grant  grant grant 
grant date  21st april  24th march 26th march 12th march 11th march
exercise price  6860p  9600p  10196p 9590p 7650p
number of employees  66  67  67 71 70
shares under option  359600  340600  337400 311700 223500
vesting period  3 years  3 years   3 years 3 years 3 years 
expected volatility  20  20  20 20 25
riskfree interest rate  46  44  51 43 25
expected dividend yield  40  25  25 30 35
fair value  1215p  2093p 2368p 2117p 1455p
notes to the accounts continued
72 spiraxsarco engineering plc annual report and accounts 2009 the number and weighted average exercise prices of share options are as follows
option exercise price  outstanding at  granted   exercised  lapsed  outstanding at
 start of year  during year  during year  during year  end of year
1999 grant 525p  25000   25000  
2000 grant 3192p  14000   8500   5500
2001 grant 3977p  14000   7500   6500
2002 grant 436p  36000   9500   26500
2003 grant 3945p  79224   19224   60000
2004 grant 5419p  101123   22340  5000 78783
2005 grant 686p  192255   62893  129362
2006 grant 960p  307400   14000 17800  275600
2007 grant 10196p  322500    10500  312000
2008 grant 9590p  311700    8600  303100
2009 grant 7650p   223500   1500 337400222000
 1403202  223500  168957  38400  1419345
weighted average exercise price  £841  £765  £587  £968  £855
weighted average contractual life remaining      69 years
performance conditions in respect of all exercisable shares have been met
b performance share plan
awards under the performance share plan are made to executive directors 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 companys total shareholder return tsr 
relative to the tsr of other companies included in the ftse allshare industrial engineering sector over a three year performance 
period where awards will vest on a sliding scale all shares within an award will vest if the companys 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 companys tsr falls between the median and the upper quartile no shares will vest if 
the companys 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 three year performance period 
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 
11 there is prorata vesting for actual growth between these two 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  
 2007 2007 2008 2009
 grant grant grant grant
grant date  26th march 10th september 12th march 11th march
mid market share price at grant date  10196p 9750p 9590p 7650p
number of employees  7 1 5 5
shares under scheme  93200 17538 131540 128146
vesting period  3 years 3 years 3 years 3 years
probability of vesting  48 47 654 691
probability of ceasing employment before vesting  zero zero zero zero
fair value  4894p 4583p 6272p 5286p
c employee share ownership plan
uk employees are eligible to participate in the employee share ownership plan esop the aim of the plan 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 plan 
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 employee share ownership plan have been measured by towers watson llp  actuaries and consultants 
using the present economic value pev valuation methodology the relevant disclosures in respect of the employee share ownership 
plans are set out below
  2005  2006  2007  2008 2009
  esop  esop  esop  esop esop
grant date   1st october  1st october  1st october  1st october 1st october
exercise price   7857p  9233p  10193p 9088p 10397p
number of employees   847  910  946 985 944
shares under scheme   70227  67380  66525 80087 69788
vesting period   3 years  3 years  3 years 3 years 3 years
expected volatility   200  200 200 200 250
risk free interest rate   43  50  52 38 06
expected dividend yield   30  25 25 30 35
fair value   8273p  9824p 10866p 9533p 10937p
the accumulation period for the 2009 plan ends in september 2010 therefore some figures are projections
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
spiraxsarco engineering plc annual report and accounts 2009 73 28 employee benefits continued
a 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
 2005 2006 2007 2008 2009
 grant grant  grant  grant  grant 
grant date  21st april  24th march  26th march 12th march 11th march
exercise price  6860p  9600p  10196p 9590p 7650p
number of employees  2  2  2 1 1
shares under option  8400  9500  8500 3500 2500
vesting period  3 years  3 years  3 years 3 years  3 years
expected volatility  20  20  20 20 25
riskfree interest rate  46  44  51 43 25
expected dividend yield  40  25  25 30 35
fair value  1215p  2093p  2368p 2117p 1455p
the number and weighted average exercise prices of share options are as follows
option exercise price  outstanding at  granted   exercised  lapsed  outstanding at
 start of year  during year  during year  during year  end of year
1999 grant 525p 15000   15000   
2002 grant 436p   17500      17500
2003 grant 3945p 35000      35000
2004 grant 5419p  39253       39253
2005 grant 686p  6062     6062
2006 grant 960p  6000     6000
2007 grant 10196p  8500     8500
2008 grant 9590p 3500    3500
2009 grant 7650p  2500    2500
 130815 2500  15000   118315
weighted average exercise price  £554  £765  £525    £563
weighted average contractual life remaining      42 years
performance conditions in respect of all exercisable shares have been met
b performance share plan
the relevant disclosures in respect of the performance share plan grants are set out below  
 2007 2007 2008 2009
 grant grant grant grant 
grant date  26th march 10th september 12th march 11th march
mid market share price at grant date  10196p 9750p 9590p 7650p 
number of employees  7 1 5 5
shares under scheme  93200 17538 131540 128146
vesting period  3 years 3 years 3 years 3 years
probability of vesting  48 47 654 691
probability of ceasing employment before vesting  zero zero zero zero
fair value  4894p 4583p 6272p 5286p
29 analysis of changes in net cash
 the group
   at 1st january   exchange at 31st december
   2009 cash flow movement 2009
   £000 £000  £000 £000 
current portion of long term borrowings  176   63
noncurrent portion of long term borrowings  25521   44255
short term borrowings  9008   9284
total borrowings  34705  37370 53602
comprising     
borrowings  34319 20614 1615 53318
finance leases  386 67 35 284
   34705 20547 1650 53602
cash and cash equivalents  54140 7390 664 62194
bank overdrafts  2045 1319 167 559
net cash and cash equivalents  52095 8709 831 61635
net cash  17390 11838 2481 8033
notes to the accounts continued
74 spiraxsarco engineering plc annual report and accounts 2009 30 related party transactions
     2009 2008
the group    £000 £000 
sales to associated companies    1259 1266
dividends from associated companies    1498 1063
amounts due from associated companies at 31st december   237 310 
              2009  2008
parent company             £000  £000 
dividends received from subsidiaries             49500  62900
loans and amounts due from subsidiaries at 31st december         93331  73490
amounts due to subsidiaries at 31st december            941  941
      
the transactions above were priced on an arm’s length basis and on standard business terms
      
31 purchase of businesses
      
2009
   masosine  other acquisitions total
     book  fv fair book fv fair  fair
     value  adj value value adj value  value
     £000  £000      £000 £000 £000 £000 £000
fixed assets 
 property plant and equipment   485  –  485  218  –  218  703 
 intangibles    –  13214  13214  –  1605  1605  14819
     485  13214  13699  218  1605  1823  15522
current assets 
 inventories    283  –  283  473  105 368  651
 trade receivables    1585  –  1585  –  – –  1585
     1868  –  1868  473  105 368  2236
total assets    2353  13214  15567  691  1500  2191  17758
current liabilities    –  –  –  –  –  –  –
long term liabilities    –  –  –  –  –  –  –
total liabilities    –  –  –  –  –  –  –
total net assets    2353  13214  15567  691  1500  2191  17758
goodwill        7392      2436  9828
purchase consideration        22959      4627  27586
satisfied by cash paid      21930    2408  24338
  deferred consideration      –    1766  1766
  expenses      1029    453  1482
        22959   4627  27586
analysis of net flow of cash and cash equivalents in respect of purchase of subsidiaries
cash consideration       25710
expenses       1482
net cash outflow       27192
1  the acquisition of the trade and assets of the maso and sine businesses based in germany was completed on 27th august 2009 
the acquisition method of accounting has been used consideration of £21930000 was paid on completion the book value of 
intangibles has been adjusted to reflect spirax sarcos accounting policies in order to arrive at their fair value
2 the acquisition of the trade and assets of intervalf business based in turkey was completed on 1st october 2009 the acquisition 
method of accounting has been used consideration of £2077000 was paid on completion the book value of intangibles has been 
adjusted to reflect spirax sarco’s accounting policies in order to arrive at fair value
3 the acquisition of the watsonmarlow swiss distributor was completed on 31st january 2009 the acquisition method of 
accounting has been used consideration of £331000 was paid on completion 
 had the acquisitions all taken place on 1st january 2009 rather than the actual acquisition dates the effect on group revenue and 
 profit after tax would have been approximately revenue £8500000 and profit after tax £1500000    
    
spiraxsarco engineering plc annual report and accounts 2009 75 31 purchase of businesses continued
2008
   flexicon as  other acquisitions total
     book  fv fair book fv fair  fair
     value  adj value value adj value  value
     £000  £000      £000 £000 £000 £000 £000
fixed assets 
 property plant and equipment   100  –  100  154  20  174  274 
 intangibles    –  8437  8437  177  773  950  9387
     100  8437  8537  331  793  1124  9661
current assets 
 inventories    744  –  744  265  26 239  983
 trade receivables    1518  –  1518  1036  4 1032  2550
 other receivables    –  –  –  24  –  24  24
 cash    55  –  55  100  –  100  155
     2317  –  2317  1425  30 1395  3712
total assets    2417  8437  10854  1756  763  2519  13373
current liabilities     
 trade payables    –  –  –  538  –  538  538
 other payables and accruals   45  –  45  184  60  244  289
 deferred tax    –  2109  2109  –  –  –  2109
 short term borrowing    849  –  849  215  –  215  1064
     894  2109  3003  937  60  997  4000
long term liabilities    125  –  125  –  –  –  125
total liabilities    1019  2109  3128  937  60  997  4125
total net assets    1398  6328  7726  819  703  1522  9248
goodwill        6856      1010  7866
purchase consideration        14582      2532  17114
satisfied by cash paid      11422    2110  13532
  deferred consideration      2817    223  3040
  expenses      343    199  542
        14582    2532  17114
analysis of net flow of cash and cash equivalents in respect of purchase of subsidiaries
cash consideration       13398
expenses       541
net cash outflow       13939
1  the acquisition of flexicon as based in denmark was completed on 11th february 2008 the transaction also resulted in the 
group obtaining full ownership of flexicon’s distribution company for the usa flexicon america inc  the acquisition method of 
accounting has been used consideration of £11422000 was paid on completion separately identifiable intangibles are recorded as 
part of the fair value adjustment goodwill reflects the significant synergies in market coverage and cost savings that can be acheived 
by being part of a larger group      
2 the acquisition of colima srl based in italy was completed on 31st march 2008 the acquisition method of accounting has been 
used consideration of £480000 was paid on completion intangibles inventory trade receivables and other payables and accruals 
has been adjusted to reflect spirax sarco’s accounting policies in order to arrive at fair value     
    
3  the acquisition of the assets and business of distant star cc based in south africa was completed on 30th june 2008 
the acquisition method of accounting has been used consideration of £90000 was paid on completion separately identifiable 
intangibles are recorded as part of the fair value adjustment       
   
4 the acquisition of pak machinery limited based in the uk was completed on 3rd november 2008 the acquisition method of 
accounting has been used consideration of £450000 was paid on completion separately identifiable intangibles are recorded as part 
of the fair value adjustment        
 
5 the acquisition of the 489 minority share of spirax sarco sa based in spain was completed on 19th december 2008 the 
acquisition method of accounting has been used consideration of £777000 was paid on completion
 had the acquisitions all taken place on 1st january 2008 rather than the actual acquisition dates the effect on group revenue and 
 profit after tax would not have been significant
notes to the accounts 
continued
76 spiraxsarco engineering plc annual report and accounts 2009 32 derivatives and other financial instruments
      
the group does not enter into significant derivative transactions the groups principal financial instruments comprise bank loans 
cash and short term deposits the main purpose of these financial instruments is to raise finance for the groups 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 groups policy that no trading in financial instruments shall be undertaken
the main risks arising from the groups 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 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 non 
collectable historically losses from trade receivables have been low
      
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 
depending on which gives best value
      
liquidity risk
the groups 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 units functional currency net cash flows between any 
two currencies of less than £1m per annum would not usually be considered sufficiently material to warrant forward cover forward 
cover is not taken out more than twelve months in advance or for more than 80 of the forecast exposure 
      
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
      
2008 the group
  fixed rate floating rate  financial liabilities
  financial financial on which no
 total liabilities liabilities interest is paid
 £000 £000 £000 £000
euro 21696 1003 – 20693
us dollar 17261 – 15267 1994
other  47514 1133 19347 27034
 86471 2136 34614 49721
      
2009 the group
  fixed rate floating rate  financial liabilities
  financial financial on which no
 total liabilities liabilities interest is paid
 £000 £000 £000 £000
euro 35163 748 17766 16649
us dollar 14518 – 12422 2096
other  52533 3995 19230 29308
 102214 4743 49418 48053
in respect of fixed rate financial liabilities the interest rate for euro financial liabilities is 1 fixed for 01 years the interest rate for 
korean won financial liabilities is 49 fixed for 04 years and the interest rate for chinese rmb financial liabilities is 49 fixed for 
09 years
2008 the parent
  fixed rate floating rate  financial liabilities
  financial financial on which no
 total liabilities liabilities interest is paid
 £000 £000 £000 £000
euro – – – –
us dollar – – – –
other sterling   256 – – 256
 256 – – 256
spiraxsarco engineering plc annual report and accounts 2009 77 32 derivatives and other financial instruments  continued
2009 the parent
  fixed rate floating rate  financial liabilities
  financial financial on which no
 total liabilities liabilities interest is paid
 £000 £000 £000 £000
euro – – – –
us dollar – – – –
other sterling   318 – – 318
 318 – – 318
the benchmark rates for the floating rate financial liabilities are as follows
us dollar libor
euro liboreuribor
terms and debt repayment schedule
the terms and conditions of outstanding loans were as follows
      2009 2008
 currency   nominal  year of   carrying  carrying
    interest rate maturity value value
     £000 £000
unsecured bank facility czk   libor  05 2012 774 828
unsecured bank facility €   – 2010 67 7 
unsecured bank facility €   1 2010 493 659
unsecured bank facility €  libor  2  2012 17699 – 
unsecured bank facility  rmb   489  2010 3630 510 
unsecured bank facility won   493 2010 337 4749
unsecured bank facility won   476  605 2010 5316 5323
unsecured bank facility won 364 2012 4786 – 
unsecured bank facility zar prime  194 2012 3364 3100 
unsecured bank facility  – – – 1378
unsecured bank facility  079 2011 12422 13889 
unsecured bank facility dkk – – – 166 
unsecured bank facility yen 147 2013 4989 5755
finance leases €   410 20102014 255 336
finance leases roubles   – 20102014 29 50
      54161 36750
interest rate risk profile of financial assets
the interest rate profile of the financial assets of the group as at 31st december was as follows
2008 the group
   floating rate financial assets
   financial on which no
  total assets  interest is earned
  £000 £000 £000
sterling  20211 6193 14018
other  165858 30754 135104
  186069 36947 149122
2009 the group
   floating rate financial assets
   financial on which no
  total assets  interest is earned
  £000 £000 £000
sterling  23962 10830 13132
other  163901 34380 129521
  187863 45210 142653
notes to the accounts 
continued

78 spiraxsarco engineering plc annual report and accounts 2009 2008 the parent
   floating rate financial assets
   financial on which no
  total assets  interest is earned
  £000 £000 £000
sterling  7984 6092 1892
other  – – –
  7984 6092 1892
2009 the parent
   floating rate financial assets
   financial on which no
  total assets  interest is earned
  £000 £000 £000
sterling  12740 10514 2226
other  – – –
  12740 10514 2226
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 033 2008 37
currency exposures
as explained above the groups 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 the currency exposures in respect of the euro 
was a net monetary liability of £372000 2008 £3000 and in respect of the us dollar a net monetary asset of £2441000 
2008 £1015000
at 31st december the percentage of debt to net assets excluding debt was 225 2008 1 for the euro and 346 2008 38 
for the us dollar
maturity of financial liabilities
the groups financial liabilities at 31st december reprice or mature if earlier in the following periods
2008 the group
 trade and  short term finance long term
 other payables overdrafts borrowings leases borrowings total
 £000 £000 £000 £000 £000 £000
in six months or less or on demand 49721 2045 8498 28 25311 85603
in more than six months but no more than twelve – – 510 58 – 568
in more than one year but no more than two – – – 69 – 69
in more than two years but no more than three – – – 68 – 68
in more than three years but no more than four – – – 71 – 71
in more than four years but no more than five – – – 73 – 73
in more than five years – – – 19 – 19
 49721 2045 9008 386 25311 86471
2009 the group
 trade and  short term finance long term
 other payables overdrafts borrowings leases borrowings total
 £000 £000 £000 £000 £000 £000
in six months or less or on demand 48053 559 5123 9 44034 97778
in more than six months but no more than twelve – – 4161 54 – 4215
in more than one year but no more than two – – – 76 – 76
in more than two years but no more than three – – – 61 – 61
in more than three years but no more than four – – – 65 – 65
in more than four years but no more than five – – – 19 – 19
in more than five years – – – – – –
 48053 559 9284 284 44034 102214
spiraxsarco engineering plc annual report and accounts 2009 79 32 derivatives and other financial instruments  continued
2008 the parent
 trade and  short term finance long term
 other payables overdrafts borrowings leases borrowings total
 £000 £000 £000 £000 £000 £000
in six months or less or on demand 256 – – – – 256
 256 – – – – 256
2009 the parent
 trade and  short term finance long term
 other payables overdrafts borrowings leases borrowings total
 £000 £000 £000 £000 £000 £000
in six months or less or on demand 318 – – – – 318
 318 – – – – 318
cash flow hedge
at 31st december the group had contracts outstanding to purchase £1200000 with south korean won £1080000 with japanese 
yen €132000 with us dollars £183000 with us dollars £6688000 with euros 63000 with swedish sek £373500 with danish 
dkk £617000 with norwegian nok £694000 with south african rand £600000 with chinese rmb £270000 with swedish sek 
£322100 with czech czk £400000 polish pln and €120000 with chinese rmb
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
   2009 2008
   £000 £000
expiring in one year or less   28597 32486
 the parent
   2009 2008
   £000 £000
expiring in one year or less   20000 20000
fair values of financial assets and financial liabilities
fair values of financial assets and liabilities at 31st december are not materially different from book values due to their size or the fact 
that they were at short term rates of interest fair values have been assessed as follows
• derivatives
 forward exchange contracts are marked to market using year end exchange rates
• interestbearing loans and borrowings
 fair value is calculated based on discounted expected future principal and interest cash flows
• finance lease liabilities
 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
• trade and other receivables  payables
 for receivables  payables 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 short term 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 31st december it is estimated that a general increase of one percentage point in interest rates would increase the group’s profit 
after tax and equity by approximately £50000 2008 £120000
at the year end borrowings totalled £54161000 consequently in respect of financial liabilities the group is not significantly at risk 
from increases in interest rates
80 spiraxsarco engineering plc annual report and accounts 2009
notes to the accounts 
continued for the year ended 31st december 2009 it is estimated that a decrease of one percentage point in the value of sterling weighted 
in relation to the groups profit and trading flows has increased the groups profit before tax by approximately £1200000 
2008 £1000000 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
the credit risk profile of trade receivables
the aging of trade receivables at the reporting date was
    gross impairment gross impairment
    2009 2009 2008 2008
not past due date    97447 271 97608 310
030 days past due date    10904 239 15588 390
30 days1 year past due date    15434 4440 14704 2605
more than one year    3171 3171 2778 2778
    126956 8121 130678 6083
based on past experience the group believes no further impairment allowance is required for receivables that are past their due date
the movement in the allowance for impairment in respect of trade receivables during the year was as follows
     2009 2008
balance at 1 january     6083 2806
movement in impairment     2038 3277
balance at 31 december     8121 6083
spiraxsarco engineering plc annual report and accounts 2009 81 financial summary 2000  2009
 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
 £000 £000   £000  £000   £000   £000   £000   £000 £000 £000 £000 
revenue             278148 291942 296363 314087 325833 315991 349100 384249 417317 502316 518705
operating profit 
†
  43370 40803 42674 45750 51100 47956 55170 61941 68336 81028 76522
operating profit adjusted   – – – – – 47956 55345 62291 68720 85669 89938
operating profit margin adjusted 
†
      156 140 144 146 157 152 159 162 165 171 173
profit before taxation 
†
 41157 38025 40693 44564 50836 48704 56959 65344 72163 85162 76415
profit before taxation adjusted   – – – – – 48704 57134 65694 72796 90146 90196
profit before taxation 
††
     40167 38641 40693 44564 50836 48704 56959 65344 72163 85162 76415
profit after taxation 
††
      27300 26625 26807 29426 33682 32442 38187 44066 49190 59788 53091
dividends in respect of the year             13301 13752 14350 15028 16102 16196 18318 20038 22754 25668 27569
net assets 138264 145115 149293 163816 182013 166286 198246 199722 242965 296006 307364
earnings per share basic 
†
 374p 344p 353p 385p 434p 431p 500p 577p 647p 780p 696p
earnings per share adjusted 
†
 – – – – – 431p 502p 581p 655p 834p 822p
earnings per share basic 
††
       354p 353p  353p 385p 434p 431p 500p 577p 647p 780p 696p
dividends in respect of the year per share        180p 186p 193p 201p 214p 214p 238p 265p 299p 333p 361p
return on capital employed    262 236 256 283 310 272 304 322 336 355 333
 the results for 2004 to 2009 have been prepared under international financial reporting standards prior year figures are shown as originally reported including 
2004 for reference adjusted operating profit profit before tax and earnings per share exclude the amortisation and impairment of aquired intangibles
†  excluding nonoperating items 
†† including nonoperating items
return on capital employed prior to 2007 is based on operating profit excluding nonoperating items and amortisation and impairment of acquired intangibles 
and average net assets excluding net goodwill and net debt for 2009 and 2008 see note 25
earnings per share adjusted operating profit adjusted £000 revenue £000
82 spiraxsarco engineering plc annual report and accounts 2009
 
2000 £278148
2001 £291942
2002 £296363
2003 £314087
2004 £325833
2004 £315991
2005 £349100
2006 £384249
2007 £417317
2008 £502316
2009 £518705
revenue £’000

ifrs basis
 
2000 £43370
2001 £40803
2002 £42674
2003 £45750
2004 £51100
2004 £47956
2005 £55345
2006 £62291
2007 £68720
2008 £85669
2009 £89938
operating proﬁt adjusted £’000

ifrs basis
 
2000 374p
2001 344p
2002 353p
2003 385p
2004 434p
2004 431p
2005 502p
2006 581p
2007 655p
2008 834p
2009 822p
earnings per share adjusted

ifrs basis financial summary 2000  2009
 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
 £000 £000   £000  £000   £000   £000   £000   £000 £000 £000 £000 
revenue             278148 291942 296363 314087 325833 315991 349100 384249 417317 502316 518705
operating profit 
†
  43370 40803 42674 45750 51100 47956 55170 61941 68336 81028 76522
operating profit adjusted   – – – – – 47956 55345 62291 68720 85669 89938
operating profit margin adjusted 
†
      156 140 144 146 157 152 159 162 165 171 173
profit before taxation 
†
 41157 38025 40693 44564 50836 48704 56959 65344 72163 85162 76415
profit before taxation adjusted   – – – – – 48704 57134 65694 72796 90146 90196
profit before taxation 
††
     40167 38641 40693 44564 50836 48704 56959 65344 72163 85162 76415
profit after taxation 
††
      27300 26625 26807 29426 33682 32442 38187 44066 49190 59788 53091
dividends in respect of the year             13301 13752 14350 15028 16102 16196 18318 20038 22754 25668 27569
net assets 138264 145115 149293 163816 182013 166286 198246 199722 242965 296006 307364
earnings per share basic 
†
 374p 344p 353p 385p 434p 431p 500p 577p 647p 780p 696p
earnings per share adjusted 
†
 – – – – – 431p 502p 581p 655p 834p 822p
earnings per share basic 
††
       354p 353p  353p 385p 434p 431p 500p 577p 647p 780p 696p
dividends in respect of the year per share        180p 186p 193p 201p 214p 214p 238p 265p 299p 333p 361p
return on capital employed    262 236 256 283 310 272 304 322 336 355 333
 the results for 2004 to 2009 have been prepared under international financial reporting standards prior year figures are shown as originally reported including 
2004 for reference adjusted operating profit profit before tax and earnings per share exclude the amortisation and impairment of aquired intangibles
†  excluding nonoperating items 
†† including nonoperating items
return on capital employed prior to 2007 is based on operating profit excluding nonoperating items and amortisation and impairment of acquired intangibles 
and average net assets excluding net goodwill and net debt for 2009 and 2008 see note 25
 prepared under ifrs
dividends per share
spiraxsarco engineering plc annual report and accounts 2009 83
 
2000 180p
2001 186p
2002 193p
2003 201p
2004 214p
2005 238p
2006 265p
2007 299p
2008 333p
2009 361p
dividends per share secretary and registered office
mr w g stebbings
company secretary and solicitor
spiraxsarco engineering plc
charlton house
cirencester road
cheltenham
gloucestershire 
gl53 8er
telephone 01242 521361
facsimile 01242 581470
website wwwspiraxsarcoengineeringcom
auditor
kpmg audit plc 
financial advisers
citigroup
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
website wwwshareviewcouk
solicitors
herbert smith llp
willans llp
important dates
ordinary shares 
quoted exdividend  14th april 2010
record date for final dividend  16th april 2010
annual general meeting  11th may 2010
final dividend payable  21st may 2010
ofﬁcers and advisers
84 spiraxsarco engineering plc annual report and accounts 2009 group
at a glance
emea what we do
what we do
americas asia pacific
group operating profit group revenue spirax sarco 
£4349m
watsonmarlow 
£838m
spirax sarco 
£726m
watsonmarlow 
£223m
spirax sarco 
emea 
£2255m
spirax sarco 
americas 
£1046m
spirax sarco 
asia pacific 
£1047m
watsonmarlow 
£838m
revenue by business
percentage of group revenue
84
revenue
£4349m 
operating profit
£726m
operating profit margin
167
percentage of group revenue
16
revenue
£838m
operating profit
£223m
operating profit margin
266
spirax sarco is the global leader in the supply of engineered 
solutions for the efficient design maintenance and operation  
of 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 as well as our extensive 
global presence spirax sarco is uniquely positioned to provide  
a broad range of environmentallyfriendly engineered solutions  
to the many industries using steam
our customers face a variety of challenges including high energy 
costs pressure to improve the efficiency and capacity of existing 
processes and the need to comply with increasingly stringent 
health safety and environmental legislation our direct sales force 
is trained at length in product application system performance 
and 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 all of this creates  
a compelling and attractive onestop approach for our customers 
watsonmarlow is the global leader in peristaltic pumping and 
specialises not only in the design and manufacture of the most 
advanced peristaltic pumps but also in the application of those 
pumps to customers’ processes our peristaltic pumps are ideal 
for difficult pumping applications they are highly accurate and 
controllable and virtually maintenancefree making them a very 
reliable and costeffective solution 
operating a maketoorder manufacturing system and 
uniquely extruding our own pump tubing we have the leading 
position in the supply of peristaltic pumps to the biotechnology 
pharmaceuticals wastewater treatment mining and food 
industries the peristaltic pumping market is a small part of the 
global pump market but it is one of the fastest growing segments
highlights of the year
difficult market conditions •	
favourable exchange benefits from •	
13 weaker sterling against the euro
good performance from large •	
operations in france germany  
and italy
improved demand and sales in russia •	
in h2 after a very slow start in h1
difficult year in the domestic uk market •	
but good project wins in december
reduced volumes at our manufacturing •	
plants contributed to profit decline
headcount down 8 •	
highlights of the year
end markets stabilised and improving •	
favourable benefits from the strong  •	
us dollar
good q1 project orders in the  •	
us contributed to h2 shipments 
good underlying project activity in •	
pharmaceuticals and biotechnology
strong sales growth in asia •	
increased demand for  •	
flexicon products
sales declined at bredel from difficult •	
mining and general industrial markets
highlights of the year
end markets stabilised in h2 but •	
continuing weakness in canada
favourable exchange benefits  •	
from 19 weaker sterling against  
the us dollar 
good trading margin of 132  •	
versus 119 in 2008 
profit increase from 2008 closure  •	
of ultrapure
lower profits in brazil from strong •	
currency impacting export market 
customers
headcount down 13 •	
masosine acquisition integration •	
proceeding well
headcount down 2 •	
highlights of the year
market conditions mixed but improving •	
favourable exchange benefits from •	
21 stronger renminbi
strong shipments in q4 from backlog •	
added new sales people in china •	
prefabricated heat exchange  •	
package sales up 30
significant improvement in japan •	
trading profit from fx benefit
headcount down 3 •	
revenue
£2255m 
revenue
£1046m
revenue
£1047m
operating profit operating profit margin
£356m 158
operating profit operating profit margin
£139m 132
operating profit operating profit margin
£23 1m 221
spirax sarco worldwide
emea
belgium
spiraxsarco nv 
czech republic
spirax sarco spol s ro
denmark
spiraxsarco ltd branch
finland
spirax oy
france
spiraxsarco sas
germany
spiraxsarco gmbh
hygromatik gmbh
ireland
eirdata environmental services ltd
italy
spiraxsarco srl
m  m international srl
ampe srl
colima srl
netherlands
spiraxsarco engineering bv 
spiraxsarco investments bv 
norway
spiraxsarco as
poland
spirax sarco sp z oo
portugal
spirax sarco equip ind lda
russia
spiraxsarco engineering llc
south africa
spiraxsarco south africa pty ltd
spain
spirax sarco sa
spiraxsarco engineering sl
m  m iberica sl 67
sweden
spiraxsarco ab
switzerland
spiraxsarco ag
turkey
spirax inter valf sanayi ve ticaret 
limited şirketi
united kingdom
spiraxsarco ltd
spiraxsarco investments ltd
spiraxsarco overseas ltd
americas
argentina
spirax sarco sa
brazil
spirax sarco ind e com ltda
canada
spirax sarco canada ltd
mexico
spiraxsarco mexicana sa 49
usa
spirax sarco inc
sarco international corp
asia pacific
australia
spiraxsarco pty ltd
china
spirax sarco engineering china ltd
india
spiraxmarshall ltd 493
japan
spiraxsarco ltd branch
malaysia
spiraxsarco sdn bhd
new zealand
spirax sarco ltd
singapore
spiraxsarco private ltd
south korea
spiraxsarco korea ltd 975
t aiwan
spirax sarco co ltd
thailand
spirax sarco thailand ltd
belgium
watsonmarlow nv 
brazil
watsonmarlow bredel ind e com  
de bombas
denmark
as watsonmarlow alitea
watsonmarlow flexicon as
france
watsonmarlow sas
germany
watsonmarlow gmbh
italy
watsonmarlow srl
mexico
watsonmarlow s de rl de cv
netherlands
bredel hose pumps bv 
watsonmarlow bredel holdings bv 
watsonmarlow bv 
south africa
watsonmarlow bredel sa pty ltd
sweden
wm alitea ab
switzerland
watsonmarlow ltd branch
united kingdom
watsonmarlow ltd
usa
watsonmarlow inc
steam specialties watsonmarlow pumps
designed by luminouscouk  
financial statements typeset by db designs  
printed by severnprint on revive pure white silk a recycled 
paper produced using 100 recycled waste at a mill 
that has been awarded the iso140001 certificate for 
environmental management the pulp is bleached using a 
totally chlorine free process
europe middle east and africa


Summary:
 4 spiraxsarco engineering plc annual report and accounts 2009
an interview with  
mark vernon
chief executive officer
sharpening  
our edge
what makes spirax sarco different
we are a niche industrial engineering group that supplies  
a very broad base of customers around the world in a  
wide range of industries we concentrate on assisting our 
customers achieve process efficiency increased production 
output energy savings and regulatory compliance we go to 
market through an extensive network of outstanding local 
sales and service engineers that are highly trained and 
singularly focused on providing the knowledge and expertise 
to understand the challenges facing steam and pump users 
our application and systems knowledge breadth of products 
and services experience and global presence all enable us 
to offer the most extensive range of engineered solutions to 
our customers the position of spirax sarco and  
watsonmarlow as world leaders is founded on our  
longheld strategy of investing for growth both organically 
and by complementary acquisitions
the group is very international we have 49 operating 
companies in 34 countries around the world our 
headquarters are based in the uk and we have sizeable 
manufacturing and selling operations on nearly every 
continent our manufacturing operations are strategically 
located in all key market regions with major facilities in the 
uk france italy usa brazil argentina and china we  
also manufacture in south africa mexico netherlands  
india germany sweden korea and denmark amongst  
our competitors we have generally been first to build a  
direct selling and trading organisation in new markets and 
within the past year we acquired our turkish distributor 
giving us a direct presence in this important country that 
boasts the world’s 16th largest economy
the resilience of our business was readily visible in the past 
year as our total sales at constant currency declined less 
than 7 as compared to falls of typically 15 to 20 or 
more for many other international industrial engineering 
businesses this resilience stems from a large portion of 
our revenues being derived from product replacements and 
spares the diverse range of industries served the breadth 
of product solutions we bring to our customers and good 
geographic distribution of sales well spread between 
developing and developed markets
we serve a very broad range of industries including foods 
brewing  distilling dairies oil refining  petrochemicals 
chemicals pharmaceuticals textiles fine chemicals mining 
printing water  wastewater treatment and many other 
general process industries we also work with hospitals and 
commercial buildings by supplying solutions for sterilisation 
space heating hot water generation and laundering it is 
important to note that no single industry represents more 
than 10 of sales and no single customer accounts for more 
than 1 of sales – in short our sales are very well spread
we have remained focused on our niche businesses and 
their development through geographic expansion new 
product developments acquisitions and expanding our 
range of products and service solutions this has enabled us 
to increase market share and to generate steady profitable 
growth for a long period of time evidenced by our excellent 
42 year dividend record although we are the market 
leader in both our businesses there remain considerable 
opportunities available to us in our fragmented markets
how does spirax sarco create value 
the spirax sarco and watsonmarlow businesses are 
anchored on the philosophy of understanding the detail 
of the customers’ processes and the ability to apply the 
properly engineered solutions t o do this we go to market 
using mostly direct sales people – about 70 of our sales 
are generated through our direct selling approach in doing 
so we form strong longterm customer relationships the 
group employs nearly 1200 direct sales and service people 
working in 56 countries in the world 
our sales people are highly skilled in both product 
applications and perhaps even more importantly in system 
understanding and troubleshooting for unique customer 
applications and industrial processes we train our sales 
engineers in our 38 training centres located around the world  spiraxsarco engineering plc annual report and accounts 2009 5
sharpening our edge  
through research and 
development
we are increasing our investment in 
research and development
our new rd centre being created in 
cheltenham will enhance our capability 
to offer customers innovative solutions 
for controlling and conditioning steam 6 spiraxsarco engineering plc annual report and accounts 2009
an interview with  
mark vernon continued
chief executive officer
sharpening our edge  
through being the best in  
our field
spirax sarco beat international 
competition to win the 2009 icheme 
innovation and excellence award in 
energy with a flash recovery energy 
management equipment freme 
system that enables customers to 
recover waste heat spiraxsarco engineering plc annual report and accounts 2009 7
most of which are equipped with live steam that facilitates 
handson training these centres are also used to train our 
customers’ technical staff 
this product and systems application knowledge combined 
with local availability of products engineered packages 
and onsite services enables our customers to achieve 
meaningful energy savings comply with increasingly 
stringent health safety and environmental regulations  
reduce emissions and achieve more efficient processes 
it is not our products alone that provide the value to our 
customers it is the application of our extensive knowledge
how is spirax sarco managing the business through this 
difficult economic period
like other industrial businesses we took early action and 
made the appropriate decisions to reduce our operating 
costs whilst needing to address the abrupt decline in 
economic activity we largely protected our global network  
of highly skilled and trained sales engineers 
as a result we reduced our workforce by 7 through  
the year most of which came as part of an announced  
5 headcount reduction in early 2009 with the balance  
coming from natural attrition throughout the year most of the 
headcount reductions were in backoffice support functions 
and manufacturing additionally our local operating company 
management teams were vigilant in controlling other operating 
costs the announced general headcount reduction was the 
first ever for spirax sarco – indicative of the unprecedented 
global economic downturn – but it was managed effectively 
by our management teams around the world 
we took steps to size our manufacturing operation in 
cheltenham not only for the decline in volume resulting  
from the global economic recession but also in anticipation  
of the volume transfer to our new manufacturing plant in 
china additionally we recently announced a reduction in  
our manufacturing footprint at châtellerault france also in  
line with our global manufacturing strategy
we continued to invest in key growth programmes for the 
future in china we selectively added sales people for the 
steam business we also invested in our watsonmarlow 
business to continue developing new markets adding  
sales people in russia and mexico we believe that our  
sales teams are well positioned to handle the eventual 
rebound in our end markets also we increased the  
amount of direct rd investment virtually the only area  
of the business that was allowed increased expenditure  
new product development is a key activity that will drive 
longerterm growth and therefore we have continued to 
invest through the downturn we have also sustained  
capital expenditure at a high level in the year as we  
invest in delivering our manufacturing strategy
what are the key business drivers and trends
our business is well spread geographically across the 
product range and over a diverse range of industries  
the following key factors have the primary influence  
on the underlying demand in our markets
global economic growth • 
industrial production and investment • 
capacity utilisation • 
energy costs • 
increasing customer outsourcing of design  • 
and maintenance
regulatory legislation eg emissions hygienic  • 
standards plant safety
looking ahead how do you plan to take the business 
forward
our business strategy remains focused on achieving  
longterm steady and profitable sales growth the industrial 
and commercial steamusing market is highly fragmented 
and although spirax sarco is the market leader we still have 
significant growth opportunities 
“ it is not our products alone that provide the 
value to our customers it is the application 
of our extensive knowledge” 8 spiraxsarco engineering plc annual report and accounts 2009
“ increasing watsonmarlow’s capability 
in offering high purity particularly in the 
biopharm sector”
an interview with  
mark vernon continued
chief executive officer
sharpening our edge  
by investing in our  
manufacturing processes
we completed the construction of a 
completely sterile £63 million silicone 
tubing extrusion plant in falmouth 
enabling watsonmarlow to offer 
high purity pumping solutions to its 
customers in the biopharm sector spiraxsarco engineering plc annual report and accounts 2009 9
we believe the underlying industry drivers are favourable for 
longterm growth for the steam business energy prices are 
at historic highs and the emphasis on reducing emissions 
is becoming increasingly important these factors provide 
a nice tailwind we are reaping the benefits of our solutions 
approach to problem solving as customers increase the 
outsourcing of design and maintenance customers are 
looking for simple singlesource transactions to solve their 
local maintenance operations product quality and capacity 
expansion issues our ability to effectively bundle a wide 
range of products and prefabricated engineered packages 
backed up by our installation and commissioning services  
is simply the best and is unmatched by any competitor  
we increasingly expand on a simple troubleshooting sales 
call to audit an entire steam system and provide a range  
of engineered solutions in a single transaction that  
customers value 
we are widening our range of products and site services  
to expand our market reach our technically expert direct 
sales force allows us to leverage our brands into new 
products and applications this increases the amount  
of plant spend that we can capture in smallscale capital 
projects and maintenance activities that are at the heart of 
our business there remains good growth potential whether 
in the developing economies of asia and south america or  
in the large and more mature markets of western europe  
and north america as we apply tailored market  
development strategies
one of our major tasks at our watsonmarlow business 
is to educate customers about the intrinsic advantages 
of peristaltic pumps so that they will increasingly be used 
to solve difficult pumping problems the product range 
is being progressively widened and developed making 
use of improved electronics and materials to broaden the 
addressable market by taking business from other pump 
types all these factors make peristaltics one of the fastest 
growing sectors of the global positive displacement pump 
market as we widen the possible applications for our 
pumps we see increasing opportunities including hygienic 
applications in pharmaceuticals biotechnology and the  
food industries 
we continue to make complementary bolton acquisitions 
to build our product portfolio introduce new technologies 
and speed access to geographic markets during 2009 
we acquired masosine a supplier of unique sinusoidal 
pumps that extends the application range of our existing 
line of watsonmarlow hygienic pumps we also acquired 
the business of our turkish distributor inter valf sanaya 
ve ticaret to build a direct presence in this important and 
developing market
how is spirax sarco sharpening its edge
the group is making a significant investment in 
modernising its manufacturing processes and facilities 
to improve efficiency and reduce operating costs we 
are midway through a fouryear £50 million capital 
investment programme having recently completed the 
new tube extrusion facility in falmouth england the new 
manufacturing plant in china will begin production late 
q2 2010 the consolidation of the three manufacturing 
facilities onto one site at our major manufacturing location in 
cheltenham england will be mostly completed by yearend 
2010 some production has already been transferred into 
the first refurbished buildings and we should see the cost 
reduction efficiency and stock reduction benefits from this 
site consolidation starting in 2011
despite the challenging market environment in 2009 we 
increased our investment in rd by over 20 and have 
begun to generate a stronger flow of new products whilst 
shortening the time to market there are a number of  
exciting new product development programmes underway  
in both the steam business and watsonmarlow and we 
expect new products to make an increasing contribution to 
sales growth we were particularly pleased to win the uk’s 
icheme 2009 ‘innovation and excellence award in energy’ 
with a packaged flash recovery energy management 
equipment system the board has approved the creation of 
a new rd development and test centre at our cheltenham 
manufacturing site that will increase our testing capability to 
much higher live steam temperatures pressures and flow 
rates – we believe this new test centre will be the world’s 
largest and most advanced facility of its type
we are taking advantage of our global purchasing power  
to consolidate purchasing volumes with fewer key suppliers 
of our cast wrought and forged metals this has resulted in 
material cost benefits in the past several years and we expect 
further benefit in 2010 to our materials and freight costs
we have developed online based tools to improve the 
technical training of our sales engineers around the world 
and speed up their development process additionally we 
are implementing information collection and sharing software 
to improve our ability to utilise application knowledge and 
provide a forum to accommodate greater knowledge sharing 
amongst work groups across our global sales network
people lie at the core of every business and we have high 
expectations of performance from our people we have 
taken steps to upgrade the quality of professional human 
resource leadership in guiding our progression to a more 
performancebased culture throughout the organisation we 
have articulated a concise set of core values and leadership 
competencies that are being implemented worldwide
 
mark vernon chief executive officer