IMI Critical EngineeringRoy Twite – Divisional Managing Director
1
Behind the numbers
£69m Orders H1 2017 from Value Engineering
12 Plants consolidated or sold, 17 remaining
£17m Invested in new ERP and CRM systems
12,000 Continuous improvement actions in 2016
8New products already launched in 2017
Value Engineering workshops held in the last 12 months100
2
IMI Critical Engineering at-a-glance
Revenue
£651m% of Group revenue
39%Operating profit
£81.8mNumber of employees
3,700
Controlvalves
Butterflyvalves
Actuation
Ballvalves
Slidevalves
FCCvalves
Order intake 2016
£614mAftermarket
£299mPower
£94mOil & Gas
£135mPetrochemical
£45mNuclear Power
£10mOther
£31m
Our performance in 2016 Our brands Our product categoriesWe help our customers control critical in-plant processes by providing superior, custom-engineered valves, actuation and control systems.
16%
22%
51%
4%7%
Western Europe
North America
Emerging Markets
UK
RoW
Revenue split by geography
3
Leading the market
▶ Supporting the customer▶ Successful adoption of Value Engineering tools
▶ Realignment of global footprint
▶ New Product Development
▶ Impact of future energy mix on New Construction orders▶ Gas is the most important transition fuel
▶ Growth in LNG demand
▶ Nuclear outlook remains attractive
▶ Installed base delivering high quality profits stream4
Delivering against IMI Group strategy
▶ Korea localisation▶ IMI Bopp & Reuther▶ Website & Intranet▶ Obeya & Project
Management Process
▶ Branding and website
▶ Houston facility▶ IMI STI relocation▶ Quarter turn actuators▶ Oil & Gas ball valves
▶ Launch 10 new products▶ Sales acceleration▶ China localisation▶ Implement dedicated
Middle East business unit.▶ Internal Control
Declaration 75%▶ ERP implemented in 9
sites▶ CRM implemented in 40%
of the Division
▶ ERP implemented in 6 sites▶ CRM blue-print designed▶ Organisational Upgrade▶ Consolidated Nuclear
manufacturing in IMI Bopp & Reuther
▶ Internal Control Declaration 73%▶ Launch 15 new products▶ IMI Th Jansen manufacturing
consolidated into IMI Z&J▶ China sites consolidated▶ Implement VA/VE and competitor
strip down
▶ Launch 10 new products▶ Lean score at 85%▶ Internal Control Declaration 78%▶ Bolt-on acquisition▶ ERP implemented in 80% of the
division▶ CRM implemented in 80% of the
Division
▶ Bolt-on acquisition▶ Launch 10 new products▶ CRM and ERP
implementations complete
▶ Internal Control Declaration 80%
✓
Year 0:The hard work begins
2014
✓
Year 1:Increased investment
2015
✓
Year 2:Benefits starting to show
2016
Year 3:Nearly firing on all cylinders
2017
Year 4:Up to full speed
2018
Ambition:Double operating profits
IMI Critical Engineering Deliverables
Supported by value enhancing acquisitions 5
Footprint for growth
6
IMI Critical Engineering footprint for growth
▶ People footprint from 2013 to 2017:▶ Increased by 15% in the East
▶ Decreased by 16% in the West
▶ Consolidated or sold 12 plants
7Before Now
IMI Critical Engineering footprint for growth
IMI CCI Korea: 80% Lean Score
IMI Critical Engineering China: 70% Lean Score
IMI CCI SriCity: 71% Lean Score
8
ERP programme
▶ £19m capex approved▶ 8 sites live, 8 to go
▶ Improved financial control▶ Faster management decision making▶ Driving overhead efficiencies
9
Czech Republic
AustriaIndia
Sweden
Korea
Japan
IFS SingaporeMalaysia
CRM programme
▶ £3m capex approved▶ 40% of revenue this year, 80% by 2018, 100% by 2019
▶ Supporting top line growth▶ Enabling global project capture▶ Proactively serving our global installed base
10
Energy transition
11
2014-2040 energy demand forecast
Future energy growth from South-East Asia, Middle East and India (Source IEA World Energy Outlook)
12
India 3.3%
Southeast Asia 2.2%
Middle East 2.2%Energy Demand by Region in the New Policies Scenario China 0.9%
Gas power growth
Gas: 1.5%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2000 2005 2010 2015 2020 2025 2030 2035 2040
Ener
gy D
eman
d (M
toe)
World Primary Energy Demand (CAGR) by Fuel in the New Policies Scenario
Coal Oil Gas Nuclear Renewables
(Source: Based on IEA data from World Energy Outlook © OECD/IEA 2016, www.iea.org/statistics, Licence: www.iea.org/t&c; as modified by IMI)
Nuclear: 2.3%
Coal: 0.2%
Oil: 0.4%
Renewables: 2.3%
13
LNG demand
▶ LNG demand to grow at 4% - 5% annually between 2015 and 2030 (Source: Shell LNG Outlook 2017)
▶ Capacity additions need to come on line by 2024 to meet demand▶ IMI orders possible in 2019 / 2020
14(Source: BP Energy Outlook 2017)
Nuclear new construction
0
5
10
15
20
25
30
35
40
45
China Russia India UAE Korea UK
Num
ber o
f Rea
ctor
s
Top Nuclear New Construction Projects 2017-2022Under Construction Planned
15
IMI Critical Engineering New Construction
▶ 2016 New Construction orders:▶ 9% Gas Power
▶ 9% LNG
▶ 2% Nuclear
16
Other Oil & Gas34%
Coal Power15%
Petrochemical14%
Other11%
LNG9%
Gas Power
9%
Other Power
6%
Nuclear2%
New Construction Orders in 2016
0
50
100
150
200
EmergingMarkets
MiddleEast &Africa
NorthAmerica
WesternEurope
Book
ings
(£m
)
New Construction Orders By Destination Region in 2016
Other includes Biomass, CSP, CHP for Oil and Gas
IMI Critical Engineering Aftermarket
▶ 2016 Aftermarket orders:▶ 16% Gas Power
▶ 5% LNG
▶ 15% Nuclear
17
0
20
40
60
80
100
120
EmergingMarkets
NorthAmerica
WesternEurope
MiddleEast &Africa
Book
ings
(£m
)
Aftermarket Orders By Destination Region in 2016
LNG5%
Petrochemical8%
Other Power10%
Other Oil & Gas12%
Nuclear15%
Gas Power16%
Other16%
Coal Power18%
Aftermarket Orders in 2016
Other includes Biomass, CSP, CHP for Oil and Gas
IMI Critical Engineering footprintControl valves installed base
▶ 750,000 valves in the installed base
▶ c.£300m in aftermarket revenue
18
Are we ready for the 2040 electric vehicle target?
61GWper year
British energy capacityCurrent electricity usage at peak times
30GWper year
Extra energy needed to power electric cars by 2040
The electric driving revolution
To produce the extra 30GW per year we would need to build an extra:
10,000New wind turbines
9.6Hinkley nuclear power station
Build time6 months per wind turbine
or
Costing£1.3 millionper wind turbine
Costing£20 billionfor each nuclear power station
Build time20 yearsper nuclear plant
Electric vehicle uptakeVehicles (millions)
How key electric cars compareTesla Model STop of the range
Nissan LeafBest seller
Range 381 miles
Range 124 miles
Charge time 9 hours Charge time 12-15 hours
Cost £126,900 Cost £16,680
Electricity generation sourcesGeneration (Terawatt-hour)
Source: The Telegraph 25th Jul 2017 19
Electricity generation sources
▶ Generation (Terawatt-hour)
20
▶ China gears up to ban diesel and petrol cars in coming decades
▶ Aim to implement before the UK
▶ Ford estimate demand would be 6m electric vehicles per year by 2025
Are we ready for the 2040 electric vehicle target?
21
Leading the market
▶ Supporting the customer▶ Successful adoption of Value Engineering tools
▶ Realignment of global footprint
▶ New Product Development
▶ Impact of future energy mix on New Construction orders▶ Gas is the most important transition fuel
▶ Growth in LNG demand
▶ Nuclear outlook remains attractive
▶ Installed base delivering high quality profits stream22
DisclaimerThis document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and operating margins, market trends and our product pipeline are forward-looking statements. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward-looking statement which could cause actual results to differ materially from those currently anticipated. Any forward-looking statement is made in good faith and based on information available to IMI plc as of the date of the statement. All written or oral forward-looking statements attributable to IMI plc are qualified by this caution. IMI plc does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in IMI plc’s expectations.