Halma: Site Visit to HWM Tuesday 1 October 2019 1 Welcome Andrew - PowerPoint PPT Presentation

Halma: Site Visit to HWM Tuesday 1 October 2019 1

Welcome Andrew Williams Group Chief Executive 2

Agenda 11am - Noon Presentation and Q&A Buffet lunch 12.45pm Coach to HWM 1pm HWM site tour/product breakout sessions 3pm Close Coach departs for station 3

Introduction Constance Baroudel Divisional Chief Executive 4

HWM: a Halma Environmental Monitoring company HWM leveraging Halma HWM core to Growth Enablers Environmental & Analysis For a cleaner world Talent & Culture E C M&A Convergence opportunities C Strategic Peer support Communications Halma like financials Digital Growth Engines 5

Rob Fish Managing Director, HWM 6

Market Leaders in Digital Water and Digital Waste Water 7

Mission Save natural resources and reduce CO 2 emissions 8

Long-term growth drivers Increased Limited and expectations of stressed water service resources Growing Increased populations and environmental water usage legislation Ageing Higher regulatory infrastructure standards 9

Markets Served Digital connectivity for global utility networks Monitoring assets, delivering data, bringing control (Multi-utility) ~70% <5% >20% Note: percentages shown are % of FY 2019 revenue 10

1993 1994 2003 2019 2005 2013 11

Business Model Progression Phase 1: Phase 2: Phase 3: Phase 4: Tools To Site Remote Fixed Network Data Delivery Deployment 12

Technology Rugged, battery powered products and GSM connectivity solutions monitor critical customer infrastructure 13

Case Studies Calculate Minimum Night Monitor Level and Flow Flow to identify distribution in sewers to prevent network leakage blockage and spills 14

Customers HWM has grown through strong customer focus , innovative product development, a complete user service and our digital data model 15

Financials Revenue Revenue by geography USA UK Europe Asia Other 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenue by activity Revenue by customer type Hardware UK water Air Time & Data UK Electricity Svs Export water Installation Other Repairs Note: Pie charts show revenue split for FY2019 16

Operations Manufacturing • Cwmbran and Northampton 209 employees • Box build, test, configuration 5 locations • Medium volume, low capital intensity Install and maintain model Supply Chain spend • Recurrent revenues PCBs • HWM responsible for logger fleet Cable harnesses performance Batteries • Analysis and reporting teams Enclosures monitor logger fleet behaviour Factored components 17

Digital data HWM process over 10 million HWM Products HWM Customers data connections daily. A major business focus is to ensure high connectivity rates for our devices, to maintain this key competitive advantage. ISO 27001 accreditation 18

Future Growth • Broaden range of solutions Maximise potential in • Increase digital insights clean water solutions • Water quality • Launching new products Build waste water • Further geographic expansion segment • Acquire new capabilities Apply remote • Gas network monitoring monitoring solutions • Air quality, smart agriculture in adjacent markets 19

Business Growth Drivers and the Regulatory Environment Mike Tennant Director of Sales and Business Development, HWM 20

Market/Business drivers Our markets have a number of long term growth drivers:   Limited and stressed water resources  Increased population and water usage  Increased standards of living, expectations of service in water and sewerage  Increased Environmental legislation  Ageing Infrastructure  Regulators  Looking specifically at regulation in our main market - UK 21

OFWAT and the AMP  The unique ‘monopolistic’ model of UK Privatisation necessitated a regulator to protect customers  OFWAT regulates through 5- year price reviews  Business plans submitted, investment plans and price proposals reviewed  Key targets established which have to be met 22

Regulation Principles and HWM  Customer Outcomes, PR19 Principles Resilience and Innovation drive targets and opportunities for HWM, specifically:  Leakage – overall reduction of 15%, 170 Billion Litres per year  Pollution Incidents – 37% reduction, and 80% for the worst offenders 23

Leakage Reduction Targets  OFWAT delivers toughest Initial target New target ever targets Anglian Water 17% 17% Dwr Cymru Welsh 15% 15% Water  Requires innovation and Hafren Dyfrdwy 15% 15% technology Northumbrian 16% 15% Water Severn Trent 15% 15%  Cannot simply do the South West Water 15% 15% Southern Water 15% 15% same as the last 30 Thames Water 15% 25% years United Utilities 15% 20% Wessex Water 15% 15% Yorkshire Water 25% 25%  Already driving a huge Affinity Water 15% 20% Bristol Water 15% 15% investment in Smart Portsmouth 15% 20% Water early leak detection South East Water 14% 15% systems = PermaNET South Staffs 23% 23% Water SES Water 15% 15% 24

37%- 80% reduction in pollution incidents  Reduction in Pollution is key to Environmental and customer service targets;  Can no longer monitor only treatment and spill  Need to monitor the network for early identification and prevention  Needs lower cost, battery powered telemetry - SpillGuard 25

Summary  Strong regulation in our main market continues to drive opportunity and growth  Long term climate change, population growth and finite water availability ensure continued investment  Regulation is not matched world-wide but is increasing  Other long-term drivers will drive international investment and likely regulation  Many markets looking at a form of the UK model 26

Any questions? Saving natural resources and reducing CO 2 emissions 27 27

Appendices 28

Rob Fish Divisional Managing Director Steve Tooms Stuart Trow Rob Kitchen Executive Executive Managing Director Director Director Mick Bolton Mike Tennant Gavin Orr Simon Fisher Davide Di Palma Innovation Operations Sales & Business Finance Engineering Project Director Director Development Director Director Director Jim Burke Head of FCS 29

• Palmer & Radcom merge to form Key dates HWM-Water Ltd 2010 • First high volume digital water solutions provided to UU/STW/YW Launch of world first leak noise • Radio Tech merged with HWM 1979 correlator ASL added to extend electricity 2013 metering solutions – now multi utility AMR Palmer and Reten merge on 1995 Cwmbran site Launch of first ATEX approved data 2015 logger targeting at waste water and gas launches of world first 1999 Largest ever deployment of permanently deployed ANL 2017 fixed network leak sensors – Affinity Water Palmer integrates Wessex & FCS Invenio added to group to 2000 brands – FCS become USA re-seller 2019 extend clean water solutions into customer side 30

Disclaimer This document contains statements about Halma plc that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Halma plc’s operations; and (iii) the effects of government regulation on business. These forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Halma plc. They involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such statements. They are based on numerous assumptions regarding the present and future business strategies and the future operating environment . All subsequent oral or written forward-looking statements attributable to Halma plc or any of its shareholders or any persons acting on its behalf are expressly qualified in their entirety by this cautionary statement. All forward-looking statements included in this document speak only as of the date they were made and are based on information then available to Halma plc. Investors should not place undue reliance on such forward-looking statements, and Halma plc does not undertake any obligation to update publicly or revise any forward- looking statements. No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by Halma plc or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction. 31