IMI plc 2015 Interim Results 31 July 2015 IMI plc Interim Results - PowerPoint PPT Presentation

IMI plc Interim Results Presentation IMI plc 2015 Interim Results – 31 July 2015

IMI plc Interim Results Presentation Agenda ‣ Highlights: Mark Selway – Chief Executive ‣ Financial review: Daniel Shook – Finance Director ‣ Operational review and Outlook: Mark Selway ‣ Q&A: IMI Executive Team

IMI plc Interim Results Presentation Highlights Revenue Segmental operating profit Operating margins £765m Down 2% 1 £116m Down 9% 1 15.2% Down 180bps Cash generation Adjusted earnings per share Dividend per share £82m Up 26% 30.3p Down 13% 13.9p Up 2% ‣ Results in line with expectations in challenging external environments ‣ Strong cash generation and good net debt position ‣ Strategic initiatives on track and delivering early benefits 1. Change is presented on an organic basis; i.e. on a constant currency basis and excluding the effect of acquisitions and disposals

IMI plc Interim Results Presentation Financial review Daniel Shook – Finance Director

IMI plc Interim Results Presentation Revenue H1 2014 H1 2015 Disp Acqs £m Exch Organic Organic H1 2014 H1 2015 Critical Engineering 315 (10) (10) 295 295 (17) 278 Precision Engineering (10) (1) - 355 344 342 342 Hydronic Engineering (11) (1) - 139 127 128 128 Segmental revenue 809 (31) (12) 766 765 (17) 748 % Change on 2014 -4% -5% -2%

IMI plc Interim Results Presentation Operating profit H1 2014 H1 2015 Disp Acqs £m Exch Organic Organic H1 2014 H1 2015 Critical Engineering (2.3) (3.2) 1.0 56.1 50.6 39.8 40.8 Precision Engineering (1.5) 1.2 - 69.4 69.1 63.7 63.7 Hydronic Engineering 25.8 (2.3) - 23.5 23.0 - 23.0 Corporate Costs (14.1) - - (14.1) (10.3) - (10.3) Segmental operating profit 137.2 (6.1) (2.0) 129.1 116.2 1.0 117.2 % change on 2014 -4% -9% Segmental operating margin 17.0% 16.9% 15.2% 15.7%

IMI plc Interim Results Presentation Income statement £m H1 2014 H1 2015 Segmental operating profit 137.2 116.2 Restructuring costs - not exceptional (1.1) (1.5) Loss on disposal of subsidiaries - not exceptional (0.4) - Net interest expense (8.0) (7.3) Net pension finance income/(charge) (1.6) 0.1 Profit before tax and exceptional items 126.8 106.8 IAS39 adjustment (0.2) 4.4 Restructuring costs - exceptional - (6.7) Gain on special pension events 3.2 - Impairment charges - (11.9) Acquisition/disposal costs (0.4) - Acquired intangible amortisation (8.5) (20.6) Profit before tax 87.1 105.8 Taxation (21.4) (16.8) Profit from continuing operations after tax 84.4 70.3 Profit from discontinued operations (net of tax) 477.6 7.9 Total profit for the half year 562.0 78.2

IMI plc Interim Results Presentation Operating cash flow summary £m H1 2014 H1 2015 EBITDA* 137.6 155.0 Inventory (39.5) (32.1) Debtors 2.0 (26.2) Creditors 20.5 7.7 Working capital (22.4) (45.2) Capital expenditure (22.9) (29.4) Provisions and employee benefits (3.3) (12.5) Asset sales/other 2.3 (0.6) Operating cash flow 76.7 81.9 Interest and derivatives 15.9 16.0 Tax (27.7) (16.4) Cash generation 81.5 64.9 * After exceptional items

IMI plc Interim Results Presentation Balance sheet £m Dec Jun Jun 2014 2014 2015 Shareholders' funds 509 425 523 Net debt 200 232 289 Gearing 39% 55% 55% Continuing businesses: EBITDA* 134 334 155 Interest costs 8.0 14.3 7.3 Net debt / EBITDA** 0.9x 0.6x 0.7x EBITDA / interest 23x 21x 17x * Before exceptional items ** Based on rolling 12 month position, before exceptional items

IMI plc Interim Results Presentation Pensions £m Dec 2014 Jun 2014 Jun 2015 UK O'seas Total UK O'seas Total UK O'seas Total Assets 1,324 152 1,476 1,233 145 1,378 1,311 147 1,458 Liabilities (1,264) (247) (1,511) (1,243) (240) (1,483) (1,241) (235) (1,476) Accounting deficit 60 (95) (35) (10) (95) (105) 70 (88) (18) ‣ UK surplus increased by £10m mainly due to actuarial gains ‣ Reduced overseas defined benefit obligations despite acquisition of Bopp & Reuther (£4m). Further scheme closures or buy-outs are expected in H2

IMI plc Interim Results Presentation Foreign exchange sensitivities 2014 and 2015 H1 2014 Change H1 2015 Average rates Euro 1.22 1.37 -12% US$ 1.52 1.67 +9% Ready reckoner for translation impact of movement in FX rates on 2015 FY performance Closing rates Sensitivity to +/- 1 cent move in: Revenue Operating Profit Euro 1.41 1.25 -13% US$ 1.71 1.57 +8% US $ +/- £2.3m +/- £0.5m Euro € +/- £4.9m +/- £0.8m Impact on H1 2015: Revenue -4% Operating profit -4% ‣ If the average rates in July remained constant for the remainder of the year, it would adversely impact both revenues and segmental operating profit by 4-5%

IMI plc Interim Results Presentation Operational Review & Strategic Update Mark Selway – Chief Executive

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering 2014 Foreign Disposals 2014 2015 Acquisitions 2015 £ m 2015 First half order intake (organic) Exchange Organic Organic £292m down 6% organically Revenue 315 (10) (10) 295 295 (17) 278 Growth % -6% -6% Aftermarket up 5% £134m Operating 56.1 (2.3) (3.2) 50.6 39.8 1.0 40.8 Oil & Gas up 8% £72m Profit Operating Fossil Power down 6% £46m 17.8% 17.2% 13.5% 14.7% Margin % Petrochemical down 32% £17m ‣ Aftermarket orders up 5% when Nuclear down 79% £5m compared to H1 2014 Other down 3% £18m ‣ Good project wins in LNG and Oil & Gas Revenue by geography ‣ Expect to deliver organic revenue Western Europe 7% 6% 14% and profit growth in H2 North America Emerging Markets ‣ New Korean plant and Chinese 23% UK service centre RoW 50%

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering Continue to invest to support addressable growth markets - £7bn… Controls Oil & Gas Isolation Power Generation Actuation Silencers Petrochemical … and organic technology transfer to new locations

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering Continue to invest in infrastructure, enhanced systems and processes ‣ New Project Management process piloted at IMI CCI USA ‣ Obeya rooms now in place at IMI CCI Czech Republic and IMI CCI Korea ‣ ERP system launched on ‣ IMI Critical divisional ‣ Roll out programme in time and on budget in the intranet launched place for all IMI CCI sites Czech Republic ‣ IMI Critical global website ‣ Two further sites planned launched to go live in Q4 2015 www.imi-critical.com

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering 100 90 80 ‣ Third round of Lean assessments now 70 complete 60 50 ‣ Improvements evident at all sites 40 30 ‣ Action plans in place 20 for further 10 improvement over the next six months 0 IMI Z&J Germany IMI CCI SPEC JV IMI Fluid Kinetics IMI TH Jansen ** IMI Truflo Marine IMI Z&J Houston IMI CCI Sweden IMI Truflo Rona IMI CCI Sri City IMI CCI Japan ‣ World-class by 2018 IMI CCI Korea IMI Z&J China IMI CCI RSM IMI InterAtiva IMI CCI Brno IMI Remosa IMI Bopp & IMI Orton Reuther * Belgium IMI SSF IMI STI IMI NH 3 rd round target % 56 58 59 52 53 52 50 50 56 50 44 55 51 51 41 45 41 57 40 35 3 rd round score % 56 59 55 48 50 50 52 49 50 51 43 49 47 44 40 46 40 54 41 29 27 * IMI Bopp & Reuther has had two assessments ** IMI TH Jansen has had one assessment

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering The acquisition of Bopp & Reuther Safety Valves Control Valves Shut-Off Valves H1 2015 H1 2014* Variance £ m Order intake 24.3 27.7 (3.4) Revenue 17 27 (10) Operating Profit (1.0) 2.2 (3.2) Acquired for € 153m – deal completion 2 January 2015 ▸ ▸ Closely aligned: ‣ Enhanced presence in the growing power sector ‣ Product range extension ‣ Access to new higher margin aftermarket opportunities ‣ Significant synergies including rationalisation of European nuclear assets * Pro forma unaudited comparative financials

IMI plc Interim Results Presentation IMI plc Interim Results Presentation IMI Critical Engineering The acquisition of Bopp & Reuther ‣ In the balance of the year, on a constant currency basis, organic revenue performance is expected to deliver a comparable percentage reduction to the first half of this year ‣ Given current order book phasing, both second half revenues and margins will show significant improvements on the first half of the year ‣ Due to the second half phasing of the order book, we expect Bopp & Reuther to significantly improve revenues and profits when compared to the first half of the year