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Capital Markets Presentation Accelerating Growth The long term drivers 2 October 2013 Disclaimer These capital markets day materials include forward-looking content with respect to the markets in which the Group operates. Such content may be affected by a number of risks and uncertainties that can cause results and developments to differ materially from those currently anticipated. IMI undertakes no obligation to update forward-looking content. Market share information is approximate and based on certain market niches and applications where IMI is active. 2 Welcome and Introduction Martin Lamb Chief Executive, IMI plc Strategic convergence Focusing on the ‘sweetspot’ • Shared progress through Capital Markets series over three years • Drive ‘sweetspot’ convergence to 75% by 2017 October 2011 – Fluid Technologies October 2012 – Niche Leadership Frozen 15% CDD Opps Efficiency Rail HydronicEnergy Sector Conditioning Sector 10% Aftermarket Life Sciences Foodservice Variety, Health & Food & Petrochem Wellness Beverage & Refin Fossil Commercial Vehicle 5% TRV's 0% Hydronic Balancing Nuclear LNG Iron & Steel October 2013 – Growth Drivers • Opportunities arising from megatrends • Understanding of engineering ‘need’ • Derivation of technology roadmap Key messages • Mega-trends will have a profound impact on our customers and end markets • Prime position to benefit based on market positioning and technologies • Technology roadmaps in place …… and brimming! • Pathway to higher returns clear cut ……execution is key Agenda Welcome & Introduction Martin Lamb Long term growth drivers Roy Twite Mega-trend driven growth opportunities - LNG: New growth opportunities - Petrochemical: Positive impact of shale gas - Commercial Vehicles: Tomorrow’s truck Rob Campbell Metin Gerceker Mark Sealy Break for refreshments Mega-trend driven growth opportunities - Life Sciences: Healthcare of the future - Indoor Climate: Smart buildings - Beverage: Restaurant of the future Robert Guerra Stefan Seitz Mike Coombes Sweetspot development conclusions Martin Lamb Questions and Answers Executive Directors Refreshments Long Term Growth Drivers Roy Twite Executive Director Growth drivers – agenda 1. Major global trends 2. Creating engineering requirements 3. Driving IMI’s technology road map Growth drivers – mega-trends Climate change Urbanisation Resource scarcity Ageing population long term sustainable global Climate change “From 1990 to 2030 greenhouse gases are expected to increase by between 25% to 90%” Source: Frost & Sullivan Climate change “Markets for low-carbon energy products are likely to be worth at least $500bn per year by 2050” Source: Frost & Sullivan Resource scarcity “A 40% increase in energy demand is forecast by 2030” Source: Frost & Sullivan Resource scarcity “An additional $26trn of investment required to support increasing energy demands” + 50 GW Source: Frost & Sullivan Resource scarcity “Shale gas reserves are expected to make the US energy independent by 2020” Source: Frost & Sullivan Urbanisation “Between 2009 & 2050, urban population will double to 6.4 billion people” Source: Frost & Sullivan Ageing population “Between 2000 and 2050 the proportion of people over 60 will double from 11% to 22%” Source: Frost & Sullivan Ageing population “Two-thirds of healthcare spending goes on people over 65 years old” Source: Frost & Sullivan Mega-trends to IMI technology roadmap Understand the mega-trends and sub-trends they drive Understand the customer‘s engineering requirements Understand how that translates into new technology developments Our niches Future CAGR CDD Opps Efficiency 15% Frozen Rail Sector Hydronic Energy Conditioning Sector Hydronic Balancing 10% Aftermarket Foodservice Life Sciences Food & Beverage Variety, Health & Wellness Fossil Nuclear Petrochem & Refin Commercial Vehicle 5% LNG Iron & Steel TRV's Leadership position Leadership Threshold 0% Niche leadership – LNG The Niche : Severe Service application valves & actuation into LNG plants Niche Size IMI Share % Market Position Key Competitors Key Customers c.£210m <10 10-20 20-30 >30 1 Growth CAGR 2012-2017 Industry growth Source: IEA, Douglas Westwood 6 - 8% Niche growth 6 - 8% Incremental revenue growth opportunities 0 - 2% Koso, PBVS, Severn Glocon, Vanessa (Tyco) Bechtel, Chevron, JGC, Petronas, Shell, Woodside Source: IMI estimates Prioritising projects Smart Choices…… • Dragons Den/Shark Tank KAM – Choosing winning :• End market drivers • Customers • Projects • Fit with strategy • Value proposition • Competitive position Backing winners Fluid Power Dragons Den Climate change Climate change – implications Climate change TRENDS ENGINEERING REQUIREMENTS Move to combined cycle gas in powergen Control of huge pressure drops Power plant efficiency Higher temperature materials Less flaring Pressure protection systems Commercial Vehicle fuel efficiency legislation Waste Heat Recovery Energy efficiency in buildings More precise flow control Move away from harmful refrigerants New refrigerants Nuclear still important to China and India Safety retrofits required Climate change – technology roadmap Analytical chromatography valves for gas analysis District Energy Products Range of energy efficient beverage coolers New TRV with Flow Control Terminal unit balancing & control valves Nuclear steam control valves and actuators Optimised nuclear strainers Commercial Vehicle valve – Euro VI Launched Zero leakage seals / fugitive emissions monitoring Year 1 Severe Service Smart Valve and Actuator Nuclear containment venting systems Valves for small nuclear reactors Commercial Vehicles - CNG Commercial Vehicle – waste heat recovery Year 2 Fluid Power Indoor Climate Year 3 + Beverage Climate change – truck engines 2006 engine (Eu3) IMI opportunity: €50 per truck 2018 engine (US) €900 per truck Resource Scarcity Resource scarcity – implications TRENDS ENGINEERING REQUIREMENTS More extreme extraction e.g. deep sub sea Higher pressure valve sealing Gas transportation / LNG Faster response compressor control valves Floating platforms – FPSOs and FLNG Smaller envelope, lighter weight cryogenic valves Remote locations Lower power requirements Fuel & energy efficiency legislation Better control Peak load → cycling Lower noise requirements Resource scarcity Resource scarcity – technology roadmap District Energy Products Redundant Valve Manifold for ESD HIPPS control system for upstream Oil & Gas Smart Valve and Actuator Customised valves for Catofin Low power valves for shale gas Rapid response positioner technology TA Fusion Control Valve range Terminal unit balancing & control valves ¼ turn actuators for oil & gas Optimised nuclear strainers Ball valves for oil & gas 1000 bar Partial stroke solenoid valves Launched Year 1 Severe Service Automated manual transmissions CV – Waste Heat Recovery Optimised valves for Catofin and FCC processes Localised control capability Valves optimised for floating platforms Small nuclear reactors Commercial Vehicles - CNG Sub-sea actuators Sub-sea valves Sub-sea solenoid valves Year 2 Fluid Power Indoor Climate Year 3 + Beverage Resource scarcity – polymers Cracking IMI opportunity: £3m per install Dehydrogenation Up to £18m per install Urbanisation Urbanisation – implications Urbanisation TRENDS ENGINEERING REQUIREMENTS Increased demand for power, energy efficient buildings More precise flow control Increasing freight transportation Lower weights & energy efficiency Increased demand for mass transit More reliability, faster access Increasing consumer demands More dispense variety Increased demand for materials Gas to chemicals Microdosing Pressure on space More compact solutions Increased pollution from transportation EGR and SCR Urbanisation - technology roadmap CV– Bus HVAC valves Emissions control for off-highway vehicles Rail air dryer systems Train door control systems Balancing & control calve range Terminal unit balancing & control valves CNG valves and regulators Automated Beverage Dispenser New TRV with flow control Batch carbonator carbonator Batch for organic sodas for organic sodas Residential Residential carbonated water carbonated water dispenser dispenser Blend in cup smoothie dispenser Launched Smart valves and actuators Tea dispensers dispensers Tea Year 1 Severe Service District energy products Year 2 Fluid Power Indoor Climate Year 3 + Beverage Urbanisation – evolving buildings HVAC System 2005 Smart HVAC System 2017 • Balancing and differential pressure control valves • Basic terminal valves • Balancing & control valves • Smart valves & actuators • Full terminal valve offer • Pressurisation and water quality portfolio • Connectivity and measurement solution £350k £1.5m Ageing population Ageing population – implications TRENDS Ageing population ENGINEERING REQUIREMENTS Increased demand for healthcare Smaller, lighter Out of hospital treatment Lower Power Increasing patient expectations Ease of use, robustness Prevention vs treatment Reduce sample and reagent size, micro dosing More frequent and sophisticated testing Reduced testing cycle time Healthier lifestyles, drinks Freshness, pulp dispense Ever greater regulatory burdens Increased safety & redundancy in systems Shortages of skilled clinical staff Increased automation Ageing population - technology roadmap Disposables & consumables Laminated manifold technology Chromatography multiport valves & fittings Micro proportional valves Separation technology (gas & liquid) Analytical proportional valves Analytical gas/liquid detectors Electronic pressure & flow Controllers Miniature inline syringe / piston pumps Launched Proportional valves for liquids Configurable syringe pump technology High flow proportional valve Miniature media separated valves Condition monitoring & dispense confirmation Year 1 Severe Service Nanoliter (nl) dispense/dosing technologies Year 2 Fluid Power DC & closed- looped intelligent pumps Indoor Climate Year 3 + Beverage Ageing population – respiratory care 2003 portable ventilator Weight: 6.5 KG IMI opportunity = £200/device . 2013 portable ventilator Weight: 0.5KG IMI opportunity = £250/device IMI Group technology roadmap District Energy Products Redundant Valve Manifold for ESD HIPPS control Disposables & Smart ValveZero and leakage Analytical system forHVAC CV– Bus consumables Actuator seals / fugitive chromatography upstream Oil & valves Laminated emissions Condition valves for gascontrol Emissions Gas Automated manifold monitoring monitoring & Rail air dryer analysis formanual off-highway CV – Wastedispense Heat technology systems Customised vehicles Recovery transmissions confirmation valves for CatofinChromatography District Energy Range of energy Micro Terminal unit Train door control District Energy Optimised valves Products CNG valves and Proportional &response& proportional efficient beverage Rapidbalancing systems multiport valves Products and regulators valves for liquids fittings positioner coolers valvesfor Catofin control valves Localised control Low power valves FCC processes Balancing capability technology for shale gas & Terminal unit Configurable Smart Valve and Separation Automated Control Valve High flow New TRV with balancing & syringe Valvespump optimisedActuator technology (gas Beverage Terminal unit range proportional valve control Flow Control valves Small nuclear technology for floating & liquid) Dispenser TA Fusion Control Smart Valves balancing & reactors platforms Valve range andAnalytical Actuators control valves Analytical Nuclear Nuclear steam New TRV with Optimised Valves for smallDC & closed- looped Miniature media Batch carbonator gas/liquid proportional containment control valves Commercial Flow Control nuclear reactors separated valves nuclear for strainers organic sodas ¼ turn actuators Sub-sea actuators intelligent pumps Optimised nuclear detectors valves venting systems and for actuators Vehicles CNG oil & gas strainers Blend in cup Electronic Commercial Nanoliter (nl) Miniature inline Commercial Residential Subsea solenoid Tea dispensers Ball valves oil Partial stroke pressure & Commercial flow smoothie Vehicle –dispense/dosing waste syringe piston Vehicle valve –for/water carbonated Sub-sea valves Vehicles CNG valves & gasVI 1000 bar solenoid valves Controllers dispenser heat recovery technologies pumps Euro dispenser Launched Year 1 Severe Service Year 2 Fluid Power Indoor Climate Year 3 + Beverage Filling the technology gaps • Some technology needs will be met via: • Acquisition, licencing, joint ventures • Potential adjacent markets include: - Sub-sea valves and actuation - Complex controls and electronics - Sensors - Specialist filtration Group technology roadmap impact Adjacencies LNG Nuclear Fossil • Underlying growth in niche markets 5-7% Petrochem Iron & Steel Commercial Vehicle Life Sciences Food & Beverage Rail Energy • c.£400m of revenue coming from new products in 2017 • Incremental growth from new products 2-3% Hydronic Balancing Hydronic Conditioning TRVs Variety, Engagement, Health & Wellness Operator Efficiency Frozen Aftermarket Parts 2012 17 Niches 2017 c.20 Niches • Opportunities to develop leadership positions in adjacent niches through acquisition Mega-trend driven growth opportunities • LNG New growth opportunities Rob Campbell • Petrochemical Positive impact of shale gas Metin Gerceker • Commercial Vehicles Tomorrow’s truck Mark Sealy Mega-trend driven growth opportunities • Life Sciences Healthcare of the future Robert Guerra • Indoor Climate Smart buildings Stefan Seitz • Beverage Restaurant of the future Mike Coombes LNG New growth opportunities Rob Campbell Sales Director, Northern Europe Niche leadership – LNG The Niche : Severe Service application valves & actuation into LNG plants Niche Size IMI Share % Market Position Key Competitors Key Customers c.£210m <10 10-20 20-30 >30 1 Growth CAGR 2012-2017 Industry growth Source: IEA, Douglas Westwood 6 - 8% Niche growth 6 - 8% Incremental revenue growth opportunities 0 - 2% Koso, PBVS, Severn Glocon, Vanessa (Tyco) Bechtel, Chevron, JGC, Petronas, Shell, Woodside Source: IMI estimates Mega-trends – driving growth in LNG Mega-trends Sub-trends Climate change Abundant US shale gas New solenoid valves for ESD Increased demand Coal → Gas powergen HIPPS Economic fuel switch Nuclear → Gas More compact, light weight valves for FLNG Massive exploration – e.g. Mozambique Sub sea anti surge Increased safety standards Actuation control and precision Environmental legislation Electric & sub sea actuation More economical and flexible → Floating LNG Process expertise to support EPC’s Resource scarcity Urbanisation Ageing population Increased vendor collaboration IMI opportunity Harnessing the growth opportunity Support global engineering for O&G Majors Subsea LNG valves Redundant Valve Manifold for ESD Optimised valves for Floating Platforms Fast Trak / Quick Trak Ball valves for oil & gas <1000bar Safety Integrity Level 2 & 3 ¼ turn actuators for oil & gas Partial stroke solenoid valves Launched Year 1 Optimised valves for Catofin & FCC Fugitive emissions monitoring Year 2 LNG valves for marine engines Commercial Vehicles - CNG Floating LNG valves Year 3 + Recent successes in LNG Recent LNG projects awarded: Australia Pacific LNG 9mtpa Gladstone LNG 3.5mtpa Ichthys LNG 10mtpa Sabine Pass 1 & 2 LNG 10mtpa Prelude (Shell) FLNG 3.6mtpa PNG Papua New Guinea 6.9mtpa Approx. £85m in value Forthcoming LNG projects LNG projects pipeline Gorgon 4 (Australia) Yuedong LNG (China) Mozambique LNG LNG Carriers S1015-S1017 Petronas (Malaysia) – FLNG Browse (Australia) now FLNG India H-Gas LNG gateway Yamal (Russia) 2014 2014 2014 2014 2014 2015 2015 2015 Cove Point (US) Sabine Pass 2 (US) Kitimat (Canada) Freeport (US) Lake Charles (US) 2013 2014 2014 2015 2017 The opportunity is c.£160m Floating LNG Why Floating LNG? • Addresses environmental constraints • More economical • Can be relocated • More suitable for small gas fields Floating LNG Projects • Shell Prelude • Browse, Australia • Petronas (Malaysia) New FLNG designs – meeting needs Design for • lightweight • streamlined castings • DRAG for low noise characteristic Designs validated by our Valve Doctors and flow capacity and stress analysis using CFD and FEA Original design New design CFD studies Floating example – Prelude Prelude – world’s first FLNG • Many valve packages (to date, design not finalised) • Need to be approved/certified by Shell & Technip • IMI has won 75% of all packages for ball and butterfly isolations valves LIQUEFACTION (Cryogenic Process) Tri Eccentric Butterfly Trunnion Mounted Ball Anti surge compressor valves COOLING SYSTEM Butterfly STEAM PACKAGE FIRE FIGHTING Butterfly UL 1091 Unique to FLNG PROCESS VALVE Top Entry Ball Valve GAS TREATMENT (Sweetening; De-Watering etc.) Tri Eccentric Butterfly Trunnion Mounted Ball Valves Other growth opportunities in LNG • Noise – manned floating platforms • Lightweight but maintain CV (capacity) • Fast response, precise control Summary LNG Opportunity • The mega-trends are driving growth in LNG of 6-8% • Sub-trend towards Floating • Terminal process reversal in US • Niche leadership in Severe Service valves in LNG is captured through • Valve Doctor & engineering expertise • Design Partnership – Key LNG & EPC players • Surge protection • Delivered by developing technology • Actuation – speed of response, precise control • Noise attenuation • Lightweight maintaining capacity Petrochemical Positive impact of shale gas Metin Gerceker Managing Director, Zimmermann & Jansen Niche Leadership – Petrochemical The Niche: Severe service in several key applications; Delayed Coking (DC), Fluid Catalytic Cracking (FCC), Ethylene/Propylene (Catofin) and Purified Terephthalic Acid (PTA) Niche Size IMI Share % Market Position Key Competitors Key Customers Growth c.£180m <10 1020 20-30 >30 1 Delta Valve (both Curtiss Wright), Poyam, Tapco/Enpro ExxonMobil, Lukoil, Petrobras, Sinopec, Statoil, UOP CAGR 2012-2017 Industry growth Source; Global Data 12, Oil & Gas Journal 2 - 4% Niche growth 2 - 4% Incremental revenue growth opportunities 3 - 5% Source: IMI estimates Mega-trends – driving growth in Petrochemical Mega-trends Climate change Sub-trends Shale & LNG demand reduced gas costs US investing in new petrochem plant Resource scarcity Urbanisation Increased demand for plastics OPEC countries – aim to add more value to resources Requirement for new catofin plants Ageing population Increased vendor collaboration IMI opportunity High temperatures Highly corrosive materials Duplicated safety valve systems Fracking injection New generation plants in ME FCC DC Harnessing the growth opportunity Every product is engineered to order Variable orifice valves Butterfly valves Double disc through conduit Partial stroking solenoid valves Through conduit valves New ball valves for processes Goggle valves Hydraulic actuation for Catofin valves Fugitive emissions monitoring Slide gate valves Hydraulic control for DC valves Combined control/isolation valves for FCC Launched Year 1 Year 2 Support global engineering for O&G majors Year 3 + Recent successes in Petrochemical Recent Petrochemical projects awarded: Enterprise Catofin® (US) Reliance PTA (India) PDVSA (Venezuela) TANEKO (Russia) Wood River (US) TongYi (China) Hengli Petrochemical (Dalian, China – PTA) Project value c.£55m Forthcoming Petrochemical projects Selected Petrochem projects pipeline Atyrau PetroPeru EIL – BPCL SK Gas KPI GS Petrologistics/JGC Shangdong II PDVSA Kazakhstan Talara Kochi Refinery, India S. Korea Kazakhstan Trakreer Refinery, India China Venezuela Project value c.£90m Catofin® is the process license owned by Lumus (CB&I) Refinery Coking FCC & Coker Catofin® Catofin® FCC Catofin® Catofin® FCC Winning in Petrochemical Catofin dehydrogenation • Converts feedstock (propane) into plastic (propylene) for commercial use • Severe service valves: − − − − Air inlet and outlet Steam purge Hydrocarbon inlet/outlet Evacuating • Up to £18m per plant Delayed Coker Units • Thermal cracking to produce hydrocarbon coke • Severe service valves: − Butterfly isolation − Slide valves for unheading − Goggle valves • Up to £5m per plant Winning in Petrochemical Fluid Catalytic Cracking • Converts heavy gas oil into gasoline and diesel • Severe service valves: − Sliding gate valves around the fractionator (c50-60 tonnes) − Goggle valves around precipitator − Turbo expander butterfly valves • Up to £3.5m per plant Meeting the Severe Service valve needs Unique needs of FCC & Delayed Coker • Very high temperature – 750 to 1,650°C • Extremely corrosive environment • Maximum reliability – install for 25 year life Delayed Coker – Severe Service GDP growth leads to demand – e.g. Rosneft, Russia Typical Coking plant Double Disc Through Conduit slide gate valves & goggle valves Catofin plant – Severe Service • Air inlet & outlet valves • Hydrocarbon inlet & outlet valves • Hydraulic actuators, control system Summary Petrochemical Opportunity • The mega-trends and sub-trends are driving growth in Petrochemical of 2 – 4%% • Niche leadership in Severe Service valves in Petrochemical are captured through: • Engineering know-how & expertise • Bespoke solutions • Proven track record of reliability over a large install base • Delivered by developing technology • Optimised slide valves • Design to feedstock requirements Commercial Vehicles Tomorrow’s truck Mark Sealy Global Technical Director CV Sector Niche Leadership – Commercial Vehicle The Niche; robust, precise pneumatic and fluids control for heavy duty commercial vehicles – engine valve control, transmission automation and chassis cab applications Niche Size IMI Share % Market Position Key Competitors c.£580m <10 10-20 20-30 Growth >30 1 or 2 Bendix, Bosch, Pierburg, Wabco Scania, Volvo, ZF, MAN, Key Customers Cummins, Paccar, Daimler, Ford, Eaton, Caterpillar CAGR 2012-2017 Industry growth Source: LMC, Stark, ATC 3 - 5% Niche growth 4 - 6% Incremental revenue growth opportunities 1 - 2% Source: IMI estimates Mega-trends – driving growth in Commercial Vehicles Mega-trends Climate change Resource scarcity Urbanisation Sub-trends IMI opportunity Emissions control legislation Clean engine development Environmental control <CO2 After treatment Improved fuel consumption Waste Heat Recovery Freight efficiency Reduce rolling resistance Abundant cheap shale gas Battery cooling Hybrid drives CNG engines Ageing population Increased mobility Secondary braking Strategic value Harnessing the growth opportunity Amplify New throttle Prop pneumatic ISIS UTHV 2 Waste Heat Electric AIT Wastegate Growth Digital pair FormFit Seat Water valves Air prep Asia Trans Fuel Mechanical pneumatic CNG/LNG Tyre inflate Axle mgmt Cab switches ERHC Evaluate ZF, Eaton Sustain Manifolds Effort / risk Recent successes Norgren emissions technologies to address pollution and climate change Electric Throttle Proportional pneumatic Wastegate Purge air Urea tank heating Increasing vehicle sophistication = more potential 2006 engine 2018 engine 74 Extending our technology into emerging markets e.g. Level 4 emissions & secondary braking legislation in BRIC Retarder & shift assist Wastegate control Gearbox Interlock EGR control 75 The road to 2020 – CO2 reduction imperative • US 2012 legislation requires 17% less CO2 for Class 8 trucks (for a freight-ton-mile) by 2018 • Europe to reduce greenhouse gases from the transport sector by 20% between 2008 and 2030 Typical CO2 output CO2 reduction – every aspect of fuel usage is examined Every facet will be improved Over 50% of the fuel is wasted directly as heat Exhaust 22% s CO2 reduction – what it means by 2020 • 10 - 30% of commercial vehicles will have converted to natural gas • Rankine cycle waste heat recovery will be deployed • Advanced & active aerodynamics will be common • Super single tyres will pervade with inflation management • Auxiliary Power Units will be utilised to avoid idle time • Automated Manual Transmissions with retarders will be prevalent • Most city trucks will have some level of hybrid drive • Fully electric vehicles will continue to slowly penetrate • Fuel cells will remain a niche Conversion from diesel to natural gas is accelerating Natural gas presents several fluid control opportunities Waste Heat Recovery – a strategic new opportunity Typical operating conditions • • 350Kw engine > 100Kw waste heat > 30Kw can be recovered > 5% real life fuel saving 200g/sec flow rate, -40ºC to 300°C, 30 Bar Ethanol (vacuum sealed for life) We have made good progress in 12 months • Market potential for valves in Europe and US > £100M • 100% sweet spot convergence • 4 OEM customer programmes > strategic co-developments • 4 differentiated valve solutions > 3 significant patents • Deep collaboration between Fluid Power & Severe Service • Presently leading the valve field Ethanol turbine by-pass with de-superheating Summary Commercial Vehicle opportunity • The mega-trends will continue to drive growth in the CV niche by 4 to 6% • Niche leadership in CV is captured through • Proven range of products that operate in extreme environments (temperature & vibration, long life expectancy) • Proven track record creating solutions for new applications • Extension of products within global OEMs • Technology development includes • Electric inlet throttles • Next generation digital pneumatics • Natural gas • Waste heat recovery Life Sciences Healthcare of the Future Robert Guerra President, Norgren Americas Niche Leadership – Life Sciences The Niche: providing application specific solutions for the most critical precision fluidic applications in medical devices, diagnostics and analytical equipment. Niche Size IMI Share % Growth c.£520m <10 10-20 20-30 >30 Market Position 2-3 (market dependant) Key Competitors Bürkert, Hamilton, Parker Idex, Tecan Key Customers GE Healthcare, Philips, Abbott, Danaher, Illumina, Mindray, Waters CAGR 2012-2017 Industry growth Source: AMR International 4 - 6% Niche growth 4 - 6% Incremental revenue growth opportunities 2 - 4% Source: IMI estimates Mega-trends – driving growth in Life Sciences Mega-trends Climate change Sub-trends Rising costs of healthcare Point of care / fast results Resource scarcity Food / drug / environmental concerns Urbanisation Ageing population Personalised medicine Prevention & detection vs. treatment IMI opportunity High flow proportional valves Electronic pressure & flow control Chromatography multiport valves Configurable syringe pump technology Inline syringe pumps Laminated manifold technology Gas & liquid detectors Analytical Flow Products (AFP) acquisition Analytical Flow Products (AFP) acquisition -A strategic fit for Life Sciences Life Sciences technology roadmap Laminated manifold technology Chromatography multiport valves & fittings Micro 6mm solenoid valves Configurable syringe pump technology High flow proportional valve Miniature media separated valves Miniature inline syringe / piston pumps Launched Analytical gas/liquid detectors Analytical proportional valves Electronic pressure & flow Controllers Year 1 DC & closedlooped intelligent pumps Nanoliter (nl) dispense/dosing technologies Year 2 Year 3 + Analytical technologies’ impact on healthcare Analytical technologies will impact the future of healthcare • • • • • Drug discovery Pre-Symptomatic diagnostics Personalised therapy Pharmacogenomics Personalised medicine Norgren opportunity • • • • • • Genomics-Microarray equipment Genomics-DNA amplification equipment Genomics-DNA sequencing equipment Chromatography Mass spectrometry Automated sample preparation Analytical technologies’ impact on healthcare Norgren LMT for Genomic OEMs Ageing population Genomics / Microarray Laminated Manifold Technology Laminated Manifold Technology (LMT) enables Genomic OEMs the ability to accurately move small samples and multiple reagents at high speeds. Life Sciences technology roadmap Benefits • Ability to create complex fluid paths reduces overall footprint/size • Fewer leak paths increase reliability • Fully assembled/tested sub assembly from a single supplier mitigates OEM’s risk Laminated manifold technology Chromatography multiport valves & fittings Micro 6mm solenoid valves Configurable syringe pump technology High flow proportional valve Miniature media separated valves Miniature inline syringe / piston pumps Launched Analytical gas/liquid detectors Analytical proportional valves Electronic pressure & flow Controllers Year 1 DC & closedlooped intelligent pumps Nanoliter (nl) dispense/dosing technologies Year 2 Year 3 + Analytical technologies’ impact on healthcare Norgren FAS solenoid valve technology for Genomic OEMs Ageing population Genomics / Microarray Miniature media separated valves Miniature Media Separated Solenoid Valves. FAS solenoid valves help the OEM reduce the overall footprint of their instrument, use less reagents, and improve the reliability and repeatability of their analysis. Life Sciences technology roadmap Benefits: • Cartridge & manifold-mount valve designs reduces the overall footprint • Low power consumption reduces heat so the components can be mounted close together • Highly repeatable valve performance is required to control low flow liquids & gasses Laminated manifold technology Chromatography multiport valves & fittings Micro 6mm solenoid valves Configurable syringe pump technology High flow proportional valve Miniature media separated valves Miniature inline syringe / piston pumps Launched Analytical gas/liquid detectors Analytical proportional valves Electronic pressure & flow Controllers Year 1 DC & closedlooped intelligent pumps Nanoliter (nl) dispense/dosing technologies Year 2 Year 3 + Case study – single cell genomics Ageing population Genomics / Microarray Laminated Manifold Technology Miniature Media Separated Valves Customer: » Leading single cell genomics manufacturer Trend: » Prevention vs. treatment, personalised medicine Opportunity: » Precision fluidic assembly for single cell genomics Competition: » SMC, Burkert, Idex Solution: » Multi-module pneumatic assembly to include multilayered manifold, ultra high accuracy electronic pressure controls, valves, actuators & FRLs Advantage: » Core competency of delivering integrated and tested solutions with pneumatic, design, engineering expertise Key: » Product mix/speed of integration/co-collaborate on solution/international product/KAM support Case study – digital Polymerase Chain Reaction Ageing population Genomics / Microarray Laminated Manifold Technology Miniature Media Separated Valves Customer: » Leading digital Polymerase Chain Reaction manufacturer Trend: » Prevention vs. treatment, personalised medicine Opportunity: » Air-over liquid Multilayered manifold for Digital Polymerase Chain Reaction (dPCR) Competition: » Parker, LEE, SMC Solution: » 5-layer acrylic manifold with 11-FAS Chipsol valves, 1 FAS MS valve, 1 FAS Flatprop and an array of sensors Advantage: » Core competency of delivering integrated and tested solutions with precision valves and layered plastic manifolds Key: » Large percentage of the bill of material, manifold capabilities, assembly and testing capabilities Summary Life Sciences opportunity • The mega & sub-trends are driving growth in Life Sciences of 4 - 6% • Niche leadership in Life Sciences is captured through • Providing application-specific solutions for the most critical precision fluidic applications in medical, analytical, and diagnostic markets • Delivered by developing technology • For precisely filtering, regulating, sensing, pumping and controlling gasses and fluids Smart Buildings Stefan Seitz VP Business Development, TA Hydronics Niche Leadership – Indoor Climate Hydronics Hydronic Balancing, Hydronic Conditioning & Thermostatic Control • Critical to the overall performance and energy consumption of HVAC system • We are unique in our combined offer c.£170m European Balancing IMI Share % <10 10-20 20-30 >30 Market Position 1 Key Competitors Danfoss, Oventrop, Key Customers Ahlsell, Arup, Cordes & Graefe, GDF Suez, Saint Gobain, Skanska Source: IMI estimates GLOBAL CAGR 2012-2017 Industry growth Source: Comparable Heating & Cooling Equipment, Freedonia World HVAC Equipment Study 2 – 4% Niche growth 4 – 5% Incremental revenue growth opportunities 5 – 6% Building’s evolution Building performance Building controls “final” Oil crisis??? •Sustainable buildings End of Asia crisis => and eco-cities strong econ. growth •De-central, •Improvement of regenerative energy system efficiencies generation with integrated •“Plus” energy, 0 CO2 components emission buildings •Performance based Facility management • all E-supply, Estorage, E•Performance distribution and contracting dissipation systems communicate via •Life cycle costs “smart grid” Building envelope 1st/2nd oil crisis, 1st Gulf War: •Investment in Insulation •Investment in nuclear Power Plants 1980 2nd Gulf War: •Improvement of component efficiencies •Efficient system management with BMS 1990 Smarter Building, Eco-District 2000 2010 2020 Mega-trends – driving growth in Hydronics Mega-trends Climate change Resource scarcity Sub-trends District Energy to grow 25%+ Focus shift to “greening” existing buildings Speedier & easier system install Flexible Buildings “Smart Grids” ”Smart Buildings” Ageing population North America Emerging Markets Comfort & productivity From eco-efficient buildings to ecodistricts Urbanisation IMI opportunity Measurement & Diagnostics Pre Fab Systems HVAC System communication De-centralised apartment subsystems Hydronic conditioning “Fit & Forget” products Flexibility in home energy usage (matching lifestyle) Home Automation Water Quality & Saving Potable Water Indoor Climate technology roadmap TA SCOPE upgrade (measuring device) Equalizer Control Valve (USA) Terminal Unit valve for Emerging markets USA Potable Water Valve EcoEfficient DeGassing Unit (water quality) Next Generation Braincube for Pressurisation (water quality) “Fit & Forget” TRV with Flow Control Terminal Unit Balancing & Control Valve (heating & cooling/emerging) TA FUS1ON Balancing & Control Valve range Next Gen Air & Dirt Separator (Water Quality) Launched Year 1 Apartment prefab stations (Heating & Cooling) Water Quality Portfolio District Energy Portfolio Potable Water Portfolio Year 2 Smart Valve & Actuator Next Generation Thermostatic Radiator Valve Home Automation Year 3 + At the heart of what we do Energy Insights When comparing a non balanced with a balanced system, electrical pumping and energy costs can be significantly reduced whilst enhancing comfort: Indoor Climate projects proven energy savings: • Hammarplast Consumer factory, Sweden (61%) • Tianjin Saixiang Hotel, China (31%) • Pfizer, France (31%) • Citate Administrativa, Brazil (21%) At the heart of what we do Energy Insights • In heating systems, the room temperature being 1°C too high costs 6% to 11% of the annual plant energy consumption • ICG Renovation Project: MOL, Hungary (27% Energy saving) • In cooling systems, the room temperature being 1°C too low costs 12% to 18% of the annual cooling plant energy consumption Driving energy efficiency in buildings • Small things can make a BIG difference The use of accurate thermostatic radiator valves can provide energy savings of up to 28% compared to the use of manual valves* • Consideration of a single Thermostatic control valve (vs manual valve) • Saving on consumption – oil (gas) 70 litres (m³) /yr • Cost reduction 53 EUR /yr • Payback 1 year • CO2 reduction 168 kg /yr (*) Source: University of Dresden Independent Study Driving energy efficiency in buildings • There are an estimated 600 million manual valves still used in Europe today. • Example Europe: converting all manual to thermostatic control valves • • • • Saving on consumption – oil (gas) Cost reduction Payback CO2 reduction 42 billion litres (m³) /yr 32 billion EUR /yr 1 year 100 million tons /yr • This is an equivalent of 50 million cars with an annual mileage of 15,000 km with CO2 emissions in average of 133 g/km. Winning in the Niche BBVA HQ • Occupancy from Sept 2013 (multi phase development) • 6000 employees • 7 buildings (inc a 22 storey tower) • £1m opportunity for ICG • Energy saving target of 30% • LEED accreditation sought • Proven results Summary Hydronics Opportunity • The Mega Trends are driving growth in Hydronics with the sub trends creating specific opportunities • Niche leadership in Hydronics is captured through • Translating trends into customer value • Global infrastructure • Our Technology development delivers: • Energy efficiency • Comfort & reliability • Building value Beverage Dispense Restaurant of the Future Mike Coombes Commercial Director, North West Europe IMI Cornelius Niche leadership – Beverage The Niche: Foodservice operators are investing in new BEVERAGE dispensers that will drive both incremental sales through variety; better for you choices and increase profitability from store efficiencies Niche Niche Size V,E, H&W c.£130m IMI Share % <10 Market Position Key Competitors Key Customers Op Eff c.£40m 10-20 20-30 >30 Niche Growth Industry growth V,E, H&W Opp Eff CAGR 2012-2017 1 - 3% 1 Niche growth 5 - 7% 9-11% Incremental revenue growth opportunities 1 - 3% 4-6% Manitowoc, Lancer, Bunn McDonalds, YUM!, Starbucks, Subway, Coca-Cola, Pepsi, Brita Vivreau, Grohe Source: IMI estimates Mega-trends are impacting restaurants Mega-trends Sub-trends Climate change Energy Efficiency Resource scarcity Labour Savings Urbanisation Right sized Equipment Ageing population Life style Variety & Choices Impact $2bn Annual Energy bill for McDonald's Restaurants globally 10.5% Wage increases expected in emerging markets by end of 2013 $1,500 Annual cost of one square foot of retail real estate in major urban markets 170,000 Ways to create the perfect Starbucks drink Global restaurant market Global restaurant industry will generate $1.8 trillion revenue by end of 2015 ‒ Fast-food sector $240b in 2014, a 19% increase during last 5 years ‒ QSR’s represent largest segment, with 71% of global market value ‒ Competing for consumer footfall and up selling opportunities ‒ QSR’s are creating a ‘destination’ for beverage ‒ McDonald’s beverage sales 22% of revenue ‒ Beverage represents a significant revenue and profit opportunity Source: Euromonitor International Beverages generate high profit potential Gross margins 20% - 40% higher than food Source: Technomic Global foodservice market trends for Beverage Beverages are central to successful strategy Beverage day part growth opportunity 500 450 Beverages drive consumer traffic throughout the day 400 350 Specialty beverages provide incremental day part opportunities 300 250 200 150 Variety above all 100 50 Late Night Snack Evening Dinner Afternoon Snack Lunch Source: Euromonitor International Morning Snack Tea is the next wave hot and cold 0 Breakfast Refreshing over sweet driven by healthier beverage choices Opportunities for IMI to grow in the Beverage niche Mega-trends Climate change Sub-trends Energy Efficiency IMI opportunities HFC-free gases Automation Miniaturisation Resource scarcity Labour Savings Emerging Markets Fit for purpose Health & Wellness Social Media Urbanisation Right sized Equipment Hot & cold combinations Indulgence Frozen Ageing population Life style Variety & Choice Variety Fresh Hand-crafted Driving IMI’s beverage technology development IMI opportunities HFC free gases Automation Miniaturization Technology roadmap Cooling Remote Cooling Merchandising Modular Fit for purpose Social Media Hot & cold combinations Indulgence Frozen Variety Cooling Rack Refrigeration Cooling HFC-free Emerging Markets Health & Wellness Valves Microdosing Merchandising LED Carbonating Variable Valves Self Cleaning Valves Multi-flavor Valves Valves Miniature Merchandising Touch Screen Blending Ice Drink Blending Carbonating In-Line Carbonating Batch Carbonation Fresh Hand-crafted Launched Year 1 Year 2 Year 3 + Creating new product development opportunities Product roadmap Emerging Markets all in one Systems Digital Display Towers Batch Carbonator for organic sodas Self Serve Towers – Consumer Engagement Fountain Touch Screen Automated Beverage System Residential carbonated water dispenser Multiple Beverage Fountain Dispense Station High Density Tower Dispenser Range of energy efficient beverage HFC free coolers Launched Enhanced Water Dispensing Blend in Cup smoothie dispenser Year 1 Hot/Cold Tea Dispensers Year 2 Coffee Dispensers Year 3 + Key projects Helix blended ice drinks system Opportunity | A fully automated blend-in-cup blended ice drinks system for QSR Te c h no l ogy Ratio & blending technology Optimized valves, pumps and actuators for dispense accuracy Real time, PC Control system HFC-free refrigeration Clean-in-place [CIP] Result S u b Tr e n ds t o C u s t o me r Va l ue R i ght -s ized e qui pm ent ~10% smaller in footprint ~50% more ice capacity Ene r gy s a vi ng ~15% less energy consumption ~20% reduction in product waste ~50% reduction in rinse water La bor s a vi ngs Crew touch screen operation Speed of service – 3 drinks per minute Clean-in-Place system for ice maker Li f e -styl e c hoi ce Up to 14 configurable iced fruit & yogurt smoothies and f rappe’s O pe r a tor Va l ue Significant profit opportunity – less than 1 year payback Automated Beverage System (ABS) Opportunity |Next generation fully automated beverage delivery system that can specifically for drive through QSR’s... in US markets drive through sales account for up to 70% of revenue Te c h no l ogy Automated Cup Fill Pattern Recognition & Vision System Splash Proof Sink Design with motion/Actuation mechanisms and protection Result S u b Tr e n ds t o C u s t o m e r Va l ue R i g h t - s i z e d e q u i pm e nt Drive thru and front counter Increased brand choice L a b o r s a v i n gs Integration with POS system 6sec process per drink 12 drinks at any one time Labor saving of $15,000 provides potential one year pay back O p e r a t or Va l u e Sales Uplift – fewer ‘drive offs’ Increased variety and choice Batch carbonator for hand-crafted sodas Opportunity | To enable an operator to uniquely hand-craft and batch carbonate a variety of soda’s on a compact footprint Te c h no l ogy Batch Carbonation Patented agitation carbonation technology Anti-foaming silicone seal/gasket design Fast processing cycles – Batch carbonated within 36secs Result S u b Tr e n ds t o C u s t o m e r Va l ue R i g h t - s i z e d e q u i pm e nt Compact and light -weight Equipment design complimentary to customer operating environment L a b o r s a v i n gs Controlled batch carbonation one drink at a time – customised Easy access and clean L i f e S t yl e C h o i c e s Unique Beverage menu with ability to customize to consumer choice Theatre of dispense to add consumer engagement O p e r a t or Va l u e Creates higher value & higher price points Significant profit opportunity – less than 1 year payback Summary Beverage Opportunity • The mega trends are driving growth in Beverage Dispense of 5% - 7% • Sub trends creating specific growth opportunities with global chains as well as with beverage brand owners. • Niche leadership in Beverage Dispense is captured through • Customer intimacy with beverage brand owners & key retailers • Market leading position & extensive knowledge base • Global and local presence support network • Technology development includes • Energy efficient equipment – HFC free • Next generation valve technology – multi flavour • Dispense solutions to enable beverage menu extension Summary and Conclusions Martin Lamb Driving sweetspot convergence 2013 H1 sweetspot 60% +3% Supported by favourable mega-trends and strong emerging markets growth EM sales to increase from 24% to 35% Growth and market share gains from new product development +4% Directed by detailed technology roadmaps Supported by accelerated investment in new product development % NPD sales less than 3 years old to increase from 15% to 20% M&A • Strengthening of existing positions • Adoption of new adjacencies +4% Directed by technology roadmaps Supported by strong balance sheet Disposal of Merchandising +4% On track Higher underlying market growth sweetspot niches Illustrative 2017 sweetspot 75% Organic revenue growth 2 x GDP Operating margins 20% Post tax ROIC 20% Key messages • Mega-trends will have a profound impact on our customers and end markets • Prime position to benefit based on market positioning and technologies • Technology roadmaps in place …… and brimming! • Pathway to higher returns clear cut ……execution is key Questions and Answers Executive Directors
