Slide 1: 2019 Preliminary Results
IMI plc 2019 Preliminary Results Roy Twite – Chief Executive Daniel Shook – Finance Director
Slide 2: Key messages
IMI plc Key messages 2019 second half margins 60bps above H2 in 2018, despite industrial market downturn Good progress on immediate profitability improvement initiatives £27m of rationalisation benefits delivered in 2019 Cash generation strong Strategic projects progressing well c£45m ra
Slide 3: Business review
IMI plc Business review Daniel Shook – Finance Director
Slide 4: Organic revenue and operating profit
IMI plc Organic revenue and operating profit £m 12 months to 31 December 2019 12 months to 31 December 2018 Adjusted Adjusted Adjusted Organic Adjusted Foreign Acquisitions/ Organic post IFRS 16 pre IFRS 16 Growth (%)* Growth (%)** Exchange Disposals and notional and notional rent rent and excluding
Slide 5: Income statement
IMI plc Income statement £m 2019 2018 Adjusted operating profit 266.1 265.5 Net interest expense higher due to lease Net interest expense (14.9) (12.9) accounting change Net pension finance expense (0.5) (1.4) Restructuring costs (including Adjusted profit before tax 250.7 251.2 impairment losse
Slide 6: Rationalisation plans
IMI plc Rationalisation plans £m 2019 2020 Overall Restructuring charge (including impairment losses) programme IMI Precision Engineering (31)* (30) (75) IMI Critical Engineering (19) (10) (29) IMI Hydronic Engineering - (5) (6) Total charge (50) (45) (110) Cash impact (24) (60) (105) £m 2019 2020 A
Slide 7: Operating cash flow
IMI plc Operating cash flow £m 2019 2018 Adjusted operating profit 266 266 Strong cash delivered in 2019 Depreciation & amortisation 59 54 Debtor reduction reflects continued focus on improving cash collection Lease depreciation 32 - Capital expenditure of £66m represents EBITDA (from continui
Slide 8: Net cash flow
IMI plc Net cash flow £m 2019 2018 Adjusting Operating cash flow 299 222 Adjusting items reflect £26m of restructuring spend, primarily in IMI Adjusting items (26) (9) Critical & IMI Precision Statutory Operating cash flow 273 213 Lease liabilities of £90m included in net Interest (15) (13) debt
Slide 9: IMI Precision Engineering operational review
IMI plc IMI Precision Engineering operational review £m 2019 IFRS 16 2019 FX Organic Acq’n 2018 Sales by sector Adjusted and notional Adjusted Adjusted rent* Pre IFRS 16 and notional rent Industrial £509m Automation Down 6% Adjusted Revenue 907 - 907 11 (29) 9 916 Commercial £194m Vehicle Down 2% Or
Slide 10: IMI Critical Engineering operational review
IMI plc IMI Critical Engineering operational review £m 2019 IFRS 16 Acq’n 2019 FX Organic 2018 Order input by sector*** and Adjusted Adjusted notional Adjusted Pre IFRS 16 rent* and notional rent Aftermarket £364m and excluding PBM Up 2% Adjusted Revenue 651 - 8 643 3 (42) 682 Oil & Gas £123m Up 30%
Slide 11: IMI Hydronic Engineering operational review
IMI plc IMI Hydronic Engineering operational review £m 2019 IFRS 16 2019 FX Organic 2018 Sales by sector and notional Adjusted Adjusted rent* Adjusted Pre IFRS 16 and notional rent IMI TA £152m Up 1% Adjusted Revenue 315 - 315 (2) 8 309 IMI Heimeier £97m Up 1% Organic Growth 3% 3% 0% IMI Pneumatex**
Slide 12: Coronavirus
IMI plc Coronavirus First priority has been the health and safety of IMI employees Supporting our Life Science customers in helping those affected Direct exposure: China represented 8% of IMI sales in 2019 IMI’s two China factories are in Shanghai Indirect exposure: a further c8% of sales
Slide 13: Group outlook
IMI plc Group outlook Any forecasting difficult given Coronavirus uncertainty The following outlook assumes no worsening of current situation In H1, continued weakness is expected in Factory Automation and Commercial Vehicle markets IMI H1 revenues expected to be lower than H1 2019 H1 marg
Slide 14: Strategy Update
IMI plc Strategy Update Roy Twite – Chief Executive
Slide 15: Strategy update
IMI plc Strategy update New customer-focused organisational structures in IMI Precision and IMI Critical starting to bed down Growth Accelerator teams progressing well First three orders won in IMI Critical Multi-year £75m IMI Precision restructuring programme on track to deliver £35m of ann
Slide 16: Achieving the divisional margin targets
IMI plc Achieving the divisional margin targets Target: 20% top of cycle Target: 17%-20% Target: 20% £35m annual benefits from £5m annual benefits from £3m annual benefits from footprint optimisation footprint optimisation supply chain optimisation Beat inflation through Margin improvement
Slide 17: Increasing customer focus
IMI plc Increasing customer focus Three awards won from key customers in H2 2019 Customer satisfaction included in incentives for 2020 New customer-focused organisations bedding in Growth Accelerator teams generating hundreds of customer interactions 17
Slide 18: Creating growth
IMI plc Creating growth Customer problem Reducing diagnosis time Improving vaccine production Saving energy in buildings IMI solution Engineered acrylic manifold with 23 Bespoke radial diaphragm valves Fully balanced system with differential microsolenoids & software interface integrated into all cr
Slide 19: Operational improvements
IMI plc Operational improvements Continuous improvement – Las Vegas Continuous improvement – Sardinia Continuous improvement – Olkusz Pull systems and Kanban Value Stream Mapping and Kaizen New assembly stations and fixtures Improved manufacturing flow, Improvement of test processes materi
Slide 20: IMI's ESG performance – 2019 overview
IMI plc IMI’s ESG performance – 2019 overview Climate change Our products have a direct and positive impact on the world Since 2015 we have reduced our carbon usage by over 5% People Health & Safety a key priority – LTAs now 48% lower than 2015 Active supporters of WISE, promoting the succes
Slide 21: Key take-aways
IMI plc Key take-aways H2 margins improved by 60bps over H2 2018, despite market downturn Increasing commercial focus and accountability resulting in some key wins Growth Accelerator starting to generate market-led innovation Margins improving and margin targets reaffirmed 20% for IMI Prec
Slide 22: Appendices
IMI Appendices
Slide 23: Lease Accounting changes (IFRS 16) – from 1 January 2019
IMI plc Lease Accounting changes (IFRS 16) – from 1 January 2019 £m FY 2019 Impact from FY 2019 FY 2018 (post IFRS 16) (pre IFRS 16) IFRS 16 Notional Adjusted operating profit increases by Rent £1.8m, offset by higher finance expense Income Statement Minimal impact to profit before tax IMI Preci
Slide 24: Pensions
IMI plc Pensions £m Dec Dec 2019 2018 Total Position: UK scheme remains in surplus following the de-risking exercises completed in 2018 Liabilities (655) (597) Proactive management of Swiss schemes Assets 624 545 during 2019 Deficit (31) (52) UK Schemes: Liabilities (500) (445) Assets 548 473 Su
Slide 25: 2019 sales by destination & employees
IMI plc 2019 sales by destination & employees £m Sales by Destination No. of £m Employees Europe 818 6,689 UK 90 1,205 Germany 234 1,960 Switzerland 53 427 Italy 37 684 Other 404 2,413 Americas 538 2,630 USA 440 2,040 Other 98 590 Asia Pacific 404 1,321 China 158 461 Japan 49 113 India 45 294 South
Slide 26: Foreign exchange
IMI plc Foreign exchange Ready Reckoner for translation impact of movement in FX rates on 2019 FY Performance *Compares the impact of projecting rates average rates for January 2020 (USD:1.31; EUR:1.18) for the full year and applying to our 2019 results. 26
Slide 27: Capital allocation
IMI plc Capital allocation Maintain capital investment at current levels Improve free cash flow through profit growth and margin expansion Maintain progressive dividend, rebuild cover Continue to pursue strategically and financially attractive acquisitions Acquisition returns must exceed I
Slide 28: Forward-looking statements disclaimer
IMI plc This 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 t