Slide 1: IMI plc 2018 Interim Results
IMI plc 2018 Interim Results 1
Slide 2: Agenda
IMI plc 2018 Interim Results Agenda ► Highlights Mark Selway – Chief Executive ► Financial review Daniel Shook – Finance Director ► Operational review Mark Selway – Chief Executive ► Q&A IMI Executive Team 2
Slide 3: Highlights
IMI plc 2018 Interim Results Highlights Revenue Segmental operating profit Segmental operating margin £915m Up 6% 1 £120.0m Up 13% 1 13.1% Up 60 bps Operating cash flow2 Adjusted earnings per share Dividend per share £68m Down 21% 32.9p Up 16% 14.6p Up 3% ► Organic revenue 6% higher ► Organic operat
Slide 4: Financial review
Financial review Daniel Shook – Finance Director 4
Slide 5: Organic revenue and operating profit
IMI plc 2018 Interim Results Organic revenue and operating profit 6 months to 30 June 2018 6 months to 30 June 2017 Adjusted Organic Acquisitions/ Foreign Acquisitions/ Adjusted Organic growth growth Adjusted Organic £m Disposals exchange Disposals (%) (%) Revenue IMI Critical Engineering 319 319 4%
Slide 6: Income statement
IMI plc 2018 Interim Results Income statement £m 2018 2017 ► Net interest expense lower Adjusted segmental operating profit 120.0 106.1 ► Restructuring costs of £5m Restructuring costs (0.3) (1.3) lower by £9m Net interest expense (5.9) (6.6) Net pension finance expense (0.7) (0.7) ► Continued de-ri
Slide 7: Operating cash flow
IMI plc 2018 Interim Results Operating cash flow £m 2018 2017 ► Increased inventory to support Precision Engineering market EBITDA (from continuing operations) 146 129 growth Inventory (38) (21) ► Creditor movement reflects £15m Debtors (15) (13) lower advanced payments in Creditors (7) 14 Critical
Slide 8: Net cash flow
IMI plc 2018 Interim Results Net cash flow £m 2018 2017 ► Adjusting items include £9m of Adjusted Operating cash flow 68 86 restructuring spend, primarily in Adjusting items (13) (13) Critical Engineering Statutory Operating cash flow 55 73 Interest (6) (6) ► Bimba acquired debt free for Derivatives
Slide 9: Balance sheet
IMI plc 2018 Interim Results Balance sheet Jun Dec Jun ► Net debt of £459m includes £m 2018 2017 2017 £138m acquisition of Bimba and £68m dividend payment Shareholders' funds 620 607 581 Net debt 459 265 318 ► Weighted average debt Gearing 74% 44% 55% maturity of 4.9 years, 90% at fixed rates EBITDA
Slide 10: Operational Review
Operational Review Mark Selway - Chief Executive 10
Slide 11: Critical Engineering
IMI plc 2018 Interim Results IMI Critical Engineering 11
Slide 12: Critical Engineering Operational review
IMI plc 2018 Interim Results IMI Critical Engineering Operational review Performance in H1 2018 Input by sector £m H1 FX Disp Organic H1 2018 2017 Revenue Order input H1 2018 Revenue 319 (6) (2) 19 308 £319m Up 4% £297m Down 12%* Control valves Organic growth % +6% Operating profit Aftermarket Opera
Slide 13: Critical Engineering: Creating tangible value
IMI plc 2018 Interim Results IMI Critical Engineering Creating tangible value Repositioning has placed the Rationalisation has generated 1. Geographic footprint business at the centre of future 2. Rationalisation delivering c.£58m of annualised markets. for growth tangible benefits benefit, with £6m
Slide 14: Critical Engineering Outlook
IMI plc 2018 Interim Results IMI Critical Engineering Outlook ► In the second half, organic revenues are expected to show modest improvement when compared to the second half of 2017. ► The benefits of restructuring and phasing of the order backlog will deliver improved profits and margins in the sec
Slide 15: Precision Engineering
IMI plc 2018 Interim Results IMI Precision Engineering 15
Slide 16: Precision Engineering Operational review
IMI plc 2018 Interim Results IMI Precision Engineering Operational review £m H1 FX Organic Acq. H1 Performance in H1 2018 Sales by sector 2018 2017 Revenue Industrial Automation Revenue 449 (10) 31 40 388 Pneumatic £449m Up 16% £257m Up 6%* valves Product Photo Organic growth % +8% Operating profit
Slide 17: Precision Engineering: Creating tangible value
IMI plc 2018 Interim Results IMI Precision Engineering Creating tangible value Healthy growth across all markets. 33 new products in pipeline with 1. Growth across all 2. New Product process well established. major verticals Development Rail 2018 H1 Sales & Verticals Engineering Sales & £21m Up 19%
Slide 18: Bimba integration on track
IMI plc 2018 Interim Results Bimba integration On track ► Bimba contributed £40m of sales and £4m of operating profit to Precision’s half year results + in its maiden five months ✓ Extends product range, no overlap ✓ Doubles presence in Industrial Automation in North America Minneapolis Chicago Mass
Slide 19: Precision Engineering Outlook
IMI plc 2018 Interim Results IMI Precision Engineering Outlook ► On an organic basis, revenues, profits and margins are expected to improve when compared with the second half of 2017. ► Full year revenue growth is expected to be good although slightly lower than that achieved in the first half, refl
Slide 20: Hydronic Engineering
IMI plc 2018 Interim Results IMI Hydronic Engineering 20
Slide 21: Hydronic Engineering Operational review
IMI plc 2018 Interim Results IMI Hydronic Engineering Operational review Performance in H1 2018 Sales by business unit £m H1 FX Organic H1 2018 2017 Revenue TA Revenue 147 (1) (2) 150 £147m Down 2% £73m Up 3%* Manual Organic growth % -1% balancing Operating profit Heimeier Operating profit 22.2 (1.0
Slide 22: Hydronic Engineering: Creating tangible value
IMI plc 2018 Interim Results IMI Hydronic Engineering Creating tangible value Input cost inflation to be Renewed focus on profitability 1. Economic recoveries substantially recovered to 2. Reducing complexity reveals further opportunities to protect margins. sharpen focus. USD/lb 3.2 Top 6 markets:
Slide 23: Hydronic Engineering Outlook
IMI plc 2018 Interim Results IMI Hydronic Engineering Outlook ► In the second half, on an organic basis, we expect our self-help initiatives to deliver significantly improved profits from modestly higher revenues, when compared to the same period in 2017. 23
Slide 24: IMI plc summary
IMI plc 2018 Interim Results IMI plc summary ✓ Group revenues, profits and margins were ahead of 2017 H1. ✓ Critical Engineering delivered good financial progress, despite continued tough markets. Value Engineering contributing hugely to competitiveness and win rate. ✓ Precision Engineering enjoying
Slide 25: Group outlook
IMI plc 2018 Interim Results Group outlook ► The trading outlook for the Group remains positive and in the second half of 2018 we expect organic revenue and profits to show good improvement compared to the same period in 2017. The improved results will be supported by market growth in Precision Engi
Slide 26: Q&A
Q&A 26
Slide 27: Appendices
Appendices 27
Slide 28: Pensions
IMI plc 2018 Interim Results Pensions Jun Dec Jun £m 2018 2017 2017 ► UK scheme remains in surplus while we continue to de-risk the Total Position: position Liabilities (1,012) (1,080) (1,136) Assets 962 1,002 1,075 ► Proactive management of Deficit (50) (78) (61) schemes in Switzerland UK Schemes:
Slide 29: Foreign exchange
IMI plc 2018 Interim Results Foreign exchange H1 2018 H1 2017 Change Ready reckoner for translation Average rates impact of movement in FX rates on 2018 FY performance Euro 1.14 1.16 2% US dollar 1.37 1.26 -9% Sensitivity to +/- June Dec 1 cent move in: Revenue Operating Profit Change 2018 2017 Clos
Slide 30: Forward-looking statements disclaimer
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 these sta