Spirax Group Plc. · LSE:SPX
Spirax — Spirax-Sarco Engineering — Investor Day (May 2018)
104 slides from Spirax's investor day presentation, May 31, 2018
Slide 1: Spirax-Sarco Engineering plc Capital Markets Day
Spirax-Sarco Engineering plc Capital Markets Day Thursday 31st May, 2018 Engineering Opportunities 0 Capital Markets Day 31st May 2018
Slide 2: Welcome
Welcome Kevin Boyd Group Finance Director Engineering Opportunities 1 Capital Markets Day 31st May 2018
Slide 3: Spirax-Sarco Engineering plc
Spirax-Sarco Engineering plc World leader in the control and efficient use of steam, electrical thermal energy solutions and peristaltic pumping and associated fluid path technologies • 2017 Group Sales: £999 million Three significant strategic acquisitions: Watson-Marlow Steam Specialties: • Aflex
Slide 4: Group structure
Group structure Showing recent acquisitions: Aflex Hose, Gestra and Chromalox Industrial and Process heating Niche peristaltic pumps and associated fluid commercial steam and temperature path technologies systems management solutions Engineering Opportunities 3 Capital Markets Day 31st May 2018
Slide 5: Agenda
AGENDA 10:15 – 11:30 Presentation: Jay Whalen (President, Watson-Marlow Fluid Technology Group) Sean Coyne (Sales & Marketing Director, Aflex Hose) Q&A Product demonstration 11:30 – 11:50 Coffee break (Siemens Room) 11:50 – 13:00 Presentation: Maurizio Preziosa (Divisional Director, Gestra) Lutz Oel
Slide 6: Aflex Hose
Aflex Hose Jay Whalen, President, Watson Marlow Fluid Technology Group 5 Capital Markets Day 31st May 2018
Slide 7: Aflex Hose – the world leader in PTFE hoses
Aflex Hose – the world leader in PTFE hoses • Acquired November 2016 • Located in Yorkshire • 260 employees in the UK, small stock and assembly company in the USA • 2017 turnover of £25.7m; ahead of expectations WMFTG Strategy Aflex fit Current route to market: 3rd party distribution Market sector s
Slide 8: Aflex Hose - fit to the WMFTG product range
Aflex Hose - fit to the WMFTG product range • Connects vessels to vessels • Connects pumps to vessels – cross selling opportunities with other WMFTG fluid path products • Aflex hoses complement FlowSmart silicone process hoses • FlowSmart silicone hoses cover less demanding applications • Aflex hose
Slide 9: Aflex Hose – alignment to WMFTG sectorised sales
Aflex Hose – alignment to WMFTG sectorised sales • Key markets of Biopharm and Industrial – Rapid success selling through WMFTG Biopharm direct sales, USA – Strong start with WMFTG Industrial direct sales, France – Scale up of conversions from 3rd party distribution to WMFTG direct sales in 2018 • B
Slide 10: Aflex Hose – synergy in supply operations
Aflex Hose – synergy in supply operations • Aflex: expertise in end fittings for hoses in demanding applications – production of fittings for FlowSmart hoses switched to Aflex – utilising Aflex hose configuration assembly expertise for FlowSmart and BioPure • Aflex: strong production engineering and
Slide 11: Aflex Hose Ltd
Add an image Aflex Hose Ltd Sean Coyne Sales & Marketing Director 10 Capital Markets Day 31st May 2018
Slide 12: Who is Aflex Hose?
Who is Aflex Hose? • Manufacturing PTFE hose for over 40 years • World’s most technically advanced range of PTFE hose products • Complete control of the process from raw materials to finished hose assemblies • Most reliable choice for process fluid transfer • Our brand is instantly recognised and is
Slide 13: Aflex evolution
Aflex evolution People Revenue • 1973 – 4 Employees • 1973 - £0 • 2017 – 280 Employees • 2010 - £11m • 2017 - £25.7m Products • 1973 – 1 facility = 60,000sqft Production • 2017 – 4 facilities = 120,000sqft • 1973 – 1 market, 1 product = Smoothbore • 2017 – multiple markets, 7 products = Bioflex Ultr
Slide 14: New factory
New factory 16,200m² 13 Capital Markets Day 31st May 2018
Slide 15: From raw materials to finished products
From raw materials to finished products SS Bar PTFE Granules Wire Electropolished end fittings Bioflex Ultra RC Extruded Liner Braiding Braided Hose 14 Capital Markets Day 31st May 2018
Slide 16: Aflex Non-Bonded PTFE Hose
Aflex Non-Bonded PTFE Hose • Convoluted outer for maximum flexibility • Smooth liner for maximum flow • PTFE right through the end connector – maximum purity and chemical resistance • Everything customers want from the fluid path with our patented design 15 Capital Markets Day 31st May 2018
Slide 17: Markets
Markets Biopharm Vaccine manufacture » Final product transfer » Uninterrupted hygienic flow Food & Beverage Yoghurt production » Filling lines » No volumetric expansion resulting in consistent product dispensing Bulk Chemical Petrochemical manufacture » Hydrofluoric acid transfer » Chemical and perm
Slide 18: Europe & Middle East
Europe & Middle East 2017 Revenue £14.4 million • Direct sales in the UK • France – Previously one Aflex sales engineer and two sales agents. Now direct sales with 19 WM customer facing sales specialists • Distribution throughout EMEA • Further conversion from distribution to direct scheduled 17 Cap
Slide 19: Asia Pacific
Asia Pacific 2017 Revenue • Converted from a distributor in Singapore £1.6 million to WM direct sales • Singapore now acts as a hub for S.E. Asia, giving Aflex access to Taiwan, Malaysia, Indonesia, Thailand and Vietnam • Korea WM direct sales • Distributors in Japan, China, India, Australia and New
Slide 20: Americas
Americas 2017 Revenue £9.7 million • Converted from distribution to WM direct sales in New England, USA, an important Biopharm hub, resulting in more focus and dedication on Aflex products • Distribution network throughout USA, Canada, Mexico, Chile and Brazil • Further conversions from distribution
Slide 21: Aflex Hose
Aflex Hose The perfect addition to the Watson-Marlow fluid path family! • Aflex Hose assemblies: - chemical resistant flexible connections to Watson-Marlow chemical dosing peristaltic pumps - complete the sterile fluid path for Watson-Marlow peristaltic pumps when flexible hoses required - connect t
Slide 22: Gestra Division
Gestra Division Maurizio Preziosa Gestra Divisional Director 21 Capital Markets Day 31st May 2018
Slide 23: Gestra acquisition
Gestra acquisition The process The acquisition process • August 2016 Flowserve decided to sell Gestra • Phase 1: private equity companies • Phase 2: expanded to industrial companies Integration • September 2016 Spirax Sarco Group involved Deal completed Deal signed • Acquisition project team appoint
Slide 24: Gestra acquisition strategic rationale
Gestra acquisition strategic rationale The intrinsic value of Gestra • Strong, globally recognised German brand and product range • Very well respected in the steam market • Leading player in Germany, the biggest European industrial market • World-leading boiler control technology and product range
Slide 25: Gestra acquisition strategic rationale
Gestra acquisition strategic rationale The added value of Spirax Sarco Group to Gestra • Once-in-a-generation opportunity to acquire a direct steam competitor • Spirax Sarco strategic fit with Gestra Vision: recognized by customers as the world leader in Steam and Thermal Energy Solutions Missio
Slide 26: Gestra long-term strategy
Gestra long-term strategy Pillars underpinning the strategy 1. Operating as a stand alone division of the Spirax Sarco Steam Specialties business 2. Dual brand strategy, market sector driven 3. Geographical expansion 4. Product range platforms 5. Cross selling opportunities 6. Manufacturing, supply
Slide 27: Gestra long-term strategy
Gestra long-term strategy 1. Operating as a stand alone division of the Spirax Sarco Steam Specialties business • Creation of the new Gestra division • Dedicated acquisition programme implementation • Focused targets and own P&L • No distraction from key objectives for the rest of the business Steam
Slide 28: Gestra long-term strategy
Gestra long-term strategy 2. Dual brand strategy, market sector driven • Two brands in the steam market: Spirax Sarco and Gestra • Both premium brands in the high end market • Maintaining two autonomous organisations: no changes from the customer perspective no limitation of customer choice • Ge
Slide 29: Gestra long-term strategy
Gestra long-term strategy 3. Geographical expansion • Gestra brand and product range globally recognised: sales to large German OEMs products specified by multi-national German end users with plants all over the world German precision engineering • Current business in several countries captive
Slide 30: Gestra long-term strategy
Gestra long-term strategy 4. Product range platforms • Leveraging the best Gestra product ranges • Creating a platform for Spirax Sarco and Gestra product ranges • Strategic product differentiation where appropriate • Gestra world-leading technology and product ranges boiler house controls disc
Slide 31: Gestra long-term strategy
Gestra long-term strategy 5. Cross selling • Phase 2 of the acquisition business plan, once dual brand strategy well established and accepted by the market • Selling Gestra products in markets covered by Spirax Sarco • Selling Spirax Sarco products in markets covered by Gestra • Strategic product di
Slide 32: Gestra long-term strategy
Gestra long-term strategy 6. Manufacturing, supply chain and back office synergies • Leverage manufacturing, supply chain and back office opportunities; non-visible to customers, not undermining dual brand strategy • Purchasing & logistics: increased purchasing power for similar materials to leverag
Slide 33: Gestra financial performance
Gestra financial performance 2017 2017 under Spirax Sarco pro forma Future performance ownership Sales £51.5m £77m • Correlation with Industrial Production (IP) growth rates Profit £7.6m £11m • Expect to grow in line with Operating Margin 14.8% 14.1% IP, 2018 • Anticipate small margin decline in 201
Slide 34: Gestra
Gestra Engineering Steam Performance Lutz Oelsner Managing Director – Gestra Germany 33 Capital Markets Day 31st May 2018
Slide 35: Contents
Contents • History • Sales and markets • Products and applications • Gestra’s global operations • Gestra – positioned for growth! 34 Capital Markets Day 31st May 2018
Slide 36: History
History • Long, distinguished history engineering steam products • Founded on safe use of steam in industrial applications • First products: steam traps • Designed first safety critical Automated Boiler Controls • Technical leader for difficult control valve applications • Market leader in Germany 3
Slide 37: History
History 1902 Company founded in Germany by Messrs. Gerdts & Strauch 1956 - 1961 Expansion into France, Italy, England, Spain, South America 1968 GESTRA KSB Vertriebsgesellschaft formed 1976 GESTRA Inc. founded in the USA 1981 Conversion into GESTRA AG by purchase of GESTRA KSB Vertriebsgesellschaft
Slide 38: Sales and markets
Sales and markets North America, 7% South America, 1% Asia, 6% Gestra 2017 Germany, 41% Revenue by Revenue €87.9m ship-to country, 2017 Europe (all other) & Middle East, 45% 37 Capital Markets Day 31st May 2018
Slide 39: Products and applications
Products and applications Condensate Management products Application: all industrial steam systems Markets: Chemical, Power Generation, OEMs & General Industrial • Wide product range to solve customer problems • Various technologies to suit different applications • Engineered and manufactured to hig
Slide 40: Products and applications
Products and applications Products to improve steam system performance Condensate monitoring application Customer value: • Improved steam system life • Reduced water & treatment costs • Sustainability improvements • Improved levels of safety 39 Capital Markets Day 31st May 2018
Slide 41: Products and applications
Products and applications Control and boiler automation products Application: Boiler control, control of steam, water, condensate and other media Markets: Chemical, Power Generation, OEMs & General Industrial • Wide product range – temperature, pressure, line size • Technology leader in Boiler Contr
Slide 42: Products and applications
Products and applications Products to give safer, more efficient steam production Automated Boiler Control application Customer Value: • Maximised reliability and steam generation • Reduced emissions • Lower energy bills • Improved safety • Improved reliability • Improved productivity 41 Capital Mar
Slide 43: Gestra's global operations
Gestra’s global operations Bremen, Germany • Manufacturing and HQ in Bremen, Germany • Strong direct sales presence in Germany, primarily distributors elsewhere • Direct sales: 8 countries • Distributors: 57 countries • Good geographical growth opportunities Global headquarters & manufacturing plant
Slide 44: Gestra – positioned for growth!
Gestra – positioned for growth! • Successful transition; Gestra employees retained and new recruitment underway • Great products with new product releases planned • Strong in key markets of Chemicals, Power Generation and Boiler OEMs • Geographical market growth opportunities Gestra is positioned fo
Slide 45: Chromalox
Chromalox Nicholas Anderson Group Chief Executive 44 Capital Markets Day 31st May 2018
Slide 46: Chromalox acquisition details
Chromalox acquisition details Completed 3rd July 2017 • Transaction Enterprise Value US$415 million (£319 million) • 2016 performance: revenue US$201 million; EBITDA US$43 million; EBIT US$37 million • Multiple of 9.7x EBITDA 2016 • Funded in cash; net debt to EBITDA ratio of 1.5 by 31st Dec 2017; 1
Slide 47: Related acquisition
Related acquisition Strong strategic fit with long-term potential Related acquisition: expands addressable market and accelerates Group acquisition strategy: opportunities for growth 1. Create significant Direct sales business model shareholder value Provide products or services where there is a h
Slide 48: Complementary technologies
Complementary technologies • Thermal Energy Management: electricity and steam have complementary uses • Choice between heating mediums driven by application needs or customer circumstances * New Product Introduction 47 Capital Markets Day 31st May 2018
Slide 49: Expanding our addressable market
Expanding our addressable market Watson-Marlow Steam Specialties market share 19% market Watson-Marlow Steam Specialties market share Niche pumps and market 18% associated equipment market Niche pumps and associated Chromalox £1.3bn equipment market share 6% market £1.3bn £4.5bn New 2016 addressable
Slide 50: 2017 Financial results
2017 Financial results Revenue by destination of sales, 2017 Full Year 2017 2017 For reference only Revenue £75.1m £146m -2% Adjusted operating profit £13.8m £26m +3% Adjusted operating margin 18.4% 17.8% +80 bps • Performance in line with expectations 9% • Strong H2 demand; good sales and profit gr
Slide 51: Integration and opportunities
Integration and opportunities Integration Future performance • Operating as a stand-alone division within the Spirax Sarco business group • Correlation with Industrial • Strong, long-serving executive team remains with business post-acquisition Production (IP) growth rates • Expect to grow in line w
Slide 52: Chromalox
Chromalox Mike Sutter President, Chromalox 51 Capital Markets Day 31st May 2018
Slide 53: Agenda
Agenda 1 Business Overview 2 Footprint 3 Commercial Strategy 4 Technology & Innovation 5 Product Segments 7 Conclusion & Transition To Product Demonstration 52 Capital Markets Day 31st May 2018
Slide 54: Business Overview
Section 1 Business Overview 53 Capital Markets Day 31st May 2018
Slide 55: Leading provider of advanced thermal technologies
Leading provider of advanced thermal technologies We combine advanced thermal technologies with strong application engineering to solve the most demanding mission critical heating problems Who We Are What We Do How We Do It Founded in 1917, headquartered Design and manufacture the Focus: To de
Slide 56: Comprehensive product and service offering
Comprehensive product and service offering Chromalox is the only company with an established position in both industrial process heating and temperature management Industrial Heaters & Systems Component Technologies Heat Trace (IH&S) (CT) (HT) Solutions Process Heating Component Heating Temperature
Slide 57: Global leadership structure
Global leadership structure Mike Sutter * President and CEO Troy Dixon Roger Ormsby Craig Creaturo Bill Kennedy VP – Marketing & * VP – Operations & Chris Molnar VP – Product Mgt & * CFO, President – Americas Business Supply Chain Engineering VP – Administration Development Rick Payne VP – US Mark C
Slide 58: Unique position at intersection of Process Heating and Temperature Management
Unique position: at the intersection of Process Heating and Temperature Management Chromalox is able to provide customers with a complete solution for process heating and temperature management needs Process Heating Solutions Temperature Management Solutions Highly-Engineered, Packaged Process Heati
Slide 59: Sales spans broad range of customers and end segments
Sales spans broad range of customers and end segments 2017 Sales by Geography 2017 Sales by Channel APAC Direct: End EMEAI 5% Distributors Users & Opportunity to gain share in EMEAI and 35% Contractors 16% 33% APAC 33% of sales to End Users and EPC’s* Americas represents project work 79% Top 1
Slide 60: Footprint
Section 2 Footprint 59 Capital Markets Day 31st May 2018
Slide 61: Strategic global footprint
Strategic global footprint Operations supported by talented manufacturing/process engineers, Black/Green belts and Lean Tool Experts Ogden, Utah Pittsburgh, Pennsylvania Soissons, France Size (sq. ft.): 184,000 Size (sq. ft.): 22,000 Size (sq. ft.): 150,000 Products: IH&S Employees: 65 Products: IH&
Slide 62: Strategic global footprint
Strategic global footprint Industry leading engineering capabilities with 130 engineers globally* Calgary, Canada Pittsburgh, Pennsylvania EMEAI Application Engineer: Develops Application Engineers: 1 Application Application Engineers: 10 thermal solutions for customer 25 Engineers: Design Enginee
Slide 63: Commercial Strategy
Section 3 Commercial Strategy 62 Capital Markets Day 31st May 2018
Slide 64: Go-to-market strategy & global sales organization
Go-to-market strategy & global sales organization Chromalox goes to market through direct sales personnel and rep organizations that sell to Distributors, OEMs and End Users / EPCs Chromalox Sales Channel Summary Chromalox Sales Footprint Direct Sales Rep Orgs. and Distributors End Users / People Ag
Slide 65: Technology and Innovation
Section 4 Technology and Innovation 64 Capital Markets Day 31st May 2018
Slide 66: Innovation and new products driving growth
Innovation and new products driving growth Commitment to innovation supported by ~5% of sales invested in R&D and engineering annually Focused on building extendable product platforms in areas of core competencies Several disruptive technologies and new products recently introduced; additional N
Slide 67: Product segments
Section 5 Product segments 66 Capital Markets Day 31st May 2018
Slide 68: Component Technologies
Component Technologies 67 Capital Markets Day 31st May 2018
Slide 69: Component Technologies overview
Component Technologies overview Mission critical components specified into product Products designs, ordered by customers on recurring basis, replaced regularly by end users Foundation for more complex industrial heaters and Tubular Heaters Cartridge Heaters Flexible Heaters Temperature Controls
Slide 70: Selected new product innovation: XtremeDuty
Selected new product innovation: XtremeDuty™ XtremeDuty™ products engineered to withstand harsh use and perform in most difficult locations Engineered thermal solutions; proprietary XtremeDutyTM Application Environments technologies designed for extreme environmental and process conditions Process
Slide 71: Selected new product innovation: XtremeDuty
Selected new product innovation: XtremeDuty™ XtremeDuty™ products engineered to withstand harsh use and perform in most difficult locations XtremeDutyTM Alternative Energy Application Technology XtremeDutyTM MaxiZone Heaters surrounding fluidized bed reactor delivering high efficiency heat transfer
Slide 72: Industrial Heaters and Systems
Industrial Heaters and Systems 71 Capital Markets Day 31st May 2018
Slide 73: Industrial Heaters & Systems overview
Industrial Heaters & Systems overview Industry’s most complete offering of process heating Products solutions; a broad range of industrial heaters, engineered systems and related services Chromalox widely recognized as thought leader Immersion Engineered Large Tank Circulation Air Heaters Power
Slide 74: Selected new product innovation: DirectConnect
Selected new product innovation: DirectConnect™ Chromalox DirectConnectTM medium voltage electric heating systems are a new, disruptive technology that reduces installation and life-cycle costs while providing pollution-free operation for process heating Chromalox Standard Low DirectConnect TM Volta
Slide 75: Selected new product innovation: DirectConnect
Selected new product innovation: DirectConnect™ Key advantages: – Eliminates need for medium- to low-voltage conversion (directly DirectConnect™ Savings vs. Traditional Low Voltage connects to medium voltage source) Solutions – Reduces installation labour costs up to 90% Direct TM Savings Cost of
Slide 76: Heat Trace
Heat Trace 75 Capital Markets Day 31st May 2018
Slide 77: Heat Trace overview
Heat Trace overview Temperature management solutions for piping systems, Products Representative Customers valves and tanks; full suite of flexible cable and associated control products Established position within small and medium scale Self-Regulating Jacketed Heat Trace Controls and applicatio
Slide 78: Selected new product innovation: High Temp Self-Regulating Heat Trace
Selected new product innovation: High Temp Self-Regulating Heat Trace New high temperature self-regulating polymer – Proprietary extrusion process enables higher temperature materials – Max. continuous exposure temps up to 285°C – 480V self-regulating cable; up to 35W/ft Patented thermal box des
Slide 79: High Temp Self-Regulating Heat Trace advantages
Selected new product innovation: High Temp Self-Regulating Heat Trace Chromalox SRH Advantages Over Competing Technologies Illustrative Cost Comparison Chromalox Mineral Insulated Power Limiting Traditional Self- ~30% Cost Reduction using SRH Cables ("MI") Constant Wattage Regulating Chromalox SRH A
Slide 80: Selected new product innovation: C2i
Selected new product innovation: C2i™ Proprietary control platform and software with Central Control Capability intuitive Human Machine Interfaces ("HMI") Remote monitoring and management software simplify heat trace system installation and of every parameter on each circuit across all multiple loop
Slide 81: Selected new product innovation: C2i
Selected new product innovation: C2i™ Central Control Capability Typical 500 Circuit Project Cost Comparison Remote monitoring and management software of every parameter on each circuit across all multiple loop control panels $3.9mm $3.2mm Wireless temperature transmitters 18% Savings $2.4mm 38% Sav
Slide 82: Conclusion and transition to product demonstrations
Section 6 Conclusion and transition to product demonstrations 81 Capital Markets Day 31st May 2018
Slide 83: Providing a unique customer value proposition
Providing a unique customer value proposition HEAT TRACE INDUSTRIAL HEATERS & COMPONENT ENGINEERING & SITE SYSTEMS TECHNOLOGIES SERVICES Self Reg Cable ISC Control Software Cartridge Heaters Tubular Heaters Seal Gas LTFX Tank Heater Haz. Area Air Project Engineering & Design Heater Heater Management
Slide 84: Unique thermal technologies platform
Unique thermal technologies platform Leading technology and innovation platform with Only company that Unique platform for comprehensive can deliver both both organic and product and service electrical process in-organic growth offering heating and temperature management solutions Highly diversified
Slide 85: Steam Specialties Organic Growth Strategy Update
Steam Specialties Organic Growth Strategy Update Neil Daws Executive Director, EMEA, Spirax Sarco 84 Capital Markets Day 31st May 2018
Slide 86: Three steps to build a new strategy
Three steps to build a new strategy Built by a team of experienced managers, with significant involvement by the executive team and… 1 2 3+ Strategy Design Implementation Formulate Strategy Design the high-level Deliver Detailed design, planning and operating model delivery of changes ...+300 contri
Slide 87: Fresh insights – about industries and customers
Fresh insights – about industries and customers Industry insights Customer insights 86 Capital Markets Day 31st May 2018
Slide 88: Our vision describes the aspiration of the steam business
Our vision describes the aspiration of the steam business We will be… Recognised by customers as the world leader in Steam and Thermal Energy Solutions Expands our addressable market 87 Capital Markets Day 31st May 2018
Slide 89: Eight strategic thrusts to drive growth and performance
Eight strategic thrusts to drive growth and performance Strategic thrusts are the ‘vital few’ initiatives we must deliver to succeed Sales growth in priority segments 1. Grow end user sales in 4. Early entry to 2. Grow sales in 3. Grow sales in Food & Beverage and attractive geographic OPC and Che
Slide 90: Five 'where to play' industries
Five ‘where to play’ industries Providing the best return on our investments Focusing on the most attractive industries and where we are strongest Food & Beverage Healthcare OPC Chemicals OEM • Focus industries will direct Group investments and be the main priority for operating companies 89 Capital
Slide 91: A stronger customer focus in our organisation
A stronger customer focus in our organisation % Sectorisation (Sales and Service Engineers) 30% % Sectoriesation 24% 16% 5% 2014 2015 2016 2017 Year Sectorisation is the process of aligning an organisation to priority industries. For sales this means swapping ‘territory efficiency’ for ‘sales effect
Slide 92: Our vision states an expansion of our business scope
Our vision states an expansion of our business scope to cover wider thermal energy management Steam customer improvements in the control, re-use, recovery and storage of thermal energy in steam, utilities and related process waste streams. Expands our addressable market 91 Capital Markets Day 31st M
Slide 93: We will adopt a Total Customer Solution position
Vision Recognised by customers as the world leader in Steam and Thermal Energy Solutions We will adopt a Total Customer Solution position Customer Customer Customer Needs Economics Bonding Fulfilling customer needs Strengthening our bond with through focussed offers of Competing on customer customer
Slide 94: Gestra strategic fit
Gestra strategic fit • Gestra acquisition assessed for ‘fit’ • Very complementary to ‘Customer first’ strategy • World class boiler controls strengthens OEM business • High pressure products expands offer into Oil, Gas & Chemicals • Opens up the Power Markets expanding steam addressable market • Can
Slide 95: Customer first implementation results
Customer first implementation results • Priority sectors (Thrusts 1, 2 & 3) growing at a faster rate; 50% of turnover in 2017, up from 40% in 2014. • Eight fully operational OpCos established in new markets in last 3 years and five new sales offices opened (Thrust 4). • Thermal Energy Management and
Slide 96: Our strategic objectives describe the high level goals
Our strategic objectives describe the high level goals • Self-generated growth with no dilution of trading margin • An aligned organisation retaining entrepreneurial spirit • Using consistent frameworks and methodologies 95 Capital Markets Day 31st May 2018
Slide 97: Closing remarks
Closing remarks Nicholas Anderson Group Chief Executive Engineering Opportunities 96 Capital Markets Day 31st May 2018
Slide 98: Our direct sales business model
Our direct sales business model Positioning us well to create value Customer needs: We help our customers to solve their difficult productivity and process challenges, improve their operational sustainability and comply with increasingly stringent health, safety and environmental requirements. Custo
Slide 99: Customer capex vs opex spend
Customer capex vs opex spend Sales by value driver* Maintenance and 85% repair sales that maintain existing systems, supported by the end users’ opex of Group revenue is generated budgets, with a typical from annual maintenance and invoice value of around £1k operational budgets 15% Small project sa
Slide 100: Diverse markets and broad customer base
Diverse markets and broad customer base A source of resilience Food c.50% of Group Beverage 1% 14% revenue derived from 1% 18% Pharmaceutical & Biotechnology defensive, less cyclical, 2% OEM machinery end markets Oil & Gas 3% 3% Chemical 3% Healthcare 85% of Group revenue 4% Group Sales Power Genera
Slide 101: £8.2 billion market size
£8.2 billion market size £1.4bn Condensate 13% market share Watson-Marlow Steam Specialties Management market share 19% market 9% market products Niche pumps and associated share 26% market equipment market £1.8bn Thermal share Energy Chromalox Management market share 6% £1.3bn £4.5bn products £4.5
Slide 102: Sales growth 2011-2017
Sales growth 2011-2017 32.0 Organic Acq'n/Disp Exchange Reported 28.0 24.0 20.0 Sales growth % 16.0 12.0 8.0 4.0 0.0 -4.0 -8.0 2011 2012 2013 2014 2015 2016 2017 Engineering Opportunities 101 Capital Markets Day 31st May 2018
Slide 103: Broadening the platform for future organic growth
Broadening the platform for future organic growth 7% CAGR over the 10 years 30% Sales to 2016; step up from £1,000 28% Sales from acquisitions, 2017 acquisitions in 2017 £900 Reported profit margin 26% Margin excluding acquisitions, 2017 £800 Margin increased from 24% £700 Sales £ millions Profit ma
Slide 104: Questions
Questions Engineering Opportunities 103 Capital Markets Day 31st May 2018