Site visit to IMI Brno

Site visit to IMI Brno IMI Group presentation Mark Selway, IMI Group CEO

9 June 2015

Site visit to IMI Brno

Strategic work streams completed Reviewed existing competencies and opportunities

Markets Customers

Products Peers

Competition

1. ✓

Manufacturing operations Product development Systems and controls

2. ✓

Collaboration Synergies

Economies of scale Brand

3. ✓

Investment for growth Acquisitions

4. ✓

Site visit to IMI Brno

Mar

ket A

ttrac

tiven

ess

Competitive Position

Well positioned in attractive markets

Low High

Low

H

igh

Best in class

Maximise potential

Commercial Vehicle

Life Sciences Industrial Automation

Oil & Gas - CE

Oil & Gas - PE

Control

Water Quality

Power

Actuation

Petrochemical

Water Pressure

TRV Balancing

‣  Attractive high growth markets with good competitive positions

= c. £1bn market size

‣  Large attractive markets with self-help opportunities to grow competitiveness

‣  Highly attractive niche markets with strong competitive positions

Site visit to IMI Brno

Key challenges identified

‣  New capital investment required

‣  IT systems (56 different unaligned systems) ‣  Facilities

‣  Increased investment needed in product development

‣  Complex organisational structure

‣  Lack of acquisition integration

‣  No standardisation of processes across Group

‣  Under utilisation of manufacturing capacity

IMI plc – site visit to IMI Brno operations

Power Oil & Gas Petrochemical &

Metals Actuation

2013 Revenue* (£m) 277 186 156 37

Market size (£m) 1,343 3,108 1,152 1,080

Market growth (value) pa 9% 7% 3% 5%

Cyclicality Medium Medium High Medium

Aftermarket potential High High High Low

ROS (best practice) 25% 24% 16% 25%

Leadership Potential Leader Potential Potential Challenging

Share (est. global value) 21% 6% 14% 3%

Position (share) 1/2 6 2 5

Share trend Steady Growing Growing Steady

Competitive advantage Technology Installed base Installed base Technology

Installed base Technology

In-house sales

ROS (IMI 2013) Low teens Best practice Best practice Best practice

Mar

ket A

ttrac

tiven

ess

Abi

lity

to c

ompe

te

IMI Critical Engineering (Formerly Severe Service) Market and positioning

‣  Almost £7bn addressable market

‣  Attractive growth markets

‣  Leadership position in power and potential to achieve in other key sectors

‣  Barriers to entry provide excellent opportunity in high margin aftermarket

* 2013 included other revenue of £60m

IMI plc – site visit to IMI Brno operations

Capitalise on attractive growth in existing markets

1.

IMI Critical Engineering Focus and grow

Invest to support growth markets

2.

‣  Our goal is 6 - 8% organic CAGR over 5 years

Enhance systems and processes

3. Acquisitions to support growth

4.

‣  New larger sites in Houston and Korea being built (c.£15m)

‣  Planned new Z&J site in Germany (c.£14m)

‣  Investigate additional service locations to support aftermarket

‣  New product development

‣  Project execution benchmarking

‣  ERP implementation underway at IMI CCI (c.£10m)

‣  Add strategically aligned bolt-ons

‣  Extend into adjacent markets including subsea

‣  Expand product portfolio - semi-severe and configured valves

IMI plc – site visit to IMI Brno operations

Industrial Automation Commercial Vehicle Oil & Gas Life Sciences

2013 Revenue (£m) 423 165 85 50

Market size (£m) 9,174 1,478 1,365 1,516

Market growth (value)pa 4% 4% 6% 5%

Cyclicality Medium/High High Medium Low

ROS (best practice) 24% 16% 25% 22%

Leadership Potential Challenging Challenging Potential Challenging

Share (est global value) 5% 11% 6% 3%

Position (share) 3 4 6 7

Share trend Declining Steady Increasing Increasing

Competitive advantage Brand and installed

base Emissions technology Technology Micro and syringe pump technology

ROS (IMI 2013) Upper quartile Best practice Best Practice Best practice

IMI Precision Engineering (Formerly Fluid Power) Market and positioning

‣  £14bn addressable market opportunity

‣  Challenging competitive environment

‣  Best in class returns but falling market shares

‣  Significant potential in Industrial Automation ‣  Ieading brand ‣  high margins from

aftermarket

Mar

ket A

ttrac

tiven

ess

Abi

lity

to c

ompe

te

IMI plc – site visit to IMI Brno operations

‣  Simplify organisational structure ‣  Introduce standard costing to improve competitiveness and profit visibility ‣  Significantly improve operational performance ‣  Address supply chain complexity ‣  Our goal is growth in line with GDP in years 1 and 2 and CAGR of 6 – 8% thereafter

IMI Precision Engineering Fix, focus and grow

Fix the basics in the next two years

1. Revitalise industrial automation and grow organically

2. Increase plant utilisation

3. Grow emerging market local manufacturing content

4. Future opportunity for larger acquisitions to accelerate growth

5.

Site visit to IMI Brno

IMI TA IMI Heimeier IMI Pneumatex

Balancing Control Thermostatic

Control Pressurisation Water Quality

2013 Revenue (£m) 131 26 101 34 13

Market size (£m) 563 733 538 396 156

Market growth (value)pa 4% 6% 5% 5% 5%

Cyclicality Low Medium Low Low Low

ROS (best practice) 20% 17% 25% 22% 28%

Leadership Potential Leader Challenging Leader in Northern Europe Challenging Potential

Share (est global value) 23% 4% 19% 9% 8%

Position (share) 1 <5 2 3 3

Share trend Steady Growing Steady Declining Declining

Competitive advantage Customer loyalty Technology leader Customer loyalty and brand Swiss-made quality Technology leader

ROS (IMI 2013) Best practice Medium Best practice Best practice Best practice

IMI Hydronic Engineering (Formerly Indoor Climate) Market and positioning

Mar

ket A

ttrac

tiven

ess

Abi

lity

to c

ompe

te

‣  £2bn addressable market opportunity

‣  Low cyclicality due to resilience of refurbishment markets

‣  Leadership position in core North European markets

‣  Best in class returns but falling market shares

Site visit to IMI Brno

Capitalise on European leadership position

1.

IMI Hydronic Engineering Focus and grow

Increase new product development

2. Optimise organisational structure

3. Acquisitions 4.

‣  14 new products launched in last 12 months

‣  Double investment in NPD over next 5 years

‣  Our goal is >5.0% organic CAGR over 5 years

‣  Introduce core processes

‣  Implement new ERP system (c.£10m)

‣  Review Swiss Principal structure

‣  Potential bolt-on acquisitions to target North America

Site visit to IMI Brno

‣  Focus on bolt-on, product in-fill, semi-severe and configured

‣  Fix and focus and then target more

significant acquisitions (e.g. non-core businesses of large multi-nationals)

‣  Consider opportunities to strengthen position in North America

Acquisition road map

Site visit to IMI Brno

Strategy execution timeline

“The hard work begins”

“Increased investment”

“Benefits starting to show”

“Nearly firing on all cylinders”

Year 0 2014

Year 1 2015

Year 2 2016

Year 3 2017

Year 4 2018

“Up to full speed”

‣ Assess our markets and drivers for growth ‣ Benchmark performance and plan for improvement

‣ Invest in products and capital for growth ‣ Foundations established and benchmark improvements evident ‣ Sorting the basics in Precision Engineering complexities and structure

‣ Accelerated growth evident in results ‣ Working capital benefits visible in results ‣ Emerging markets ready for local full technology supply

‣ Growth outruns peers in every division ‣ Benchmark performance nearing world class standards ‣ Precision supply chain and capacity issues resolved

‣ Ambitions for growth fully realised ‣ Achievement of world class performance evident in results

✓

Year 5 2019

“Double operating profits”

‣ All divisions in attractive, high growth markets

Supported by value enhancing acquisitions

Organic initiatives

Site visit to IMI Brno

✓

✓

✓

✓

✓

Strategic Progress in 2014 Strategic review completed and 5 year roadmap defined

Benchmarking complete and improvement plans developed in operational, project management and financial systems

Excellent progress made in Lean with further improvement targeted in 2015

Underinvestment in IT being addressed with clearly defined and on-target plans to launch ERP systems in each of the divisions

Rebranding now largely complete providing a coherent and unifying platform

Disposed of non core businesses, including Eley and AFP

Great progress on new product development, including 14 new products in Hydronic

Acquisition of Bopp & Reuther has well defined plans to deliver substantial synergies

✓

✓

✓

Site visit to IMI Brno

Interim Management Statement 7 May 2015

‣  Markets challenging: delays impacting first half order intake

‣  No cancellations but delays could push some projects to 2016

‣  Oil and gas orders remain resilient ‣  Nuclear disappointing and actions taken ‣  First half revenues and margins lower ‣  Second half revenues and margins

significantly improved on H1

‣  Good start to year with small revenue gain in continued slow construction markets

‣  Slightly higher revenues with lower margins in H1

‣  Good second half growth with normal second half margin benefit

‣  First half revenues broadly flat with lower margins versus 2015

‣  Brazilian market and economics poor and actions taken

‣  One off costs to clean up USA accounts ahead of JDE

‣  Market conditions in China slowing ‣  Modest second half growth with similar

H2 margins to 2014

‣  Lower Group revenues and margins in H1 versus prior year

‣  Improving second half with revenues and margins slightly below 2014