IMI plc

Good morning everyone and welcome to IMI's 2025 full year results presentation. I am joined here today by our CFO, Luke Grant. Together we will take you through another year of strong strategic and financial progress. And I would like to begin by thanking all of our people for their tremendous contribution. The execution of our growth strategy is creating significant value for shareholders and it was another strong performance in 2025. We have now delivered five consecutive years of mid single digit organic revenue growth and supported by the delivery of our financial framework, we are compounding earnings growth. We delivered 5% organic sales growth and 8% organic adjusted operating profit in 2025 and achieved a 20% operating margin for the first time. It was another year of strong cash generation and we are committed to deploying this capital for growth and to enhance shareholder returns. Organic investment is at record levels and I am pleased to be announcing a £500 million share buyback alongside a proposed 10% increase to the final dividend. We expect to deliver our sixth consecutive year of mid-single digit organic growth in 2026. And based on current market conditions, fully adjusted basic EPS is expected to be between 136 pence and 142 pence. IMI has been fundamentally transformed since our growth strategy was launched in 2019. With our world-class engineering expertise and our relentless focus on commercial excellence, we are well placed to address our customers needs for bespoke high value add fluid and motion control systems supported by three long-term mega trends energy automation and healthcare and our focus on the attractive aftermarket we are compounding eps growth

Thank you Roy and good morning. I'm pleased to be able to take you through our 2025 performance today. Our one IMI operating model continues to drive consistent compounding results and 2025 was another strong year. Revenue increased by 5% organically, adjusted operating profit increased 8% organically, and our adjusted operating margin increased by 30 basis points to 20%. Adjusted basic EPS was up 8% year on year. Cash conversion remains strong and we are proposing a further 10% increase in the final dividend, reflecting our confidence in the business. As Roy mentioned, we delivered our fifth consecutive year of mid single digit organic revenue growth in 2025. Organic revenue grew by 5%, partly offset by the impact of foreign exchange and recent disposals. Adjusted operating profit increased to 460 million with organic operating profit up 8% year on year. We have made significant progress delivering sustainable improvements in our margins since launching our strategy in 2019. Our margins are now at 20%, which is 580 basis points higher than 2019, alongside the record levels of investment we are making in our business. This is an important milestone and we expect both in our attractive end markets, strong pricing power and continued progress in the high margin aftermarket. While we will be making the previously communicated cyber security investments in 2026 to further enhance the resilience of the business, our strong operating leverage means we still expect to deliver a drop through of around 30% over the medium term. Turning to the income statement, we saw strong organic revenue and profit growth in the year. The net interest charge was £17.7 million and the tax rate increased to 25.4% in line with our guidance. Now, as you may be aware, IMI's multi-year restructuring program completed in 2024. This program transformed the business, streamlining our global footprint and laying the foundations for future growth. Our focus is now on continuous improvement. And while we continue to look for efficiency opportunities, the costs associated with our current business are now being taken into our underlying results rather than as an adjusting item. Adjusted basic EBS increased by 8% to 132.3 pence in the year. Now looking at the performance of the platforms and sectors which was in line with expectations. Automation delivered strong growth with revenue of 8% organically. Process automation had an excellent year, delivering strong order intake as shown at the bottom of the slide. Adjusting for the planned disposal of TruFlo Marine, orders were up 5% organically, with particular strength in conventional power and nuclear, which Roy will cover later on. We made further progress in the high margin aftermarket, where, after a very strong fourth quarter, full year orders were 11% higher than 2024, and 9% higher after adjusting for TruFlo Marine. Organic revenue was 12% higher than the prior year and the order bug was up another 2%. Industrial automation delivered a resilient performance despite uncertain markets. Organic revenue was 1% lower year on year. Turning to live technology where organic revenue was 1% higher than 2024. Climate control delivered another good performance with revenue up 5% on an organic basis We saw continued demand for our products that reduce energy consumption in buildings and benefited from our growing portfolio of smart connected products, including those supporting advanced cooling technologies in data centers. Life science and fluid control was flat organically in 2025 as the global life science device market began to stabilize. Transport organic revenue was 6% lower than 2024 in line with the global heavy duty truck market. So continuing to the cash flow where we delivered further improvements during the year supported by our strong profit performance and great working capital management. I'm incredibly proud of our operational and commercial teams delivering a 3 million working capital inflow in the year whilst driving another year of mid-single-digit organic revenue growth, with debtor and creditor increases in line with growth more than offset by a £31 million reduction in inventory. With the restructuring programme now completed, we are making good progress reducing safety stocks across IMI. Inventory reduction also benefited from the ongoing strategic review of transport, where we are delivering significant operational improvements in line with our plan. The review of transport is progressing well. We are clear that any outcome must deliver compelling long-term value for shareholders and in the current market environment continue to see further opportunities to strengthen performance within the group while continuing to assess all strategic options. Capital expenditure remains at record levels as we continue to invest right across IMI for future growth. We expect capex to depreciation to be around 1 to 1.2 times over the medium term. Free cash flow increased to £290 million and we returned £281 million of this to shareholders through dividends and our share buyback programme. Our net debt has reduced to £533 million at year end and net debt to EBITDA at one times is at the bottom of our target range. I am also very pleased to report that I've heard a tremendous amount of hard work from our team over the last decade. We have now completed the final buyout of our UK pension scheme. This is an important milestone for IMI, and I would like to thank everyone involved for their significant efforts. IMI is a highly cash-generative business with a clear and disciplined approach to capital allocation, prioritising investments in our people, processes and operations, We remain committed to a progressive dividend and, as mentioned, are very pleased to be recommending a 10% increase to the final dividend. We will also pursue bolt-on acquisitions that enhance our positions in attractive long-term growth markets. We have deployed over £400 million in bolt-on while increasing our fully burdened return on invested capital by 260 basis points to 14%. TWTG, a leading sensor solutions provider, acquired for €25 million in October 2024, is now integrated into IMI. TWTG's differentiated product portfolio has greatly expanded our asset monitoring offering, providing us with the opportunity strong and we will continue to seek attractive bolt-on acquisitions that accelerate organic growth and expand our capabilities while delivering returns in line with our strict financial criteria. Finally, we will look to return surplus capital to our shareholders should net debt to adjusted EBITDA fall sustainably below our one to two times target range. We completed a 200 million share buyback in July and are pleased to be announcing a further 500 million pounds share buyback today. By deploying a growing free cash flow into organic growth opportunities, attractive acquisitions and value enhancing share buybacks, we are confident we can continue our track record of compounding EPS growth. We are very excited about the opportunities for growth at IMI and expect to deliver our sixth consecutive year of mid single digit organic revenue growth in 2026. Based on current market conditions, we expect adjusted EPS to be between 136 pence and 142 pence. This guidance assumes that process automation will grow mid to high single digits supported by the record order book. Industrial automation is expected to deliver another resilient year with organic revenue flat to modelously higher. We see continued good demand in climate control and stability within life science and fluid control with some growth in our life science business. Transport is expected to be broadly flat in line with the global heavy duty truck market. We expect the adjusted operating margin to be flat to slightly up. previously communicated cybersecurity investments. Our guidance assumes that the disposal of TruFlow Marine will complete in mid-2026. We are assuming a net interest charge of £20 million, that our tax rate will increase to 26.3% and our weighted average number of shares of £238 million following a £500 million share buyback. Foreign exchange rates are not currently expected to have a material impact on sales or profits. With that, I'm going to hand over to Roy, who will talk you through the strategy update.

Over the last six years, we have focused on aligning our business to three long-term megatrends, energy, automation, and healthcare. These structural drivers provide us with significant opportunities to create long-term value and will underpin the delivery of profitable growth in the years to come. IMI is a global leader in fluid and motion control with a compelling value proposition. Our solutions typically represent a small part of the total system cost, but have a significant positive impact on end customer outcomes. This drives growth, customer loyalty and strong pricing power. We are well placed to support our customers in the attractive aftermarket, which represents around 45% of IMI sales. Our business is aligned to long-term megatrends and is built on the strength of our one IMI operating model. By applying a consistent approach, rooted in commercial excellence, market-led innovation and continuous improvement, we are creating significant value for shareholders. Our people and performance culture are the foundation of the One IMI operating model, and we have worked hard to build a culture of ownership, of customer focus and of innovation. We are making significant investments in our people to help them grow, help them develop and create value for customers. Adopting artificial intelligence has been a key priority and we are rolling out exciting new tools and platforms across IMI. I'm pleased to report that over 2,000 of our colleagues have now completed our AI training. These investments are delivering tangible benefits employee engagement remains very high and our productivity continues to improve and has increased by 31% since 2019. Over half of IMI sales are directly supported by rising energy demand and energy efficiency, and I wanted to share a few examples of how this long term megatrend is supporting sustainable, profitable growth. As many of you may be aware, IMI is a key supplier to the large gas turbine OEMs, and we benefited from very strong demand in conventional power during the year. Order intake in the high margin aftermarket was up 16% organically, and new construction was up 32%. with strong momentum driven by widespread electrification and the need for stable, reliable energy to power data centres. Our customers now have significant multi-year order books and we feel positive about the opportunities for further growth. We also saw a resurgence in demand for our solutions for the nuclear market during 2025. Plant life extensions present a significant opportunity for IMI, and we saw very strong growth in the aftermarket, where orders were up 33% organically year on year. Thirdly, LNG. While IMI's fluid control solutions play a key role across the LNG value chain, we are particularly excited about the significant opportunity to support the liquefaction capacity additions in North America. We have strong customer relationships, leading technology, and we see a clear opportunity to deliver growth. Finally, how the rapid expansion of data centers is not only driving energy demand, But it is also presenting an exciting opportunity for climate controls, energy efficient fluid control products. Our innovative solutions can play a direct and key role in the liquid cooling systems, and we more than doubled our order intake to £18 million in 2025, with a global pipeline of opportunities that continues to expand. We have an outstanding culture of customer-led, market-driven innovation at IMI. Grounded in deep customer insight and executed through our Entrepreneurial Growth Hub model, our innovations solve complex engineering challenges. Our teams utilize a disciplined test and learn approach to quickly validate solutions and validate market potential. Through this process, we maximize our return on investment by bringing products to market once customer endorsement has been secured. Our methodology continues to evolve, and I am particularly proud of how we are now using artificial intelligence to help identify and validate Growth Hub opportunities even faster and with greater precision. We launched Growth Hub across IMI in 2019. and delivered a record 206 million pounds of orders in 2025, up 38% on 2024. I also wanted to spend some time this morning highlighting the key role that process automation looks set to play in the energy transition. Process automation represents about 40% of our revenue, and overall orders have grown at 8% CAGR since 2020. New construction represents about 40% of process automation, and as you have seen earlier in this presentation, there is renewed momentum across RM markets, principally driven by electrification and data center investments. Adjusting for the disposal of TruFlo Marine, over half of our new construction business is directly exposed to gas, power, nuclear and hydrogen. We are very encouraged by the outlook for these markets. They support our medium-term growth ambitions and importantly, expand our installed base, driving the aftermarket and supporting long-term profitable growth. Aftermarket orders now represent over 60% of process automation, and as you can see on this slide, orders have grown at an 11% CAGR since 2020. We actively track over 200,000 severe service valves in our own installed base, where our parts, upgrades and services are absolutely mission critical to plant safety, efficiency and profitability. By working closely with customers to maximise uptime in their most critical applications, we build long term relationships and secure recurring high margin revenue. IMI has been fundamentally transformed over the last six years as we built a track record of compounding EPS growth. We have delivered average organic growth of 5% over the last five years, supported by our leading positions in attractive long-term growth markets and our success in driving commercial excellence and market-led innovation. Our adjusted operating margin is now at 20%, 580 basis points higher than in 2019. This continued progress reflects our strong operating leverage, our focus on the high margin aftermarket, and the final benefits from our restructuring program. We aim to deliver further margin progression in the medium term, supported by the growth in our attractive markets. Cash conversion remains high at 96%. And as Luke has outlined, we are committed to deploying this cash to accelerate growth and enhance our shareholder returns. Our fully burdened return on invested capital has now increased to 14%, significantly higher than our 12% underpin and our weighted average cost of capital. So to summarise then, we are very proud of the achievements in 2025. Organic revenue grew by 5%, the operating margin is now at 20%, and our organic operating profit grew by 8% with strong cash conversion. So the key takeaways are, firstly, our growth strategy is compounding earnings growth. Second, in line with our disciplined approach to capital allocation and commitment to value creation, we are announcing a £500 million share buyback in addition to the 10% increase in the final dividend. Thirdly, we are targeting a sixth consecutive year of mid-single digit organic revenue growth in 2026. And based on current market conditions, we expect this year's full year adjusted EPS to be between 136 pence and 142 pence. And finally, I would really like to take a moment to thank all of our people for another great year. We are looking forward to another year of progress in 2026. Thank you. I'm now going to hand over to the moderator for the Q&A.