IMI Severe Service

Agenda

• Welcome and introductions

• What is Severe Service?

• About IMI Severe Service

• Market and competitive landscape

• Growth strategy

Personal introduction

• Appointed as President on August 1st, 2005

• Previously 12 years with Novar plc; most recently as President of Novar’s Americas region

• Wide experience in managing industrial systems businesses

• Professional engineer (Imperial College) with MBA (Harvard)

What is Severe Service?

Severe Service: Control

Control of steam flow through a turbine in a power station

Control of gas flow through a gas processing plant

Severe Service: Isolation

Emergency shutdown of gas flow into a LNG plant

Shut-off of gas flow in a high integrity pressure protection

system (HIPPS)

Severe Service: Characteristics

• High pressure drop

• High velocity flow control

• Extreme temperatures/cryogenics

• Fine control requirements

• Tight shut-off

• Corrosive/erosive environments

• Nuclear applications

• Operational reliability

• Safety critical/emergency shutdown

• An engineered solution incorporating high levels of performance and reliability

Cost of failure is many times the cost of the solution

Severe Service – putting it in context

Average house tapPressure: 50 psi

Hoover Dam300 psi

Severe Service control valveUp to 15,000 psi

Severe Service – Top of the Pyramid

General Service

Applications and

Technologies

Severe ServiceApplications andTechnologies

~$22bn

~$3bn

Source: McIlvaine, PMSI, ARC, IMI estimates – Oil/Gas, Power and Petrochem only – excludes Service

Severe ServiceNot all Severe Service valves are the same …

Cavitation Erosion

Photographs of competitors’ products

About IMI Severe Service

Strong growth orientation with potential for strategic development

IMI Severe Service today

• Leader in severe service solutions

• Serving major customers in the global energy and power markets

• Over 2,000 dedicated employees worldwide

• Global manufacturing, sales and support capability

• Emerging market focus

• Unrivalled reputation for aftermarket support

• Experienced and talented management team

• Heroically, customer focused culture

IMI Severe Service – 2006 segmentationIndustry

Geography

Oil & gas20%

Industrial/other14%

Service29%

Nuclear power17%

Fossil power20%

Americas21%

EMEA43%

Asia-Pacific36%

IMI Severe Service – Our journey2003

Fluid Kineticsand Herion

Valves

IMI Severe Service

1961Founded

1967CCI Patents theDRAG® valve

1971B&W

acquires CCI

1979Bailey Valves

1981IMI

acquires CCI

1992Dikkers nuclear

valves

1997Sulzer valves

2001BTG valves

2002STI

2006Truflo

2005ABB Japan Control

Valves; 100% of CCI Korea; Shanghai CCI JV

formed

Foundations of our success …Committed people everywhere

Foundations of our success …Direct relationship with the market

EPC Client

OEM

“Partner” “Customer” “End User”

Oil & Gas

Power

Integration Price, eng support,project execution

Life cycle op cost,service

Foundations of our success …The Valve Doctor®

CCI Valve Doctors

• Our best engineering talent

• Strong application knowledge

• Great, personal customer relationships

• Keep us “ahead of the game” in terms of innovation and technology

• Focus on results for the end-user –“Plant Betterment”

• Our most experienced valve engineers:

– 40 Valve Doctors

– 9 countries

– >600 years combined experience

Foundations of our success …Proven technology• Track record of solving severe service problems in over 4,500 plants

worldwide

• Recognised as leader in custom engineered solutions

• Focus on engineering leadership and innovation

Foundations of our success …Global service and operations capability

Market and competitive landscape

IMI Severe Service: Oil & gasBillion US$

2007 2008 2007 2008 2007 2008 2007 2008 2007 2008

1516 16

17 2021

2021.5

2223

• Oil majors are investing record CAPEX in exploration and production to sustain the demand for energy and supported by high oil prices

• 2007 CAPEX expenditure will exceed $280+ billion dollars

• CAPEX is a leading indicator for IMI Severe Service, but that is not the whole story …

Source: BP, EIA

IMI Severe Service: Oil and gas

Focused on upstream gas production and midstream LNG/GTL chain

IMI Severe Service: Oil and gas

Gas production

0

1,000

2,000

3,000

4,000

5,000

2004 05 06 07 08 09 2010 2015 2020 2025

Bn m3/year

Source: Douglas Westwood

Global LNG Capex

0

5

10

15

20

25

30

35

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$bn

Source: Douglas Westwood

• Gas production projected to grow; primarily driven by demand for electricity generation

• Mid-term, greater proportion of gas will be transported by LNG for geo-political reasons

• Longer term clean coal processes and nuclear will impact demand for LNG, especially from US and China

IMI Severe Service: Fossil and nuclear power

Global fossil-powered electricity generating capacity

0

1,000

2,000

3,000

4,000

5,000

2003 2010 2015 2020 2025 2030

Gigawatts

Source: EIA

Nuclear reactorsunder construction

(April 18th, 2007)

0 1 2 3 4 5 6 7

Romania

Pakistan

Korea

Japan

Iran

Finland

Argentina

Ukraine

Taiw an

Bulgaria

China

India

Russia

Source: IAEA

• Fossil generating capacity projected to grow steadily; driven by energy demand in China and India

• Environmental considerations will come to the fore, driving investment in clean coal and CO2 capture with re-injection

• 31 nuclear plants under construction currently as part of upgrade and expansion of 443 units operating today

IMI Severe Service: Competitive landscape

#1 or #2 in markets we serve

Power Oil and Gas

Severe Service: Control

Power/O&G* Nuclear

Severe Service: Isolation

* Tri-X technology

Growth strategy

Growth Strategy: Severe Service Solutions

Leverage existingproducts, markets

and services

Emerging marketfocus

Increaseapplication scope

with new productsand technologies

Enter newapplication areas,

eg subsea,downstream

Severe ServiceSolutions

Several avenues for organic and strategic growth

Growth Strategy: Severe Service Solutions

Valves Actuation Control

From product provider to system integrator

Severe Service Solutions

Increasing end-user influence

Growth Strategy: Execution

• Leveraging existing markets• HIPPS systems• Emerging markets focus• Acquisition of Truflo

• Global supply chain• Low cost procurement• New facility in India• Support center in India

BusinessDevelopment

ProcessExcellence

Innovation

OrganisationCapability

• Dedicated R&D group• New chokes and actuation

• Regional leadership• Leverage future acquisitions• World class leadership team

IMI Severe Service – In summary

• Excellent IMI platform business

• Positioned for profitable growth

• Exposure to buoyant, global energy markets

• Direct relationship with the partners, customers and end-users

• Significant recurring aftermarket and service revenues

• Strategic development potential

• High proprietary, engineering content

• Experienced, committed and talented team

Delivering on our commitments; developing the business

Focus presentations

Oil & gas room

Oil & gas

LNG (Orton)

Power room

Nuclear

Fossil power

Technology room

Technology / Innovation

Customer Service