IMI Aktie

Good morning, everyone, and thank you for joining us on today's IMI plc Q1 Trading Update. My name is Drew, and I'll be the operator on the call today. [Operator Instructions] With that, it's my pleasure to hand over to Roy Twite, CEO, to begin. Please go ahead when you're ready.

Good morning, everybody, and welcome to IMI's First Quarter Trading Update. I'm joined here today by our CFO, Luke Grant. We have made a good start to the year, delivering organic growth across IMI in the first quarter. This performance reflects the strength of the One IMI operating model, our strategic focus on 3 megatrends: Energy, Automation and Healthcare, and the continued efforts from all of our people globally. We are pleased to reconfirm our full-year guidance. We remain firmly on track to deliver our sixth consecutive year of mid-single-digit organic revenue growth in 2026.

And we continue to expect that full year adjusted EPS will be between 136p and 142p. Process Automation delivered strong revenue growth. As expected, order intake was slightly lower year-on-year against a strong Q1 comparator, particularly in the aftermarket, where we grew 19% organically in the first quarter of last year, driven by several large nuclear orders that we previously announced. Industrial Automation performed in line with expectations, benefiting from an easier comparator following the cyber incident in the first quarter of last year. Climate Control continues to perform well, supported by demand for our energy-efficient solutions. Life Sciences and Fluid Control was slightly better than the prior year as we saw further signs of stabilization in the life science device market. Transport grew in line with the heavy-duty truck market.

Before I hand back to the operator, I would like to provide a quick update on the Middle East. We are actively monitoring the situation where the safety of our people remains our absolute top priority. The region represents 6% of IMI sales in 2025, principally in Process Automation. And I wanted to be clear on how this is reflected within our guidance. As at the end of April, we have shipped approximately GBP 35 million to the Middle East year-to-date. Despite the ongoing disruption, we currently have a further GBP 15 million planned for delivery in May and June. Our guidance assumes that conditions normalize, allowing us to deliver around GBP 75 million in the second half and therefore, approximately GBP 125 million across the full year into the Middle East. IMI remains well positioned with a unique market-led approach to innovation, significant recurring high-margin aftermarket exposure and strong pricing power. Importantly, our strong balance sheet and significant cash generation continue to support investment, shareholder returns and strategic flexibility.

So with that, I'm going to hand you back to the operator, who will manage the Q&A session. Thank you.

[Operator Instructions] Our question today comes from Chitrita Sinha from JPMorgan.

I have 3, please. My first question is just on the orders to be delivered in the Middle East. I believe you said, I think, GBP 75 million of orders that should be delivered in H2. Given the present situation, I mean, what are some of the risks to those deliveries in H2? And I guess also the GBP 15 million that you mentioned will be delivered in the next few months?

And then my second question is on Industrial Automation, where in the release, you said that you see modestly higher growth for the year versus flat to modestly higher previously. What are you seeing in this business that has made you incrementally more positive? And my final question is on Transport. The quarter clearly saw 9% organic growth. But as you mentioned, there's some easy comps there. How do you see the underlying growth for the rest of the year? And has that had any impact on the strategic review?

Well, thanks, Chitrita. That's a comprehensive set of questions to start with. So orders in the Middle East, yes, so I laid out a few minutes ago, GBP 35 million delivered year-to-date. Really for us, the key month was April because obviously, that's the one where we've got the current level of disruption, and that's what we based our guidance on for the first half. So what we're saying is that if we look at what we delivered in April, and obviously, the team worked really hard to do that, looking at the orders and the shipments Incoterms -- by Incoterm, considering other ways that we can get the product to customers.

What we're saying is that in May and June, we -- on that basis, we will deliver another GBP 15 million of shipments. That does mean though that GBP 15 million of sales will move from the first half to the second half, and we're now planning on GBP 75 million of shipments into the Middle East in the second half. If April conditions continued, and it didn't get any worse than that or any better than that, then in the full year, there would be about GBP 30 million of shipments at risk in our guidance to give you an overall view. But obviously, what we're all hoping is that conditions improve in the second half and we get back to a much more normal situation.

So hopefully, that answers all the details on the Middle East Chip. On IA, as you know, we look at lots of data. We looked at our 60-day moving average, which is slightly messed around by the cyber incident. It is looking strong versus last year, but you've got to take that with a pinch of salt. In terms of looking at it on an ongoing basis, yes, it's definitely in a better position, particularly in the U.S. And a lot of that's down to improving market conditions, but also the hard internal work that the team are doing to really use data to drive better effectiveness in the commercial area.

So that's why we now think, yes, actually, instead of being flat to modestly higher, IA will be higher. Clearly, PMIs have helped and external data has helped as well. Seeing the global PMI pinch up to 52 is better than it's been for a long time. I mean it's not fantastic. It's not in a real growth territory, but at least it is in a slightly positive situation. Clearly, we have got an eye on the Middle East, and we have taken that into account as well.

And then on Transport, yes, very good start from the transport team, but it was an easier comp exactly as you said, Chit. So again, when we look at the data coming in from customers, we're still maintaining Transport being broadly flat this year. Obviously, if the situation in the U.S. continues to be strong, then that could be revised up. But at the moment, we still think Transport will be about flat. What's really encouraging, and I've visited all of our key factories over the last sort of 6 months or so in transport is the rate of operational improvement.

And the first key sign of that is inventory turns. We're seeing a lot of cash coming out of the transport sector, which is really good as they really start to lean up all the processes. And they've been very good around cost control as well, plus there's some new products coming through at accretive margins. So that's really only just the beginning of that. We're not really seeing much of that new product in the P&L yet. But if you take that over the sort of next 18 months, that will clearly help them move towards their target, which is to match IMI's return on capital employed. So hopefully, that answers all your questions, unless I missed anything.

Our next question today comes from Christian Christian Hinderaker from Goldman Sachs.

I want to start actually on the data center comment in process. I wonder if you maybe you can help with an indication of your exposure there. How do we think about that in terms of pipeline development over the start of the year?

Did you mean in climate?

No, Process Automation. You've called out demand strength from data centers and widespread electrification in the release.

Yes. So as you know, within Process Automation, it's mainly conventional power where we did about GBP 300 million of orders last year, Christian. I mean it's been an absolutely fantastic start in the first quarter. I don't want to get carried away, but new construction orders on conventional power first quarter literally doubled. So it's a very, very strong start within conventional power. Yes. And when you look at our customers, and you know our customers are -- they are calling out very strong order books and our hit rate is very, very high, Christian. So yes, that whole data center sort of value chain, the power part of it is helping both process automation on conventional power, but obviously also climate as well.

And then maybe thinking more midterm around the Middle East or at least operationally, and I appreciate the color in terms of monthly run rates. That's very helpful. But what sort of actual effects are you seeing on customer sites? Is there a lot of shift to care and maintenance? Could that cause risk of increased breakages in your valves and hence, require a bit of an upgrade cycle, assuming that we come out of this at some stage?

Yes, Christian. So obviously a terrible situation in the Middle East. But we are seeing already opportunities to quote for replacement valves, yes. So it's only small at the moment, Christian. I think the bigger effect will honestly be energy -- the effect on energy security, a bit like after Russia, Ukraine, typically, we're sort of a year to 18 months after FID, as you know. But what we saw was a whole wave of increased investment because of energy security. And I just think there are some countries now -- some of the countries with huge populations that are now thinking, okay, they need to diversify their energy.

And I think that will only help what we see as powerful trends in obviously, conventional power, but also in LNG and gas in particular, more generally. So yes, I do agree. I think that in the medium term, there will be another way, both rebuilds and more broadly in terms of energy security investments.

Our next question comes from Stephan Klepp from BNP Paribas.

Can we talk a little bit about the order momentum in Process Automation? I mean, okay, you had high comps in the first quarter. It was down minus 2%. But if I look into the phasing of the last year, Q2 and Q3 have pretty low comps. How do you see orders developing for Process Automation through the year? And obviously, you pointed out power. Should we assume that this simply continues? And then the second question would be on the data center bit in CC, in Climate Control. Can you talk about the order that you're flagging there? What your expectations are for the year? You're coming from GBP 18 million orders in 2025, if I'm not wrong.

Excellent, Stephan. So yes, I mean in terms of Process Automation, we're obviously pleased with the start. I think in terms of new construction, power started really well, as I said, LNG started really well, and we see a very good pipeline in nuclear 7. So pretty much those thematics offset a bit by downstream, but still we expect to make a bit of progress on new construction this year. Then on the aftermarket side, yes, Q1 last year, we were up 19%. I did call it out at the time some big nuclear aftermarket orders if you go back and check what I said in the transcript, clearly, that was going to be a very difficult comparator.

Despite that, we're only 1% down in aftermarket. So yes, very pleased with the start. We had a detailed review with the team. And yes, the aftermarket outlook still looks good. Luke has done a bit of analysis. Do you want to talk about?

Yes. So the analysis we looked at for the first quarter in aftermarket, if you sort of strip out the impact of nuclear in the first quarter and normalizing for the Middle East, our underlying growth is around about mid-single digits. So we feel really good with how that starts playing out for us.

So in good shape, Christian, and then on the data center side in climate, yes, I mean, we've gone from nothing sort of 3 years ago as you said, 18 million last year, and it doubled last year, more than doubled last year. This year, for Q1, very good again, Stephan. So yes, I would think it will be something like 50% up. It's obviously the pipeline, and we'll see how fast all of that comes through, but something around 50% up this year would be sensible, I think, Christian. So yes, really, really quite strong.

Yes. Through Stephan, but it's okay. What about the verification process with those large consumers of the liquid cooling? Are you making any progress there? And then sorry, one add-on. You've talked about the shipments in the Middle East quite a lot and the team put a lot of effort in. Has that increased the margin situation because you had extra cost to deliver to the Middle East?

Sorry, Stephan, your line was a little bit late. Has the shipments to the Middle East changed the margin situation? Is that your question?

Yes, that was one of the questions because you said you put a lot of effort into getting shipments out, was that at higher cost and that impacted margins?

No, it's immaterial, Stephan. Yes. There's been a bit more airfreight and all that, it's around the edges. And margins are pretty much exactly where we expected them to be. So I don't worry about the margin. I think in terms of liquid cooling, Luke, do you want to talk about that?

Your question just about -- could you just repeat it again, as Roy said the line was very muffled on our side.

I'm sorry, yes. So I was asking, you are in those verification validation processes with some big consumers of liquid cooling. Is there any progress on that front as well that you can report about?

Nothing specific, but we are still working on that, and we'll come back.

Our next question comes from Jonathan Hurn from Barclays.

Just 2 questions from me, please. Firstly, can I just come back to the GBP 30 million of shipments that are potentially at risk for this year. Can you just talk about the margin of those orders that are at risk? Is that pretty much in line with the process average? Or are they higher or lower? That was the first one. And the second one was just coming back to your comments on conventional power. And obviously, you talked about a really high hit rate. Can you just give us some more information on that really, just in terms of sort of the stuff that you're tendering for, how much you're winning your success rate?

Yes. I mean, obviously, it varies slightly by customer, but it's Yes, a very high hit rate is what I'm going to call it, Jonathan. We really -- I was in South Korea a few weeks ago, and the factory there is quite frankly awesome, Jonathan. Really, the level of continuous improvement and therefore, competitiveness out of there and to be fair out of our other factories is now, I would say, really truly world-class. And yes, our hit rate is very, very high in power. And that's partly the service we're offering and obviously partly the technology that we have.

In terms of margins on the GBP 30 million that potentially might not get into the Middle East, again, it's around the edges really, Jonathan, but it would be slightly lower than Process Automation average because obviously, that is mainly the bigger new construction valves. And you know that aftermarket on average, margins are more than double what they are in new construction. So I'm sure that will help you with your modeling to stay with your maths, Jonathan.

Perfect. Very clear. And maybe just one sort of follow-up on the margin. Just obviously, we've got that sort of increased cyber spend coming into the profit bridge for this year. Is that going to be more H1 weighted? Or is it going to be equal sort of H1, H2?

Yes. Well, it's -- Jonathan, if you think about we started to put the investments in the second half of next year -- of last year, not next year, and the second half of last year in a meaningful way. So the comparator is going to be harder in the first half than it's going to be in the second half on that investment.

Our next question comes from the line of Kulwinder Rajpal from AlphaValue.

So the first one is on Climate Control. I recently read on EHPA that heat pump demand has been temporarily up in certain geographies in Europe, particularly in Germany. So I wanted to understand how could that translate into demand for you in Climate Control in particular? Secondly, on pricing. So you clearly mentioned in the press release that you'll be able to pass on prices to customers. So I wanted to understand what is the lag? Is the pricing immediately passed through to the customers? Or is there a particular lag that we are looking at? And thirdly, on M&A, what's the pipeline currently looking like? And if you were to do any M&As, which areas would you be targeting? Because it's been a while since we had any addition to the portfolio.

I can pick in there. So on the first question, so you mentioned a bit about improving demand in heat pumps in Europe. I think I'll just remind everyone that we tend to be pretty agnostic to the heat source, whether it's a gas boiler or a heat pump or so on, as long as there's water in the system. Heat pumps are usually slightly beneficial for us in terms of the fact that they operate within a narrower temperature range, the balancing and control becomes even more important, which is great. I would say no significant impact on demand in the quarter as a result of that for us.

So I think overall, just the broader drive for energy efficiency, particularly when energy prices are increasing in Europe at the minute, is what's been a demand driver as well as the data centers that we've talked about. I'd say for us if you look at our business historically through recent inflationary times, we've been very disciplined and good at putting pricing through into the market. As a reminder we're always usually a single-digit percentage cost of the system that we go into, but a very crucial part in that system. Just depending on the end market that we're selling into, this is across all of IMI, there could be something like a 30 or 60-day lag to put pricing through where you have agreements, things like that, with customers, but not too long in general.

And then your last question was just on the M&A pipeline. M&A pipeline still look good. We're still spending a lot of time investing energy into that and looking for the right targets for us with the right returns. I think really for us, there's probably two easy ways to think about the key things in the pipeline. We like things like severe service valve companies that have underserviced aftermarket, that's a key area for us to look at and that play in niche applications that would really suit the rest of our portfolio. All we really like wonderful technology adjacencies. I would give TWTG acquisition we've already done as a great example.

It's a sensing company, it's a fantastic company, and it's enabling us to generate more opportunities within the aftermarket, within Process Automation. So things like that that we're looking at.

Our next question comes from Lacie Midgley from Bloomberg Intelligence.

Already actually really helpful on the Middle East color. But just looking at the pipeline comment slightly differently, just a couple of follow-ons on that. When you say it's strong, can you just quantify whether that means projects, larger projects, higher probability weighted value or better win rates? And within that, obviously, data center exposure is becoming increasingly important for you. Assuming orders here are more project-based lumpy than the traditional HVAC business?

And lastly, just you touched on it briefly earlier on, I think, but how should we think about the backlog conversion timing and margins for those data center orders, that would be helpful.

So Lacie. Just I'm absolutely clear. Are you talking about the pipeline of power orders in Process Automation? Or are you talking about the data center orders in climate control?

I guess both. I mean, first, I guess, is more important from a front end perspective, I guess the first, but maybe comments on both.

You're absolutely right, Lacie. I mean that's the big effect at the moment. And it's big because, obviously, of the new construction orders. But, what I really like about those power orders in Process Automation is that once we have installed those severe service valves. Then for years and years and years, that gives us a recurring revenue of aftermarket. And that really is valuable in terms of driving overall economic profits for a very long time and obviously cash generation. So yes, when we look at that pipeline then, I think, we've had a big increase over the last, let's say, five quarters in new construction power orders.

What we still think though is that as we talk to our customers that are actually building these combined cycle gas power stations, that they can only build them at a certain rate. If you look, you can see, I won't mention their names, but you can see some of their press releases. Their book-to-bill is historically high levels, right? The ability to actually build them is obviously controlled by the ability to get skilled labor resolve all of the supply chain, all of that. So yes, there'll be an increase in the build rate that has to be, but it will be moderated by those things.

So what we actually see is, which we prefer, a sort of sustainable growth trend, which should be over the next several years, Lacie. So yes, it's a good pipeline for us. We've got very high hit rates. The real cash generation comes with the aftermarket for many years. That's what we really like about that part. As you say, I mean, that was GBP 300 million last year, of which 75% was aftermarket, right? So yes, that's a great situation. On the other side, which is the Climate side, I think you said it might be a little bit more lumpy. The orders there, they are a little bit more lumpy than normal Climate, but we're talking lumps of sort of GBP 6 million, which at an IMI level, at that sort of quantum, Lacie, it's nice to have rather than a problem, I would say. Right?

And what we see there is, as I said, the orders last year -- sorry, sales last year were GBP 18 million. We'd expect that to increase by about roughly 50% again this year off a very fast ramp-up. Really good and we're obviously investing more in resources, dedicated data center commercial resources to really help us accelerate that journey. And Stephan earlier was talking about some of the things that we're doing that will take a bit of time, but then could unlock even further growth as well, Lacie. So yes, we're very excited about that whole data center value chain. I mean, just to put it in a sort of sentence, for IMI, the resulting energy demand and the resulting requirement for energy efficiency, which is obviously Climate Control, affects about 50% or slightly over 50% of IMI's total business. So for us, this is an exciting sort of thematic growth driver.

Our final question comes from Richard Paige from Deutsche Bank.

Just a nice straightforward simple one for me, hopefully. Just on the -- you've said a lot about Process Automation, some expectation shift in the second half. We've obviously also got the Truflo Marine disposal. I assume that's still on track for the mid part of this year. But I just ask about, is there anything unusual in the second half weighting and in terms of profit that we should expect here? Or should it be a more typical IMI year, please?

Yes. I mean I think you've obviously got to strip Truflo Marine out from the half year. Clearly, that's just going through the last sort of approvals. So really, that's that's obviously not in our control, but we still expect that to happen about the midyear, Richard. So you've obviously got to strip that out, and I'm sure everybody is sensible strip out their numbers already for the second half. You are right though, Richard, to point out, it would be a normal year for us, sort of GBP 45 million, GBP 55 million, bang on normal, except for that GBP 15 million. And our base case is that GBP 15 million shipments in Process Automation, as I said, moves into the second half. So apart from that, bang on.

With that, we have no further questions in the queue.

I believe that's the last question.

Yes. I'll hand over to you for closing remarks. Thank you.

Well, thanks, Drew, for organizing that, and thanks, everybody, for attending. In summary, it was a very good first quarter for us. We're on track to deliver our sixth year of mid-single-digit growth. And the quality of our earnings is good. This is a point Luke made to me the other day, which is really important. You can see now a really strong drop-through to free cash flow in IMI, and that is obviously giving us plenty of optionality.

The pipeline for acquisitions is good. You all know we'll be incredibly disciplined about that. They will tend to be bolt-ons, and we will be looking for good returns. Absent that, there will be more returns to shareholders. So with that, I thank you all again, and wish you a good Q2. Thank you.

Thank you all for joining. That concludes today's call. You may now disconnect your lines.

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 5 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 GBP 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, full year adjusted basic EPS is expected to be between 136p and 142p.

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 3 long-term megatrends, energy, automation and health care, 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 GBP 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 to deliver further progress over the coming years, driven by growth in our attractive end markets, strong pricing power and continued progress in the high-margin Aftermarket.

While we will be making the previously communicated cybersecurity 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 GBP 17.7 million and the tax rate increased to 25.4%, in line with our guidance.

Now, as you may be aware, IMI's multiyear 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 EPS increased by 8% to 132.3p 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 up 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 book was up another 2%. Industrial Automation delivered a resilient performance despite uncertain markets. Organic revenue was 1% lower year-on-year.

Turning to Life 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 & 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 GBP 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 GBP 31 million reduction in inventory.

With the restructuring program 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 1x to 1.2x over the medium term.

Free cash flow increased to GBP 290 million and we returned GBP 281 million of this to shareholders through dividends and our share buyback program. Our net debt has reduced to GBP 533 million at year-end and net debt-to-EBITDA at 1x is at the bottom of our target range.

I am also very pleased to report that after a tremendous amount of hard work from our team over the last decade, we have now completed the final buyout of our U.K. 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, prioritizing investments in our people, processes and operations that accelerate organic growth. We remain committed to a progressive dividend. And as mentioned, I'm 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 GBP 400 million in bolt-on acquisitions since 2019 while increasing our fully burdened return on invested capital by 260 basis points to 14%.

TWTG, a leading sensor solutions provider, acquired for EUR 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 to accelerate Aftermarket growth even further.

Our M&A pipeline remains 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 1 to 2x target range.

We completed a GBP 200 million share buyback in July and are pleased to be announcing a further GBP 500 million share buyback today. By deploying our 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 136p and 142p. 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 modestly higher. We see continued good demand in Climate Control and stability within Life Science & 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, with strong operating leverage offsetting the previously communicated cybersecurity investments. Our guidance assumes that the disposal of Truflo Marine will complete in mid-2026.

We are assuming a net interest charge of GBP 20 million, that our tax rate will increase to 26.3% and our weighted average number of shares of 238 million following a GBP 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 6 years, we have focused on aligning our business to 3 long-term megatrends: energy, automation and health care. 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 centers.

Our customers now have significant multiyear 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 Control's 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 GBP 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 GBP 206 million 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 our end 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 maximize 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 6 years as we built a track record of compounding EPS growth. We have delivered average organic growth of 5% over the last 5 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 summarize 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 GBP 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 136p and 142p; 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.

[Operator Instructions] Our first question comes from Lush Mahendrarajah from JPMorgan.

I've got 2, I think, both on process. The first is just a clarification on sort of Q4. It looks like you saw a quite steep acceleration in order momentum. Could you just sort of quantify that, particularly what you saw in New Construction and in Aftermarket? And just within, I mean, I'm guessing it's power, nuclear, et cetera, but just sort of the key drivers? And is there any sort of big orders in there? That would be helpful.

And the second question is on power and nuclear. Just how we think about lead times when you get an order, both for New Construction and Aftermarket? Obviously, some of your customers are taking orders throughout the year. Just trying to think about a lot of those orders for delivery in the sort of coming 12 to 18 months? Or do you have to think longer than that?

Yes. Thanks, Lush. I think I've got those questions. The line wasn't brilliant. So I think the first question was on Q4 Process Automation orders. Yes, as you said, they were really strong. So overall Q4 Process Automation orders were up 26%. When you break that down, New Construction was up 36%, but I always say this is not really a quarterly business.

And within that New Construction orders increase, there was a big nuclear order. And as you know, nuclear new construction, you get a big order. This was a big order for strainers, flow control strainers that go into an installation in the U.K. So great news that we won it, but they are lumpy at the moment. I do expect over time, over the next few years, nuclear new construction to increase, but it will take time.

On the Aftermarket side, yes, really good news because orders were up 20% as well in the Aftermarket in Q4. And I think, again, the way I look at that is Aftermarket orders for last year as a whole were up 11% again. And that, of course, is great news and really testament to Jackie, Roby and the teams and the investments we're making to drive that Aftermarket higher.

I think you fully understand, Lush, our upgrade valve strategy, and that's paying dividends again. And then once we get those upgrade valves, there's a long stream of that beautiful parts business recurring revenues that we get from that. So yes, a good strong quarter.

I would say for Process Automation, again, we said in the presentation that if you take Truflo Marine out, and we still expect to sell that, as we said, by the half year, get that completed, then last year's orders were 5% up for Process Automation, and we're guiding this year for sales to be sort of mid-single digit to high single digit up, something around 6%, 7%, something like that, we think is sensible for sales for Process Automation for this year.

So yes, good news on Q4. In terms of power, power was very strong for us last year. So the power segment was up to just under GBP 300 million of orders for Process Automation, 75% Aftermarket. And that whole segment was up 20% on the year before. The new construction part of power was actually up 32% last year. So yes, we're seeing an increase coming through for orders on those gas turbines you talked about, in particular, and that's obviously great news.

What I would say is, ultimately, the order rate though is going to be defined by how quickly the OEMs, those big OEMs you're talking about, the big gas turbines can actually build these power stations. So we see how that goes over time.

Typically, our lead time typically was about 6 months afterwards, they give us an order. I expect that will probably go out, Lush, because they've got multi-multiyear order books now. So it's great news for the sort of longer term, but yes, 32% up last year, I'm not sure we'll repeat that or anything close to it this year, but we still expect growth, obviously.

Did that cover your questions, Lush?

Yes, that did. Appreciate the color.

Our next question comes from Christian Hinderaker from Goldman Sachs.

I want to start on Process Automation. I think you had GBP 102 million of LNG orders. That's about 9.5% of order intake overall. I wonder how we should think about your oil and gas exposure in the context of the recent price spikes and obviously, geopolitical challenges. I appreciate it might be an initial view, but how are you impacted there? And is any of your installed base directly affected by recent events? That's the first one.

Yes, nice one, Christian. Good question. Yes. So LNG, you're absolutely right, it was up again last year to GBP 100 million. 40% of that is Aftermarket. More broadly, oil and gas, upstream midstream was up 12% to about GBP 130 million. 40% of that is Aftermarket as well, Christian.

In terms of the Middle East, in total, it represents about 6% of IMI sales. And the vast majority of that, as you expect, is in Process Automation. I think we're going to see a bit of sort of short-term volatility. Obviously, the good news about Process Automation is the order book, particularly the Aftermarket order book that's underpinning where we think it will be this year. We do expect a bit of midterm volatility.

And obviously, our thoughts go to everybody in the Middle East and everybody that's affected. As you can expect, we put maximum security protocols in place, and we're in touch. We've got about 60 people there. We're in touch straight away over the weekend.

So aside from that, short-term volatility in terms of the business and then normally, people's minds turn to energy security. And if you look at other recent events, then you would expect that will lead to further investment at some point, Christian. But clearly, we know that all takes time. So yes, we're happy with where we are with our guidance. And clearly, we're watching closely for the effects of what happens in the Middle East.

Maybe on Life Tech then, if we can look at the drivers in the bridge, particularly in H2, I appreciate year-on-year revenues were sort of flat and the margin accordingly. But how do we think about the margin here? Because, I guess, consensus was a little out in front relative to the 18% or so. Are there any incremental savings we can expect for the segment? Or is it all about growth in 2026?

It's mainly about investment and growth, Christian, is where we are. So if you think about the sort of constituents of that, we expect another year of good growth within Climate. We grew at 4% in the second half of last year. It seems a reasonable place to start, probably a little bit second half loaded in Climate this year.

But overall, we expect another good year driven by the need for the energy saving products and of course, the demand for the data center products as well. So I think Climate is in good shape. Margins are coming through nicely.

Life Science & Fluid Control, I think Life Sciences is starting to show a little bit of growth, which is good. The Fluid Control part is more into industrial markets. And we are not expecting anything fantastic out of industrial markets this year.

Of course, we've all seen PMIs going up a bit. Normally IA and sort of Fluid Control will follow PMIs 3 to 6 months later. I think you know that, Christian. But we're just making sure that we want to see that in our orders before we start committing that in our outlook.

So overall, Life Science & Fluid Control, we probably carve out a little bit of growth this year. Transport, we put basically in line with the global heavy-duty truck markets that we serve and think that's going to be about flat.

So I think in terms of -- and again, as I said earlier, the Transport team, the passenger car team that came in 18 months ago, doing a great job of leaning that out, driving stock turns up, getting the cash out of the business. So I think -- I wouldn't expect anything stellar on margins across IMI this year because of the extra investments we're putting in place.

And I flagged those back in November. We're investing in the business, and we're investing particularly we're upping our investment in cybersecurity, which we see our base case is that will step up in terms of investment. It started in the second half of last year actually, but go through this year.

And then we would expect that to be the new run rate, unless, of course, the bad guys get increased tech and we're forced to invest incrementally again. But our base case is not that, Christian. Our base case is this year, profits move more or less in line with sales, organic sales, but then we get back to our sort of 30% drop-through in the years beyond that and margins start to accrete again. That's our base case, Christian.

Our next question comes from Jonathan Hurn from Barclays.

Just a few questions from me, please. The first one is on process. Just in terms of the pricing in our business, and particularly for nuclear and conventional power and focusing on gas, I mean, what are we seeing there? Like you say, strong demand? Are you also seeing positive pricing? Are you getting better pricing for that? That was the first question. Maybe we'll start there.

Yes. Well, thanks, Jonathan. Yes, so on the New Construction side on pricing, I would say margins are reasonable. They're sort of slightly above where they were last year on our New Construction side, but nothing -- no real move yet.

What tends to happen, Jonathan, I'm just thinking, the last time we saw this when particularly oil and gas at the time really took off and once capacity in the industry fills up, and we're still away from that. I mean, certainly, we've got plenty of capacity, which is the good news. But we're still away from the capacity of the industry filling up.

So I would say, yes, I mean, if it continues at this rate, and they find a way to accelerate -- really accelerate the production of these plants, that could well happen. But I'd say pricing is slightly better across New Construction for us in the order book, but nothing huge at the moment, Jonathan.

Okay. Very clear. Second one is just on Transport, like you say, the guys are delivering in terms of the turnaround. Just in terms of your view there, is there anything you can say? Are you more inclined to keep that business going forward? Any sort of comment there would be helpful.

Yes. I think Transport, as I said, is very much an internal focus at the moment. Really pleased with what the team are doing. As I said on the last call, Jonathan, we're really focused around getting the return on capital employed in that sector in line with IMI as an average.

I think if they can do that, yes, it will mean the margins are slightly lower, but we have to be a bit realistic about this. What they're doing in terms of driving working capital turns is really quite exciting.

And the plan hasn't changed. It's all around driving the new product introduction, driving the lean initiatives, continuous improvement really, really hard, exiting some of the lower-margin business that basically on a risk-reward basis doesn't make sense for us. And overall, really improving the position of that business. So very much focused on that.

As you know, the North American market, in particular, has been very difficult for heavy-duty trucks in the second half of last year. There's some early signs that might be improving. But 2 months don't make a spring or certainly don't make a summer. So until we see a sort of sustained improvement, we're very, very much focused internally. And we'll make the right decision for shareholders in the medium term if things improve in that market.

Very clear. And then maybe just one last question. Just in terms of M&A, obviously, in your presentation, you talked about it quite a lot. But if we kind of look back, there really hasn't been a big deal since Q4 2022. I mean can you just talk about what's happening there? I mean, you normally sort of do a reasonably sized large acquisition probably every sort of 2 years, but obviously, that hasn't happened. Just comments there, why we haven't seen sort of more M&A coming through?

Yes. I mean it comes down to our discipline really, Jonathan. We've always said that the #1 priority is organic growth, right? And we -- you understood right from the beginning that strategy and growth, I mean, I'm just so pleased with where our innovation was creating minimal growth last year to get GBP 200 million or over GBP 200 million of orders from business that we didn't even have pre 2019.

It's just been a marvelous result from the Growth Hub teams. And we're just taking that to another level. Now we're doing these completely cross IMI multisector sprint team pitches. We just have one in Asia. We're going to have another one in the U.S.

So it's just a joy to behold how much validation of customer problems, customer willingness to pay, very fast test and learn, solution development, including, as I said in the video, we're now using an AI agent as the fifth dragon, I hate calling it dragons actually, but the dragons of the picture are really helping the thinking of the teams to really try and create the most robust business case that we can as early as possible, before we've invested much money, to really test the market, test product market pull.

And that, as you know, that's all part of the overall game plan of saying right, how do we really consolidate organic growth around mid-single digit, drive earnings growth and make sure we compound every year, as we have done for the last 5 years, as we want to do for the next years and beyond that, right, hopefully, for many, many years to come.

So that's been the overall game plan. Then what we've done is, say, okay, some nice bolt-on acquisitions. And TWTG, as Luke said in the presentation, is a great example of where we've added sensing capability, which in the long term will help us drive Process Automation, Aftermarket growth even more, right? And it's a great acquisition of a fantastic technology, and we're really excited about where that's going.

So yes, when the Growth Hub team say, here's a customer problem that will be enhanced through a bolt-on, exactly as TWTG was, that was found through the Growth Hub capability, and we can buy at a sensible valuation because remember, we're looking to get above our cost of capital within 3 years, and then we're not looking to be materially dilutive to IMI's underpin, the 12% ROIC, which is a harsh ROIC measure with everything in the denominator within 5 years, right?

And that's easy to say. But that's not easy to do, right? So that's what we're looking for in acquisitions. Last year, we walked away from several. Our acquisition pipeline looks good, and I have to say there's some interesting things in there, but we're not going to overpay to the point that we can't get decent shareholder returns. We're very proud of our returns track record, and we certainly want to maintain it, Jonathan. So that's where we are on acquisitions.

[Operator Instructions] Our next question comes from Mark Fielding from RBC.

In terms of -- I want to talk a bit more. You touched on pricing, but can we take a wider comment on how you see pricing across the business? And in that context, cost inflation, I suppose I'm thinking about some of the metal prices rises, how that might, in fact, impact businesses like climate, but also probably equally thinking about how IA last year probably had positive pricing, so volumes were even a bit lower and just how you think about these things evolving into 2026?

Yes, I don't mind taking that one. I think across IMI last year, pricing versus volume was about half and half. So we won't go into sort of all the different specifics within the sectors, but I think we did a good job of winning the sort of price inflation equation as we look back into last year.

And I think as we look ahead into this year, we would think about a similar sort of ratio. Clearly, if inflation pushes up on things like copper, our track record, our history of being able to push pricing through the market in high inflationary environment has been good.

And that always comes down to that fact that we're using that single-digit percentage cost of a system but a key component in the system. So we're just watching the inflation on things like copper and anything that might come out of the conflict in the Middle East, and we'll go to the market if we need to on price later in the year.

Great. And I'm going to really cheekily ask a really short second question despite your nice lady just asking me to ask one. But can you just clarify in terms of your EPS guide, does that assume the full GBP 500 million buyback completes in the year or -- just so we understand what you're thinking there?

It's right. So as we said, we're assuming the Truflo Marine disposal completes in about the middle of the year, and we assume the GBP 500 million share buyback, I think completes towards the end of the year.

Our next question comes from Kulwinder Rajpal from AlphaValue.

So just wanted to clarify a bit on the power business within PA. So I apologize if I missed it. So when we think about the power business, is it entirely combined gas cycle business for you? Or are there other components in it as well? And when we think about the cyclicality or the lack of orders that is coming in the New Construction, is it fairly correct that there is no lag? Or is there a certain amount of lead time that is there in that business?

Thanks, Kulwinder. Your line is not great either. I think what you said is, can you describe a bit more about power business within Process Automation, how much of it is combined cycle and then talk a bit about the lead times, is that right?

Yes.

Yes. Okay, Kulwinder, yes, got it. As I said, the power segment was just under GBP 300 million last year. 75% of that is Aftermarket. Of the New Construction part, over half is combined cycle gas. There's other things in there as well.

There's things like molten salts, the solar systems. There's some coal-fired power in there, which is still reasonably strong in places like China and India as well, Kulwinder, on the New Construction side and on the Aftermarket side.

And as I said earlier, Kulwinder, the lead time typically is about a 6-month lag. It has been historically from when we would see the orders from the OEMs, right? But that is likely to be going out now because they've gone from, let's say, a normal demand level or even a low demand level to a very, very high demand level and their order books have gone to multiyear order books now. So I'm sure that, that time will go out now. But historically, it's been about 6 months.

Our next question comes from Harry Philips from Peel Hunt.

Just a question on Growth Hub and broader new product development, please. Just thinking about how more rapid, if you like, the time to market Growth Hub is given it's more customer focused? And then given that sort of collaboration with the customer, the margins are, therefore, a little bit higher than they would be on a more sort of traditional new product launch. And then just I missed the Truflo ex or process ex Truflo orders on the organic basis. So just repeating those could be very helpful, please.

Thanks, Harry. Great. Luke, do you want to do the Truflo -- ex Truflo?

Overall, ex Truflo orders are up 5%. New Construction was flat and Aftermarket was up 9% all excluding Truflo last year on orders.

Yes. So again, I'd say our typical profile really over the last few years, very strong Aftermarket, holding our own on the OE side. So that said, Growth Hub, Harry, I think you know I can talk for a very long time on Growth Hub. I'll try and keep it short.

So you're absolutely right on both things. But the fundamental thing about the spirit and the culture of Growth Hub is, number one, proper customer intimacy. In other words, really understand the acute customer problems that the customer is prepared to pay to solve, what their willingness to pay is.

So let's say that you can make a process -- customers' process go faster, you can make it more reliable, what is that value worth and how much of that value can we capture, and therefore, what's the business case? And to do that very, very early. All of that work to come up with a rough cut business case, we try and do it in 12 weeks, Harry.

And to give you an idea, that will be a much better business case than we would have done 10 years ago in terms of customer buy-in because often, to get to the next 12 weeks of Growth Hub, once you've done that first 12 weeks, we will be looking for some sort of customer commitment because we know that you can spend a lot of money and customers will say, yes, that would be great if you can solve that problem.

But what we're really looking for is something. It could be a letter of intent, it could be an order, it could be actually some joint investment. There's a whole range of things that could signal that intent. But what we're looking for is much more certainty that when we do develop that product, it will have genuine market pull, and it will achieve the sales.

To give you a rough idea, 10 years ago, we were achieving only half the sales that we expected to in our new product plans. And so that meant that IMI, and we try and think of IMI, okay, so how do we make sure and we check this about 3 or 4 ways, how do we really try and make sure we are going to grow mid-single digit. And we think, okay, in a normal year, that would be 1% or 2% from our markets, 1% or 2% from price, 1% or 2% now from innovation. And that's what we've been getting.

In fact, last year, if you look at the incremental growth, it was closer to 3% from innovation, right, which is fantastic. And remember, all the time, you've got products coming to end of life as well, Harry. So you have to take that into your model to genuinely grow mid-single digit.

So I'd say Growth Hub has tremendously reduced the time to an effective product that will actually sell. And that's really the most important thing because those products genuinely solve customer problems. So we've got about 9 projects now that are delivering significant orders because those products are things like Retrofit3D, where the power station is having trip outs because of the circuit that we are involved in, right?

And as you know, we're very strong in things like turbine bypass valves, which are very much at the heart of that process. They're at the severe part of that process. And because we came up with a way of being able to retrofit and derisk, so you don't always have to cut the valve out of the circuit to upgrade the whole valve, you can upgrade the inners of the valve to our track design because we managed to do it through the 3D printing and shrink the size of that technology.

So it goes in other people's valves as well as our own valves. And what that means is that business has gone from something like literally 0 to something like GBP 26 million. But what it does for the customer is derisk the decision, stop the trip outs that they've got, which is tremendously high value. So exactly as you say, that is good margin business for us, accretive margin business.

And that's really what Growth Hub is doing for us. One, give us more certainty that the product will sell in the numbers that we think it will. Two, give us more certainty that we are actually solving a customer problem and creating real value that we can then capture a decent amount of that value, Harry. So you're absolutely right on both. And yes, really proud of the teams.

But I actually think, Harry, if you think about it across IMI, we're still only at an early stage. We've been in this for 6 years. There's still plenty of opportunity. And if I look at the next set of projects coming through, I mean, some of them are really exciting.

Obviously, not all of them will work. We have to accept that or you're not going to innovate. You're going to end up with a culture where you can't -- if you can't fail and you can't fail fast, people stop innovating, right? But I think some of them have got tremendous potential for the next 5, 10 years.

They won't necessarily gain traction really quickly because they're in some of the customers' very critical processes. And that, of course, has got its advantages. But in terms of innovation, it doesn't necessarily mean we get a very, very fast uptake, but it means we get long-term sustainable, profitable growth, Harry, and that's what we're trying to generate. So hopefully, that answers your question.

Our next question comes from Stephan Klepp from BNP Paribas.

I don't want to bore you with orders too much in Process Automation, but I still have another one there. So if we bear in mind that hydrogen was very strong in 2024 and very weak in '25 because of drop of subsidies, isn't the order picture, the 5% underlying ex Marine a little bit too conservative because we had an extraordinary driver in 2024 and then that was dropping in 2025?

So is the conclusion that the orders that you see in Process Automation, having heard what you said about power, should start to rather accelerate because the low base effect is now gone -- sorry, the high base effect is now gone?

Yes, not too sure how you look at it. We try to be careful with what we strip out and what we don't strip out because there's always a reason, right? So Truflo Marine nothing we can strip out because that should complete around the half year.

I think there's ups and downs elsewhere. Yes, as I said, power is super strong, really, really good for us. And last year, overall, up 20%, that whole segment to GBP 300 million, great news. But also don't forget you've got downstream, midstream, which is tough for everybody right now. And downstream, midstream was down for us, refining and petrochem, down 22%, right?

So it's all -- you've got to take the whole thing to account. You know me, Stephan. I certainly don't want to oversell anything or overpromise anything. I think you're right, though, we're sort of saying, well, 5% underlying orders. We do expect sales this year to be more like 6%, 7% up than 5% up.

So we do expect growth in that area. And let's see how the whole year shakes out. Clearly, right now, as I said earlier, there's going to be some volatility, right, because of what's happening in the Middle East.

But to offset that, we've got a very strong order book, as you can see from what happened in the fourth quarter in Process Automation. So in and around, we think, as a base case, Stephan, 6%, 7% growth, something like that for Process Automation in sales is about right this year.

Okay. And then on the margins, again, so you said margins flat to slightly up because of the cyber investments. So is it as easy as understanding it this way that with the normal 30% drop-through, you would increase your margins 50 basis points. They're not coming through this year. And that 50 basis points, you invest in cybersecurity. Is that how we should read it?

Yes. I mean when I did the math, and I went through this on the last call, effectively over 5 years, on average, of course, it's going to change a bit with mix and things like that. But you're absolutely right. On average, we expect about a 30% drop-through from our mid-single-digit organic growth.

If you do the math over 5 years, that moves you more towards 22% margins than where we are today, Stephan. So the right way to think about it. As I said earlier, we really feel these investments in cybersecurity are vital. And so far, I have to say I'm really pleased with them. I think we're going to a different level.

It does not mean we cannot get attacked. Anybody can get attacked. This is a race between the bad guys and the good guys. But I think the good guys that we've got on board now are very, very impressive. And we just want to be the hardest door to knock on out there. That's our ambition.

We have time for one final question. Our next question comes from Richard Paige from Deutsche Numis.

I've a few, and I made the cut just about. I'll keep -- trying to switch the focus from Process Automation to Climate Control. And obviously, that big growth in orders, it looks like it's accelerated in the second half in data center cooling. Just wondering, I assume a reasonable chunk of that is to U.S. customers. And I know there are technology constraints here, but does it make you think about U.S. as an opportunity slightly differently at all?

Yes. I think we were asked this question on the Q3 call, and I think it was slightly less than half of the orders were to North America. But actually, as we ended the year, we had a really strong fourth quarter of North American orders, and it's now over half. So it's really focusing on that North American growth market.

And I think key is that understanding that a lot of the smaller data centers in the installed base at the moment are all air-based systems. All of the newer, bigger data centers that are coming in are water-based systems, which is really in our sweet spot. So I think, yes, we are definitely investing and some of that investment that we talked about earlier in Life Technology is specifically in North America for Climate Control to support growth there.

This concludes our Q&A session. So I will now hand back over to Roy for some closing remarks.

Yes. Well, thank you. And thanks, everybody, for joining the call. And thanks to everybody in IMI. Thanks to all our people; number one, for a great year in 2025, I really appreciate that, very strong finish, great cash flow; number two, for everything we're setting out to achieve this year. As I said, this will be, if everything comes as we expect it to come, our sixth consecutive year of mid-single-digit organic growth, and we're really proud of that compounding track record. Thanks, everybody.

Thank you.

Hello, everyone, and welcome to the IMI plc Q3 Interim Management Statement. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host, Roy Twite, CEO, to begin. Roy, please go ahead.

Good morning, everybody, and welcome to IMI's Third Quarter Trading Update. I'm joined here today by Luke, our CFO. It was another excellent performance from our team in the third quarter. Organic revenue was 12% higher than the same period last year and is now 5% higher year-to-date, demonstrating the continued success of our growth strategy and the strength of our One IMI operating model.

We delivered an outstanding performance in Process Automation, supported by rising global energy demand and our focus on high-margin aftermarket orders, which are now up 7% organically year-to-date and were up 1% against a strong performance in the third quarter last year.

The Climate Control, Industrial Automation and Life Science % Fluid Control market sectors all performed well. There is strong momentum across the business, and we remain on track to deliver our fourth consecutive year of mid-single-digit organic revenue growth. And I am, therefore, pleased to reconfirm guidance. We continue to expect that full year EPS will be between 129p and 136p.

With that, I'm going to hand back to the operator, who will manage the Q&A session. Thank you.

[Operator Instructions] The first question goes to Christian Hinderaker of Goldman Sachs.

I want to start on the Process Automation growth rate. I think you've called out what the year-to-date number was, but what was the quarterly figure? And then just how do we think about the quantum of the shipment catch-up that you flagged both with respect to process, but maybe elsewhere as well?

So in terms of Process Automation, obviously, the sales grew 26% in the quarter. That was shipment phasing, Christian, okay? So we still see Process Automation high single digit, maybe slightly higher, maybe 9%, 10% for this year in terms of shipments. No change to that. But what we've done is derisk the final quarter, which obviously, if you do the math, we expect to be flattish in terms of shipments versus last year.

If you remember last year, we had an absolutely fantastic Q4 in terms of shipments and December, in particular, was massive. And what we've done is derisk that. So I'm really pleased with the team. Obviously, to be able to ship 26% more is excellent in terms of execution. And that really has been a long journey in terms of our investment in the factories, our investment in supply chains and obviously, the team.

On the order side, in Q3, we were flat in the quarter versus last year, which was a very tough comparator. I mean, from memory, last year, aftermarket orders in the third quarter are up 10% and new construction was up 20%. So it was a huge third quarter. So I'm pleased we're flat. The difference really was mainly those big hydrogen orders that we won with VIVO in Q3 last year, which we said we were never going to repeat, right, because the grants that were given by governments and local governments were not repeated this year in hydrogen to that extent. So yes, we were flat in terms of orders.

Year-to-date, I think the important number that we put in the release is that total orders outside of the multiyear marine order, which we called out last year are up 5% organically year-to-date. And we see, obviously, Christian, we do see good support from combined cycle gas, energy in general across Process Automation, obviously, on the back of what's happening with the energy demands for electrification and for data centers and AI. So we see good demand there

I think we see good demand in Nuclear aftermarket at the moment for the sort of upgrades to the existing plants, the life extensions to the existing plants. And in time, we expect to see good demand on new construction in Nuclear, but that will obviously be a few years out. That's not something that's going to happen quickly. But in general, Process Automation, I would say, in good shape. We had a good look, Luke and I at the pipelines with Jackie and Robbie and the team and the pipelines of opportunity for aftermarket and new construction, and they look good.

So yes, it's -- I would say, in terms of shipments, we are about where we thought we would be. Maybe the year-end will be slightly better than we thought at the half year for Process Automation. And in terms of orders, again, pretty much bang on where we thought. And that would lead, Christian, into what I would call good growth for next year, not at the high single-digit level. I don't think we'll be quite that good next year, but around the mid-single-digit level for Process Automation in terms of shipments.

Yes. Maybe just the second question you asked, Christian, was on shipment catch-ups in the quarter. So the group overall, as you know, grew 12% organically, and we think about 2% to 3% of that was shipment catch-ups and quite a bit of that was in the Life Science and Fluid Control sector, some in Industrial Automation and then a little bit in Process Automation, but only a relatively small impact from a percentage growth perspective in both Process and Industrial Automation, and then there was a reasonable amount of catch-up in Life Science and Fluid Control in the quarter.

Very helpful. Can I just squeeze one on IA -- sorry, Luke, go ahead.

I was just going to say we do think the catch-up is about done now.

Okay. Can I just squeeze one on IA? I guess just interested in any commentary around regional developments and I guess, the sort of underlying backdrop there. Obviously, data has been a bit mixed.

Yes. No, we had a good look at this. And broadly, all regions are broadly flat, Christian. It's -- I think industrial automation markets generally are still struggling a bit. We haven't yet seen the recovery we're hoping for. I think I said previously that sort of 60-day moving average was up, which it was. Now it's about flat in Industrial Automation. So still not yet seeing that investment. We all know it will come. It's just a question of when, and we've all seen these cycles before. But it's across the regions, Christian, it's broadly flat.

The next question goes to Lushanthan Mahendrarajah of JPMorgan.

I've got 3, I think. The first is on Process Automation and orders, and I guess, OE in the quarter. I appreciate there's a sort of, I think, GBP 9 million comp in Q3. I think ex that, were sort of new construction orders up 10% in Q3. Just wanted to check my math there. And if so, what are the key end markets driving that? I know you sort of called out power already, but just interested to hear what's driving that sort of OE growth there.

The second question is on next year, if possible. I know it's early, but I don't got any initial thoughts. I know you've sort of touched on process already, but across some of the other end markets as well. And then also margin-wise, anything we need to think about?

And then the third question is just on transport and the strategic review. Just any update you can give there? I appreciate the backdrop is probably tougher now than maybe we thought it was going to be 6, 7, 8 months ago, just if that's impacted your thinking in any way?

Three good questions, Lush. On Process automation orders, I think your math is about right. So orders in the third quarter were just over GBP 90 million. And yes, the hydrogen orders that you -- I think you are referring to, the comp on that is about GBP 10 million. So yes, you're right. If you did -- I think be careful what we strip out, I think, but if you did take out those sort of hydrogen orders from the grants from last year, yes, you'd be looking at about 10% growth in the quarter on new construction.

I still think, Lush, in my mind, the sort of 5% it's very much a year-to-date business process automation. As you know, it's a longer cycle. So I still think that sort of total orders of 5% up organically year-to-date. If you strip out the marine order that we called out last year, I still think that's a pretty good guide. But as I said, we do see good opportunity pipelines in both combined cycle gas and in gas generally LNG and so on.

Your second question then was about next year. So obviously, we haven't completed the budget reviews yet. We've sort of done some pre-budget reviews. But we saw one of the peers call out yesterday sort of 4% organic growth for next year in overall terms across the piece. And I wouldn't disagree with that. Again, I think mid-single-digit growth for next year looks to me at the moment about right, subject to sort of current market conditions carrying on.

I think on top of that, our tax rate, unfortunately, will be going up next year. This year, we have benefited from settling some old tax cases. And next year, our tax rate will be going up to just over 26%. So that's worth getting into your models.

And then the other thing, clearly, we are going to be -- we are already investing more in cyber. Having been through the cyber incident beginning of this year and seeing what else is happening, obviously, around the piece in the industrials, but more broadly in retail and automotive, we are going to be -- we are upping our game already. Luke talked about a bit about it on the last call, investing in the team, investing in the best systems, investing in training broadly across IMI. In all of this, it will probably cost us about 1.5p of EPS incremental next year. So again, it's an investment I absolutely believe we need having been through that attack earlier this year.

And then your last question on transport, yes, tough market, particularly U.S., that is a regional effect where some of our customers have literally shut down for a week or more because of the lack of demand. So transport market, tough. The transport strategic review made very good progress in the quarter, I have to say. We've got a really strong team.

As you know, we brought in some ex passenger car people last year. They are -- come up with a pragmatic ambitious plan, which was presented to the Board, accepted by the Board. It's a 5-year plan, obviously, in line with all of our plans. I talked a little bit about on the last call. Obviously, it's predicated on value engineering, new products of better margins and exiting, frankly, some of the lower-margin business. They've also built on that. There's more continuous improvement, lean and cost effectiveness that's gone into the plan as well. That's sort of a fourth leg of that plan.

And then the fifth leg is all about working capital and particularly stock turns. And they've made good progress this year, and we can see good runway for next year as well. So they're very focused on improving the return on capital of that business. And indeed, by the end of the 5 years, getting the return on capital employed of transport to be pretty close to the IMI average.

So yes, it's a good plan, Lush. They're very focused. Clearly, as you said, externally, truck market is not great, and we're very much focused on the internal plan, get our heads down to deliver those improvements. Does that cover all your points, Lush?

Yes. That was really helpful.

The next question goes to Colin Grant of Davy.

Just a question on 2 things really. Just firstly on margin development. Is there anything you can give us in terms of what you're expecting margins to do in the current year 2025? I mean you've got very strong growth coming through here and you're getting it in your higher-margin areas. Just any kind of view on the accretion that you might get in margin would be helpful.

And secondly, just if you could give us an update on any thoughts looking into 2026 around potential share buybacks that you might look to try and do next year given the strength of your balance sheet.

Yes. Great. Thanks, Colin. I'll let Luke talk about share buybacks in a moment for next year. Just a couple of points for me. Margins, as I said, where consensus is for this year is our base case, looks about right. That would mean margins of about 20% for this year, which obviously, I'm very pleased with the team, Colin, because we started at 14% and we've made year-on-year progress towards that original target.

As we go forward over time, I would expect over the sort of 5-year period, as I've said before, for those margins to tick up. And if you take roughly a 30% drop-through because we are going to continue to fully invest in the business, growth is our #1 priority. So we will continue to fully invest in the business. But we still expect to do around on average, obviously, it won't be every year around a 30% drop-through over that 5-year period, and that will take margins closer to sort of 22% over that period.

Before I let Luke talk on share buybacks, I will just say the acquisition pipeline does look better than it's looked for a while. Of course, these things are very binary. And we're very, very disciplined about how we use shareholder money. And as you know, we are looking for returns above the cost of capital within 3 years, and we're looking to be not too dilutive to IMI's sort of 13% over a 5-year period. So we're very strict about that.

But I would say, Colin, the muscles that we've built, particularly around aftermarket, Growth Hub innovation around the way we go to market commercial excellence, the use of data and obviously, our operational footprint, which I really say was truly world-class. And the way we can improve companies in that way means that we are more confident of generating those returns.

So with that, I'll let Luke talk about share buybacks.

Colin, and looking at the year's free cash flow, I think we feel really good about the work we've been doing, particularly on working capital this year and particularly the inventory reduction work we're doing. So it's nice cash generation coming through there. And we've always said we'll look at our leverage and operate roughly between a 1x to 2x range. And at the half year, it was 1.4x. Subsequent to the half year, we completed the share buyback, paid the dividend.

So sort of as we now approach the end of the year, we said we'll delever to around about 1.1x come the end of this year. And as we get into next year, we'll look ahead. And if we sustainably think we'll have leverage below x, we'll definitely look at initiating a share buyback. But I'd sort of echo the same as Roy, that we continue to have M&A as part of our strategy and look at that as well.

The next question goes to Jonathan Hurn of Barclays.

Just 3 questions, please. Just going to focus on some of the other subsegments. Firstly, just in terms of Climate Control, obviously, 5% growth. If we kind of look to Q4, there's a really tough comp, probably the toughest comp of the year. Do you think that business can still grow at sort of 5% in Q4? And if you can just give us a little bit more info about that sort of exposure to data centers and what you're seeing. I think we had 14 million orders of that last time you spoke about it, where we're sitting in that.

Second question was just on sort of Life Science and Fluid Control. Obviously, a big spike up in growth, 13%. Can you just sort of break that out? How much of that is underlying? And where is that coming from? And how much of that is catch-up?

And then the third question was just coming back to process, but just focusing on that sort of nuclear opportunity there. I mean, look, there's a lot of talk out there about what that market can ultimately be. Can you just sort of give us some more information about where you sit, where you're winning, what type of growth rates you expect? Just some sort of more color on that nuclear opportunity going forward for you in process, please?

As usual, Jonathan, you managed to find 3 new questions after everybody else [indiscernible]. Climate 5%. Climate has been growing at 5% pretty much year in, year out for the last 5 years, something like that, Jonathan. And it really has driven by overall requirement for energy saving principally in Europe, right? So it's a great growth track record. It does have a very difficult comparator in Q4. So I'm not sure if we'll quite grow that fast. But in the overall year, we'll be around that 4% to 5% level for climate. So very pleased with their performance.

As you said, data centers is becoming an increasing part. It's only 2% or 3%, but that's come from nothing over the last few years, obviously, for data centers. And the pipeline is strong. And as I said on the last call, we will follow several years after those initial investment decisions on those data centers. So that's good for the future because that means with all that data center investment that's been announced, that gives us a very good pipeline.

Life Sciences, yes, I mean, 13%. I'll let Luke talk in a minute about what was catch-up. Clearly, the catch-up side was on the Fluid Control side, and we flagged that at the half year. I still think Life Sciences an overall term will be about flat for the year, about flat for the fourth quarter. So we're not seeing that inflection point yet. Certainly, though, the mood music is better. And at some point next year, I'm not going to call first or second half at this point, Jonathan. But at some point next year, I would expect it to start to return to, let's say, low single-digit growth before eventually kicking up to more of that mid-single, even higher growth that we saw historically.

And then on Nuclear, yes, I mean, Nuclear new construction, as I said earlier, is not going to happen quickly. These are long, long cycle projects. It's very good news for IMI. I mean this year, as you know, we won a big project in the U.K. already. I think Nuclear -- in terms of Nuclear new construction and aftermarket put together will probably be 7% or 8% of our orders this year, so ticking up nicely. Per reactor, we can get up to GBP 20 million worth of content around the valves and the strainers. And then on an SMR as well, that could be up to GBP 20 million worth of content as well. So again, longer term, but bodes well for the future as that starts to really kick in.

Aftermarket will be up in Nuclear again this year. And that's the extension to the nuclear reactors that's already happening. And I expect to see more of that, Jonathan. And that aftermarket is just about the best aftermarket we have in terms of the capture rate. Obviously, a lot of it is regulatory and in terms of the margins because everybody competes very hard on new construction, as you probably remember, but then aftermarket can be an annuity for decades after that, a very good recurring revenue stream.

Does that capture your questions apart from -- I'll just let Luke talk about [indiscernible] catch-up.

On the Life Science and Fluid Control organic growth of 13% growth in the quarter, but 3% to 4% of that was underlying growth and then the rest was catch-up. As Roy said, the most important thing is it's now brought us to where we thought we would be, which is 1% year-to-date growth and then around about that for the year.

Great. That's very helpful. Can I just have one just very quick follow-up just on that sort of aftermarket within process. Can you sort of tell us where that sits in terms of percentage of the division? I know it's been growing, but where are we kind of in that sort of AMOE mix? And where do you think you can go to in process?

Yes. Yes. So Jonathan, it's about 60%. I think last year it was 59%. So it's in that sort of 60% aftermarket, 40% OE. Clearly, I want both segments to grow as fast as possible, right? That will be my absolute dream, which means the mix wouldn't change. Naturally, I think what's changed over the last couple of years is the power requirement globally has obviously stepped up, and that's very good for our combined cycle gas, good for LNG, good for our gas business in general.

So let's see how the next sort of few years sort of fall out. We have said at the Capital Markets Day back a few years ago now that we expect aftermarket to grow more like 5% to 7% new construction in the longer term, probably a bit slower than that, which will mean the mix will tick up, which will mean, obviously, the margins will tick up. Roughly, our gross margins are 2.5x in the aftermarket, what they are in new construction. So as that mix does tick up over time, Jonathan, that's obviously very healthy for us.

The next question goes to Mark Davies Jones of Stifel.

We're getting down to some gory detail here. But on process, I just wanted to ask quickly on the non-power gen-related markets and whether you're seeing any softening in the sort of refining petrochem end of the world given where current oil prices are. That was the first one.

And then on IA, obviously, it hasn't really turned yet. But looking into next year, are you starting to hear any more positive noises out of particularly Germany, given the sort of stimulus plans coming through there? Is that likely to feed through to you? Or is that still fairly distant?

Yes. Good questions, Mark. Yes, you're absolutely right. On process, it's downstream where orders are lower. You're absolutely right. I think everybody is seeing that, and we're certainly seeing that.

In IA, I would say it's early days yet, Mark. I would -- when you look at a normal IA cycle, I'd say we're overdue an uplift. And certainly, with the investment going into Germany at some point, I mean, Germany is 12% of IMI's total sales. And the biggest part of that is into the sort of industrial production economy, which is obviously both IA and the Fluid Control part of Fluid Control and Life Sciences. And then very close behind that, we've got Climate Control with what we do in HVAC.

So Germany, very important to IMI. At some point, I'm pretty sure there will be a lift now. When exactly that is, is difficult to call, I would say, Mark.

The next question goes to Stephen Klepp of BNP Paribas. Moving on to the next question from Richard Paige of Deutsche Bank.

As Mark said, down to the nitty gritty, but could you just remind us on gas combined cycle, what the size of your opportunity there and ultimately, how quickly aftermarket flows from new construction there?

And then secondly, just a point of clarity on the European -- sorry, on the Climate Control data center work, is all of that exclusively European customers, please?

Yes, good questions. I'll let Luke talk about data centers in Climate in a minute. In terms of gas combined cycle -- well, in terms of, let's call it, conventional power, Richard, which is mainly gas combined cycle, that's about 25% of process automation, 5% is new construction at the moment and 20% is aftermarket.

So yes, that's a significant tailwind. And I'm sure you've seen what's happened to our customers in that segment. Their order books are very, very full. And that's building for us, and we're getting nice high hit rates as well. So very encouraged about that.

In terms of data centers, do you want to talk a little bit about data centers and Climate?

Yes, definitely. So we continue to see lots of opportunity there with our cooling products going in there, and that's fully global exposure. So of the orders we've had year-to-date, about half is Europe, 40% is in North America and then about 10% in Asia Pacific. So I think we've got a really good geographic spread and exposure opportunities there.

The next question goes to Mark Fielding of RBC.

Actually, I'm going to be not original and asking new question, but actually circle back to one at the start in terms of just getting a little bit more sense around this phasing in Process Automation. I was trying to think about clever ways to ask it. But I think the simplest one is in terms of us understanding how good Q3 was and what that means in Q4, how do you think the sequential progression will be Q4-on-Q3 in the revenues in Process Automation?

Yes, very good. Yes. So you're right, Mark, because I think what you've cottoned on to is that last year, the comparator in Q3 was weaker and the comparator in Q4 was a lot harder, right? But if we look at overall shipments in Q3 this year, we shipped about just over GBP 230 million, right. And then in Q4, we're going to be shipping just over GBP 300 million. That's the plan, right?

So -- and that will be very similar, as I said earlier, to the level that we shipped last year, Mark. So you're right. We still got a lot of work to do, and the teams know that. And that probably puts it better in context than I did, Mark. So thank you for that.

[Operator Instructions] And we have a question from Stephan Klepp of BNP Paribas.

Can you hear me now, guys?

Yes, Stephan, it's a very, very bad line though.

I'm very sorry. I'll speak a bit louder [indiscernible] Just follow-up, sorry for that. On transport, you sounded very positive on the internal catch-up plan. Are you ruling out that you divest the division? And secondly, on the acquisition side of things, I think you have for a long time not been that positive on acquisitions. What are you looking at, at the moment size-wise? Because the last big acquisition was TWTG and that was a tiny one. What is basically in your funnel there at the moment?

I think I heard you right. So transport I think you were asking about the balance between the internal efforts and what we might be doing externally. And as I said earlier, Stephan, the real focus is on internal progress with a great team at the moment. Clearly, the external market with what's happening, particularly in the U.S., is not in great shape. And so we will always, as we always do, as we run through our strategic review process, look at both across the business and what value we can generate over a reasonable time period versus what value we can attract externally. But right now, as I said, the focus is on internal improvement, I think, for obvious reasons. And it's a great internal improvement plan, I have to say, from the team.

I think your second question is what sort of size of acquisitions do we look at? And there's really no change there to what we've always said. We would look at bolt-ons up to a value of about GBP 500 million in terms of the acquisition cost. What's really important for us is that 1 plus 1 equals a lot more than 2. As I said earlier, the muscles that we have around aftermarket generation, around things like innovation, around our commercial excellence, the broad, the global teams that we have that can really expand businesses.

But when we really look at that, and we're quite harsh in our judgment, which is why we're only doing an acquisition every year or so, that when we do that, the returns -- we understand the returns on day 1. and that we understand the returns on at the end of year 3, and they have to be above our cost of capital. And then at the end of the 5-year period that we're not too dilutive to our overall IMI return on invested capital. And we really look at that and we make sure that we can look ourselves in the basis. We are paid in our long-term investment plan on our all-in return on invested capital, right? So we are incentivized to make sure that we create shareholder value. And it is, I can tell you, top of our minds.

But yes, the acquisition pipeline, as I said, Stephan, does look better than it's looked for a while, and there's a few interesting ones in there. I'm sorry, I couldn't hear your question in detail because of the line, but hopefully, that covered what you asked.

Moving on to the final question from Harry Philips of Peel Hunt.

Again, sorry, 2 questions from myself. And again, just sort of given some of the other questions around nerdy detail that sort of got up my competitive streak. So another nerdy detailed one. Just wondering around the LNG opportunity and what scale that is within the business?

And then secondly, I just missed the data center percentage of Climate earlier on. I know you've just given the sort of joke split, but I missed the original one as a data percentage of total Climate at the current time, please?

Yes. Data center Climate, 2% or 3%, Harry, that's a nice, easy one. And then in terms of LNG, LNG is around 10%. When you look at aftermarket and new construction combined, it's about 10% of Process Automation, Harry. And as you said, the pipeline of opportunities, the projects as we go sort of into next year and the next few years looks very strong to us, yes.

We have no further questions. I'll hand back to Roy for any closing comments.

Well, I'm obviously just going to use this as a big thank you. A lot of people across IMI listen to this. And I want to thank them for an excellent -- and I don't use that word often, but an excellent operational performance, excellent execution in the third quarter, an excellent recovery from cyber and everything else that's happened geopolitically this year.

And in particular, I want to thank, obviously, the exec, Jackie and the operations team. I think it was a really outstanding performance. And we look forward to closing out the year from here. Thanks very much, everybody, for listening. Thank you.

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, everybody, and welcome to IMI's 2025 Interim Results Presentation. I am joined here as usual, but sadly for the last time by Dan Shook. I'd also like to extend a very warm welcome to Luke Grant, who many of you already know and is joining the presentation for the very first time.

This slide covers the key messages in the presentation. and the first thing to say is that it was another good performance in the first half.

We delivered 2% organic sales growth and 5% organic adjusted operating profit growth. Adjusted operating margins were up another 30 basis points and we delivered an outstanding GBP 64 million of orders through our innovative Growth Hub.

And I would like to express a personal thank you to everyone across IMI for their hard work and dedication during the first half to deliver this performance amid the market uncertainty and to recover so quickly from the cyber incident reflects a tremendous effort from all of our people.

I'm also pleased to report that the GBP 200 million share buyback announced in February, is now complete and that we are once again raising the interim dividend by 10%, reflecting the continued confidence that we have in the business.

With the completion of the buyback, we have now returned over GBP 1 billion to shareholders since the start of 2019. The strategic review of transport is progressing. Our sector team is developing a detailed plan to accelerate improved financial returns, and we continue to assess all strategic options.

There is strong momentum in IMI heading into the second half, underpinned by a record order book in Process Automation, continued strong demand in Climate and improving trends and catch-up shipments in Industrial Automation as well as supportive order books in both Transport and life Sciences & Fluid Control. I'm therefore pleased to reconfirm our guidance for 2025.

We are on track to deliver our 4th consecutive year of mid-single-digit organic revenue growth, and we continue to expect that full year adjusted basic earnings per share will be between 129p and 136p.

With that, I'm going to hand over to Dan to talk through the first half results in more detail.

Thanks, Roy, and good morning, everyone. I'm pleased to be able to take you through our first half results today, one more time.

Here we go. As Roy mentioned, another good performance in the first half. Revenue increased by 2% organically. Adjusted operating profit was up 5% and our adjusted operating margin increased another 30 basis points.

Adjusted basic EPS was 3% higher than the prior period as adverse currency and tax rate movements were offset by the reduction in outstanding shares.

Operating cash conversion was very strong, and we are pleased to be increasing our proposed interim dividend by another 10%.

So firstly, some more detail around our revenue and profit performance. We delivered 2% organic revenue growth, but due largely to a weaker U.S. dollar, our statutory revenue was slightly lower.

Adjusted operating profit increased to GBP 198 million, organic profits increased by 5%, which was again offset by FX.

Looking at the income statement. As mentioned, we saw good growth in revenue and operating profit in the year. The net interest charge was broadly in line with last year at GBP 8.6 million, despite the share buyback and the adjusted tax rate increased from around 24% to roughly 25%, in line with our guidance for the full year.

Now as I'm sure you are aware, IMI was subject to a very serious cyber attack in the first quarter, thanks to the incredible efforts of our people supported by industry experts, we were able to limit the impact to temporary operational disruption.

The second quarter organic revenue growth of 6% reflects the catch-up on sales that we expect to complete in H2.

As expected, we have recognized a one-off exceptional charge of $25.4 million in the first half. That covers IT system recovery, risk management, upgraded IT infrastructure and advisory costs. Now looking at the performance of the platform and sectors, which was very much in line with our expectations.

Starting with Automation. Automation delivered good growth with revenue up 3% organically and margins in line with the prior period at 18.4%.

Process Automation had an excellent first half, delivering strong order intake as shown at the bottom of the slide. Adjusting for the one-off multi-boat marine order last year, orders were up 7% organically with particular strength in Power and Nuclear.

We made further progress in the high-margin aftermarket where organic orders were 10% higher than last year. Organic revenue was 8% higher than the prior period, and the order book was up another 5%.

Industrial Automation organic revenue was 4% lower than the same period in the prior year, reflecting the one-off impact from the cyber incident and softer industrial activity in Europe and the Americas.

The business is rebuilding momentum. It was flat organically in Q2 and will benefit in the second half from further catch-up of shipments impacted by the cyber incident.

And turning to Life Technology. As expected, organic revenue was 1% lower than the prior year. However, margins improved by 80 basis points to 17.8%, supported by the final benefits from our footprint optimization initiatives.

Climate Control delivered another strong performance in the first half as we saw continued demand for our products that reduce energy consumption in buildings, including the benefit from our growing portfolio of smart-connected products. Organic revenue was 5% higher than the prior year period.

Life Science & Fluid Control organic revenue was 5% lower than the prior period. Now the Life Science sales were only slightly down in the first half with good order intake with a book-to-bill in H1 was 1.1x. The Fluid Control sales were more impacted by the cyber incident, but it is recovering well and also has a strong order book heading into the second half.

Transport revenue was down 9% organically in the first half. This was in line with expectations given the 13% organic growth delivered in the first half of 2024. So continuing to cash flow. Our adjusted operating cash flow was 21% higher than the prior period, supported by the strong profit performance and good working capital management.

Inventory levels rose in the first half, but this is due to our normal seasonality plus investment to support the Process Automation order book growth.

The inventory position reduced by GBP 21 million versus the same point last year despite the Process Automation order book increasing by over GBP 45 million. We are actively managing the position to ensure we reduce stocks in the second half while maintaining customer service levels.

Free cash flow was lower than the prior period, largely due to the one-off exceptional costs associated with the cyber incident and a GBP 26 million loan we have made to our U.K. pension scheme to support the final wind-up process.

The loan is providing flexibility to the scheme as it manages its remaining illiquid investments, we expect it to be partially repaid in the second half.

Now when I joined IMI in 2015, our U.K. scheme had roughly GBP 1.3 billion in liabilities. So to now be in the final wind-up stage is really great, and it reflects a tremendous effort from our team over the last 10 years.

Our net debt has increased from GBP 548 million at the beginning of the year to GBP 738 million at the half year. This principally reflects the successful execution of our GBP 200 million share buyback and the GBP 54 million dividend payment.

Net debt to trailing 12-month EBITDA was 1.4x, which continues to give us the capacity to invest in both organic and inorganic growth opportunities.

So with that, let me hand over to Luke, who will be covering the outlook today. Thanks, everyone.

Thanks, Dan. As Roy mentioned, with the completion of our GBP 200 million share buyback, I'm very pleased to report that we have now returned over GBP 1 billion to shareholders since the start of 2019.

This has been supported by significant improvements in our free cash flow. And you can see on the slide that we see a clear pathway to delivering further improvements.

We expect to deliver GBP 1 billion of free cash flow over the next 3 years, supported by further growth and the normalization of working capital.

We have an extremely disciplined approach to deploying this capital, prioritizing investments in our people, processes and operations that accelerate organic growth.

We will also pursue bolt-on acquisitions that enhance our position in attractive, long-term growth markets and that deliver results in-line with our strict financial criteria.

Finally, we will continue to deliver returns to shareholders. We are committed to maintaining a progressive dividend, and we will look to return capital to shareholders should leverage fall sustainably below a 1 to 2x net debt-to-EBITDA target range.

At the end of the first half, net debt to EBITDA was 1.4x towards the midpoint of that range. We are on track to deliver our 4th consecutive year of mid-single-digit organic growth in 2025.

We continue to expect that full year adjusted basic EPS will be between 129p and 136p. Our guidance assumes that the full year adjusted operating margin will be around 20% and that our interest charge will be slightly higher than our previous guidance.

The tax rate is still expected to increase to around 25%, and we expect that the weighted average number of shares will reduce to 249 million at the year-end.

Exchange rates have been volatile in recent weeks. But as things stand, we see a 1.5% headwind to profits in the full year. We'll be keeping a close eye on how this develops in the second half.

With that, I'm going to hand over to Roy who will talk you through the strategy update.

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. Our business is aligned to 3 long-term structural growth trends, automation, energy efficiency and health care demand.

These powerful drivers support the delivery of sustainable, profitable growth, and all of this is underpinned by our One IMI operating model. The One IMI operating model is a proven platform for value creation and sustainable growth designed to deliver our financial framework.

By applying a consistent approach rooted in commercial excellence, market-led innovation and continuous improvement, we are creating significant value for shareholders.

Commercial excellence remains at the heart of our growth strategy. We are focused on creating ever more value for our customers through premium service, technical support and disciplined sales execution.

We have significantly improved customer satisfaction scores, and we leverage these relationships to co-create high-value-add solutions. All of this is supported by significant investments that we have made in our people, in our processes and our operations, including in Data and Digital, which I'll touch on later in this presentation.

A unique market-led approach to innovation is creating real value, grounded in deep customer insight and executed through our entrepreneurial Growth Hub model, we develop solutions that address industry-wide problems.

We leverage our strong customer relationships to gain a deep understanding of our customers' needs before moving at pace to validate solutions and full market potential.

Through this process, we minimize upfront investment before rapidly bringing validated solutions to market once our customers' endorsement has been fully secured. We delivered GBP 64 million of Growth Hub orders in the first half with a strong pipeline of opportunities across IMI.

And as Luke mentioned, we also pursue attractive bolt-on acquisitions. Since 2019, IMI has been strengthened by 6 complementary acquisitions, while our fully burdened return on invested capital has increased to 13.4%, significantly higher than our 12% underpin and our weighted average cost of capital.

Finally, with our full multiyear restructuring program now complete, our focus is on continuous improvement. Whilst IMI now operates from a leaner, stronger platform, we will continue to identify programs to improve efficiency, reduce complexity and better serve our customers. Restructuring costs associated with our current business are now being taken into underlying operating profit.

I also wanted to spend some time sharing a few examples of how we are executing our One IMI operating model across the business.

Firstly, our investments in data and digital are accelerating high-margin aftermarket growth. Through the hard work from our Process Automation team, we have built a full database of over 200,000 valves in our installed base. Using this database, we are able to identify key aftermarket opportunities and prioritize our sales efforts. We estimate that this has had at least a GBP 70 million positive impact from this initiative alone on our order intake over the last 2 years, with more to come.

Secondly, the excellent progress we have made expanding our range of connected products, smart-connected products make up roughly 25% of Climate Control sales now and there is a strong growing demand for the precision, the insight and the convenience that these connected solutions offer.

In March 2025, we launched a new electronic thermostatic radiator valve, that leverages Heatmiser's technology and can be controlled via an app. This is an incredibly exciting new opportunity and presents us with a significant opportunity to scale across our European markets and in over 200,000 homes in the Heatmiser ecosystem.

Finally, we are focused on driving excellent customer service and productivity through continuous improvement. In Industrial Automation, we win in highly customized applications, with fast response to customers is absolutely crucial.

And there is lots of great work across the sector, and our Rockford facility is an excellent example.

The team have built a digital twin of the site to facilitate layout simulations and optimizations in real-time, drastically reducing lead time to customers and improving flow.

Our people and culture are the foundation of the One IMI operating model, and we have put a lot of effort into building a culture of ownership, culture of accountability and customer focus.

And this has played a key role in IMI's transformation over the last 6 years. And as you can see on the screen, it's supported by a significant increase in productivity.

We are focused on embedding a performance-driven mindset and have made significant investments in our people to help them grow, develop and continue creating significant value for customers. We are committed to targeted development at every level and have launched a range of new training programs in the first half. We also ensure that our top talent regularly moves across the group enabling us to leverage best practice and develop the next generation of leaders.

Congratulations to Tarak, on his appointment to the most senior position with Industrial Automation. Another key driver of significant productivity gains is our absolutely relentless focus on continuous improvement. A great example of this is in our Brno facility in Czech Republic, where they identified over 600 improvement initiatives in the first half of this year alone, as they continue to reduce complexity and improve customer service every single day.

All of this is supported by employee engagement, and I'm very glad to report that 79% of all our employees would recommend IMI as a Great Place to Work in our recent survey.

As you've seen on the previous slides, IMI has been fundamentally transformed over the last 6 years. We are executing the growth strategy, and we are on track to deliver our financial framework.

As a reminder, we want to deliver 5% organic growth, operating margins of 20% plus, cash conversion above 90% and maintain our fully burdened return on invested capital above 12% as we continue to create significant value by deploying our capital, both organically and into targeted bolt-on acquisitions.

It is clear that our growth strategy continues to deliver great results. And as you can see on this slide, we have built a track record of compounding profitable growth. Adjusted EPS has grown at 11% CAGR since 2019, and we expect further progress in 2025.

So to summarize then, the key takeaways from today are, first, that our growth strategy continues to deliver results, and I'm proud of our achievements during the first half.

Organic revenue grew by 2%, adjusted operating margin was up another 30 basis points, and our organic adjusted operating profit grew by 5%.

Second, that there is great momentum within our business, as we head into the second half, and we are on track to deliver our 4th consecutive year of mid-single-digit organic revenue growth.

Third, and finally, as Luke said, we are reconfirming our EPS guidance range. We continue to expect that this year's full year adjusted EPS will be between 129p and 136p.

Okay. I'm going to stop talking there and turn over to the moderator for the Q&A, please.

[Operator Instructions]

Our first question comes from Andrew Douglas from Jefferies.

Welcome, Luke. I've got 3 questions, standard 3 questions. But beforehand, I just want to say on behalf of the analysts, who've worked with you over the last 10 years, Dan, thank you for everything that you've done for us.

You've been absolutely a genuine pleasure to work with. So I think on behalf of everyone, I just want to wish you well for whatever comes next for both of you and the family, so thank you.

Over to questions, can we just talk about Process Automation, please? You flagged the order book was going to be under a little bit of downward pressure on the OE side due to Marine. I think that's all well understood. Can you talk about what you see over the next kind of 12, 18 months?

I think hydrogen was a reasonably tough comp for you in the second half of last year. Can I just make sure that we're confident of Process Automation continuing to grow as a division next year? And just how well that's underpinned by the order book?

Secondly is on the slightly more cyclical bits. You've talked about order books improving in IA, in Fluid Control & Life Sciences, can I just quadruple check that, that is over and above recovery post the cybersecurity incident? Just make sure I understand that.

And then last but no means least, is on the share buyback. Share buyback is finished. You're going to be around about 1x by year-end. Was there a debate about whether we should just do another GBP 200 million now because you've got plenty of firepower? Or do you have a strong M&A pipeline?

Well thanks Andy. Yes, I totally agree on your comments on Dan. It's been fantastic working with Dan. But Luke, we're in safe hands. So welcome to Luke's first presentation.

I'll take the first 2, and then I suggest, Luke, you talk about the share buybacks. Yes.

So Process Automation, Andy, in short, the order book is up 5% despite the multiyear marine contract that we called out over the last few calls. So we're pleased with the situation that's in. As you know, 60% of that division is aftermarket and the gross margins in aftermarket are 2.5x what they are in new construction.

So the good news was that aftermarket orders up another 10% in the first half. Jackie, Robbie and the team just driving the whole upgrade valve strategy which we go in, we swap out either our old valves or increasingly the competition's valves that aren't working for the customer that are providing reliability issues or noise or vibration issues, and that strategy continues to pay dividends.

So yes, we think we're going to finish the year with the order book higher again, and that would lead us naturally into growth again for next year, Andy. So we feel very good about where Process Automation is.

The second question was on the sort of short-cycle businesses, IA. Yes, I mean, the good news is, yes, we've got a higher order book, which is partly catch-up on IA because of the effects of the cyber incident.

There's no doubt about that. But we're also seeing in the order run rate a pick up to what I would call growth now, Andy. So it was slightly ahead. We're now seeing growth sort of consistent with our outlook for the second half, which is around 3%, 4% growth for the second half in IA.

So we are encouraged by that. We'll see whether it's a sustained recovery. As you know, there's still lots of moving parts in the global economy. There's still lots of settling down to do there with things like the tariffs and stuff, but the encouraging thing is we're making progress.

And on the IA team, honestly, I haven't seen IA in better shape for as long as I can remember. What Jackie has done with that sector of our business, as I said on the presentation, we brought Tarak now who's been with IMI something like 10 years. He's very successful in Process Automation. He moved across into IA well over a year ago. Now he's done very well there.

And now he's going to be set to head. I'm really pleased with that. Again, a bit like Luke, we've moved people through, develop them, and now where we are with the strategy and the team, we're in a good position, Andy.

Similar thing on -- particularly on the fluid control part of Life Science & Fluid Control, but we've got a good order backlog, partly because of the effects of the cyber instance. So part of it is catch-up.

On the Life Science side, though, Andy, customer order schedules are definitely showing growth for the second half. And I think we'll deliver growth in that segment in the second half. Again, on the Life Sciences side, I'm not calling a sustained recovery. Again, we all look at the news, right?

There's been enough profit warnings over the last few weeks in that sector. Obviously, we've got the issue with the U.S. funding and stuff. So I'm definitely not calling a sustained recovery. But at least in the second half, we think we're going to show growth and customers are talking about new product launches, and we are winning future platforms.

So again, the team there, Kevin is doing a really good job. I think we're really focused in the right areas. And I think over a period of time, we'll see that return to growth as the aging population, all of those dynamics and the propensity to spend more money on health. But certainly, second half, we see growth.

Luke, do you want to cover share buyback?

Yes, of course, yes Andy, I think as you said, the leverage at the half year was 1.4x net debt to EBITDA. And I think we expect delever to about 1.1x come the year-end, and that would be sort of our normal rate of delevering. It's roughly about 0.5x a year. I think we just completed our last tranche of GBP 200 million just this week and we are going to continue to look at share buybacks as we get sustainably below the 1x range. So that will probably happen sometime in the next 12 months.

The other thing I would always say is that capital allocation, we take very seriously. We look at the M&A pipelines, they continue to be strong. We continue to review opportunities. So we'll always look at it through that lens as well.

Our next question comes from Christian Hinderaker from Goldman Sachs.

I'll, of course, echo Andy's sentiments and thanks to Dan, and welcome to Luke. If I can come back to the run rate growth comment in IA, 3% to 4%. I just want to clarify if that was in quarter or after the end of June? I guess, interested as well within IA to understand relative growth dynamics across Europe and the Americas. I'll start there.

Yes, brilliant question. Christian, sorry, I should have said, we use our standard 60-day moving average order income rate. And it's that 60-day moving average because over the years, we found that's been the best sort of smooth average predictor of what's happening at least in the next quarter or so. The order book is about 3 months in IA, as you know. So it's not a Process Automation full 12 months, but is a pretty good indicator.

And in terms of Europe, U.S., both have returned to growth, actually, Christian, which is good news. It's not just one area, taking it all. It's actually growth across both of the major regions. So yes, that's encouraging.

Thank you, Roy. Maybe it's a bit early, but you touched on the strategic review in Transport, I guess, curious as to when we might receive sort of full context there. And then also in terms of the growth expectations for that segment as we enter the half that are built into your guidance?

Yes. So I'll start with that. So Transport, second half will be down, I would say nowhere near as down as the first half. Remember, we grew at 13% in the first half of last year. As all the OEMs caught up, managed to get the components that they needed post-COVID. So the first half was against a very difficult comparator.

Second half, well, if we look at it consecutively, we see that first and second half sales will be about the same as the way we see it, Christian.

In terms of the review, the review is progressing well, as I said. The internal team, we've done a couple of reviews with them, and they're building their plan. We've got a very, very strong internal team now.

And they are absolutely committed to improving the financial returns. I've absolutely no doubt about that. As I've said before, we brought in some real heavyweights from passenger car and they really know exactly what they're doing.

And that means increasing the amount of value engineering we're doing, really making sure that our new products are accretive to margins, and then frankly, exiting some poorer business.

And so that really is the sort of 3-point game plan. They're doing the detailed -- all the detailed plans behind that and we continue to look at external options.

As I said on the last call, to Christian, I don't expect this to be quick thing. We're going to optimize for value, not for speed, and I see this very much in the same way as we did the 20% to 30% of what was critical back then, which has, as you know, been an incredibly effective driver of shareholder value for IMI. Does that answer your question Okay?

Maybe just a quick final one then on the tariff situation. Can you just clarify, have you put through price increases as part of your actions? And if so, in what form?

Yes, Christian. So again, I mean, Jackie and all of the teams have done an incredible job with this really because as you know, it's been a moving picture to say the least in the first half. They have managed to mitigate a lot of the effects of tariffs through things like exemptions, which is incredibly intensive in terms of documentation, but I've done that, we've rerouted some supply chains as well. We've got our global footprint. We brought that into play.

What remained, Christian, was about GBP 4 million of impact that we couldn't avoid and we have passed that through in the form of surcharges, mainly to customers, and customers have understood why we had to do that. So that's the sort of extent of it in the first half. Again, it's a moving picture, but at the moment, our base case is in the second half, the effect will be just over twice that, just over twice the GBP 4 million. And again, we're in a good place to mitigate that effect as well.

Our next question is from Lush Mahendrarajah from JPMorgan.

I just want to echo the views before, welcome, Luke and Dan, best of luck on the next step, been great innings at IMI. I've really enjoyed getting to know you and working with you and look forward to staying in touch.

I've got three questions, I think, if that's okay. The first is just on tariffs and obviously help us sort of quantifying the impact, I mean is that lean into any specific business in particular?

And I guess, have you seen anything in there, whether it's sort of prebuys ahead of tariffs? Or just given your cost base versus some of your peers, have you seen any sort of shifts in market share on the fringes, just interested in that, so that's the first question.

Second question is just on Process Automation again and sort of orders and sort of helpful color earlier, but I guess could you just give us a bit more sort of detail on some of the sort of moving parts in the market wise? I know you called out sort of power and nuclear in particular, but just interesting sort of what you're seeing elsewhere, maybe oil and gas, et cetera, as well?

And then the third question is just on Life Sciences. I know you sort of touched on the sort of the orders there. But as you said, there's been sort of mixed reporting so far from some of the big guys. And I guess, where is your -- why do you think your order has been so good in the first half and I guess, keeping that confidence into the second half?

Yes. Thanks, Lush. Yes, so tariffs first. So tariffs, as I said, GBP 4 million impact in the first half, completely offset through the actions that we took. The big impact for us in Industrial Automation and in Transport, Lush, they're really the 2 big ones. And the single biggest impact at the moment is Mexico. So our flows from Mexico into the U.S. Some of that has been offset through exemptions, but it's still the biggest impact once we've got all the exemptions we can get.

In terms of process -- in terms of market share, you said as well on top. Yes, very interesting. So we are obviously taking any opportunity that we can to take market share from these changes in tariffs. And what's been interesting is Jackie told me last week that we've actually won some business in Asia from the reciprocal tariffs on the back of that. So yes, around the edges, I think because we've got a global footprint and some of our smaller competitors obviously haven't, there will be opportunities, and we're alert to them. So I'm really pleased with that.

Process Automation orders, where we see real strength this year is Nuclear, both on the new construction side and in the aftermarket, but interesting that we're winning some big new construction orders now in the U.K., actually, Lush, LNG. LNG, as I said on the last call, second quarter orders were really strong.

And actually, we see LNG obviously continuing through the second half and into the full year. And then conventional power, we're seeing a real surge in conventional power. I think you probably know, Lush, that the order books of some of our customers are now at record levels on conventional power, particularly combined cycle gas.

So yes, actually, that's been real lift. It shouldn't be a surprise, I suppose, because typically, we see an order a couple of years, 1.5 years, a couple of years after final investment decision on a lot of these things.

And if you think about it, data centers, AI, EV, what's driving this. We talked about it a few years ago, that this was going to drive a resurgence. But definitely, our customers have record order books now, and that bodes well both the new construction and obviously for aftermarket that we'll generate in the longer term.

And then the last one was about Life Sciences. You're right. I mean very mixed reporting. We have got some particular platforms that are recovering nicely. And if I think about sort of the one that's moving the most, it's where our customer has been able to do the test in the doctor surgery rather than in the laboratory and this particular equipment can test for, I think it's over 200 different pathogens and literally give you a result within less than an hour.

It's that sort of things, Lush. And it really is recovering well into the second half, so that's the -- if that helps at all, that's the single biggest thing.

But I would say generally across the patch, the destocking, at least with our customers, is less, and therefore, we're starting to see a bit of a pickup. Remember, Life Sciences is only 7% of our business, and I'm not calling a sustained recovery. I certainly think, Lush, it's is going to continue to be bumpy, right, particularly with you look at some of the U.S. reductions in investment and so on, but at least for the second half, we're seeing a nice order book and good order patterns, let's put it that way.

Our next question comes from Jonathan Hurn from Barclays.

Just a few questions for me, please. A couple of them sort of clarifying things that have been touched earlier. But firstly, just coming back to process, just looking out to that to '26. Obviously, you talk about the order book, but that's sort of the growth of that business in '26.

If you look at the order book, obviously, it's plus 5% at the first half, is that the kind of level of growth we should expect for Process in 2026?

And also just, Roy, if you could just give us how much book to ship you need to do in H2 to meet the forecast by '25? That was the first question.

Second question was just coming back to the IA, obviously, you're seeing sort of 3% to 4% growth coming through in the second half of that business. Just to understand how much of that 3% to 4% is actually that order book catch-up or delivery catch-up because of the stuff that was delayed in the first half? Is that sort of half of that 3% to 4?

And then the third question was just on -- sorry, it was on hydraulic or climate. If we look at that, obviously, great performance in the first half, plus 5%. If we look into the second half, that comp actually gets a lot tougher for that business in H2. Do you still think you can do 5% growth in H2? And if so, what's sort of really driving that performance there?

Jonathan, as usual, we'll get through a lot of questions. If you asked 3 really good ones. So I really appreciate that. On the Process Automation order book, I mean, we're not going to forecast next year yet Jonathan. Give us a chance to try. It was up 5% at the half year despite that big marine order, which is multi-year, aftermarket growing at 10%.

We do think the order book will be higher at the end of this year. I mean, let's see how much higher, but good momentum in that business. As I said, particularly on conventional power. Conventional power is about 25% of Process Automation, 5% is new construction and 20% is aftermarket, right? So that's nice that, that sort of reasonably big part has got some nice momentum behind it.

You've got LNG going really well as well. Jonathan, so that's good, and then Nuclear, as I said, seems to be picking up. So let's see. But right now, as I said, we think we'll finish the year with a better order book, then we came into it, and that would mean that we'd grow it again next year.

Book-to-ship, yes, we've got GBP 15 million more book to ship this year than at this point last year. So on book-to-ship, we feel good, right? Because book to ship, obviously, we've got most of the new construction orders because they tend to be a 12-month later. This is aftermarket. And as you can see, the momentum in aftermarket is great. So we feel fine about where book-to-ship is.

IA, so of the sort of 3% to 4% growth. Let's say, very, very roughly, Jonathan, about 1/4 of it -- 1/4 to 1/3 of it is backlog catch-up and then the rest is order momentum. So give you a rough idea of the breakdown of that.

And then in terms of Climate -- yes, I mean, Climate, wow, again, fantastic performance first half, Stefano and the team doing a cracking job. And what's really growing there is the 25% of that business that's connected products, is really providing momentum.

The TA-Smart valve, we've talked about it a lot, that's really taken off now. So yes, that's what we see. Jonathan, I would say certainly within our guidance is about similar levels of growth as the first half. As you know, the heating season, how strong that is, can determine a bit of that growth.

So we can't predict it exactly, but we would expect all things equal that because our products generate an energy saving. And I think you've seen some of the peers that have had difficult results, right? But because we're very focused on energy saving while providing a very comfortable indoor climate, making sure that we know that because we've got market-leading brands, market-leading shares, we do feel pretty good.

That business continues to grow and generate excellent returns, Jonathan. So yes, that's why we feel, even though it's used at a more difficult compare to second half, when we look at all of the component parts within there, we feel comfortable with that level of growth.

Does that answer your question?

Yes, absolutely. That's great. Thanks very much, Roy. Likewise, I'd just like to say or express the same sort of gratitude to Dan for this time over the last 10 years. Thanks very much, and good luck for the future.

Our next question comes from Kulwinder Rajpal from AlphaValue.

So just wanted to understand the extent of the data center business within your group, I would presume most of it falls under Climate Control and probably a small part of it. But just wanted to understand how has that business been growing? And are there any other divisions that could eventually cater to this segment?

Yes, Kulwinder. So within Climate, I think last year, the orders, I want to say, were sort of GBP 6 million, GBP 7 million, specifically around data centers. In the first half, we've done about the same number of orders, amount of orders in Climate on data center. So I think we did about GBP 6 million in the first half. So we're probably double what we did last year.

The interesting thing on Climate actually, Kulwinder, is that we typically get orders sort of 3 or 4 years after the data center is announced that it's going to be built. So that's very encouraging, obviously, because that means that as all these data centers come through, we would expect that number to increase nicely.

At the moment, Kulwinder, though by far the bigger effect is the effect it's having on Process Automation, right? Because energy demand, as I said earlier in the call, right, roughly 25% of Process Automation is conventional power. And we are seeing that our customers, particularly in combined cycle gas power stations, their order books are just at record levels.

They could not make combined cycle gas power stations, as fast as they need to, right so that is obviously providing a nice pull-through for us, the power that's data using that secondary effect.

Right. And then is there any aspiration to maybe grow the data center piece a little bit more through investments in Growth Hub or through innovation?

Yes. I mean, absolutely. So within Climate, there's a focused team that's actually pulling on people outside of Climate that are using absolutely Growth Hub teams, Growth Hub techniques to grow that business absolutely, Kulwinder. So yes, we see it as a very strong area for years to come. And yes, absolutely.

And lastly, I just wanted to go back to Slide 17, where we see the aftermarket metrics. So is the aspiration there to go from bottom right to top right? Is that reading correct?

The aftermarket potential versus the aftermarket performance?

Yes. I think the -- so the aspiration with aftermarket Kulwinder, as I said, we have matched our own assets, and we continue to improve our ability to help customers identify earlier and earlier whether they're going to have a problem with one of our installed valves, and that's 200,000 valves, right?

The other opportunity is, obviously, the 300,000 installed severe service valves from our competition. And we grew that, upgrade valves were up 17% in the first half, 17% -- another 17%, right?

And competitor upgrade valves were up another 12% on volumes, right? So it's really that strategy, that Jackie, Robbie and the teams are driving that means that we see a lot of runway for the years to come in the aftermarket within in Process Automation.

So yes, our ambition is just -- it's a highly technical sale. As you know, we've got valve doctors. They're the most advanced applications engineers in the industry. When they come out of universities with an advanced degree. It typically takes them another 7 years to qualify as a valve doctor, and that's gaining lots and lots of application knowledge. Most of these process plants and power plants are different. They're all unique. So it requires a lot of engineering knowledge to go in and then actually do an upgrade valve cell. But that's our ambition to keep growing that very, very profitable space to obviously carry on generating huge amounts of cash out of that, which is now let's face it, IMI's biggest profit pool, aftermarket Process Automation.

Our next question comes from Mark Davies Jones from Stifel.

And of course, I joined in the virtual round of applause for Dan. It's difficult to do when we're not in the room, but yes, share those sentiments. Couple of slightly more niche questions, if I may.

The latest bit of Trump tariff nonsense overnight, they seem to be slamming something extreme on Switzerland. I remember from COVID days, there were some specialist miniature valves produced out of Switzerland. I know it's just breaking news, but I don't know if there is material manufacturing still there, and that's anything you could comment on.

But more broadly on tariffs, we are beginning to hear some companies suggesting there is more resistance to simply passing through cost, are you beginning to see any signs of that? And is that a concern through the back end of the year?

Thanks, Mark. I'll start with passing through cost actually. So passing through cost we obviously do everything else first, Mark, right? We try and get exemptions, we try and reroute supply chains. But in the end, certain things, I think, I said on the last call, Mark, right, manufacturing costs outside the U.S. in some of our factories are so competitive that they can be even after tariffs, literally half what we can make it for in the U.S., right?

So you get to the point where -- and I have to say, in our case, yes, of course, customers question it, of course. I mean, but when you go through the logic and in the end, you're typically talking about a mid-single-digit increase for a lot of people on a product or a component or system that is normally, in our case, a very, very small part of the overall cost of their system, but obviously a vital part of the cost of their overall system and the way it performs for their customers. So I think in the end, we have to do our absolute best. But as I said in the first half, we completely offset the GBP 4 million that we couldn't do anything about. And then on Switzerland, well, yes, that is breaking news, isn't it? Yes, we will..

It's unfair, I know.

I just try, I'll try and frame it for you Mark. So those are, again, tiny valves where the tolerance is, I mean, we are one of only, I would say, 2 or 3 companies globally, as you saw in COVID, that can make these valves. I can tell you a story about that because during COVID, obviously, some other people thought they could make those valves, even some of the most advanced manufacturing companies in the world thought they could make them, but they obviously couldn't, right? Because you're literally dealing with micron level tolerances. So literally, 150th of a human hair and stack tolerances, typically 6 to 10 tolerances that go inside a proportional valve that has tens of thousands of settings to go inside of a ventilator that will keep you alive when you're in a coma.

I mean the technology is quite frankly, amazing. So yes -- and again, this is going to be a bit of a guess, to be honest with you, Mark. We might have GBP 5 million to GBP 10 million of that sort of product that would flow out of Switzerland into the U.S.

So we will obviously look at it, if that becomes an enduring thing. We have got -- we did build extra capacity, obviously, during COVID to obviously, may need to save lives. So we will have options as usual, and we will be agile around it. If that becomes an enduring thing, but in the scheme of things, I don't think it's going to be a massive thing for us.

And if I can ask a slightly odd question. Was there anything positive to come out of the cyber attack in terms of what you've learned from that process and where your systems are now?

Wow, that's a really good question because at the time, it felt not positive, Mark. But you know what, the recovery, the 6% growth in Q2 from our teams, and I was out visiting 3 of our German sites in the last couple of weeks. And the response was, frankly, absolutely fantastic.

So we have this sort of saying around one big team. The amount of teams that pulled together, Mark, so our French sales team, I made the leader of the French sales team, he was there in Germany with us. And.

The whole French sales team, 20 of them moved in to manually put orders in with the German, just to give you one example of what happened globally. And so that feeling of spirit -- team spirit to overcome adversity like COVID or like the inflation that we had with the sort of cost of living crisis in order, those things just bring us together and ultimately makes you stronger, right? If you survive it, you become stronger.

Of course, we are investing in the second half in more IT security and more IT infrastructure. There is no doubt about that. We've done a fundamental external review. And there's lots of things but let Luke just touch on 2 or 3 of them, but there's lots of things that we're going to do because, ultimately, I read the other day, Mark, there's about 1 billion phishing e-mails a year now. The average number of people clicking on them still is about 5%. We're actually at 3% now. So we're training, training, training obviously. But if you click on that phishing e-mail, it's obviously a risk, right? That's what -- that's the main way people tend to get into your systems.

And then it's what you do to make yourself, the place where the attack is the hardest door to knock on, right? Because that they're obviously improving every day, and it's a race.

But Luke, do you want to just touch on the sort of things we're doing?

Yes. I think maybe just to add, there's probably 3 things I call out. I think Roy touched upon one, which was just all the work we're doing on phishing and the efforts around training in the business.

I think the second one is the IT security team itself. We're more than doubling in size and most of those people are joining in the coming weeks. And then the last one is just investing in more tools. So we'll have more multilayer tools than we've ever had before and really just going for the top end tools at every single stage of our IT security set up.

Yes. So lots of stuff, Mark, that we've learned. Luke is now a fantastic IT security expert already, and we're still learning. This is only going to get more difficult. AI is going to make this more difficult. But yes, it's a race, and we want to try and stay ahead in the race. Yes.

Our next question comes from Richard Paige from Deutsche Numis.

And obviously, echoing again for Dan, if it's getting boring, fantastic legacy to have left behind. But before you put your feet up in Dubai, my leaving present to you is a question on the pension. Obviously, a great legacy to reduce those liabilities to GBP 1.3 billion. But can you just explain what's going on in terms of that loan in what future cash costs and obviously the ultimate buyout that scheme, please?

And then just a second one, Process Automation, just some clarity. I noticed it's a small thing, but on the sales-as-a-Service, it's dropped from GBP 40 million to GBP 25 million. I assume that relates to process inflation, just explain those moving parts as well, please.

Richard, thanks for the parting gift here. Pensions, yes, yes. No, really, really great journey. And as you'd expect, when we had GBP 1.3 billion, we had a number of asset classes, including some of these longer-dated private equity investments.

Most of that we've been able to turn into cash. There's just this final tail. And as we're going through the buy-in and the buyout, we don't want to leave money on the table by trying to accelerate the liquidation of those.

And given the balance sheet we've got, it was just an easy decision. We'll put some capital into the trust. That will give them the time over the next 12-plus months to wind the whole thing down.

We'll likely get some of that cash back already in the second half of this year, and then we'll watch how it all winds down. But yes, very pleased. I told, Adrian, who is in charge of it, get it done. Otherwise, I'm showing up at the AGM and asking tough questions of Luke, next May.

So as pensions, field service, basically is reverted to the mean, Richard. So field service, we won a big contract. It was in Texas last year -- in the half year last year, and we reverted pretty much back to our normal sort of run rate of field service. Field service is important because some customers require us to do more work around things like start-up of the plant and things like that. It's also important because we get insight on valves that could cause problems, right? But it tends to sort of revert to the mean, Richard, whereas it's the upgrade valve part of Process Automation and then the very good margin parts business on the back of that, that's obviously where the growth strategy is.

Our next question is from Harry Philips from Peel Hunt.

I think I'm going to use my standing as the oldest lag on the circuit to maybe just conclude with a few thoughts on Dan. Just really, what an amazing 10 years, this very quiet unassuming person who turned up all that time ago. Yes, quite an amazing innings. But I know people are busy. So just very simply down, your contribution to where IMI is today is absolutely enormous. Very hard to overstate your impact, and you've set an enormously high bar for Luke, which I'm sure he's going to appreciate greatly. Legacy is a much overused word, but I think it is extremely appropriate here.

And I think I can say on behalf of us all on the call and elsewhere, that you help, support, guidance, wisdom have been huge and much appreciated over that period.

And also, you made it fun, which is particularly important. May you be -- may you enjoy your family life, may be long and joyful, slap on a sun cream, improve the golf, giants might even have a winning season. But very simply, Dan, we're going to miss you hugely and very good luck for the future.

Wow, Okay. That's not fair, Harry -- are we ready to finish up or any more questions Harry? Is that it? Well, all right. Thank you, Harry. Okay. Firstly, I got to even it up from February. Happy birthday Katy, my daughter. She's got her birthday coming up in a couple of weeks. If I didn't do that, it could have been a very tough family event going forward. Sentiment right back to everybody on the call, you all the analysts have been -- have made it fun back the investors, everybody, you've supported me.

I've learned a tremendous amount, and you've challenged along the way, which has helped us deliver this great company to the position it is today.

I know their employees and on the call and the listen later, it's been just such a privilege to be a part of this great organization. And it's -- again, it's been fun to learn about these incredible products like these incredibly small valves that come out of Switzerland, just brilliant. And yes, the exact -- my friends right here, Roy, you've been an incredible boss. You've been an incredible colleague, and you know that you've been a great friend as well. It's just been tremendous.

Yes, Luke, bar is high, but you all know Luke almost as well as I, you're going to smash it out of the park, and yes, I won't say goodbye. Not sure what we'll do, definitely maybe a little bit more golf. Thank you, Harry. I don't think the giants are going to be doing any good anytime soon. But eventually, but I won't say goodbye, I'll just say until the next time. It's just been an absolute privilege. And for those of you who know, I'm going to take a selfie right now to commemorate. So yes, many thanks. We'll see you all soon.

Well, thanks, everybody on the call, but my main thanks to Dan and well done for holding it together. Well said, Harry. totally. We've had, as you can imagine, a couple of big leaving dues for Dan, including a Dan fest because that is the outpouring of love from this organization for you, Dan. And it really has been a brilliant 10 years, and you've been an amazing partner. And yes, we're going to miss you. Thanks, everybody, and I'm sure we'll all catch up soon. Thank you.