Roy Twite
Divisional Managing Director
“Bopp & Reuther represents an important and entirely aligned addition to Critical
Engineering’s portfolio of operations. Its products, markets and customers are well
understood across IMI CCI and the increased geographic sales distribution and
productivity benefits we bring will help accelerate Bopp & Reuther’s growth ambitions.”
CASE STUDY
High Integrity Pressure Protection System (HIPPS)
With growing demand for oil & gas globally and because the
costs of exploration and production from new fields is often
high, increasing utilisation levels to extract more from existing
fields is becoming ever more important. However increasing
the yield from older and more difficult fields often involves
significant levels of H2S (sour gas) and creates significant
safety issues.
Sour gas is extremely dangerous and it is vital that field
owners and operators ensure the safety of the field and the
equipment from over pressure that could lead to controlled
releasing of sour gas, for example gas to flare. As a result,
investment in HIPPS is becoming a key application.
Leveraging a long history of experience, IMI CCI in Italy
designs control and hardware for the system.
Aftermarket orders were up 9% compared to 2013 and
excluding the nuclear aftermarket were up 16%.
After adjusting for the impact of adverse exchange rate
movements of £37m and for disposals, revenues increased 2%
on an organic basis. Revenues of £692m (2013: £716m) were
down 3% on a reported basis. Segmental operating profit of
£120m (2013: £117m) grew 3% on a reported basis and 10%
on an organic basis while margins increased to 17.3% from
16.3% in 2013. This growth in profitability and margins reflects
the benefits of ongoing improvements in project execution.
During the second half the division made good progress on a
number of its growth initiatives including the acquisition of Bopp
& Reuther, the division wide adoption of lean manufacturing and
the start of a project to introduce a new ERP system across the
IMI CCI business.
Key Achievements
• Delivered the HIPPS solution to the Middle East customer,
the largest single order in IMI Critical Engineering’s history
• Increased Oil & Gas orders by 3% and Power orders by 4%
• Increased Aftermarket orders by 9%
• Improved the operational effectiveness of our factories
through the initial phase of lean implementation
• Relocated IMI Z&J’s US business into new expanded facilities
in Houston
• Relocated and expanded IMI CCI facility in South Korea
• Relocated the IMI STI actuator business into larger premises
in Northern Italy
• Opened two new service centres in Beijing and Shanghai
• Significantly enhanced the division’s growth prospects in
the power sector through the acquisition in January 2015
of Bopp & Reuther
Market Review
The recent oil price declines are causing uncertainty in the
industry and investment is being postponed in the regions
where the cost of oil and gas production is high. In the short
to medium term, the Nuclear market is expected to continue
to be subdued post-Fukushima, but longer term prospects
remain good. In the Fossil Power sector new build activity
remains concentrated in the emerging markets with the
slowdown in China likely to continue.
Outlook
Based on the current order book, on an organic basis,
revenues are expected to be broadly flat for the full year 2015
but slightly down in the first half. While the division will continue
to improve its project execution capabilities, operating margins
are expected to be lower, impacted by the acquisition of the
lower margin Bopp & Reuther business, the disposal of the
higher margin, but non-core, Eley businesses and the ongoing
investment in the division’s strategic growth initiatives. First
half margins will be impacted further by the mix of product
shipments, but this will correct itself in the full year.
Safeguards
employees &
investment
Highest
safety
integrity
Case studies online
37
Strategic Review
Performance Review
Corporate Governance
Financial Statements
Introduction
Annual Report and Accounts 2014
