Tuesday 1 October 2019

Halma: Site Visit to HWM

1

Andrew WilliamsGroup Chief Executive

Welcome

2

Agenda

11am - NoonPresentation and Q&A

Buffet lunch

12.45pmCoach to HWM

1pmHWM site tour/product breakout sessions

3pmClose

Coach departs for station

3

Constance BaroudelDivisional Chief Executive

Introduction

4

HWM: a Halma Environmental Monitoring company

HWM leveraging HalmaGrowth Enablers

HWM core to Environmental & Analysis

M&A

Talent & Culture

Digital Growth Engines

Strategic Communications

Convergence opportunities

Peer support

For a cleaner world

Halma like financials

5

C

C

E

Rob FishManaging Director, HWM

6

Market Leaders in Digital Water and Digital Waste Water

7

Mission

Save natural resources and reduce CO2 emissions

8

Long-term growth drivers

Limited and stressed water

resources

Growing populations and

water usage

Ageing infrastructure

Increased environmental

legislation

Higher regulatory standards

Increased expectations of

service

9

Markets ServedDigital connectivity for global utility networksMonitoring assets, delivering data, bringing control

~70% <5% >20%

10

Note: percentages shown are % of FY 2019 revenue

(Multi-utility)

11

1993 1994 2003

2005 2013 2019

Business Model Progression

Phase 4:Data Delivery

Phase 3:Fixed Network

Phase 2:Remote

Deployment

12

Phase 1:Tools To Site

Technology

Rugged, battery powered products and GSM connectivity solutions monitor critical customer infrastructure

13

Case Studies

Calculate Minimum Night Flow to identify distribution

network leakage

Monitor Level and Flow in sewers to prevent blockage and spills

14

HWM has grown through

strong customer focus,

innovative product

development, a complete

user service and our

digital data model

Customers

15

Financials

USA

UK

Europe

Asia

Other

Hardware

Air Time & DataSvs

Installation

Repairs

UK water

UK Electricity

Export water

Other

Revenue by activity

Revenue by geography

Revenue by customer type

Revenue

Note: Pie charts show revenue split for FY2019

16

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Operations

Manufacturing

• Cwmbran and Northampton

• Box build, test, configuration

• Medium volume, low capital intensity

Install and maintain model

• Recurrent revenues

• HWM responsible for logger fleet performance

• Analysis and reporting teams monitor logger fleet behaviour

209 employees5 locations

Supply Chain spend

PCBs

Cable harnesses

Batteries

Enclosures

Factoredcomponents

17

HWM CustomersHWM ProductsHWM process over 10 million

data connections daily.

A major business focus is to ensure high connectivity rates for our devices, to

maintain this key competitive advantage.

Digital data

18

ISO 27001 accreditation

Future Growth

19

Maximise potential in clean water solutions

Build waste water segment

Apply remote monitoring solutions in adjacent markets

• Broaden range of solutions• Increase digital insights• Water quality

• Launching new products• Further geographic expansion • Acquire new capabilities

• Gas network monitoring• Air quality, smart agriculture

Business Growth Drivers and the Regulatory Environment

Mike TennantDirector of Sales and Business Development, HWM

20

Market/Business drivers

Our markets have a number of long term growth drivers: Limited and stressed water resources Increased population and water usage Increased standards of living, expectations of service in

water and sewerage Increased Environmental legislation Ageing Infrastructure Regulators

Looking specifically at regulation in our main market - UK

21

OFWAT and the AMP

The unique ‘monopolistic’ model of UK Privatisation necessitated a regulator to protect customers

OFWAT regulates through 5-year price reviews

Business plans submitted, investment plans and price proposals reviewed

Key targets established which have to be met

22

Regulation Principles and HWM

Customer Outcomes, Resilience and Innovation drive targets and opportunities for HWM, specifically:

Leakage – overall reduction of 15%, 170 Billion Litres per year

Pollution Incidents – 37% reduction, and 80% for the worst offenders

PR19 Principles

23

Leakage Reduction Targets

Initial target New targetAnglian Water 17% 17%Dwr Cymru Welsh Water 15% 15%

Hafren Dyfrdwy 15% 15%Northumbrian Water 16% 15%

Severn Trent 15% 15%South West Water 15% 15%Southern Water 15% 15%Thames Water 15% 25%United Utilities 15% 20%Wessex Water 15% 15%Yorkshire Water 25% 25%Affinity Water 15% 20%Bristol Water 15% 15%Portsmouth Water 15% 20%

South East Water 14% 15%South Staffs Water 23% 23%

SES Water 15% 15%

OFWAT delivers toughest ever targets

Requires innovation and technology

Cannot simply do the same as the last 30 years

Already driving a huge investment in Smart early leak detection systems = PermaNET

24

37%- 80% reduction in pollution incidents

Reduction in Pollution is key to Environmental and customer service targets;

Can no longer monitor only treatment and spill

Need to monitor the network for early identification and prevention

Needs lower cost, battery powered telemetry -SpillGuard

25

Summary Strong regulation in our main market continues to drive

opportunity and growth

Long term climate change, population growth and finite water availability ensure continued investment

Regulation is not matched world-wide but is increasing

Other long-term drivers will drive international investment and likely regulation

Many markets looking at a form of the UK model

26

Any questions?

Saving natural resources and reducing CO2 emissions

2727

Appendices

28

Rob KitchenManaging Director

Simon FisherInnovation

Director

Mike TennantSales & Business

Development Director

Mick BoltonOperations

Director

Gavin OrrFinance Director

Davide Di PalmaEngineering Project

Director

Rob FishDivisional Managing Director

Stuart TrowExecutive Director

Jim BurkeHead of FCS

Steve ToomsExecutive Director

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Key dates

1979

1995

1999

2000

2010

2013

2015

2017

2019

Launch of world first leak noise correlator

Palmer and Reten merge on Cwmbran site

launches of world first permanently deployed ANL

• Palmer & Radcom merge to form HWM-Water Ltd

• First high volume digital water solutions provided to UU/STW/YW

• Radio Tech merged with HWM

Palmer integrates Wessex & FCS brands – FCS become USA re-seller

ASL added to extend electricity metering solutions – now multi utility AMR

Launch of first ATEX approved data logger targeting at waste water and gas

Largest ever deployment of fixed network leak sensors –Affinity Water

Invenio added to group to extend clean water solutions into customer side

30

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