Emerging Markets

Barış Telseren

Where we are

Markets served

Key success factors

Expansion strategy

Developing our business

Sales growth

Summary

2

Agenda

Emerging Markets

3

Where we are

23 plants in 7 countries – 9% of Group sales

46%

30%

24%

Eastern Europe

Mexico

Asia

Market positioning

4

It’s NOT about low cost production

Partnering with global tier-1 and tier-2 component manufacturers requiring services to Western quality standards

5

Key success factors

Partnership with Western customers

Long-term agreements (LTA), anchor customer

Global knowledge

Technology transfer

Bodycote management system

Quality accreditations

Right: Rzeszow, Poland

6

Hub & SpokeExpansion strategy

Build a hub greenfield plant supported by an LTA

£5m invested in Eastern Europe equates to £15m invested in the UK *

Develop and prove process capability

Run initial production in hub

Build the business

Build new satellite plant

Move customers from hub to satellite

Replace customers in hub and repeat

*Cost differential driven by property costs, installation costs, utilities connections and higher ramp-up costs

Developing our business

7

Turkey / Poland / Czech Republic Well positioned

Good profitability

Fill recently added capacities

Grow with hub and spoke

China / Mexico LTAs with OEMs

High-value-added processes

Fill recently added capacities

Grow with hub and spoke

Hungary / Romania Different stage of development

Increased focus

Western customers migrating

Develop hubs

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2014 2015 2016 2017 2018

(£'000)

Greenfield FacilitiesExisting Facilities

8

Sales growth

Left: Prague, Czech Republic

9

In summary…

Today:

23 plants in 7 countries

Good profits

High growth

Ahead:

Continue with our successful hub and spoke strategy

Many opportunities for Growth in Emerging Markets

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