Final Results

RNS Number : 2386C

IMI PLC

03 March 2011

 



3 March 2011

IMI plc Preliminary Results

IMI plc, the global engineering group, today announces its preliminary results for the year ended 31 December 2010.

Financial highlights:			2010		2009		% change
	Revenue		£1,911m		£1,792m		+7%
	Segmental operating profit		£319.7m		£234.2m		+37%
	Segmental operating margin		16.7%		13.1%
	Profit before tax	- adjusted ¹	£304.4m		£211.7m		+44%
		- as reported	£306.1m		£186.2m		+64%
	Basic earnings per share	- adjusted ²	66.3p		45.8p		+45%
		- as reported	70.4p		40.8p		+73%
	Cash conversion ³		110%		139%
	Dividend	- Final	17.0p		13.2p		+29%
		- Total for year	26.0p		21.2p		+23%

Business highlights:

·   Record profits, margins and earnings with operating margins of 16.7%, ahead of the Group's historic long term objective of 15%

·   Long term margin objective raised to 20% for our three Fluid Controls businesses

·   Commitment to increase investment in sales and engineering resource to accelerate revenue growth

Norman Askew, Chairman of IMI, commented:

"IMI delivered a very strong set of results in 2010 with record profits, margins and earnings.  We are now well placed for the next stage in the Group's development and have detailed plans to accelerate growth, deliver further margin improvement and make greater use of our strong balance sheet in delivering value enhancing acquisitions. 

In light of this performance, and our confidence in future prospects we are pleased to raise the final dividend by 29%. 

We remain optimistic that the Group will continue to make good progress in 2011."

1    continuing operations before exceptional items (restructuring, acquired intangible amortisation, financial instruments excluding the reversal of economic hedge contract gains and losses, and employee benefit curtailment - UK scheme) totalling a gain of £1.7m (2009: loss £25.5m)

2    continuing operations before the after tax gain from exceptional items totalling £0.5m (2009: loss £15.7m)

3    operating cash flow from continuing operations divided by segmental operating profit after rationalisation costs

CHAIRMAN'S STATEMENT

I am pleased to report a very strong performance with encouraging progress across most of the Group.  Revenue, operating profit, operating margin and earnings per share have all shown significant uplift on 2009 reflecting the increase in demand seen in many of our markets, and strong discipline in the management of our cost base. 

Group segmental revenues grew by 6% on an organic basis.  Segmental operating profit increased by 37% and the operating margin improved from 13.1% to 16.7%. Adjusted earnings per share increased by 45% to a record 66.3p.  This together with our strong performance on cash conversion and confidence in the future prospects of the Group lead the Board to recommend that the final dividend be increased by 29% to 17.0p.  This makes a total dividend for the year of 26.0p, an increase of 23% over last year's 21.2p. 

Collectively our three Fluid Controls businesses performed well helped by a significant recovery in Fluid Power volumes where organic revenue growth was 31% for the year.  This performance, together with good progress on margins in both Fluid Power and Indoor Climate, helped to offset the expected lower activity levels in our later cycle Severe Service business. Overall, on a constant currency basis, Fluid Controls revenues grew by 7%.  Operating margins for Fluid Controls rose to 18.3% from 14.7% last year. 

In Retail Dispense, both Beverage Dispense and Merchandising made encouraging progress with revenues up 4% on an organic basis despite a deliberate and focused programme to improve margins by exiting from a number of lower margin, older and more commoditised products.  Operating margins also benefited from operational efficiencies and an improved project mix, increasing to 11.8% from 8.5% last year. 

The IMI Way

During 2010 we continued to embed our code of responsible business "The IMI Way" across all of our worldwide operations.  The code targets the very highest standards of ethical business and compliance as well as setting out our responsible business priorities.  Importantly we are seeing a growing positive convergence between these priorities, including our focus on the key business drivers of energy efficiency and cleaner energy, and our customers' own responsible business agendas.

IMI people

The most important factors behind IMI's success over many years are the skills, expertise and energy displayed by my colleagues across the world and I am deeply grateful for their continued efforts and enthusiasm.  We continue to invest in upgrading our talent through new innovative training programmes such as the Management Boot Camp which we launched in 2010. 

We were pleased to announce in August 2010 that Ian Whiting, President of Severe Service, had been promoted to the Board and assumed the important additional responsibilities for developing IMI's interests in the emerging markets and for the Group's procurement function.

As I announced in November 2010, I intend to retire from the Board during the course of 2011 once a successor is found.  Since I joined the Group in 2005, IMI has made great progress in its development into one of the leading global engineering businesses, with a clear focus on the precise control of fluids in critical applications.  Importantly, in 2010 IMI emerged as a stronger business from the global economic downturn seen in late 2008 and 2009.  The Group is now well placed, under a strong management team, for a more progressive agenda with an increased focus on growth. 

CHIEF EXECUTIVE'S STATEMENT

2010 was another very encouraging year for IMI, with organic revenue growth of 6% and record operating margins of 16.7%, well ahead of the Group's historic long term objective of 15%. 

The 2010 results reflect the significant benefits that have been derived from the gradual but fundamental reshaping of the Group, which has been underway for many years.  The focus on achieving leading positions in niche global markets, with highly bespoke engineered products and a low cost manufacturing base has created a significant and sustainable improvement in the underlying quality and profitability of the Group. 

Looking forward, IMI is now well placed to move on to its next stage of development.  Over the next few years we will focus on four key areas:

1.     Strategic convergence

IMI's preferred area of operation is best defined by the convergence of three key attributes:

·     technology leadership in the precise control of fluids in critical applications;

·     market leadership in global niches populated by large successful customers who value highly customised and differentiated products; and

·     high exposure to the key global trends which we see shaping the future and driving economic growth. 

Today around half of IMI's operations have a high exposure to all three of these attributes.  These parts of IMI are characterised by higher growth, higher margins and greater resilience.  Over time we would expect to significantly increase this proportion through disciplined choices around customer selection, new product development and acquisitions.

The global trends shaping our future and providing higher than average growth opportunities for IMI include:

·    Climate change - with opportunities for IMI to provide solutions for cleaner energy (such as liquefied natural gas and nuclear), improved energy efficiency and better environmental control;

·     Resource scarcity - with opportunities for IMI in process improvement and automation;

·     Urbanisation in the emerging economies - with major opportunities for IMI around building design and mass transit infrastructure; and

·     An ageing population - with its rising aspirations for a more balanced and healthier lifestyle and an improved quality and longevity of life.

2.     Growth acceleration

Having established a firm platform for development, we are now in a position to increase investment in sales and engineering resource to accelerate revenue growth. More specifically we intend to:

·     allocate a greater proportion of current sales and engineering resource in favour of those end markets where growth is benefiting from the favourable global trends as set out above;

·     double our investment in sales and engineering resource in the key markets of China, India and Brazil to significantly increase our revenues from emerging markets over the next three years; and

·     accelerate our investment in research & development and thereby increase the percentage of revenues generated from new products, launched in the previous three years, to 20% by the end of 2013.

Overall we expect to invest an additional £45m, spread over the next three years, in new sales and engineering resources to help us achieve these goals. 

3.     Margin improvement

The Group has been successful in driving margin improvement over many years.  In 2010 we delivered a full year operating margin of 16.7%, ahead of the Group's long term objective of 15% for the first time.  Within this, the three Fluid Controls businesses collectively achieved an overall operating margin of 18.3% and the Retail Dispense businesses an operating margin of 11.8%.  Given this strong progress it is now appropriate to raise the long term margin objective for the three Fluid Controls businesses to 20%, whilst maintaining the 15% margin objective for Retail Dispense.

We can expect continued progress in margins over the next few years as a result of the following initiatives:

·     expanding our use of pricing specialists across the business to optimise the value of our products and services;

·     improving product mix through the introduction of new products at higher margins, an increased focus on high margin aftermarket sales and selective exit from low margin or commoditised product lines; and

·     investing a further £15m in each of the next two years to transfer further manufacturing to our established facilities in the lower cost economies of China, Mexico, India, Poland and the Czech Republic with the aim of increasing the percentage of low cost manufacturing to over 55% by 2014.

4.     Balance sheet utilisation

At the end of the year we were pleased to complete the acquisition of Zimmermann & Jansen (Z&J), in our Severe Service division.  Z&J has a strong reputation for its engineering expertise, has market-leading positions and technologies and a strong aftermarket business.  Its activities in the petrochemical and iron & steel markets open up a number of new niche opportunities for the combined business, as does Z&J's growing emerging markets exposure.

Looking forward the Group will make greater use of its strong balance sheet to fund further value enhancing acquisitions.  At the same time, the Group will continue to focus on cash generation with the aim of maintaining cash conversion at over 90%. 

Outlook

IMI delivered a very strong set of results in 2010 with record profits, margins and earnings.  We are now well placed for the next stage in the Group's development and have detailed plans to accelerate growth, deliver further margin improvement and make greater use of our strong balance sheet in delivering value enhancing acquisitions. 

In light of this performance, and our confidence in future prospects we are pleased to raise the final dividend by 29%.

We remain optimistic that the Group will continue to make good progress in 2011.

FINANCIAL AND OPERATIONS REVIEW

Results summary

Segmental revenues increased by 7% to £1,917m (2009: £1,785m).  After adjusting for an exchange rate benefit of £19m the organic revenue increase was 6%. 

Segmental operating profit was £319.7m, an increase of 37% on last year.  At constant exchange rates segmental operating profit rose by 34%.  Segmental operating margin was 16.7% (2009: 13.1%). Operating profit was £309.1m (2009: £201.0m), after restructuring costs of £16.0m, the gain on curtailment of the UK pension plan of £15.1m, acquired intangible amortisation of £7.0m and reversing net economic hedge contract gains of £2.7m. The Group expects to incur restructuring costs of around £15m in each of the next two years as part of a plan to move more production to its lower cost manufacturing centres.  The charge for acquired intangible amortisation will be higher in 2011 following the acquisition of Zimmermann & Jansen.

Interest costs on net borrowings were £15.3m (2009: £18.5m).  The net pension fund financing cost under IAS19 was £nil (2009: £4.0m). After adding the gain on derivatives (IAS39) of £12.3m (2009: £7.7m), the total net financing costs were £3.0m (2009: £14.8m).

Profit before tax from continuing operations was up 64% at £306.1m (2009: £186.2m).  The effective tax rate for the Group before exceptional items was 30% (2009: 30%).  We are currently planning a series of organisation and process restructuring initiatives to reduce the Group's effective tax rate over time.

Adjusted earnings per share (excluding the after tax impact of exceptional items) was 66.3p (2009: 45.8p), an increase of 45%.  The basic earnings per share was up 73% at 70.4p (2009: 40.8p).

Discontinued operations

During the year, the General Court of the European Union issued its judgement on the Group's appeal against the fine levied in 2005 in respect of allegations of anti-competitive behaviour among certain manufacturers of Copper Tube.  The result of the appeal was a reduction in the fine of £5.4m.  This income has been shown as discontinued operations as it relates to a business that was sold in 2002.

Contingent consideration of £7.4m, received during the second half of the year in relation to the disposal of Polypipe during 2005, has also been credited within profit from discontinued operations.

Exchange rates

The movement in average exchange rates between 2009 and 2010 resulted in our reported 2010 segmental revenue and segmental operating profit being 1% and 2% higher respectively.  Whilst the Euro was 4% weaker against Sterling than in 2009, this was more than offset by all other major currencies being stronger including the US dollar which strengthened by 2%. If current exchange rates of US$1.63 and €1.18 had been applied to our 2010 results, it is estimated that revenue would have been 1% lower and segmental operating profit would not have been materially different. 

Cash flow

The net cash inflow from operating activities was £257m, compared to £236m last year.  Capital expenditure on property, plant and equipment amounted to £46m (2009: £37m) and was 1.0 times depreciation (2009: 0.8 times).  Major cash outflows in the year included tax of £56m, and dividends of £71m. In April the Group paid £12.4m for the remaining 30% minority interest in Pneumatex and in December the Group paid £110m (net of cash acquired) on completion of the acquisition of Zimmermann & Jansen.  In addition the Group purchased £30m of IMI shares for employee share plans.  In June the Group made a contribution of £48.6m into the UK pension fund in addition to the £16.8m paid in July as part of the agreed funding recovery plan.  The Group then received £48.6m as an investment by the UK pension fund.  The total cash inflow for the year was £30m compared to £82m in 2009.

Balance sheet

The balance sheet remains strong and net debt fell 16% to £145m (2009: £172m). In addition to the £30m cash inflow during the year there was an adverse translation impact of £3m on the revaluation of the Group's foreign currency debt. The ratio of net debt to EBITDA was 0.4 times at the end of the year.

Shareholders' equity at the end of December was £526m, an increase of £126m since the end of 2009, which includes the attributable profit for the year of £225m, less an after-tax actuarial loss on the defined benefit pension plans of £19m and the 2009 final and 2010 interim dividends totalling £71m.

Pensions

The IAS19 pension net deficit was revalued to £199m which compares to the deficits of £329m at June 2010 and £258m at December 2009.  A recovery plan was agreed with the pension fund Trustee following the March 2008 actuarial valuation that requires additional cash contributions of £16.8m to be paid in July of each year until 2016.  The next triennial actuarial valuation of the UK pension fund will be undertaken as at the end of March 2011.

As described in the interim financial report in August, working with the Trustee we implemented a number of actions during the year aimed at improving the funding position and reducing the volatility risk of the UK defined benefit pension scheme ("the Fund"). Following a consultation period the Fund was closed to future accrual on 31 December 2010.  Active members who were affected have been offered alternative defined contribution pension arrangements.  This closure resulted in an exceptional curtailment gain of £15.1m in the year.

The combined impact of the measures taken in the year resulted in an improvement to the funding position measured on a technical provisions basis of around £30m; a reduction to the volatility risk of 25% and the removal of approximately 20% of the mortality risk. The reduction in the IAS19 deficit over the year of £59m related principally to the Fund and resulted mainly from the closure to future accrual and the additional cash contributions.

Operations review

The following review of our business areas for the year ended 31 December 2010 compares the performance of our operations, as reported under IFRS8: Operating Segments, with the year ended 31 December 2009 and on a constant currency, 'organic', basis.  This section also comments on current market conditions in each of our businesses.

Severe Service
Revenue	£452m	(2009: £512m)
Operating profit	£78.4m	(2009: £101.4m)
Operating margin	17.3%	(2009: 19.8%)

Our Severe Service business saw an overall organic revenue decline of 14% for the full year.  This performance was a reflection of the later cycle nature of its markets and the lower order intake seen in new construction markets in 2009.  As previously indicated shipments of new valves in both the Oil and Gas and Fossil Power sectors were significantly down on 2009.   Activity levels in the Nuclear sector were slightly down, whilst in the Aftermarket, shipments were stronger than last year.  As expected, margins were impacted by lower volumes and fell to 17.3% for the full year.  Our new manufacturing facility in the Czech Republic opened in May 2010 and its sister facility in India is now operational.

The order book at the year-end was up 17% on the position at the beginning of the year.  Order intake was up 3%, with like-for-like orders up 9% after adjusting for the effect of the multiyear, master contract agreed with EdF in 2009.  The strong recovery in the Oil & Gas sector and the LNG markets in particular continued with order intake up around 70% in the full year.  As previously indicated we have seen a slower recovery in bookings in the Fossil Power market where order intake was down around 20% in the year.   There continues to be significant opportunities in the Nuclear market and we were pleased to sign a memorandum of understanding with the Shanghai Automation Instrumentation Company Ltd in December to create a new venture to supply control valves into the China nuclear industry.

At the end of December we completed the acquisition of Zimmermann & Jansen (Z&J), a leading engineering business specialising in severe service valves and related flow control products, for a consideration (net of cash acquired) of £110m.  The acquisition of Z&J is highly complementary, both in market terms, extending our interests into downstream Oil and Gas (Refining and Petrochemical) and into Iron and Steel; and in technology terms, with Z&J's highly acclaimed isolation valve technology a natural fit alongside the Truflo technology acquired in 2006.  The use of IMI's global sales and aftermarket infrastructure is expected to improve Z&J's geographic penetration.

The increased order intake seen in the year, together with ongoing strength in the Nuclear and Aftermarket businesses, are expected to support a return to growth in 2011.   However, margins in the first half of 2011 will be impacted by an unfavourable mix of lower margin Nuclear and Oil and Gas projects.

Fluid Power
Revenue	£685m	(2009: £520m)
Operating profit	£113.7m	(2009: £32.8m)
Operating margin	16.6%	(2009: 6.3%)

The overall organic growth in revenues was 31% for the full year reflecting the continued improvement in end markets after the significant falls seen in 2009. 

During the year we have continued to make good progress in developing our sector business. This part of our business, which focuses on bespoke solutions for key original equipment manufacturer (OEM) customers in global niche markets, grew at 38% in the full year, compared to 28% for the rest of the Fluid Power business. All of the five key global sectors - Commercial Vehicles, Life Sciences, Rail, Energy and Food & Beverage - performed well with a particularly strong bounce back in commercial vehicle volumes after a difficult 2009.  Overall our targeted sectors now represent 41% of total Fluid Power revenues. 

The business continued to deliver strong profits drop-through on higher volumes throughout the year with segmental operating profits up 247% and operating margins up at 16.6% compared with the 6.3% delivered last year and 13.7% in 2008.  This step change in margin performance has been driven by increased operational efficiencies as we continue to transfer manufacturing to our low cost facilities in China, the Czech Republic, Brazil and Mexico, and by our initiatives to deliver material cost savings and to maximise the value secured for our products and services. 

The positive momentum in Fluid Power seen in 2010 has been maintained in the first two months of 2011.

Indoor Climate
Revenue	£296m	(2009: £292m)
Operating profit	£70.3m	(2009: £60.7m)
Operating margin	23.8%	(2009: 20.8%)

As expected, the Indoor Climate business returned to growth in the second half of the year and delivered full year organic revenue growth of 2% despite the lacklustre construction market. This resilient performance continued to be driven by strong refurbishment activity levels and the increasing impact of European energy efficiency legislation. Overall refurbishment activity represented two thirds of sales in the year reflecting the growing trend to retrofit our products into existing buildings in the drive to improve energy efficiency and deliver more effective climate control. 

We continued to invest in educating the market to help drive demand for our energy efficient products and solutions with over 60,000 customers attending one of our seminars during the year.  We are expanding this seminar programme further in 2011 with particular focus on North America, Germany and China. 

We benefited during the year from the cumulative impact of a number of cost saving initiatives implemented during 2009 and operating profit for Indoor Climate increased by 16% to £70.3m.   The operating margin showed further strong progression on last year, rising from 20.8% to 23.8% in 2010 as we continued to benefit from the positive mix of renovation business.  Underlying margins in the second half were nearer 24% as we benefited from the recovery of certain legal costs incurred in prior years.  In recent months we have faced significantly higher copper prices albeit we expect to recover this through improved pricing. 

As energy costs continue to rise we expect the drive to make both existing and new buildings more energy efficient to accelerate.  To take advantage of this opportunity we are expanding our engineering and sales resource, notably in the emerging markets and North America, as well as investing further in our industry leading seminar programme.  The ongoing drive for improved energy efficiency positions us well for higher growth in 2011.   

Beverage Dispense
Revenue	£315m	(2009: £297m)
Operating profit	£32.0m	(2009: £21.1m)
Operating margin	10.2%	(2009: 7.1%)

Beverage volumes continued to recover throughout the year with overall organic revenue growth of 5% on 2009, notwithstanding our decision to exit a number of lower margin product lines which accounted for around 3% of 2009 revenue.  The strongest markets were in the Americas and China which more than offset the more challenging conditions seen in Europe where volumes were impacted by the weaker Spanish, Greek and Irish markets and by our decision to exit some of the lower margin beer business.  3Wire, our parts management business in North America, continued to perform well.

Operating profit increased by 52% to £32.0m resulting in a strong uplift in operating margin to 10.2%.  This positive performance reflects both our focus on improving the quality of the business and a further improvement in operational efficiencies.

We have continued to make good progress on new product development where we are targeting the higher growth water, juice, frozen drinks and smoothies markets.  The demand for our new more energy efficient coolers is also growing as these products fit well with our major customers own sustainability initiatives. 

Looking forward we expect to benefit from increased investment in emerging markets by our major global customers which together with continued strength in North America and our new product initiatives should support further positive progress in 2011.

Merchandising
Revenue	£169m	(2009: £164m)
Operating profit	£25.3m	(2009: £18.2m)
Operating margin	15.0%	(2009: 11.1%)

Overall organic growth for the year was 2%.  As expected, after a weaker first half, the second half benefited from some good project wins in the automotive sector with second half organic growth of over 15%.  While the automotive sector was stronger, the cosmetics sector ended slightly down on last year and the food and beverage sector was broadly flat. 

Operating profits were up 39% compared to 2009.  As with Beverage Dispense, Merchandising has been focusing on improving the overall quality of the business by targeting higher margin project opportunities. The business has made good progress in this regard delivering operating margins of 16.8% in the second half and 15.0% for the full year, a significant improvement on the 11.1% achieved last year. 

In 2011 we are planning to open our new "In-Vision" customer experience centre in the US which will be used to explain to customers the science of merchandising and to visually demonstrate how we can add greater value for them.

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
							Restated (note 1)
		Notes	2010				2009
			Before except- ional items	Except- ional items	Total		Before except- ional items	Except- ional items	Total
			£m	£m	£m		£m	£m	£m
Revenue		2	1,917	(6)	1,911		1,785	7	1,792
Segmental operating profit		2	319.7		319.7		234.2		234.2
Restructuring costs				(16.0)	(16.0)			(34.9)	(34.9)
Employee benefit curtailment - UK scheme				15.1	15.1			-	-
Acquired intangible amortisation				(7.0)	(7.0)			(7.2)	(7.2)
Reversal of economic hedge contract
	(gains)/losses	2		(2.7)	(2.7)			8.9	8.9
Operating profit		2	319.7	(10.6)	309.1		234.2	(33.2)	201.0
Financial income		4	5.2	20.5	25.7		3.7	37.2	40.9
Financial expense		4	(20.5)	(8.2)	(28.7)		(22.2)	(29.5)	(51.7)
Net finance expense relating to defined
	benefit pension schemes		-	-	-		(4.0)	-	(4.0)
Net financial (expense)/income		4	(15.3)	12.3	(3.0)		(22.5)	7.7	(14.8)
Profit before tax			304.4	1.7	306.1		211.7	(25.5)	186.2
Taxation		5	(91.3)	(1.2)	(92.5)		(63.6)	9.8	(53.8)
Profit for the year from continuing operations			213.1	0.5	213.6		148.1	(15.7)	132.4
Profit from operations discontinued in prior years		7		12.8	12.8			-	-
Total profit for the year			213.1	13.3	226.4		148.1	(15.7)	132.4
Attributable to:
	Owners of the parent				224.7				130.2
	Non-controlling interests				1.7				2.2
Profit for the year					226.4				132.4
Earnings per share		6
	Basic - from profit for the year				70.4p				40.8p
	Diluted - from profit for the year				69.4p				40.6p
	Basic - from continuing operations				66.4p				40.8p
	Diluted - from continuing operations				65.4p				40.6p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
		2010		2009
		£m	£m	£m	£m
Profit for the year			226.4		132.4
Other comprehensive income
Change in fair value of effective net investment hedge derivatives		(6.5)		13.3
Income tax effect on above		1.8		(3.7)
Exchange differences on translation of foreign operations net of hedge
settlements and funding revaluations		16.9		(28.1)
Income tax effect on above		(0.9)		3.0
			11.3		(15.5)
Fair value (loss)/gain on available for sale financial assets			(2.5)		1.2
Actuarial loss on defined benefit plans		(22.2)		(153.3)
Income tax effect		3.4		44.0
			(18.8)		(109.3)
Other comprehensive income for the year, net of tax			(10.0)		(123.6)
Total comprehensive income for the year, net of tax			216.4		8.8
Attributable to:
Owners of the parent			214.4		7.0
Non-controlling interests			2.0		1.8
Total comprehensive income for the year, net of tax			216.4		8.8

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2010
		Restated (note 1)
	2010	2009
	£m	£m
Assets
Intangible assets	517.1	386.4
Property, plant and equipment	241.3	233.0
Employee benefit assets	1.6	0.6
Deferred tax assets	56.3	89.6
Other receivables	4.9	5.4
Other financial assets	7.0	3.6
Total non-current assets	828.2	718.6
Inventories	288.0	249.9
Trade and other receivables	344.8	306.0
Other current financial assets	15.1	13.3
Current tax	4.8	4.2
Investments	19.2	17.7
Cash and cash equivalents	122.9	81.0
Total current assets	794.8	672.1
Total assets	1,623.0	1,390.7
Liabilities
Bank overdraft	(2.5)	(5.3)
Interest-bearing loans and borrowings	(13.2)	(1.2)
Provisions	(13.9)	(22.4)
Current tax	(36.8)	(25.8)
Trade and other payables	(423.2)	(340.6)
Other current financial liabilities	(4.6)	(4.0)
Total current liabilities	(494.2)	(399.3)
Interest-bearing loans and borrowings	(252.6)	(246.9)
Employee benefit obligations	(201.0)	(258.1)
Provisions	(47.4)	(44.5)
Deferred tax liabilities	(20.3)	(15.0)
Other payables	(31.7)	(24.9)
Total non-current liabilities	(553.0)	(589.4)
Total liabilities	(1,047.2)	(988.7)
Net assets	575.8	402.0
Equity
Share capital	85.0	84.9
Share premium	168.1	166.6
Other reserves	67.4	56.4
Retained earnings	205.2	91.9
Equity attributable to owners of the parent	525.7	399.8
Non-controlling interests	50.1	2.2
Total equity	575.8	402.0

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
			Share capital	Share premium account	Capital redemption reserve	Hedging reserve	Translation reserve	Retained earnings	Total parent equity	Non-controlling interests	Total equity
			£m	£m	£m	£m	£m	£m	£m	£m	£m
As at 1 January 2009			84.7	165.1	7.9	(2.2)	65.4	131.5	452.4	9.3	461.7
Profit for the year								130.2	130.2	2.2	132.4
Other comprehensive income						9.6	(24.3)	(108.5)	(123.2)	(0.4)	(123.6)
Total comprehensive income						9.6	(24.3)	21.7	7.0	1.8	8.8
Issue of share capital			0.2	1.5					1.7		1.7
Dividends paid								(66.0)	(66.0)	(1.6)	(67.6)
Cancellation of unclaimed dividends								0.2	0.2		0.2
Share based payments (net of tax)								4.8	4.8		4.8
Shares acquired for employee
	share scheme trust							(0.3)	(0.3)		(0.3)
Acquisition of non-controlling
	interests									(7.3)	(7.3)
At 31 December 2009			84.9	166.6	7.9	7.4	41.1	91.9	399.8	2.2	402.0
Changes in equity in 2010
Profit for the year								224.7	224.7	1.7	226.4
Other comprehensive income						(4.7)	15.7	(21.3)	(10.3)	0.3	(10.0)
Total comprehensive income						(4.7)	15.7	203.4	214.4	2.0	216.4
Issue of share capital			0.1	1.5					1.6		1.6
Dividends paid								(70.9)	(70.9)	(0.5)	(71.4)
Share based payments (net of tax)								10.3	10.3		10.3
Shares acquired for employee
	share scheme trust							(29.5)	(29.5)		(29.5)
Investment in partnership
	by UK Pension Fund									48.6	48.6
Income earned by partnership										(2.2)	(2.2)
At 31 December 2010			85.0	168.1	7.9	2.7	56.8	205.2	525.7	50.1	575.8

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
			Restated (note 1)
		2010	2009
		£m	£m
Cash flows from operating activities
Profit for the year from continuing operations		213.6	132.4
Adjustments for:
Depreciation		47.2	48.7
Amortisation and impairment		12.8	12.8
Gain on sale of property, plant and equipment		(2.9)	-
Loss on disposal of investments		0.1	-
Financial income		(25.7)	(40.9)
Financial expense		28.7	51.7
Net finance expense relating to defined benefit pension schemes		-	4.0
Equity-settled share-based payment expenses		5.5	4.1
Income tax expense		92.5	53.8
(Increase)/Decrease in trade and other receivables		(13.3)	48.0
(Increase)/Decrease in inventories		(7.8)	57.5
Increase/(Decrease) in trade and other payables		53.3	(44.8)
Decrease in provisions and employee benefits		(26.0)	(8.4)
Cash generated from the operations		378.0	318.9
Income taxes paid		(56.3)	(52.6)
		321.7	266.3
CCI investigation costs and fine		(4.3)	(13.5)
Refund of EU fine *		5.4	-
Additional pension scheme funding		(16.8)	(16.8)
Special contribution to the UK Pension Fund		(48.6)	-
Net cash from operating activities		257.4	236.0
Cash flows from investing activities
Interest received		5.2	3.7
Proceeds from sale of property, plant and equipment		7.1	1.8
Sale of investments		0.8	0.5
Purchase of investments		(0.3)	(1.0)
Settlement of derivatives		4.0	(7.5)
Income from discontinued business (Polypipe) *		7.4	-
Acquisitions of controlling interests		(117.4)	(1.3)
Acquisition of property, plant and equipment		(45.8)	(37.3)
Capitalised development expenditure		(5.0)	(4.9)
Net cash from investing activities		(144.0)	(46.0)
Cash flows from financing activities
Interest paid		(20.7)	(23.5)
Investment in partnership by UK Pension Fund		48.6	-
Acquisition of non-controlling interests		(12.4)	(18.1)
Purchase of own shares		(29.5)	(0.3)
Proceeds from the issue of share capital for employee share schemes		1.6	1.7
Net drawdown/(repayment) of borrowings		14.2	(125.2)
Dividends paid to non-controlling interest		(0.5)	(1.6)
Dividends paid to equity shareholders		(70.9)	(66.0)
Net cash from financing activities		(69.6)	(233.0)
Net increase/(decrease) in cash and cash equivalents		43.8	(43.0)
Cash and cash equivalents at the start of the year		75.7	119.3
Effect of exchange rate fluctuations on cash held		0.9	(0.6)
Cash and cash equivalents at the end of the year**		120.4	75.7
*  Representing profit from operations discontinued in prior years (2009: £nil)
**  Net of bank overdrafts of £2.5m (2009: £5.3m)
Reconciliation of net cash to movement in net borrowings appears in note 10.

NOTES RELATING TO THE FINANCIAL STATEMENTS

1.  Restatement

Net financial expense has been restated to show net finance expense relating to defined benefit pension schemes separately on the face of the income statement.  The directors believe that this presentation provides a more meaningful analysis of net financial expense.

In accordance with the amendment to IAS27, the aggregate cash flows to acquire a non-controlling interest are now classified as financing activities within the consolidated statement of cash flows.  Previously these had been classified as investing activities.  This revision has been applied retrospectively.

The consolidated balance sheet has been restated to show other receivables and other financial assets due within more than one year as non-current assets.

2.  Segmental analysis

Information regarding the operations of each reporting segment is included below.  Performance is measured based on segmental operating profit which is the profit reported by the businesses, stated before exceptional items including restructuring, acquired intangible amortisation, reversal of economic hedge contract gains and losses and the employee benefit curtailment on the UK scheme.  Businesses enter into forward currency and metal contracts to provide economic hedges against the impact on profitability of swings in rates and values in accordance with the Group's policy to minimise the risk of volatility in revenues, costs and margins.  Segmental operating profits are therefore charged/credited with the impact of these contracts.  In accordance with IAS39, these contracts do not meet the technical provisions required for hedge accounting and gains and losses are reversed out of segmental profit and are recorded in net financial income and expense for the purposes of the statutory consolidated income statement.

		Segmental			Segmental operating			Segmental operating
		revenue			profit			margin
		2010	2009		2010	2009		2010	2009
BY SEGMENT		£m	£m		£m	£m		%	%
Fluid Controls		1,433	1,324		262.4	194.9		18.3	14.7
	Severe Service	452	512		78.4	101.4		17.3	19.8
	Fluid Power	685	520		113.7	32.8		16.6	6.3
	Indoor Climate	296	292		70.3	60.7		23.8	20.8
Retail Dispense		484	461		57.3	39.3		11.8	8.5
	Beverage Dispense	315	297		32.0	21.1		10.2	7.1
	Merchandising	169	164		25.3	18.2		15.0	11.1
Segmental result		1,917	1,785		319.7	234.2		16.7	13.1
Reconciliation of reported segmental revenue and operating profit
					Revenue			Profit
					2010	2009		2010	2009
					£m	£m		£m	£m
Segmental result					1,917	1,785		319.7	234.2
Restructuring costs								(16.0)	(34.9)
Employee benefit curtailment - UK scheme								15.1	-
Acquired intangible amortisation								(7.0)	(7.2)
Reversal of economic hedge contract (gains)/losses					(6)	7		(2.7)	8.9
Total revenue/operating profit reported					1,911	1,792		309.1	201.0
Net financial expense								(3.0)	(14.8)
Profit before tax - continuing operations								306.1	186.2

REVENUE BY GEOGRAPHICAL DESTINATION
								2010	2009
								£m	£m
UK								141	132
Germany								261	234
Rest of Europe								542	524
USA								543	491
Asia/Pacific								285	278
Rest of World								145	126
Total segmental revenue								1,917	1,785
Reversal of economic hedge contract (gains)/losses								(6)	7
Total								1,911	1,792

3.  Acquisitions

3.1  Controlling interests

The company acquired 100% of the share capital of Zimmermann & Jansen Technologies GmbH (Z&J) on 31 December 2010 for consideration (net of cash acquired) of £109.5m.  This includes £6.3m due from the vendor, which is subject to agreement through the completion accounts process.  The results of this acquisition will be reported within Severe Service, however there is no impact on the Group's 2010 results.

Z&J manufactures critical process valve solutions for severe applications, primarily focused in the Refining and Petrochemical and Iron and Steel markets.  Approximately 40% of revenue is generated from emerging markets, including Russia, India and China and Z&J has manufacturing facilities in Germany, USA and South Africa.  The Group completed this acquisition as Z&J's activities in these markets open up a number of opportunities for the combined business.  Assuming that the acquisition of Z&J had been completed on 1 January 2010, it is estimated that the Group segmental revenue and segmental operating profit would have been £2,000m and £333.7m respectively.

The methodology for arriving at fair value, intangible asset values and residual goodwill is described in the accounting policies in note 1 to the annual report to be issued on 29 March 2011.  The goodwill of £49.4m recognised on acquisition principally relates to skills present within the assembled workforce, customer service capability and the synergies available to the combined business from its geographical and sector presence.

The fair value adjustments relate principally to the harmonisation with Group IFRS compliant accounting policies, recognition of intangible assets (which principally comprise the value of non-contractual customer relationships and the order book at acquisition) and adjustments to move the carrying value of the identifiable net assets from cost to fair value.

Transaction costs of £1.9m have been expensed and are included within administrative expenses.
Recognised amounts of identifiable assets acquired and liabilities assumed are summarised below:
	Fair value of net assets acquired £m
Customer relationships	54.5
Order book	18.5
Capitalised development cost	2.8
Patents and licences	1.5
Property, plant and equipment	11.5
Inventories	20.9
Trade and other receivables	15.9
Cash and short-term deposits	14.9
Trade and other payables	(32.8)
Current tax	(5.4)
Retirement benefit obligations	(5.2)
Deferred tax	(22.1)
Total identifiable net assets	75.0
Goodwill arising on acquisition	49.4
Total purchase consideration	124.4

Cash flows from the acquisition of controlling interests are shown below:
	£m
Purchase consideration:
Cash	130.7
Receivable from vendor	(6.3)
Total purchase consideration for Z&J	124.4
Less cash acquired	(14.9)
Receivable from vendor	6.3
Net cash paid on acquisition of Z&J	115.8
Deferred consideration in respect of previous acquisitions	1.6
Included in cash flow from investing activities	117.4
Transaction costs of the acquisition (included in cash flows from operating activities)	1.9
Total cash flow on acquisition of controlling interests	119.3

Trade and other receivables of £15.9m are stated after a provision for bad debts of £1.3m.  The net amount is all expected to be collected within 12 months.

Given the proximity of the acquisition to the year end, the fair values of all assets acquired and consideration for Z&J have been provisionally determined at 31 December 2010.  Completion accounts have been prepared and adjustments to both consideration and the fair value of assets acquired may arise when these are finalised. 

During the year the Group paid £1.6m deferred consideration in respect of the acquisition of 70% of Pneumatex AG originally completed on 28 December 2007.

On 17 December 2009 the company acquired the assets of NASS Parts and Service for a cash consideration of £1.4m.  The fair value of the net assets acquired was £0.4m resulting in goodwill of £1.0m.  The result of this acquisition is reported within Beverage Dispense; however there was no impact on the 2009 results.  Had NASS Parts and Service been acquired at the beginning of 2009 Group segmental revenue in that year would have been £1,788m and the impact on segmental operating profit would not have been material.

3.2  Non-controlling interests

The IMI Scottish Limited Partnership ("the partnership") was established during the year ended 31 December 2010.  The IMI Pension Fund agreed to invest a special contribution of £48.6m made by the Group during the year into the partnership, giving them rights to receive income of £4.4m per year for twenty years.  The partnership is fully consolidated in these accounts with the pension fund's interest presented within equity in the Group's consolidated balance sheet, separately from equity attributable to the owners of the parent.  The investment valuation at 31 December 2010 was provided by the Trustee, based on an independent valuation prepared for the Trustee in June 2010.

In December 2009 the Group exercised its option to purchase the remaining 30% non-controlling interest in Pneumatex AG, the controlling interest in which was originally acquired on 28 December 2007.  The exercise of the purchase option in December was unconditional and the whole controlling interest accordingly passed to IMI at that date.  Consideration of £12.2m was accrued at 31 December 2009 resulting in goodwill of £6.1m.  The transaction was finalised on 26 April 2010 and final consideration of £12.4m was transferred.  This was prior to the adoption of the amended IAS27: 'Consolidated and Separate Financial Statements'.

On 1 January 2009 the remaining 19.1% non-controlling interest in Display Technologies LLC, part of the Merchandising group, was acquired by the Group under the terms of the original purchase agreement.  At that date the net assets of the company were £6.3m.  Based on the contracted pricing mechanism the cash consideration paid was £18.1m, resulting in goodwill of £16.9m.  Display Technologies LLC was originally acquired in June 2001.

4.  Net financial income and expense

					Restated
	2010				2009
	Interest	Financial Instru- ments	Total		Interest	Financial Instru- ments	Total
Recognised in the income statement	£m	£m	£m		£m	£m	£m
Interest income on bank deposits	5.2		5.2		3.7		3.7
Financial instruments at fair value
through profit or loss:
Designated hedges		0.5	0.5			2.0	2.0
Other economic hedges
- current year trading		9.6	9.6			11.6	11.6
- future year transactions		10.4	10.4			23.6	23.6
Financial income	5.2	20.5	25.7		3.7	37.2	40.9
Interest expense on interest bearing loans and borrowings	(20.7)		(20.7)		(22.2)		(22.2)
Interest cost capitalised	0.2		0.2		-		-
Financial instruments at fair value
through profit or loss:
Designated hedges		(0.4)	(0.4)			(1.9)	(1.9)
Other economic hedges
- current year trading		(7.3)	(7.3)			(20.1)	(20.1)
- future year transactions		(0.5)	(0.5)			(7.5)	(7.5)
Financial expense	(20.5)	(8.2)	(28.7)		(22.2)	(29.5)	(51.7)
Net finance expense relating to defined benefit
pension schemes	-		-		(4.0)		(4.0)
Net financial (expense)/income	(15.3)	12.3	(3.0)		(22.5)	7.7	(14.8)

Included in financial instruments are current year trading gains and losses on economically effective transactions which for management reporting purposes (see note 2) are included in segmental operating profit.  For statutory purposes these are required to be shown within net financial income and expense above.  Gains or losses for future year transactions are in respect of financial instruments held by the Group to provide stability of future trading cash flows.

5.  Taxation

The effective tax rate on profit before tax, excluding exceptional items is 30% (2009: 30%).

6.  Earnings per ordinary share

The weighted average number of shares in issue during the year, net of shares held as treasury shares or held in trust to satisfy employee share schemes, was 319.0m, 323.8m diluted for the effect of outstanding share options (2009: 318.8m, 321.0m diluted).  Basic and diluted earnings per share have been calculated on earnings of £224.7m (2009: £130.2m).  On continuing operations the basic and diluted earnings per share have been calculated on earnings of £211.9m (2009: £130.2m).

The directors consider that adjusted earnings per share figures, using earnings as calculated below, give a more meaningful indication of the underlying performance because either the quantum, the one off nature, or volatility of these items would otherwise distort the underlying performance.

	2010		2009
	£m		£m
Profit for the year from continuing operations	213.6		132.4
Non-controlling interests	(1.7)		(2.2)
	211.9		130.2
Charges/(credits) included in profit for the year:
Restructuring costs	16.0		34.9
Employee benefit curtailment - UK scheme	(15.1)		-
Acquired intangible amortisation	7.0		7.2
Financial instruments excluding economic hedge contract gains and losses	(9.6)		(16.6)
	210.2		155.7
Taxation on charges/(credits) included in profit before tax	1.2		(9.8)
Earnings for adjusted EPS	211.4		145.9
Weighted average number of shares	319.0m		318.8m
Adjusted EPS	66.3p		45.8p
Diluted adjusted EPS	65.3p		45.5p

7.  Discontinued Operations

During the year the General Court of the European Union issued its judgement on the Group's appeal against the fine levied in 2005 in respect of allegations of anti-competitive behaviour among certain manufacturers of copper tube.  The result of the appeal was a reduction in the fine of £5.4m.  This income has been shown as discontinued operations as it relates to a business that was sold in 2002.

Consideration of £7.4m received during the second half of the year in relation to the disposal of Polypipe during 2005 has also been credited within profit from discontinued operations.  In previous years a financial asset of £4.2m was recognised in respect of the estimated deferred contingent consideration payable in respect of Polypipe.  This was derecognised in the consolidated statement of comprehensive income within the fair value loss on available for sale financial instruments of £2.5m on receipt of this payment.

No tax is chargeable on the discontinued items in 2010.  The basic and diluted earnings per share from discontinued operations was 4.0p (2009: nil).

8.  Dividend

The directors recommend a final dividend of 17.0p per share (2009: 13.2p) payable on 23 May 2011 to shareholders on the register at close of business on 15 April 2011, which will absorb around £54m (2009: £42m).  Together with the interim dividend of 9.0p per share paid on 15 October 2010, this makes a total distribution of 26.0p per share (2009: 21.2p per share).  In accordance with IAS10 'Events after the Balance Sheet date', this final proposed dividend has not been reflected in the 31 December 2010 balance sheet.

9.  Employee Benefits

Pension arrangements, other post-employment and other long-term employee benefit arrangements are accounted for in accordance with the requirements of IAS19.  As at 31 December 2010 the Group continues to provide pension benefits through a mixture of defined benefit and defined contribution arrangements.  Contributions to defined contribution arrangements are recognised in the consolidated income statement as incurred.

The Group has 79 different defined benefit arrangements worldwide.  The major pension and other post-employment benefit arrangements are funded with plan assets that have been segregated in a trust or foundation.  Assessments of the obligations for funded and unfunded plans are carried out by independent actuaries, based on the projected unit credit method.  Pension costs primarily represent the increase in the actuarial present value of the obligation for projected benefits based on employee service during the year and the interest on this obligation in respect of employee service in previous years, net of the expected return on the assets.  Movements in the pension assets and liabilities that arise during the year from changes in actuarial assumptions or because actual experience is different from the underlying actuarial assumptions are recognised through equity.

The Group also provides a number of other long-term arrangements to our employees, with benefits payable more than 12 months after the related services are rendered.  These plans are generally not funded and actuarial gains and losses are recognised in the income statement in the period in which they arise.

The Group's strategy is to move away from defined benefit arrangements towards defined contribution arrangements wherever possible and to minimise the liability of the Group.  During 2010 six defined benefit arrangements were closed to new entrants and five to future accrual.

The largest defined benefit arrangement is the IMI Pension Fund in the UK ("the Fund").  This constitutes 83% of the total defined benefit liabilities and 88% of the total assets.  The last formal triennial actuarial valuation of the Fund was carried out as at 31 March 2008 and this was the first valuation undertaken in accordance with the Scheme Specific Funding provisions of the Pensions Act 2004.  The statement of funding principles agreed with the Trustee resulted in an actuarial deficit of £118m.  The Group agreed to pay special contributions of £16.8m in December 2008 and July 2009, 2010 and 2011 as part of the recovery plan to close the deficit by 2016.  The valuation as at 31 March 2011 will determine an updated funding position and the Group will agree with the Trustee an appropriate recovery plan to meet any deficit.

The Group recognises there is a risk inherent within defined benefit arrangements that the assets do not match the liabilities at any given point in time.  In advance of the IMI Pension Fund 2011 triennial actuarial valuation, the Group has worked with the Trustee to mitigate the risk of a volatile funding position.  A number of important initiatives were implemented in 2010 in line with this objective.

The Fund was closed to future accrual on 31 December 2010, which resulted in a curtailment gain of £15.1m which has been recognised as an exceptional credit in the income statement.  The Trustee also purchased approximately £325m of annuities to match certain benefit payments due from the Fund.  The purchase price of these annuities was greater than the value, measured using the underlying IAS19 assumptions, of the insured benefits.  The Trustee also rearranged the remaining Fund assets with the objective of preserving the expected return on the total Fund assets (including the annuity policies).  This was achieved, with a reduction in the funding volatility of the Fund, as measured by the Trustee's value at risk model, of approximately 25%.  The purchase of the annuities also reduced the mortality risk by around 20%.

The difference between the cost of the annuities and the underlying IAS19 liability was financed by a special contribution to the Pension Fund of £48.6m which the Trustee agreed to invest in a special purpose vehicle giving them rights to receive income of £4.4m a year for twenty years, or until the Fund becomes fully funded.

The Group expects to agree a revised recovery plan with the Trustee in late 2011 or early 2012, but in any event by 30 June 2012.

10.  Cash flow reconciliation
Reconciliation of net cash to movement in net borrowings
							2010		2009
							£m		£m
Net increase/(decrease) in cash and cash equivalents							43.8		(43.0)
Net (drawdown)/repayment of borrowings *							(14.2)		125.2
Cash inflow							29.6		82.2
Currency translation differences							(2.6)		44.1
Movement in net borrowings in the year							27.0		126.3
Net borrowings at the start of the year							(172.4)		(298.7)
Net borrowings at the end of the year							(145.4)		(172.4)
* This includes drawings for settlement of exchange on net investment hedge derivatives of £2.7m (2009: receipts of £4.6m).
11.  Exchange rates
The income statements of overseas operations are translated into sterling at average rates of exchange for the year, balance sheets are translated at year end rates.  The most significant currencies are the Euro and the US Dollar - the relevant rates of exchange were:
		Average Rates			Balance Sheet Rates
		2010	2009		2010	2009
	Euro	1.17	1.12		1.17	1.13
	US Dollar	1.54	1.57		1.57	1.61

12.  Financial information

The preliminary statement of results was approved by the Board on 2 March 2011.  The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009 but is derived from the 2010 accounts.  Statutory accounts for 2009 have been delivered to the registrar of companies and those for 2010 will be delivered in due course.  Ernst & Young LLP has reported on both the 2009 and 2010 accounts.  Their reports were (i) unqualified, (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying its reports and (iii) did not contain statements under section S498(2) or S498(3) of the Companies Act  2006.

This announcement contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group.  By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of the preparation of this announcement and the Company undertakes no obligation to update these forward-looking statements.  Nothing in this preliminary announcement should be construed as a profit forecast.

This preliminary statement has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to IMI plc and its subsidiaries when viewed as a whole.

References in the commentary to segmental operating profit, operating margins and profit before tax, unless otherwise stated, relate to reported numbers after adjustment for exceptional items.  Segmental operating profit is reported as if economic currency and metals hedges were effective for financial reporting purposes.  Business segments enter into forward currency and metal contracts to provide economic hedges against the impact on profitability of swings in rates and values in accordance with the Group's policy to minimise the risk of volatility in revenues, costs and margins.  Business segmental operating profits are therefore charged/credited with the impact of those settled contracts.  In accordance with IAS39 'Financial Instruments: Recognition and Measurement', these contracts do not meet the technical provisions required for hedge accounting and gains and losses are reversed out of segmental profit and are recorded in net financial income and expense for the purposes of the statutory consolidated income statement.  References to EPS, unless otherwise stated, relate to reported EPS adjusted for the per share after tax impact of exceptional items.  The directors consider that the quantum, one off nature or volatility of these adjustments can distort the underlying performance of the Group and for this reason the commentary discusses these adjusted amounts. 

References to organic growth are to like for like or underlying growth and exclude the impact of exchange rate translation and acquisitions or disposals that are included in headline reported growth figures.  The organic growth is derived from excluding any contribution from acquired companies to revenues or profits in the current period until the first anniversary of their acquisition.  It also excludes the contribution to revenues or profits in both the current and comparative period from any business that has been disposed of or sold.  This adjusted growth in revenues or profits will then be compared to the adjusted prior period after its re-translation at the average exchange rates of the current period to provide the organic growth rate.

Cash conversion is the ratio of operating cash flow to segmental operating profit after restructuring costs.  Operating cash flow is the cash generated from the operations shown in the consolidated statement of cash flows less cash spent acquiring property, plant and equipment, development expenditure and the purchase of investments plus cash received from the sale of property, plant and equipment and the sale of investments.

The Company's 2010 Annual Report and notice of the forthcoming Annual General Meeting will be posted to shareholders on 29 March 2011.

-   ends   -

Enquiries to:

Will Shaw                                              -               Investor Relations Director                                -               Tel:  [phone]

Press release available on the internet at www.imiplc.com

Issued by:

Rollo Head / Clare Hunt                     -               Finsbury                                                                -               Tel:  [phone]

 

END

 

 

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