Interim Results

IMI PLC
26 July 2024
 


CONSOLIDATED INTERIM INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Note

6 months to

 30 June 2024

(unaudited)


6 months to

 30 June 2023

(unaudited)


Year to

31 Dec 2023

 





Adjusted

Adjusting items (Note 2)

Statutory


Adjusted

Adjusting items (Note 2)

Statutory


Adjusted

Adjusting items (Note 2)

Statutory





£m

£m

£m


£m

£m

£m


£m

£m

£m





 

 

 


 


 


 


 

Revenue

3


1,098

 

1,098


1,084


1,084


2,196


2,196

Cost of sales



(581.4)

-

(581.4)


(573.6)

(1.6)

(575.2)


(1,182.1)

(1.6)

(1,183.7)



 

 

 

 

 









Gross profit

 

 

516.6

-

516.6


510.4

(1.6)

508.8


1,013.9

(1.6)

1,012.3

Net operating costs

 

 

(320.5)

(19.3)

(339.8)


(317.6)

(42.3)

(359.9)


(603.3)

(90.4)

(693.7)





 

 

 









Operating profit

3


196.1

(19.3)

176.8


192.8

(43.9)

148.9


410.6

(92.0)

318.6





 

 

 









Financial income

5


5.2

 

5.2


3.7


3.7


8.1


8.1

Financial expense

5


(13.0)

 

(13.0)


(15.7)


(15.7)


(30.8)


(30.8)





 

 

 









(Losses)/gains on instruments measured at fair value through profit or loss



 

(5.6)

(5.6)



2.3

2.3



7.0

7.0

Net financial expense relating to defined benefit pension schemes



(0.9)

 

(0.9)


(0.7)


(0.7)


(0.5)


(0.5)





 

 

 









Net financial (expense)/income

5


(8.7)

(5.6)

(14.3)


(12.7)

2.3

(10.4)


(23.2)

7.0

(16.2)





 

 

 









Profit before tax



187.4

(24.9)

162.5


180.1

(41.6)

138.5


387.4

(85.0)

302.4

Taxation

6


(45.0)

7.8

(37.2)


(40.2)

11.0

(29.2)


(84.5)

19.4

(65.1)





 

 

 









Profit after tax

 


142.4

(17.1)

125.3


139.9

(30.6)

109.3


302.9

(65.6)

237.3

 

 

 




 






 

 

 












































































Earnings per share

4













Basic - from profit for the period




48.2p




42.2p




91.5p

Diluted - from profit for the period




48.0p




42.1p




91.2p







 















 









All activities relate to continuing operations and are all attributable to the owners of the Company

 


CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 




6 months to

30 June 2024

(unaudited)

6 months to

30 June 2023

(unaudited)

Year to

31 Dec 2023

 


£m

£m

£m

£m

£m

£m








Profit for the period

 

125.3


109.3


237.3

 

 

 












Items that will not subsequently be reclassified to profit and loss







Re-measurement gain/(loss) on defined benefit plans

1.8

 

(22.6)


(33.7)


Related taxation effect

(0.4)

 

5.7


8.6



 

 






 

1.4


(16.9)


(25.1)

Items that may be reclassified to profit and loss







Gain arising on hedging instruments designated in hedges

 

 





      of the net assets in foreign operation

9.4

 

6.7


6.7


Loss on exchange differences on translation

 

 





     of foreign operations net of funding revaluations

(28.0)

 

(46.2)


(41.1)


Gain on exchange differences reclassified to income statement

 






     on disposal of operations

(0.3)

 

-


(0.2)


Related tax (charge)/credit on items that may subsequently be

 






     reclassified to profit and loss

(1.4)


1.1


1.8



 

(20.3)


(38.4)


(32.8)









 

 












Other comprehensive loss for the period, net of taxation

 

(18.9)


(55.3)


(57.9)

 

 

 












Total comprehensive income for the period, net of taxation

 

106.4


54.0


179.4

 

 

 






CONSOLIDATED INTERIM BALANCE SHEET

 






 






 



30 June 2024

30 June 2023

31 Dec 2023

 



(unaudited)

(unaudited)


 


Note

£m

£m

£m

 

Assets

 

 



 

Goodwill


664.0

680.5

680.3

 

Other intangible assets


261.4

290.0

277.4

 

Property, plant and equipment


301.1

292.9

300.4

 

Right of use assets


90.4

102.3

99.6

 

Employee benefit assets

9

2.9

6.4

1.7

 

Deferred tax assets


22.2

23.5

22.7

 

Other receivables


2.0

2.0

2.3

 



 



 

Total non-current assets

 

1,344.0

1,397.6

1,384.4

 

 

 

 



 

 

 

 



 

Inventories


476.6

451.3

437.3

 

Trade and other receivables


571.4

507.7

523.9

 

Derivative financial assets


9.4

16.5

12.1

 

Current tax


4.5

1.7

4.5

 

Investments


2.4

1.7

1.7

 

Cash and cash equivalents


141.8

112.3

106.5

 



 



 

Total current assets

 

1,206.1

1,091.2

1,086.0

 

 

 

 



 

 

 

 



 

Total assets

 

2,550.1

2,488.8

2,470.4

 

 

 

 



 

 

 

 



 

Liabilities

 

 



 

Trade and other payables


(504.6)

(463.2)

(470.3)

 

Bank overdraft


(109.0)

(79.1)

(66.3)

 

Interest-bearing loans and borrowings


(150.9)

(153.2)

(47.2)

 

Lease liabilities


(23.5)

(25.3)

(25.2)

 

Provisions


(21.7)

(26.0)

(28.7)

 

Current tax


(67.8)

(59.7)

(73.0)

 

Derivative financial liabilities


(8.4)

(10.1)

(10.9)

 



 



 

Total current liabilities

 

(885.9)

(816.6)

(721.6)

 

 

 

 



 

 

 

 



 

 

 

 



 

Interest-bearing loans and borrowings


(396.0)

(551.8)

(531.4)

 

Lease liabilities


(67.9)

(74.8)

(75.0)

 

Employee benefit obligations

9

(48.8)

(46.0)

(50.6)

 

Provisions


(11.7)

(16.5)

(13.0)

 

Deferred tax liabilities


(30.3)

(47.0)

(33.3)

 

Other payables


(15.8)

(16.3)

(15.3)

 



 



 

Total non-current liabilities

 

(570.5)

(752.4)

(718.6)

 

 

 

 



 

Total liabilities

 

(1,456.4)

(1,569.0)

(1,440.2)

 

 

 

 



 

Net assets

 

1,093.7

919.8

1,030.2

 

 

 

 



 

 

 

 



 

 

 

 



 

Share capital

12

78.6

78.6

78.6

 

Share premium


17.0

16.5

17.0

 

Other reserves


168.3

183.0

188.6

 

Retained earnings


829.8

641.7

746.0

 



 



 

 

 

 



 

Total equity

 

1,093.7

919.8

1,030.2

 

 

 

 



 


CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 




Share capital

Share premium account

Capital redemption reserve

Translation reserve

Retained earnings

Total

equity

 



Note

£m

£m

£m

£m

£m

£m

 










 










 

As at 1 January 2023


78.6

16.4

177.6

43.8

589.2

905.6

 










 

Profit for the period





 

109.3

109.3

 

Other comprehensive expense








 


excluding related taxation effect





(39.5)

(22.6)

(62.1)

 

Related taxation effect





1.1

5.7

6.8

 










 

Total comprehensive (loss)/income





(38.4)

92.4

54.0

 










 

Issue of share capital


-

0.1

 

 


0.1

 

Dividends paid

7

 

 

 

 

(45.1)

(45.1)

 

Share-based payments (net of tax)






5.2

5.2

 

Shares acquired for:








 


employee share scheme trust







-

 










 

As at 30 June 2023 (unaudited)


78.6

16.5

177.6

5.4

641.7

919.8

 










 




 

 

 

 

 

 

 

As at 1 January 2023


78.6

16.4

177.6

43.8

589.2

905.6

 










 

Profit for the year






237.3

237.3

 

Other comprehensive expense








 


excluding related taxation effect





(34.6)

(33.7)

(68.3)

 

Related taxation effect





1.8

8.6

10.4

 










 

Total comprehensive (loss)/income





(32.8)

212.2

179.4

 










 

Issue of share capital


-

0.6




0.6

 

Dividends paid






(68.8)

(68.8)

 

Share-based payments (net of tax)






13.4

13.4

 

Shares acquired for:








 


employee share scheme trust







-

 










 

As at 31 December 2023


78.6

17.0

177.6

11.0

746.0

1,030.2

 










 

Changes in equity in 2024


 

 

 

 

 

 

 










 

Profit for the period


 

 

 

 

125.3

125.3

 

Other comprehensive (expense)/income


 

 

 

 

 

 

 


excluding related taxation effect


 

 

 

(18.9)

1.8

(17.1)

 

Related taxation effect


 

 

 

(1.4)

(0.4)

(1.8)

 










 

Total comprehensive (loss)/income


 

 

 

(20.3)

126.7

106.4

 










 

Issue of share capital


-

-

 

 

 

-

 

Dividends paid

7

 

 

 

 

(50.0)

(50.0)

 

Share-based payments (net of tax)


 

 

 

 

5.1

5.1

 

Shares issued from:







 

 


employee share scheme trust


 

 

 

 

2.0

2.0

 










 

As at 30 June 2024 (unaudited)

 

78.6

17.0

177.6

(9.3)

829.8

1,093.7

 










 






















 CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 


6 months to

30 June 2024

(unaudited)

6 months to

30 June 2023

(unaudited)

Year to

31 Dec 2023

 

 

Note

£m

£m

£m

Cash flows from operating activities

 

 



Operating profit for the period


176.8

148.9

318.6

Adjustments for:





    Depreciation and amortisation


60.7

62.0

124.4

    Impairment of property, plant, and equipment and intangible assets


-

0.1

5.2

    Gain on disposal of subsidiaries


(6.3)

-

 (0.7)

Loss on sale of property, plant and equipment


1.1

0.4

0.5

Equity-settled share-based payment expense


5.9

6.3

12.9

Increase in inventories


(49.8)

(52.1)

(32.3)

Increase in trade and other receivables


(63.5)

(42.1)

(56.5)

Increase in trade and other payables


50.4

46.5

57.5

(Decrease)/increase in provisions


(7.5)

0.6

(0.1)

Increase in employee benefits


1.2

0.6

1.0

Settlement of transactional derivatives


1.0

2.4

              8.8

Cash generated from operations

 

170.0

173.6

439.3

Income taxes paid


(45.5)

(42.5)

(76.1)

Cash generated from operations after tax

 

124.5

131.1

363.2

 

 

 



Cash flows from investing activities

 

 



Interest received

5

5.2

3.7

8.1

Proceeds from sale of property, plant and equipment


0.1

0.6

1.6

Settlement of effective net investment hedge derivatives


4.6

3.8

              1.0

Acquisition of property, plant and equipment and non-acquired intangibles


(41.1)

(36.0)

(79.9)

Purchase of Investments


(1.0)

-

                 -

Proceeds from disposal of subsidiaries net of cash


15.2

-

              0.1

Net cash from investing activities

 

(17.0)

(27.9)

(69.1)



 



Cash flows from financing activities

 

 



Interest paid

5

(13.0)

(15.7)

(30.8)

Proceeds from the issue of share capital for employee share schemes


2.0

0.1

0.6

Drawdown of borrowings


-

60.7

-

Repayment of borrowings


(23.4)

(93.5)

(148.4)

Principal elements of lease payments


(14.4)

(14.6)

(29.0)

Dividends paid to equity shareholders

7

(50.0)

(45.1)

(68.8)

Net cash from financing activities

 

(98.8)

(108.1)

(276.4)



 



Net increase/(decrease) in cash and cash equivalents


8.7

(4.9)

17.7

Cash and cash equivalents at the start of the period


40.2

39.2

39.2

Effect of exchange rate fluctuations


(16.1)

(1.1)

(16.7)

Cash and cash equivalents at the end of the period

 

32.8

33.2

40.2

 

 

 



Reconciliation of cash and cash equivalents

 

 



Cash and cash equivalents

 

141.8

112.3

106.5

Bank overdraft

 

(109.0)

(79.1)

(66.3)

Cash and cash equivalents at the end of the period

 

32.8

33.2

40.2

 

 

 



Notes to the cash flow appear in Note 11.

1.  Significant accounting policies

 

Basis of preparation

 

This condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK. The Group's annual financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the UK.

 

The Interim Financial Statements are unaudited but have been reviewed by the Company's auditor in accordance with the International Standard for Review Engagement (UK) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Financial Reporting Council. A copy of their unqualified review report is attached. 

 

The comparative figures for the financial year ended 31 December 2023 are derived from the Group's statutory accounts for that financial year as defined in section 435 of the Companies Act 2006. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

The Interim Financial Statements have been prepared for the Group as a whole and therefore give greater emphasis to those matters which are significant to IMI plc and its subsidiaries when viewed as a whole. The Interim Financial Statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

 

Going concern

 

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and for a period of at least twelve months following the approval of the Interim Financial Report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

The directors have considered the current macroeconomic conditions. The Group is well diversified and maintains a balanced portfolio operating across a range of markets, sectors and geographies with no single dependency. Performance in each of IMI's two platforms has been robust in the first half.

 

The Group continues to maintain a robust financial position. At 30 June 2024, the Group had cash and cash equivalents of £141.8m and undrawn committed facilities of £300m in the form of Revolving Credit Facilities (RCF), of which £50m is due for renewal in 2024, £75m in 2025, £25m in 2026 and £150m in 2027. Forecasts indicate that the Group can operate within the level of facilities in place without the need to obtain any new facilities in the twelve-month period following the approval of the Interim Financial Report.

 

The directors have assessed the viability of the Group and reviewed detailed cash flow forecasts for a period of at least twelve months following the date of approval of the Interim Financial Report. After applying a reverse stress test on the Group's banking covenants and making comparisons to the detailed forecasts, the directors have a reasonable expectation that the financial headroom will not be exhausted during this period.

 

Covenant compliance reviews are undertaken to ensure that the Group remains fully within the covenant limits. Funding covenants currently require EBITDA to be no less than 4.0 times interest and net debt to be no more than 3.0 times EBITDA. Those covenant ratios, at 30 June 2024, were 29.7 times and 1.2 times, respectively.

 

A reverse stress test shows that for there to be a breach of covenants during the twelve-month period following the approval of the Interim Financial Report, forecast revenue would need to fall by 40% and forecast EBITDA by 66% after taking into account the mitigating actions that would be undertaken in these circumstances. The mitigating actions include, but are not limited to, reducing working capital, restricting capital expenditure, reducing overhead spend and employee costs and cutting or suspending dividend payments to shareholders.

 

Accounting policies

 

The financial statements are presented in Pounds Sterling (which is the Company's functional currency), rounded to the nearest hundred thousand, except revenues, which are rounded to the nearest whole million. They are prepared on the historical cost basis except for derivative financial instruments; financial assets classified as fair value through profit and loss or other comprehensive income, assets and liabilities acquired through business combinations which are stated at fair value and retirement benefits. Non-current assets and liabilities held for sale are stated at the lower of their carrying amounts and their fair values less costs to sell.

 


 

 

 

1.  Significant accounting policies (continued)

 

As required by the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies, key sources of estimation and uncertainty and presentation that were applied in the preparation of the Company's consolidated financial statements for the year ended 31 December 2023 as described in the 2023 Annual Report.

 

(i) New or amended UK Endorsed Accounting Standards adopted by the Group during 2024

 

There are no amended or new International Financial Reporting Standards which became effective for the Group as of 1 January 2024.

 

2. Alternative Performance Measures and Adjusting items

 

 

 

 

 

 

 

Alternative Performance Measures

The Group's policy is to exclude items from underlying performance that are considered to be significant in nature (i.e. outside of the normal course of business) and/or quantum and where treatment as an adjusting item provides stakeholders with additional useful information to assess period-on-period trading performance of the Group.

 

The Group believes Alternative Performance Measures ('APMs'), which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board and Executive Committee. Some of these measures are also used for the purpose of setting remuneration targets and for banking covenants.

 

The directors' commentary discusses these APMs to remove the effects of items of both income and expense that are considered different in nature from the underlying trading and normal quantum and where treatment as an adjusting item provides stakeholders with additional information to assess period-on-period trading.

 

Management has applied judgement in the selection of the APMs used in the Interim Financial Report. The APMs presented are used in discussions with the investment analyst community and by the Board and management to monitor the trading performance of the Group.








APM

Definition

Reconciliation

to statutory

measure

Adjusted profit before tax

 

 

 

Adjusted net interest cost

 

 

 

Adjusted earnings per share

 

 

Adjusted effective tax rate

 

 

 

Adjusted EBITDA

Adjusted profit before tax is statutory profit before tax before adjusting items as shown on the income statement.

 

 

Adjusted net interest cost is statutory net interest costs before adjusting items as shown on the income statement.

 

 

Adjusted earnings per share is defined within the table in Note 4.

 

 

The adjusted effective tax rate is the tax impact on adjusted profit before tax divided by adjusted profit before tax.

 

 

This measure reflects adjusted profit after tax before interest, tax, depreciation, amortisation and impairment.

See income

statement.

 

 

See income statement.

 

 

See Note 4.

 

 

See Note 6.

 

 

 

See Note 11.

















 

2. Alternative Performance Measures and Adjusting items (continued)

 

 

 

 

 

 

 

Adjusted operating profit

 

 

Adjusted operating margin

 

 

Adjusted net financing costs

 

 

 

 

 

Organic revenue growth

 

Organic adjusted operating profit

Adjusted operating profit is statutory operating profit before adjusting items as shown on the income statement.

 

Adjusted operating margin is adjusted operating profit divided by revenue.

 

Adjusted net financing costs is interest received and interest paid including the impact on interest costs on leases before gains on instruments measured at fair value through profit or loss (other economic hedges) and net financial income relating to defined benefit pension schemes.

 

These two measures remove the impact of adjusting items, acquisitions, disposals and movements in exchange rates.

See income statement and segmental reporting in Note 3.

Adjusted operating cash flow

 

 

 

 

This measure reflects cash generated from operations as shown in the statement of cash flows less cash spent acquiring property, plant and equipment, nonacquired intangible assets and investments; plus cash received from the sale of property, plant and equipment, the sale of investments less the repayment of principal amounts of lease payments excluding the cash impact of adjusting items

See Note 11.

 

 

 

Net debt

 

 

Net debt: adjusted EBITDA

 

 

Free cash flow before corporate activity

 

 

 

 

 

 

 

 

 

Net debt is defined as the cash and cash equivalents, overdrafts, interest-bearing loans and borrowings and lease liabilities.

 

Net debt divided by adjusted EBITDA as defined above.

 

 

This measure is a subtotal in the reconciliation of adjusted EBITDA to Net Debt and is presented to assist the reader to understand the nature of the current year's cash flows excluding dividends, share buybacks and the purchase and issuance of own shares.

 

 

See Note 11.

 

 

See Note 11.








Adjusting items

 

 

 

 

 

 

 

Outlined below are the adjusting items impacting these Interim Financial Statements:




Key

6 months to

30 June 2024

6 months to

30 June 2023

Year to

31 Dec 2023

Recognised in arriving at operating profit

 

 



Reversal of net economic hedge contract gains

(a)

(0.5)

(2.8)

(8.3)

Restructuring costs

(b)

(11.0)

(23.5)

(48.1)

Acquired intangible amortisation and other acquisition items

(c)

(14.1)

(17.6)

(33.6)

Exit from Russia

(d)

-

-

(2.0)

Gain on sale of subsidiary

(e)

6.3

-

-





(19.3)

(43.9)

(92.0)

Recognised in net financial expense

 

 



(Losses)/Gains on instruments measured at fair value through profit or loss

(a)

(5.6)

2.3

7.0





 



Recognised in taxation


 



Tax impact of adjusting items above

(f)

7.8

11.0

19.4

 

 

 


 





 

2. Alternative Performance Measures and Adjusting items (continued)

 

 

 

 

 

 

 

Adjusting items (continued)





 



(a)

Reversal of net economic hedge contract gains - for segmental reporting purposes, changes in the fair value of economic hedges which are not designated as hedges for accounting purposes, together with the gains and losses on their settlement, are included in the revenues and adjusted operating profit of the relevant business segment. The adjusting items at the operating costs level reverse this treatment. The financing adjusting items reflect the change in value or settlement of these contracts with the financial institutions with whom they were transacted.

 

(b)

Restructuring costs  - restructuring costs of £11.0m were incurred in the six months to 30 June 2024. The Automation platform incurred costs of £7.4m primarily related to a site closure in the US. The Life Technology platform incurred costs of £3.6m primarily related to two site closures.

 

Restructuring costs of £48.1m were recognised in 2023 (six months to 30 June 2023: £23.5m). The Automation platform incurred costs of £30.6m related to the rationalisation of three facilities. The Life Technology platform incurred costs of £17.5m related to the Customer First reorganisation project, which transforms the structure into customerled sectors (across a number of businesses), and the rationalisation of three facilities.

 

The benefits of the restructuring programme are included in adjusted operating profit. These ongoing significant restructuring projects are due to be completed in 2024.

 

(c)

Acquired intangible amortisation and other acquisition items - the acquired intangible amortisation charge in the six months to 30 June 2024 was £14.1m (six months to 30 June 2023: £16.0m, 12 months to 31 December 2023: £32.0m), which largely relates to the amortisation of the intangible assets recognised on the acquisition of Adaptas Solutions, Heatmiser UK Ltd and Bahr Manufacturing Company. Other acquisition costs of £1.6m for the six months to 30 June 2023 and 12 months to 31 December 2023 primarily related to the write-off of the inventory fair value uplift adjustment for Heatmiser.

(d)

Exit from Russia - during 2023, changes were made to the legal structure of a customer, which resulted in a £2.0m writeoff.

 

(e)

Disposal of subsidiary - the Group disposed of its French subsidiary, Industrie Mecanique Pour Les Fluides SA, on 25 April 2024 resulting in a gain on disposal for the Group of £6.3m (see Note 14 for further details).

 

(f)

Taxation - the tax effect of the above items has been recognised as an adjusting item and amounts to £7.8m (six months to 30 June 2023: £11.0m; year ended 31 December 2023: £19.4m).

3.  Segmental information

 

Segmental information is presented in the consolidated Interim Financial Statements for each of the Group's operating segments. The operating segment reporting format reflects the Group's management and internal reporting structures and represents the information that was presented to the chief operating decision-maker, being the Executive Committee.

 

On 28 July 2023, the Group announced a structure change where the previous divisional structure, including IMI Critical Engineering, IMI Precision Engineering and IMI Hydronic Engineering was restructured to report under two platforms, Automation and Life Technology to better align IMI to its key sectors and to help position IMI to accelerate growth.

 

Automation

The Automation business leverages deep automation technology and applications expertise to improve productivity, safety and sustainability in the Process Automation and Industrial Automation sectors.

Life Technology

The Life Technology business focuses on technologies that enhance and improve everyday life, particularly in the areas of health, sustainability and comfort across the Climate Control, Transport and Life Science & Fluid Control sectors.

 

Performance is measured by the Executive Committee based on adjusted operating profit and organic revenue growth which are defined in Note 2. These two measures represent the two short-term key performance indicators for the Group.

 

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. Adjusted operating profits are therefore charged/credited with the impact of these contracts. In accordance with IFRS 9, these contracts do not meet the requirements for hedge accounting and gains and losses are reversed out of operating profit and are recorded in net financial income and expense for the purposes of the consolidated income statement.














 

The following table shows a reconciliation of platform adjusted operating profit to statutory operating profit. 2023 half year

results have been restated to reflect the Group structure change described above.




 

 

 


 

 






















Automation

Life Technology

Total


6 months to 30 June 2024

6 months to 30 June 2023

(Restated)

Year to 31 Dec 2023

 

6 months to 30 June 2024

6 months to 30 June 2023

(Restated)

Year to 31 Dec 2023

6 months to 30 June 2024

6 months to 30 June 2023

(Restated)

Year to 31 Dec 2023


£m

£m

£m

£m

£m

£m

£m

£m

£m

Revenue

684

649

1,350

414

435

846

1,098

1,084

2,196

Adjusted operating profit

125.9

112.7

257.3

70.2

80.1

153.3

196.1

192.8

410.6

Adjusted operating profit margin (%)

18.4%

17.4%

19.1%

17.0%

18.4%

18.1%

17.9%

17.8%

18.7%

Reconciliation to statutory operating profit:










Reversal of net economic hedge contract

   losses/(gains)

0.1

(1.9)

(7.5)

(0.6)

(0.9)

(0.8)

(0.5)

(2.8)

(8.3)

Restructuring costs and associated impairment

   losses

(7.4)

(15.3)

(30.6)

(3.6)

(8.2)

(17.5)

(11.0)

(23.5)

(48.1)

Acquired intangible amortisation and other

   acquisition items

(6.0)

(7.6)

(14.9)

(8.1)

(10.0)

(18.7)

(14.1)

(17.6)

(33.6)

Disposal of subsidiary




6.3



6.3



Exit from Russia



(2.0)



             -



(2.0)

Statutory operating profit

112.6

87.9

202.3

64.2

61.0

116.3

176.8

148.9

318.6

Statutory operating margin (%)

16.5%

13.5%

15.0%

15.5%

14.0%

13.7%

16.1%

13.7%

14.5%

Net financial expense







(14.3)

(10.4)

(16.2)

Statutory profit before tax







162.5

138.5

302.4














 

3.  Segmental information (continued)

The following table illustrates how revenue and adjusted operating profit have been impacted by movements in foreign exchange, acquisitions and disposals compared to the first half of 2023. 2023 half year results have been restated to reflect the structure change described above.

 

                                                                6 months to 30 June 2024                                          6 months to 30 June 2023

 

As adjusted

 

 

Organic


Adjusted growth (%)

 

Organic growth (%)


As adjusted


Disposal


Exchange


Organic



 

 

 

 


 

 

 










Revenue

 

 

 

 


 

 

 










Automation

684

 

 

684


5%

 

9%


649


-


(20)


629


Life Technology

414

 

 

414


-5%

 

-1%


435


(5)


(10)


420


Total

1,098

 

 

1,098


1%

 

5%


1,084


(5)


(30)


1,049


 

 

 

 

 


 

 

 










Adjusted operating profit

 

 

 

 


 

 

 










Automation

125.9



125.9


12%


17%


112.6


-


(4.9)


107.7


Life Technology

      70.2

.2

 

 

      70.2

 

        -12%

 

-10%

 

     80.2


   (0.9)


       (1.6)


      77.7


Total

     196.1

 

 

196.1


2%

 

6%

 

192.8


(0.9)


(6.5)


185.4


 

 

 

 

 





 



 






Adjusted operating profit margin (%)

17.9%

 

 

17.9%





 

17.8%


 




17.7%






















 

 












Balance sheet

 

 

 

 

 

 

 

 

 

 

 

The following table illustrates how the segmental assets and liabilities reconcile to the overall total assets and liabilities reported in the balance sheet. 2023 half year results have been restated to reflect the structure change, as described above.

 

 

 











 

 

 

 

 

Assets


 

Liabilities


 

 

 

 


 

 


 


 

30 June 2024

30 June 2023

(Restated)

31 Dec 2023


30 June 2024

30 June 2023

(Restated)

31 Dec 2023

 

 



£m

£m

£m


£m

£m

£m

Automation

 



1,469.0

1,417.1

1,393.0


478.5

430.7

444.1

Life Technology

 



884.0

904.7

921.8


142.8

165.5

155.6

Total segmental assets/liabilities

 








     (including lease liabilities)

 

2,353.0

2,321.8

2,314.8


621.3

596.2

599.7

Corporate items

 



23.3

21.4

18.5


32.3

36.0

38.7

Employee benefits

 



2.9

6.4

1.7


48.8

46.0

50.6

Investments

 



2.4

1.7

1.7


-

-

-

Net debt items (excluding lease liabilities)


141.8

112.3

106.5


655.9

784.1

644.9

Net taxation

 



26.7

25.2

27.2


98.1

106.7

106.3

Total assets and liabilities

 



 




 



     in Group balance sheet

 



2,550.1

2,488.8

2,470.4


1,456.4

1,569.0

1,440.2

 

 

 

3.  Segmental information (continued)









The Group's revenue streams are disaggregated by sector in the table below. 2023 results have been restated as

a result of the changes to the Group's structure, which now reports under two platforms, Automation and Life

Technology as described above.


 

 

 


 

 



 

 

 


6 months to June 2024 Revenue £m

6 months to June 2023 (Restated) Revenue £m



 

 

 

 


 

 



 

Industrial Automation

 

 


262

283



 

Aftermarket




257

217



 

New Construction




165

149



 

Process Automation

 

 

 

422

366



 

Automation

 

 

 

684

649



 

 

 

 


 




 

Climate Control

 

 


196

201



 

Life Science & Fluid Control

 

 


123

147



 

Transport

 

 


95

87



 

Life Technology




414

435



 









 

Total revenue




1,098

1,084



 

Sale of goods




1,058

1,042



 

Sale of services




40

42



 

Total revenue




1,098

1,084



 

 

 

 


 




 

 

 


 

 



















 





4. Earnings per ordinary share


 

 

 

 

 

 

 


Basic and diluted earnings per share have been calculated on earnings as set out below. Both of these measures are also presented on an adjusted basis to assist the reader of the Interim Financial Statements and provide insight into the performance of the Group.




 

 


 

30 June

30 June

31 Dec


 

 


 

2024

2023

2023


 

 


Key

million

million

million


Weighted average number of shares for the purpose

 

 





of basic earnings per share

A

260.2

259.0

259.3


Dilutive effect of employee share options


1.0

0.4

1.0


Weighted average number of shares for the purpose

 





 

of diluted earnings per share

B

261.2

259.4

260.3














6 months

to 30 June

2024

6 months

to 30 June

2023

Year

to 31 Dec

2023


 


£m

£m

£m


Statutory profit for the period

C

125.3

109.3

237.3


Total adjusting items charges included in profit for the period, before tax


24.9

41.6

85.0


Total adjusting items credits included in taxation


(7.8)

(11.0)

(19.4)


Earnings for adjusted EPS

D

142.4

139.9

302.9


 

 

 


 




Statutory EPS measures


 




Statutory basic EPS

C/A

48.2p

42.2p

91.5p


Statutory diluted EPS

C/B

48.0p

42.1p

91.2p


Adjusted EPS measures


 




Adjusted basic EPS

D/A

54.7p

54.0p

116.8p


Adjusted diluted EPS

D/B

54.5p

53.9p

116.4p


 

 

 


 




 




5.  Net financing costs



6 months to 30 June 2024


6 months to 30 June 2023


Year to 31 Dec 2023

 

Recognised in the income statement

Interest

£m

Financial

instruments

£m

Total

£m

 

Interest

£m

Financial

instruments

£m

Total

£m


Interest

£m

Financial

instruments

£m

Total

£m

 





 

 








 

Interest income on bank deposits

5.2


5.2


3.7


3.7


8.1


8.1

 

Financial income

5.2

-

5.2


3.7

-

3.7


8.1

-

8.1

 





 









 

Interest expense on interest-bearing



 








 


loans and borrowings

(11.6)

-

(11.6)

(14.2)


(14.2)


(27.9)


(27.9)

 

Interest expense on leases

(1.4)

-

(1.4)


(1.5)


(1.5)


(2.9)


(2.9)

 

Financial expense

(13.0)

-

(13.0)


(15.7)

-

(15.7)


(30.8)

-

(30.8)

 





 









 





 









 





 









 

Recognised in other comprehensive income



 









 

(Losses)/Gains on instruments measured at fair value through profit or loss:



 









 


Other economic hedges


(5.6)

(5.6)


2.3

2.3



7.0

7.0

 

Net financial expense relating to



 








 


defined benefit pension schemes

(0.9)


(0.9)

(0.7)


 (0.7)


(0.5)


 (0.5)

 





 









 

Net financial (expense)/income

(8.7)

(5.6)

(14.3)


(12.7)

2.3

(10.4)


(23.2)

7.0

(16.2)

 

 

 

 

 

 









 

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



6.  Taxation

The tax charge before adjusting items is £45.0m (year ended 31 December 2023: £84.5m) which equates to an adjusted effective tax rate of 24.0% compared to 22.3% for the comparative six-month period in the prior year and 21.8% for the year ended 31 December 2023. The normalised rate of 24.0% has been calculated using the full year projections and has been applied to adjusted profit before tax for the period ended 30 June 2024. The normalised rate includes the expected impact of the OECD Inclusive Framework agreement for a global minimum corporate income tax rate of 15%, although the impact on IMI's results is expected to be minimal.

 

The tax effects of adjusting items have been based on the applicable rates of tax applying to the adjusting items arising in the period ended 30 June 2024.

 

The statutory tax charge of £37.2m (year ended 31 December 2023: £65.1m) equates to an effective tax rate of 22.9%. This compares to a rate of 21.1% for the six months ended 30 June 2023 and 21.5% for the year ended 31 December 2023.

7.  Dividends

The final dividend relating to the year ended 31 December 2023 of 19.2p per share (year ended 2022: 17.4p) was paid in May 2024 amounting to £50.0m (2023: £45.1m).

 

In addition, the directors have declared an interim dividend for the current year of 10.0p per share (2023: 9.1p per share) amounting to £26.0m which will be paid on 16 September 2024 to shareholders on the register on 9 August 2024. In accordance with IAS10 'Events after the Balance Sheet Date' this interim dividend has not been reflected in these Interim Financial Statements.



8. Property, plant and equipment and intangible assets

 

Capital expenditure on property, plant and equipment in the period was £35.0m (30 June 2023: £28.1m), the majority of which was in respect of plant and equipment.

 

Capital expenditure on non-acquired intangible assets in the period was £6.1m (30 June 2023: £7.9m).

 

 

9. Employee benefits

 

The net defined benefit pension deficit at 30 June 2024 was £45.9m (31 December 2023: £48.9m); made up of assets of £374.8m (31 December 2023: £400.6m) and liabilities of £420.7m (31 December 2023: £449.5m). The UK net deficit in the Fund increased to £4.7m (31 December 2023: £3.7m). The increase is a result of unfavourable movements in the return on plan assets.

 

The net deficit in respect of the total overseas obligations decreased slightly to £41.2m (31 December 2023: £45.2m) due to employer contributions.











10. Fair value hierarchy


 

 

 

 

 

 

 

 

 


Set out below is an overview of the Group's financial instruments held at fair value.













30 June 2024

31 Dec 2023



Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total



£m

£m

£m

£m

£m

£m

£m

£m


Financial assets measured

 

 

 

 

 

 

 

 


     at fair value

 

 

 

 

 

 

 

 


Equity instruments*

2.4

 

 

2.4

1.7



1.7


Foreign currency forward contracts

 

9.4

 

9.4


12.1


12.1



2.4

9.4

-

11.8

1.7

12.1

-

13.8


 

 

 

 

 

 

 

 

 


Financial liabilities measured

 

 

 

 

 

 

 

 


     at fair value

 

 

 

 

 

 

 

 


Foreign currency forward contracts

 

(8.4)

 

(8.4)


(10.9)


(10.9)



-

(8.4)

-

(8.4)

-

(10.9)

-

(10.9)












*Equity instruments primarily relate to investments in associates and investments in funds in order to satisfy long-term benefit arrangements.












Level 1 - quoted prices in active markets for identical assets and liabilities


Level 2 - significant other observable inputs


Level 3 - unobservable inputs






















Valuation techniques for level 2 inputs


 

 

 

 

 

 

 

 

 


Derivative assets and liabilities of £9.4m and £8.4m, respectively, are valued by level 2 techniques. The valuations are derived from discounted contractual cash flows using observable, and directly relevant, market interest rates and foreign exchange rates from market data providers.


 

 

 

 

 

 

 

 

 


The fair values of all financial assets and liabilities in the balance sheet as at 30 June 2024, 31 December 2023 and 30 June 2023 are materially equivalent to their carrying values with the exception of the US private placement fixed rate loans, for which the carrying values are set out below:


















Carrying value

Fair value*







£m

£m


30 June 2024

 

 

 

 

523.1

498.7


31 December 2023





531.4

511.7


30 June 2023





528.2

491.7












*The US private placement fixed rate loans are valued by level 2 techniques.


11.  Cash flow reconciliation





Reconciliation of net cash to movement in net debt


6 months to

30 June 2024

6 months to

30 June 2023

Year to

31 Dec 2023


£m

£m

£m


 



Net increase/(decrease) in cash and cash equivalents*

11.0

(4.9)

17.7

Less: cash (disposed)/acquired

(2.3)

                      -        

                   0.4

Net repayment of borrowings excluding foreign

 



   exchange and net debt (disposed)/acquired

23.4

32.8

                148.4

Decrease in net debt*

32.1

27.9

                 166.5

Net cash acquired

-

-

     (0.4)       

Currency translation differences

(7.8)

6.6

                    1.8

Movement in lease liabilities

8.8

5.6

                    5.5


 



Movement in net debt in the period

33.1

40.1

173.4

Net debt at the start of the period

(638.6)

(812.0)

(812.0)


 



Net debt at the end of the period**

(605.5)

(771.9)

(638.6)

 

 



*Excluding foreign exchange.

**Net debt is defined as cash and cash equivalents, overdrafts, interest-bearing loans and borrowings and lease liabilities.





Reconciliation of net cash flow (excluding debt movements)

 

 

 

 

6 months to

30 June 2024

6 months to

30 June 2023

Year to

31 Dec 2023


£m

£m

£m


 



Adjusted EBITDA*

242.7

238.8

503.2


 



Working capital movements

(62.9)

(47.7)

(31.3)

Capital and development expenditure

(41.1)

(36.0)

(79.9)

Provisions and employee benefit movements**

0.1

0.3

(2.7)

Principal elements of lease payments

(14.4)

(14.6)

(29.0)

Other

5.6

4.5

6.0

Adjusted operating cash flow***

130.0

145.3

366.3

Adjusting items

(17.4)

(24.1)

(43.1)

Tax paid

(45.5)

(42.5)

(76.1)

Interest

(7.8)

(12.0)

(22.7)

Derivatives

5.6

6.2

9.8

Free cash flow before corporate activity

64.9

72.9

234.2

Dividends paid to equity shareholders

(50.0)

(45.1)

(68.8)

Acquisition and disposal of subsidiaries

17.5

-

0.5

Net issue of own shares

2.0

0.1

0.6


 



Net cash flow (excluding debt movements)

34.4

27.9

166.5

 

 



*Adjusted profit after tax (£142.4m), before interest (£8.7m), tax (£45.0m), depreciation (£36.8m) and amortisation (£23.8m).

**Movement in provisions and employee benefits as per the interim statement of cash flows (£6.3m) adjusted for the movement in restructuring provisions £6.4m.

***Adjusted operating cash flow is the cash generated from operations shown in the statement of cash flows less cash spent acquiring property, plant and equipment, non-acquired intangible assets and investments; plus cash received from the sale of property, plant and equipment and the sale of investments, excluding the cash impact of adjusting items. This measure best reflects the operating cash flows of the Group.











 





11.  Cash flow reconciliation (continued)

 

 

 

 

Reconciliation of adjusted operating cash flow to cash flow statement



 





6 months to

30 June 2024

6 months to

30 June 2023

Year to

31 Dec 2023

 

£m

£m

£m

Cash generated from operations

170.0

173.6

439.3

Principal lease payments

(14.4)

(14.6)

(29.0)

Settlement of transactional derivatives

(1.0)

(2.4)

(8.8)

Acquisition of property, plant and equipment and non-acquired 

   intangibles

(41.1)

(36.0)

(79.9)

Adjusting items

17.4

24.1

43.1

Purchase of investments

(1.0)

-

-

Proceeds from sale of property, plant and equipment

0.1

0.6

1.6

Adjusted operating cash flow

130.0

145.3

366.3

 

 







Reconciliation of cash and cash equivalents





6 months to

30 June 2024

6 months to

30 June 2023

Year to

31 Dec 2023

 

£m

£m

£m

Cash and cash equivalents in current assets

141.8

112.3

106.5

Bank overdraft in current liabilities

(109.0)

(79.1)

(66.3)

Cash and cash equivalents   

32.8

33.2

40.2



12. Share capital

 





 








 


 

 

Ordinary shares of 28 4/7 p each


 


 

 

Number (m)

Value (£m)

In issue at the start of the period





275.1

78.6

Issued to satisfy employee share schemes





-

-

In issue at the end of the period

275.1

78.6

 

13.  Exchange rates

The income and cash flow statements of overseas operations are translated into sterling at the average rates of exchange for the period. Balance sheets are translated at period end rates. The most significant currencies for the Group are the Euro and the US dollar for which the relevant rates of exchange were:

 



Income statement and cash flow

average rates

 

Balance sheet

rates as at



6 months

to 30 June

2024

6 months

to 30 June

2023

Year

to 31 Dec

2023

 

30 June

2024

30 June

2023

31 Dec

2023



 



 

 



Euro


1.17

1.14

1.15


1.18

1.16

1.15

US dollar


1.26

1.23

1.24


1.26

1.27

1.27

14. Disposals

 

Disposals in 2024

 

The Group disposed of its French subsidiary, Industrie Mecanique Pour Les Fluides SA, on 25 April 2024 for proceeds of £18.5m, resulting in a gain on disposal for the Group of £6.3m after disposing of £11.5m of net assets and incurring £1.0m of associated disposal costs, partly offset by recycling a foreign exchange gain from reserves of £0.3m.

 

This disposal is not disclosed as a discontinued item because it did not represent a separate major line of business.

 

Disposals in 2023

 

The Group disposed of its Dutch subsidiary, IMI AeroDynamiek BV, on 2 October 2023 for proceeds of £0.8m, resulting in a gain on disposal for the Group of £0.7m after disposing of £nil net assets and incurring £0.3m of associated disposal costs.

 

This disposal is not disclosed as a discontinued item because it did not represent a separate major line of business.

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