1 March 2024
Accelerating Better World
growth
Strong organic growth,
margin progression and cash generation
Expect further progress in 2024
Preliminary results, year ended 31
December 2023
|
Adjusted1
|
Statutory
|
|
2023
|
2022
|
Change
|
Organic4
|
2023
|
2022
|
Change
|
Revenue
|
£2,196m
|
£2,049m
|
+7%
|
+6%
|
£2,196m
|
£2,049m
|
+7%
|
Operating profit
|
£411m
|
£364m
|
+13%
|
+10%
|
£319m
|
£298m
|
+7%
|
Operating margin
|
18.7%
|
17.8%
|
+90bps
|
|
14.5%
|
14.6%
|
-10bps
|
Profit before tax
|
£387m
|
£346m
|
+12%
|
|
£302m
|
£285m
|
+6%
|
Basic EPS
|
116.8p
|
105.5p
|
+11%
|
|
91.5p
|
87.6p
|
+4%
|
Operating cash flow2
|
£366m
|
£290m
|
+26%
|
|
£439m
|
£336m
|
+31%
|
Dividend per share
|
28.3p
|
25.7p
|
+10%
|
|
28.3p
|
25.7p
|
+10%
|
Return on invested capital3
|
13.1%
|
12.7%
|
+40bps
|
|
|
|
|
1 Excluding the effect of
adjusting items as reported in the income statement. See Note 1 for
definitions of alternative performance measures.
2 Adjusted operating cash flow,
as described in Note 1 to the financial statements. Statutory
measure is Cash generated from operations as shown on the cash flow
statement.
3
Post-tax return on invested capital, as
described in Note 1 to the financial statements.
4
After adjusting for acquisitions, disposals
and exchange rates (see Note 1).
Key points
·
|
7% sales growth, 12% adjusted profit
before tax growth
|
·
|
Adjusted basic earnings per share
11% higher than 2022
|
·
|
Complexity reduction programme
delivered £20m of incremental benefits
|
·
|
Adjusted operating margin up 90bps
to 18.7%
|
·
|
Statutory profit before tax
increased by 6%
|
·
|
Significant growth in operating cash
flow to £366m
|
·
|
Return on invested capital increased
to 13.1%
|
·
|
Record Process Automation order book
provides momentum into 2024
|
·
|
Proposed final dividend of 19.2p,
increased by 10%
|
·
|
Unified IMI under one
brand
|
Roy Twite, Chief Executive,
said:
"We continued to make significant
progress in 2023 as we delivered our
fourth consecutive year of profit and adjusted operating margin
growth. Our purpose-led strategy, Breakthrough engineering for a
better world, is accelerating performance as we continue to help
our customers become safer, more sustainable, and more productive.
We have a resilient portfolio with around 45% of sales now
generated from the aftermarket, and our sectors are aligned to
attractive growth markets supported by long-term global
macroeconomic trends. Both our operating platforms increased
revenues and margins in the year.
By harnessing our engineering
expertise, addressing customer challenges, fostering market-led
innovation, and reducing complexity in our business, we are
creating real value.
Based on the strong 2023 results
and current market conditions we expect 2024 full year adjusted EPS
to be between 120p and 126p."
Enquiries to:
|
|
|
Luke Grant
|
IMI
|
Tel: +44 (0)7866 148 374
|
Matt Denham
|
Headland
|
Tel: +44 (0)7551 825 496
|
A live webcast of the analyst
meeting taking place today at 8:30am (GMT) will be available on the
investor page of the Group's website: www.imiplc.com. The
Group plans to release its next Interim Management Statement on 9
May 2024.
Results overview
IMI delivered another strong
financial performance in 2023. Organic revenue increased by 6% and
organic adjusted operating profit increased by 10%. Group adjusted
operating margin increased by 90bps to 18.7% and both platforms
increased margins in the year. Statutory operating margin reduced
by 10bps to 14.5% as we accelerated our complexity reduction
programme in the year. Statutory profit before tax increased by 6%.
Cash conversion was strong at 89% (2022: 80%) and the Group's
return on invested capital increased to 13.1% (2022: 12.7%). Our
adjusted basic earnings per share increased by 11% to 116.8p (2022:
105.5p).
Everyone at IMI was pleased to see
the Company rejoin the FTSE 100 index during the year. The
sustainable improvements in financial performance that are being
delivered are testament to the hard work of all our people. It is
an important milestone in the continued delivery of our
strategy.
As we unite our people and
business around our purpose, it is time for the next step in our
journey. We are consolidating under a unified IMI master brand
while maintaining strong product brands within our sectors, all
presented through a singular visual identity. This approach will
simplify our engagement with customers, support our growth
ambitions, unite us as one team and help us to attract top talent.
Great things happen when we come together as one - finding the best
ways of solving customer problems with breakthrough solutions that
help build a better world.
Dividend
The Board is recommending a 2023
final dividend of 19.2p per share (2022: 17.4p per share). Payment
will be made on 17 May 2024 to shareholders on the register at the
close of business on 5 April 2024.
Outlook
Based on current market
conditions, we expect 2024 full year adjusted basic EPS to be
between 120p and 126p.
This guidance reflects strong
growth in our Automation platform from the record order book in
Process Automation and continued resiliency in our Industrial
Automation sector as the competitive labour market drives
investment. The Life Technology platform is expected to be broadly
flat in the full year, reflecting continued demand for our energy
efficient products in Climate Control, offset by softer performance
in Life Science & Fluid Control and Transport. We expect that
Life Technology revenue will be down in the first half.
We expect continued margin
progression in 2024 towards our 20% through-cycle target, supported
by the benefits from the complexity reduction programme.
Our guidance assumes a net
interest charge of £17m, that our tax rate will increase to 24% and
a weighted average number of shares of 260.5m. Foreign exchange
rates are expected to have an adverse impact on sales and profits
of c.2%.
Strategic progress
Accelerating Better World
growth
Our purpose-led strategy,
Breakthrough engineering for a better world, is accelerating growth
as we continue to help our customers to operate more efficiently,
safely and sustainably. We are aligned to attractive growth markets
and are creating real value for all our stakeholders through a
focus on customer satisfaction, market-led innovation and
complexity reduction.
There is great momentum in our
business, and I am delighted that we have delivered another strong
financial performance in 2023. We have seen exceptionally strong
growth in our Process Automation sector, where our focus on growing
the aftermarket is showing tangible results, and global investments
in energy security have led to a significant increase in demand for
our solutions. Our focus on hydrogen as a sustainable fuel is also
delivering results, and I am pleased to report that hydrogen orders
doubled to £15m in 2023 (2022: £7m). The integration of Heatmiser,
acquired in December 2022 and now part of our Climate Control
sector, is progressing well and we successfully launched its
innovative range of smart control products in Germany and France
during the year.
I would like to thank everyone
across IMI for contributing to another impressive year. We would
not be where we are today without your dedication, collaboration,
innovation and expertise.
Our new structure
In July 2023, we announced a new
business structure as the next step in our purpose-led strategy,
Breakthrough engineering for a better world. To build on the
opportunities for growth, IMI has been organised into five
market-focused sectors operating within two business platforms,
Automation and Life Technology.
Platform
|
Sectors
|
Previous
Name
|
Automation
|
Process
Automation
|
IMI Critical
Engineering
|
Industrial
Automation
|
IMI Precision Industrial
Automation
|
|
|
|
Life
Technology
|
Climate
Control
|
IMI Hydronic
Engineering
|
Life Science & Fluid
Control
|
IMI Precision Fluid
OEM
|
Transport
|
IMI Precision
Transportation
|
Our five market-focused sectors
bring us even closer to our customers and align with long-term
macro trends that will support our sustainable, profitable growth
in the years to come.
Customer satisfaction
Understanding our customers and
providing world-class engineering expertise is crucial to the
delivery of our strategy. We continue to invest in our people and
processes to strengthen the customer experience further, and are
achieving industry-leading customer satisfaction scores across the
Group. We thank our customers and partners for their business and
look forward to continuing these partnerships which contribute to a
better world.
Market-led innovation
We are accelerating market-led
innovation by embracing our Growth Hub culture and processes. We
are developing breakthrough solutions to solve key industry
problems and support our customers with their most complex
engineering challenges. Our innovation pipeline remains
strong, with exciting projects across IMI. Supported by selective
M&A, this is delivering Better World growth. The integration of
recent acquisitions is progressing well, giving us further exposure
to attractive end markets.
Complexity reduction
During the year, we have continued
to identify and execute opportunities to reduce complexity and
drive more efficient, resilient operations. As forecast, our
restructuring programmes delivered £20m of incremental annual
benefits in 2023. We now expect to deliver a further £15m of
benefits in 2024 and £7m in 2025. Our complexity reduction
investment is expected to complete in 2024.
We have also progressed
initiatives focused on reducing the complexity and increasing the
resilience of our supply chains. We are strengthening relationships
with key suppliers whilst dual-sourcing components where
appropriate to ensure we can continue to serve our customers'
needs.
Environmental, Social and Governance (ESG)
Our purpose, Breakthrough engineering for a better world, continues
to focus our actions and create real energy across our
organisation.
Empowering people
Ensuring all our employees feel
safe at work has always been our number one priority. The Total
Recordable Incident Frequency Rate (TRIFR) in 2023 was 0.44 (2022:
0.35), which despite remaining in the top quartile for our
industry, was a disappointing outcome. We remain focused on
identifying and reducing workplace hazards and are committed to the
ambition of an accident-free workplace.
Our Inclusion and Diversity
activities are helping to build a more dynamic and innovative
organisation. The female representation on the Board is currently
44% and the Executive Committee is now at 50% as at 1 February
2024. Women in management, a key metric for improving gender
balance in leadership roles, remained at 22% (2022:
22%).
Our continued focus on empowering
people and on creating an inclusive, diverse, and safe workplace is
being recognised. Our employee engagement remains high, with 77% of
employees seeing IMI as a great place to work (2022: 80%). We were
pleased to see an increase in survey participation.
Sustainable solutions
IMI's solutions support our
customers' products and operations and often directly contribute to
the delivery of their carbon reduction targets. When considering
investments, we ensure that the impact on IMI's overall ESG
positioning and performance is a prime consideration.
IMI sees a natural link between
pursuing our ESG objectives with vigour and our wider ambitions for
improved growth and profitability. Many of our best growth
opportunities involve supporting customers in developing solutions
for a zero-carbon future.
In particular, we are developing
solutions for many aspects of the hydrogen value chain, including
electrolysis, liquid storage, refuelling and heavy-duty
trucks. We delivered £15m of hydrogen-related orders in 2023
(2022: £7m) and expect further growth in 2024.
Climate action
We improved our CO2 intensity by
5% in 2023. Both platforms are progressing actions that will
further reduce our Scope 1, 2 and 3 emissions as we make meaningful
progress towards our net-zero targets. We committed to setting
science-based targets during the year and have submitted both a
near-term and net-zero target to the Science Based Targets
initiative for validation. We continue to improve our metrics
regarding water withdrawal and non-recyclable waste
generation.
We also agreed our first
sustainability linked revolving credit facility in June 2023 and
used this as a template for a further revolving credit facility in
the second half of the year.
More information about our ESG credentials
and initiatives, including our policies and practices, can be found
on our website: www.imiplc.com.
Roy Twite
Chief Executive Officer
29 February 2024
Financial review
Key highlights
|
Adjusted1
|
Statutory
|
|
2023
|
2022
|
Change
|
Organic4
|
2023
|
2022
|
Change
|
Revenue
|
£2,196m
|
£2,049m
|
+7%
|
+6%
|
£2,196m
|
£2,049m
|
+7%
|
Operating profit
|
£411m
|
£364m
|
+13%
|
+10%
|
£319m
|
£298m
|
+7%
|
Operating margin
|
18.7%
|
17.8%
|
+90bps
|
|
14.5%
|
14.6%
|
-10bps
|
Profit before tax
|
£387m
|
£346m
|
+12%
|
|
£302m
|
£285m
|
+6%
|
Basic EPS
|
116.8p
|
105.5p
|
+11%
|
|
91.5p
|
87.6p
|
+4%
|
Operating cash flow2
|
£366m
|
£290m
|
+26%
|
|
£439m
|
£336m
|
+31%
|
Dividend per share
|
28.3p
|
25.7p
|
+10%
|
|
28.3p
|
25.7p
|
+10%
|
Return on invested capital3
|
13.1%
|
12.7%
|
+40bps
|
|
|
|
|
1 Excluding the effect of
adjusting items as reported in the income statement. See Note 1 for
definitions of alternative performance measures.
2 Adjusted operating cash flow,
as described in Note 1 to the financial statements. The statutory
measure is cash generated from operations as shown on the cash flow
statement.
3
Post-tax return on invested capital, as
described in Note 1 to the financial statements.
4
After adjusting for acquisitions, disposals
and exchange rates (see Note 1).
Certain alternative performance measures ('APMs') have been
included within this press release. These APMs are used by the
Executive Committee to monitor and manage the performance of the
Group, in order to ensure that the decisions taken align with the
Group's long-term interests. Movements in revenue and adjusted
operating profit are given on an organic basis (see definition in
Note 1) so that assessment of performance is not distorted by
acquisitions, disposals and movements in exchange rates. Further
rationale for the use of APMs, their definition, and a
reconciliation of APMs to statutory measures is included in Note
1.
Delivering sustainable, profitable
growth
The Group delivered a strong
financial result in the year, as revenue, profit and adjusted
operating margin improved. Revenue increased by 7% to £2,196m
(2022: £2,049m). Organic revenue was 6% higher than the prior year,
after adjusting for acquisitions, disposals and exchange rate
movements. Exchange rate adjustments had an immaterial
impact.
Adjusted operating profit of £411m
(2022: £364m) was 13% higher than last year. On an organic basis,
adjusted operating profit increased by 10%.
Group adjusted operating margin
was 18.7% (2022: 17.8%). Both platforms grew adjusted margins in
the year as we continue to progress towards our 20% margin target.
Statutory operating profit was £319m (2022: £298m), which increased
by 7%. The Group statutory operating margin was 10bps lower than
last year, largely reflecting an increase in restructuring costs
recognised in 2023.
Adjusted net financing costs on
net borrowings of £22.7m (2022: £19.2m) was higher as a result of
acquisitions completed in 2022 and increases in base rates and
includes the impact of £2.9m (2022: £2.8m) interest cost on leases.
Statutory net finance costs were £16.2m compared to £12.8m in 2022,
largely reflecting the higher interest rate environment.
Adjusted net financing costs on
borrowings were covered 22 times (2022: 24 times) by adjusted
earnings before interest, tax, depreciation, amortisation,
impairment and adjusting items of £503m (2022: £457m). Net pension
financing interest expense under IAS 19 was £0.5m (2022: £1.5m
income).
Adjusted profit before taxation
was £387m (2022: £346m), which was 12% higher than 2022. Statutory
profit before taxation increased 6% to £302m (2022: £285m)
reflecting growth in the year and the Group's continued execution
of restructuring activities to improve customer satisfaction and
long-term competitiveness. The total statutory profit for the
period after taxation was £237m (2022: £226m).
Platform results
Automation
Automation specialises in the
design and manufacture of motion and fluid control solutions that
enable a diverse range of industries, to operate more efficiently,
safely and sustainably. Our Process Automation sector supports
vital process and energy industries whilst Industrial Automation
helps create the smart, safe and sustainable factories, production
lines and warehouse operations of the future.
£m
|
Adjusted
|
Statutory
|
2023
|
2022
|
Change
|
Organic1
|
2023
|
2022
|
Change
|
Revenue
|
|
|
|
|
|
|
|
Process Automation
|
807
|
713
|
+13%
|
+14%
|
807
|
713
|
+13%
|
Industrial Automation
|
543
|
535
|
+1%
|
0%
|
543
|
535
|
+1%
|
Total Revenue
|
1,350
|
1,248
|
+8%
|
+8%
|
1,350
|
1,248
|
+8%
|
Operating profit
|
257
|
225
|
+14%
|
+14%
|
202
|
188
|
+7%
|
Operating margin
|
19.1%
|
18.1%
|
+100bps
|
|
15.0%
|
15.1%
|
-10bps
|
1
After adjusting for acquisitions, disposals
and exchange rates (see Note 1).
Process Automation (£m)
|
2023
|
2022
|
Change
|
Organic1
|
Closing order book
|
760
|
627
|
+21%
|
|
Order intake:
|
|
|
|
|
Aftermarket
|
561
|
458
|
+22%
|
+23%
|
New Construction
|
390
|
354
|
+10%
|
+10%
|
Total order intake
|
951
|
812
|
+17%
|
+18%
|
1
After adjusting for acquisitions, disposals
and exchange rates (see Note 1).
Automation delivered strong
organic revenue growth of 8%, with revenue also up 8% on a reported
basis.
Process Automation had an
excellent year, with strong order intake and continued organic
growth. Orders were up 18% organically, with a 23% increase in
Aftermarket. Organic revenue was 14% higher than 2022 and 13%
higher on an adjusted basis. We have benefitted from our self-help
initiatives in the Aftermarket and continued investments in energy
security and have seen particular strength in LNG, Nuclear and
downstream Oil & Gas.
Industrial Automation delivered a
good performance, despite uncertain markets. Organic revenue was in
line with the prior year, and was up 1% on an adjusted basis. We
see continued demand for solutions that automate processes in a
competitive labour market.
Adjusted operating profit
increased by 14% on an organic basis and the adjusted operating
margin improved by 100bps to 19.1%. This was a strong performance,
reflecting a further shift towards higher-margin Aftermarket
opportunities and the continued execution of footprint optimisation
initiatives, which delivered £15m of incremental benefits in 2023.
Statutory operating profit increased by 7% to £202m in the
year.
We expect to deliver good growth
in 2024, following on from the strong order book in Process
Automation and continued resiliency in our Industrial Automation
sector as the competitive labour market drives investment. We
expect margins to increase, supported by the continued delivery of
our complexity reduction programme.
Life Technology
Life Technology develops motion
and flow control solutions that enhance and improve the quality of
life across three key sectors. Climate Control's innovative
solutions help customers optimise heating and cooling systems,
reduce energy consumption and improve building comfort. Life
Science & Fluid Control develops solutions that empower our
Life Science customers to enhance patient-focused critical care and
diagnose disease earlier, and our Fluid Control customers to
accelerate the safety, reliability and performance of everyday
activities. Transport is at the heart of advancing commercial
vehicles, our cutting-edge technology helps manufacturers to
radically reduce emissions and improve vehicle safety.
£m
|
Adjusted
|
Statutory
|
2023
|
2022
|
Change
|
Organic1
|
2023
|
2022
|
Change
|
Revenue
|
|
|
|
|
|
|
|
Climate Control
|
386
|
350
|
+10%
|
+3%
|
386
|
350
|
+10%
|
Life Science & Fluid
Control
|
276
|
289
|
-4%
|
-5%
|
276
|
289
|
-4%
|
Transport
|
184
|
162
|
+14%
|
+14%
|
184
|
162
|
+14%
|
Total Revenue
|
846
|
801
|
+6%
|
+2%
|
846
|
801
|
+6%
|
Operating profit
|
153
|
139
|
+11%
|
+3%
|
116
|
110
|
+6%
|
Operating margin
|
18.1%
|
17.3%
|
+80bps
|
|
13.7%
|
13.7%
|
-
|
1
After adjusting for acquisitions, disposals
and exchange rates (see Note 1).
Life Technology delivered a
resilient performance, despite some significant market uncertainty.
Revenue was up 6% and 2% on an organic basis.
Climate Control saw good demand
for its energy-saving products, with revenue up 10% when compared
to 2022 and 3% higher on an organic basis. Whilst trends in the
European construction market did impact sales in the second half,
the sector continues to perform resiliently due to the strong
retrofit demand for products that improve energy efficiency in
buildings. The integration of Heatmiser, acquired in December 2022,
has progressed well as we look to accelerate our growth in smart
buildings.
Life Science & Fluid Control
revenue was 4% lower than in 2022 and 5% lower on an organic basis.
We saw customer destocking and reduced demand in the second half
and expect this to continue into 2024. The long-term fundamentals
of this sector are strong, and we remain excited about the
opportunities for growth.
Transport revenue was up 14% when
compared to 2022, and 14% higher organically. We saw growth across
all regions in the year as supply chains recovered. We have
benefitted from particularly strong demand in China and India.
Adjusted operating margin for the
year was 18.1%, 80bps higher than the prior year. The platform
continues to advance complexity reduction initiatives, delivering
£5m of incremental benefits in the year. Statutory operating profit
increased by 6% to £116m in the year.
We expect Life Technology to be
broadly flat in 2024 reflecting continued demand for our
energy-efficient products in Climate Control, offset by softer
performance in Life Science and Transport. We expect margins to
increase, supported by the continued delivery of our complexity
reduction programme.
Adjusting items
£m
|
2023
|
2022
|
Reversal of net economic hedge
contract losses/(gains)
|
(8)
|
3
|
Restructuring costs
|
(48)
|
(26)
|
Acquired intangible amortisation
and other acquisition items
|
(34)
|
(34)
|
Exit from Russia
|
(2)
|
(9)
|
Gains on instruments measured at
fair value through profit or loss
|
7
|
5
|
Tax in connection with the above
adjusting items
|
19
|
15
|
Total adjusting items
|
(66)
|
(46)
|
Adjusting items that are excluded
from adjusted profit before tax are listed below:
· Reversal of net economic
hedge contract losses/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 item reverses this
treatment at an operating profit level, leading to a loss of £8m
(2022: £3m gain).
· Restructuring
costs: Restructuring costs of £48m
were incurred in 2023, with a breakdown of these costs by platform,
alongside expected benefits provided below. Further details on 2023
projects are included in Note 6.
· Acquired intangible
amortisation and other acquisition items:
Acquired intangible amortisation is excluded from
adjusted profits, to allow for comparability of the performance
across platforms. Acquired intangible amortisation increased to
£32m (2022: £30m). Other acquisition costs of £2m (2022: £4m) were
incurred relating to a Heatmiser IFRS 3 fair value inventory
adjustment.
· Exit from
Russia: During 2023, changes were
made to the legal structure of a customer which resulted in a £2m
write-off. In 2022, the Group's decision
to end all new business in Russia resulted in a charge of
£9m.
· Gains on instruments
measured at fair value through profit or loss:
A gain arose on the revaluation of financial
instruments and derivatives under IFRS 9 of £7m (2022: £5m
gain).
· Taxation: The tax effect of
the above items has been recognised as an adjusting item and
amounts to a £19m gain (2022: £15m gain).
Complexity reduction continues to
deliver benefits
Along with investments into our
future growth, IMI continues to identify and execute on
opportunities to drive more efficient operations. The following
tables provide a summary of progress on our restructuring
programme:
£m
|
2023
|
2024*
|
2025*
|
Restructuring charge
|
Automation
|
(31)
|
(27)
|
-
|
Life Technology
|
(17)
|
(12)
|
-
|
Total charge
|
(48)
|
(39)
|
-
|
Cash impact
|
(40)
|
(27)
|
(5)
|
£m
|
2023
|
2024*
|
2025*
|
Incremental annual benefits
|
Automation
|
15
|
6
|
6
|
Life Technology
|
5
|
9
|
1
|
Total benefits
|
20
|
15
|
7
|
*Future-looking forecast
information.
Both platforms advanced their
significant multi-year restructuring projects in 2023, recognising
a total charge of £48m.
The restructuring programme
contributed £20m of benefits in the year. Including 2023, the
programme has cost £192m to date and has delivered annual benefits
of £104m.
We continue to expect that the
programme will complete in 2024, although the Group will always
seek and execute on opportunities that improve its competitive
position.
Taxation
The adjusted effective tax rate
for the Group increased to 21.8% (2022: 21.3%), reflecting the
increase in the UK statutory rate of corporation tax from 19% to
25% with effect from 1 April 2023. The tax rate in 2023 also
benefitted from favourable resolutions of certain historic tax
cases. The total adjusted tax charge for the year was £85m (2022:
£74m) and the statutory effective tax rate was 21.5% (2022: 20.7%).
The Group seeks to manage its tax affairs within its core tax
principles of compliance, fairness, value and transparency, in
accordance with the Group's Corporate Tax Strategy which is
available on the Group's corporate website. We are expecting the
adjusted effective tax rate to increase to around 24% in 2024, due
in part to higher UK corporation tax rates and new minimum tax
legislation.
Adjusted basic earnings per share
increased by 11%
The average number of shares in
issue during the period was 259m (2022: 258m), resulting in
adjusted basic earnings per share of 116.8p (2022: 105.5p), an
increase of 11%. Statutory basic earnings per share increased by 4%
at 91.5p (2022: 87.6p) and statutory diluted earnings per share
increased by 5% at 91.2p (2022: 87.2p).
Maintaining continued cash
discipline
Movement in net debt
|
2023
|
2022
|
|
£m
|
£m
|
Adjusted EBITDA*
|
503.2
|
457.0
|
Working capital movements
|
(31.3)
|
(85.1)
|
Capital and development
expenditure
|
(79.9)
|
(71.3)
|
Provisions and employee benefit
movements**
|
(2.7)
|
1.5
|
Principal elements of lease
payments
|
(29.0)
|
(32.3)
|
Other
|
6.0
|
20.2
|
Adjusted operating cash flow ***
|
366.3
|
290.0
|
Adjusting items
|
(43.1)
|
(52.6)
|
Interest
|
(22.7)
|
(19.2)
|
Derivatives
|
9.8
|
(8.6)
|
Tax paid
|
(76.1)
|
(48.6)
|
Additional pension scheme
funding
|
-
|
(3.5)
|
Free cash flow before corporate activity
|
234.2
|
157.5
|
Dividends paid to equity
shareholders
|
(68.8)
|
(62.2)
|
Acquisition/disposal of
subsidiaries
|
0.5
|
(213.3)
|
Net issuance/(purchase) of own
shares
|
0.6
|
(18.8)
|
Net
cash flow (excluding debt movements)
|
166.5
|
(136.8)
|
|
|
|
Reconciliation of net cash to movement in net
debt
|
|
|
Net increase in cash and cash
equivalents excluding foreign exchange
|
17.7
|
11.0
|
Less: cash
acquired/disposed
|
0.4
|
(10.0)
|
Net repayment/(drawdown) of
borrowings excluding foreign exchange and net debt
disposed/acquired
|
148.4
|
(137.8)
|
Decrease/(increase) in net debt before acquisitions,
disposals and foreign exchange
|
166.5
|
(136.8)
|
Net cash
acquired/disposed
|
(0.4)
|
10.0
|
Currency translation
differences
|
1.8
|
(50.6)
|
Movement in lease
liabilities
|
5.5
|
(11.8)
|
Movement in net debt in the year
|
173.4
|
(189.2)
|
Net debt at the start of the
year
|
(812.0)
|
(622.8)
|
Net
debt at the end of the year
|
(638.6)
|
(812.0)
|
*Adjusted profit after tax
(£302.9m) before interest (£23.2m), tax (£84.5m), depreciation
(£74.8m), amortisation (£17.6m) and impairment
(£0.2m).
**Movement in provisions and
employee benefits as per the statement of cash flows (£0.9m)
adjusted for the movement in restructuring provisions
(£3.6m).
***Adjusted operating cash flow
is the cash generated from the 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; a reconciliation is included in Note 9.
Adjusted operating cash flow was
£366m (2022: £290m). This represents a conversion rate of total
Group adjusted operating profit to adjusted operating cash flow of
89% (2022: 80%), largely reflecting good working capital management
during 2023. There was a £43m cash outflow from adjusting items
(2022: £53m outflow) primarily related to restructuring
costs.
Net working capital balances
increased by £31m, with a £58m increase in payables in line with
growth offset by a £57m increase in receivables and a £32m increase
in inventory, with investments in stock to support the Process
Automation order book offsetting the strategic reduction of
inventory in other sectors. The £85m increase in 2022 was due to a
£39m increase in receivables and a £47m increase in inventory,
partly offset by an increase in payables of £1m.
Cash spent on property, plant and
equipment and other non-acquired intangibles in the year was £80m
(2022: £71m), which was equivalent to 1.3 times (2022: 1.2 times)
depreciation and amortisation thereon. The Group continues to
deploy capital to support growth and improve the efficiency of its
operations, including projects that support our net-zero carbon
target.
Research and development spend,
including capitalised intangible development costs of £6m (2022:
£6m), totalled £72m (2022: £68m), representing 3.3% (2022: 3.3%) of
sales. The Group continues to support investment in growth, with
this spend focused on delivering Better World solutions. As this
measure focuses primarily on the efforts of the engineering
function, it does not fully capture the cross-functional support in
Growth Hub initiatives - a significant further investment alongside
our research and development spend.
In 2023, the Group paid cash tax
of £76m (2022: £49m), which was 117% (2022: 82%) of the statutory
tax charge for the year.
Free cash flow before corporate
activity increased significantly to £234m (2022: £158m).
Dividends paid to shareholders
totalled £69m (2022: £62m), and there was a cash inflow of £1m
associated with the issue of share capital for employee share
schemes (2022: £19m outflow).
Overall net debt reduced by £173m
in 2023 (2022: £189m increase).
Strong balance sheet offers
strategic flexibility
Net debt at the year-end was
£639m, compared to £812m at the end of the previous year. The
reduction reflects the strong cash generation in the year. The net
debt is composed of a cash balance of £107m (2022: £133m), a bank
overdraft of £66m (2022: £94m), interest-bearing loans and
borrowings of £580m (2022: £746m) and lease liabilities of £100m
(2022: £105m).
The year-end net debt to adjusted
EBITDA ratio was 1.3 times (2022: 1.8 times). At the end of 2023,
loan notes totalled £532m (2022: £546m), with a weighted average
maturity of 3.6 years (2022: 4.6 years), and other loans including
bank overdrafts totalled £114m (2022: £294m). Total committed bank
loan facilities available to the Group at the year-end were £300m
(2022: £300m), of which £nil (2022: £100m) was drawn.
At 31 December 2023, the value of
the Group's intangible assets, including goodwill, was £958m (2022:
£1,014m restated).
The net book value of the Group's
property, plant and equipment at 31 December 2023 was £300m (2022:
£299m). Capital expenditure on property, plant and equipment
amounted to £60m (2022: £57m), with the main capital expenditure
focused on production facility investment to support operational
efficiency and growth. Including capitalised intangible assets,
total capital expenditure was £80m (2022: £71m) and was 1.3 times
(2022: 1.2 times) the depreciation and amortisation charge
(excluding acquired intangible amortisation and lease asset
depreciation) for the year of £63m (2022: £60m).
The net deficit for defined
benefit obligations at 31 December 2023 was £49m (2022: £19m
deficit). The UK deficit was £4m (2022: £28m surplus), with the
liabilities fully bought-in in 2022. The deficit in the overseas
funds as at 31 December 2023 was £45m (2022: £47m
deficit).
Return on invested capital
('ROIC')
The Group uses ROIC as an
indication of IMI's ability to deploy capital effectively. The
Group's definition of ROIC is adjusted operating profit after tax
divided by average capital invested. Capital invested is defined as
net assets adjusted to remove net debt, derivative
assets/liabilities, defined pension position (net of deferred tax)
and to reverse historical impairments of goodwill and amortisation
of acquired intangibles.
ROIC was 13.1% in 2023 (2022:
12.7%), which increased by 40bps, reflecting the strong trading
performance and the full year profit impact of acquisitions
completed in 2022.
Return on invested capital
|
2023
£m
|
2022
£m
|
Adjusted operating profit
|
410.6
|
363.8
|
Notional tax charge
|
(89.5)
|
(77.5)
|
Net adjusted operating profit after tax
|
321.1
|
286.3
|
|
|
|
Net assets
|
1,030.2
|
905.6
|
Adjusted for:
|
|
|
Net debt
|
638.6
|
812.0
|
Restructuring provision
|
20.9
|
17.8
|
Net derivative assets/liabilities
|
(1.2)
|
(1.9)
|
Net defined pension benefit
|
48.9
|
18.9
|
Deferred tax on employee benefits
|
(13.5)
|
(5.0)
|
Previously written-off/impaired goodwill
|
346.9
|
346.9
|
Acquired intangibles amortisation
|
387.6
|
366.5
|
Closing capital invested
|
2,458.4
|
2,460.8
|
Opening capital invested
|
2,460.8
|
2,039.6
|
Average capital invested
|
2,459.6
|
2,250.2
|
Return on invested capital
|
13.1%
|
12.7%
|
Disposals
On 2 October 2023 the Group
disposed of IMI Aero-Dynamiek for proceeds of £0.8m resulting in a
gain on disposal of £0.7m. The business contributed revenue of £4m
and operating profit of £nil prior to disposal.
Foreign exchange
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
|
|
2023
|
2022
|
|
2023
|
2022
|
Euro
|
1.15
|
1.17
|
|
1.15
|
1.13
|
US
Dollar
|
1.24
|
1.24
|
|
1.27
|
1.21
|
The movement in average exchange
rates between 2022 and 2023 had no material impact on both revenue
and adjusted operating profit in the full year when compared to
2022.
If exchange rates as at 16
February 2024 of US$1.27 and €1.17 were projected for the full year
and applied to our 2023 results, it is estimated that both revenue
and adjusted operating profit would be 2% lower.
Treasury
IMI has a centralised Treasury
function that provides treasury services to Group companies
including funding liquidity, credit, foreign exchange, interest
rate and base metal commodity management. The Group Treasury
function manages financial risks in compliance with Board-approved
policies.
Disciplined approach to capital
allocation
The Board has a clear and
disciplined framework for capital allocation.
The Group will look to prioritise
opportunities to deliver incremental organic growth as it continues
to invest in its people and operations. Capital expenditure was
1.3x depreciation during the year (2022: 1.2x) with R&D
expenditure at 3.3% of sales (2022: 3.3%), in line with a target to
maintain spend above 3.0% of sales.
IMI will continue to pursue
strategic acquisitions to further enhance the portfolio. These
acquisitions must be in attractive, better world markets, and must
deliver returns in line with our strict financial criteria,
delivering returns above the Group weighted average cost of capital
by year three and must not be materially dilutive to the Group
return on invested capital by year five.
The Group is committed to a
progressive dividend policy and would consider the appropriate
mechanism to return additional surplus capital should the Group's
net debt to adjusted EBITDA fall sustainably below our 1.0x - 2.0x
target range.
There is significant headroom to
current funding covenants of 3.0x net debt to adjusted
EBITDA.
The Group remained highly cash
generative in 2023, with free cash flow before corporate activity
increasing 48% to £234m in the year (2022:
£158m). Net debt reduced to 1.3x adjusted EBITDA (2022: 1.8x),
comfortably within our target range.
At 31 December 2023, IMI plc (the
parent company) had distributable reserves of £304m (2022:
£282m).
Daniel Shook
Chief Financial Officer
29 February 2024
CONSOLIDATED INCOME
STATEMENT
|
FOR THE YEAR ENDED 31
DECEMBER 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Adjusted
|
Adjusting
items
(Note 1)
|
Statutory
|
|
Adjusted
|
Adjusting
items
(Note 1)
|
Statutory
|
|
|
Notes
|
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
1
|
|
|
2,196
|
|
2,196
|
|
2,049
|
|
2,049
|
Cost of sales
|
|
|
|
|
(1,182.1)
|
(1.6)
|
(1,183.7)
|
|
(1,110.9)
|
(1.2)
|
(1,112.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
1,013.9
|
(1.6)
|
1,012.3
|
|
938.1
|
(1.2)
|
936.9
|
Net operating costs
|
|
|
|
(603.3)
|
(90.4)
|
(693.7)
|
|
(574.3)
|
(64.4)
|
(638.7)
|
Operating profit
|
1
|
|
|
410.6
|
(92.0)
|
318.6
|
|
363.8
|
(65.6)
|
298.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
3
|
|
|
8.1
|
|
8.1
|
|
4.6
|
|
4.6
|
Financial expense
|
3
|
|
|
(30.8)
|
|
(30.8)
|
|
(23.8)
|
|
(23.8)
|
Gains on instruments measured at
fair value
|
|
|
|
|
|
|
|
|
|
|
through profit or
loss (Note 1)
|
|
|
|
|
7.0
|
7.0
|
|
|
4.9
|
4.9
|
Net financial (expense)/income
relating to
|
|
|
|
|
|
|
|
|
|
|
defined benefit pension
schemes
|
8
|
|
|
(0.5)
|
|
(0.5)
|
|
1.5
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial
(expense)/income
|
|
|
|
(23.2)
|
7.0
|
(16.2)
|
|
(17.7)
|
4.9
|
(12.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
|
|
387.4
|
(85.0)
|
302.4
|
|
346.1
|
(60.7)
|
285.4
|
Taxation
|
4
|
|
|
(84.5)
|
19.4
|
(65.1)
|
|
(73.7)
|
14.6
|
(59.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after tax
|
|
|
|
302.9
|
(65.6)
|
237.3
|
|
272.4
|
(46.1)
|
226.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
5
|
|
|
|
|
|
|
|
|
|
|
Basic - from profit for the
year
|
|
|
|
|
|
91.5p
|
|
|
|
87.6p
|
|
Diluted - from profit for the
year
|
|
|
|
|
|
91.2p
|
|
|
|
87.2p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All activities relate to continuing
operations and are all attributable to the owners of the
Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
|
|
FOR THE YEAR ENDED 31
DECEMBER 2023
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
£m
|
£m
|
|
£m
|
£m
|
|
Profit for the year
|
|
237.3
|
|
|
226.3
|
|
|
|
|
|
|
|
|
Items that will not subsequently be reclassified to profit
and loss
|
|
|
|
|
|
|
Re-measurement loss on defined
benefit plans
|
(33.7)
|
|
|
(82.7)
|
|
|
|
|
|
|
|
|
|
Related taxation effect
|
8.6
|
|
|
20.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25.1)
|
|
|
(62.3)
|
|
Items that may be reclassified to profit and
loss
|
|
|
|
|
|
|
Gain/(loss) arising on hedging
instruments designated in hedges of the
|
|
|
|
|
|
|
net assets in
foreign operation
|
6.7
|
|
|
(7.5)
|
|
|
(Loss)/gain on exchange differences
on translation of foreign operations net
of
|
|
|
|
|
|
|
funding
revaluations
|
(41.1)
|
|
|
40.9
|
|
|
(Gain)/loss on exchange differences
reclassified to income statement on disposal of
|
|
|
|
|
|
|
operations
|
(0.2)
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
Related tax credit/(charge) on items
that may subsequently be reclassified
|
|
|
|
|
|
|
to profit and
loss
|
1.8
|
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
(32.8)
|
|
|
33.7
|
|
Other comprehensive loss for the year, net of
taxation
|
|
(57.9)
|
|
|
(28.6)
|
|
Total comprehensive income for the year, net of
taxation
|
|
179.4
|
|
|
197.7
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Equity holders of the
parent
|
|
179.4
|
|
|
197.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
|
|
FOR THE YEAR ENDED 31
DECEMBER 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Share premium
account
|
Capital redemption
reserve
|
Translation
reserve
|
Retained
earnings
|
Total
|
|
|
Notes
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
As at 1 January 2022
|
|
78.6
|
15.2
|
177.6
|
10.1
|
497.6
|
779.1
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
|
|
226.3
|
226.3
|
|
Other comprehensive
income/(expense)
excluding
related taxation effect
|
|
|
|
|
34.0
|
(82.7)
|
(48.7)
|
|
Related taxation effect
|
|
|
|
|
(0.3)
|
20.4
|
20.1
|
|
Total comprehensive
income
|
|
|
|
|
33.7
|
164.0
|
197.7
|
|
Issue of share capital
|
|
|
1.2
|
|
|
|
1.2
|
|
Dividends paid
|
7
|
|
|
|
|
(62.2)
|
(62.2)
|
|
Share-based payments (net of
tax)
|
|
|
|
|
|
9.8
|
9.8
|
|
Shares acquired for:
|
|
|
|
|
|
|
|
|
employee share scheme
trust
|
|
|
|
|
|
(20.0)
|
(20.0)
|
|
As at 31 December 2022
|
|
78.6
|
16.4
|
177.6
|
43.8
|
589.2
|
905.6
|
|
|
|
|
|
|
|
|
|
|
Changes in equity in 2023
|
|
|
|
|
|
|
|
|
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 (expense)/income
|
|
|
|
|
(32.8)
|
212.2
|
179.4
|
|
Issue of share capital
|
|
|
0.6
|
|
|
|
0.6
|
|
Dividends paid
|
7
|
|
|
|
|
(68.8)
|
(68.8)
|
|
Share-based payments (net of tax)
|
|
|
|
|
|
13.4
|
13.4
|
|
As at 31 December 2023
|
|
78.6
|
17.0
|
177.6
|
11.0
|
746.0
|
1,030.2
|
|
CONSOLIDATED BALANCE
SHEET
|
|
FOR THE YEAR ENDED 31
DECEMBER 2023
|
|
|
|
|
|
|
|
|
2023
|
2022
(Restated
Note
1)
|
|
|
|
£m
|
£m
|
|
Assets
|
|
|
|
|
Goodwill
|
|
680.3
|
697.4
|
|
Other intangible assets
|
|
277.4
|
316.7
|
|
Property, plant and
equipment
|
|
300.4
|
299.2
|
|
Right of use assets
|
|
99.6
|
107.0
|
|
Employee benefit assets
|
|
1.7
|
28.5
|
|
Deferred tax assets
|
|
22.7
|
24.2
|
|
Other receivables
|
|
2.3
|
2.6
|
|
|
|
|
|
|
Total non-current assets
|
|
1,384.4
|
1,475.6
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
437.3
|
417.7
|
|
Trade and other
receivables
|
|
523.9
|
483.9
|
|
Derivative financial
assets
|
|
12.1
|
15.7
|
|
Current tax
|
|
4.5
|
1.9
|
|
Investments
|
|
1.7
|
2.0
|
|
Cash and cash equivalents
|
|
106.5
|
133.0
|
|
|
|
|
|
|
Total current assets
|
|
1,086.0
|
1,054.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
2,470.4
|
2,529.8
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Trade and other payables
|
|
(470.3)
|
(438.0)
|
|
Bank overdraft
|
|
(66.3)
|
(93.8)
|
|
Interest-bearing loans and
borrowings
|
|
(47.2)
|
(150.1)
|
|
Lease liabilities
|
|
(25.2)
|
(25.8)
|
|
Provisions
|
|
(28.7)
|
(27.2)
|
|
Current tax
|
|
(73.0)
|
(70.4)
|
|
Derivative financial
liabilities
|
|
(10.9)
|
(13.8)
|
|
|
|
|
|
|
Total current liabilities
|
|
(721.6)
|
(819.1)
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and
borrowings
|
|
(531.4)
|
(595.4)
|
|
Lease liabilities
|
|
(75.0)
|
(79.9)
|
|
Employee benefit
obligations
|
|
(50.6)
|
(47.4)
|
|
Provisions
|
|
(13.0)
|
(15.3)
|
|
Deferred tax liabilities
|
|
(33.3)
|
(59.2)
|
|
Other payables
|
|
(15.3)
|
(7.9)
|
|
|
|
|
|
|
Total non-current liabilities
|
|
(718.6)
|
(805.1)
|
|
|
|
|
|
|
Total liabilities
|
|
(1,440.2)
|
(1,624.2)
|
|
|
|
|
|
|
Net
assets
|
|
1,030.2
|
905.6
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
78.6
|
78.6
|
|
Share premium
|
|
17.0
|
16.4
|
|
Other reserves
|
|
188.6
|
221.4
|
|
Retained earnings
|
|
746.0
|
589.2
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
1,030.2
|
905.6
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF
CASH FLOWS
|
FOR THE YEAR ENDED 31
DECEMBER 2023
|
|
|
|
|
|
|
2023
|
2022
|
|
Notes
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
|
Operating profit for the
year
|
|
318.6
|
298.2
|
Adjustments for:
|
|
|
|
Depreciation and
amortisation
|
|
124.4
|
122.2
|
Impairment/(reversal of impairment) of property, plant and
equipment and intangible assets
|
|
5.2
|
(1.6)
|
(Profit)/loss on
disposal of subsidiaries
|
12
|
(0.7)
|
4.8
|
Loss on sale of
property, plant and equipment
|
|
0.5
|
1.7
|
Equity-settled
share-based payment expense
|
|
12.9
|
11.7
|
Increase in inventories
|
|
(32.3)
|
(47.6)
|
Increase in trade and other
receivables
|
|
(56.5)
|
(38.8)
|
Increase in trade and other
payables
|
|
57.5
|
1.3
|
Decrease in provisions
|
|
(0.1)
|
(16.0)
|
Increase in employee
benefits
|
|
1.0
|
2.2
|
Settlement of transactional
derivatives
|
|
8.8
|
(2.3)
|
Cash generated from operations
|
|
439.3
|
335.8
|
Income taxes paid
|
4
|
(76.1)
|
(48.6)
|
Cash generated from operations after tax
|
|
363.2
|
287.2
|
Additional pension scheme
funding
|
|
-
|
(3.5)
|
Net
cash from operating activities
|
|
363.2
|
283.7
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Interest received
|
3
|
8.1
|
4.6
|
Proceeds from sale of property,
plant and equipment
|
|
1.6
|
2.9
|
Settlement of effective net
investment hedge derivatives
|
|
1.0
|
(6.3)
|
Acquisitions of subsidiaries net of
cash
|
11
|
-
|
(201.2)
|
Acquisition of property, plant and
equipment and non-acquired intangibles
|
|
(79.9)
|
(71.3)
|
Proceeds from disposal of
subsidiaries net of cash
|
12
|
0.1
|
(2.1)
|
Net
cash from investing activities
|
|
(69.1)
|
(273.4)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Interest paid
|
3
|
(30.8)
|
(23.8)
|
Shares acquired for employee share
scheme trust
|
|
-
|
(20.0)
|
Proceeds from issue of share capital
for employee share schemes
|
|
0.6
|
1.2
|
Drawdown of borrowings
|
9
|
-
|
259.1
|
Repayment of borrowings
|
9
|
(148.4)
|
(121.3)
|
Principal elements of lease
payments
|
|
(29.0)
|
(32.3)
|
Dividends paid to equity
shareholders
|
7
|
(68.8)
|
(62.2)
|
Net
cash from financing activities
|
|
(276.4)
|
0.7
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
17.7
|
11.0
|
Cash and cash equivalents at the
start of the year
|
|
39.2
|
29.1
|
Effect of exchange rate
fluctuations
|
|
(16.7)
|
(0.9)
|
Cash and cash equivalents at the end of the
year
|
|
40.2
|
39.2
|
|
|
|
|
|
|
|
|
Reconciliation of cash and cash equivalents
|
|
|
|
Cash and cash equivalents
|
|
106.5
|
133.0
|
Bank overdraft
|
|
(66.3)
|
(93.8)
|
Cash and cash equivalents at the end of the
period
|
|
40.2
|
39.2
|
|
|
|
|
|
|
|
|
Reconciliation of net cash to movement in net
borrowings appears in Note 9. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. Segmental information
Segmental information is presented
in the consolidated 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 existing divisional
structure, including IMI Critical Engineering, IMI Precision
Engineering and IMI Hydronic Engineering now reports by 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 and Fluid
Control sectors.
Performance is measured by the
Executive Committee based on adjusted operating profit and organic
revenue growth which are defined in Note 1. These two measures
represent the two short-term key performance indicators for the
Group.
Businesses enter 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.
Restatements
2022 comparatives have been
restated to reflect the impact of the following items:
Adjustments arising on prior year
acquisitions
In finalising the accounting for
the 2022 acquisitions of CorSolutions LLC and Heatmiser UK Ltd,
2022 goodwill was decreased by £36.3m at 31 December 2022 and
allocated to Other intangible assets (increase of £46.2m),
Inventories (increase of £1.4m), Trade and other receivables
(decrease of £1.0m), Trade and other payables (decrease of £1.7m),
Deferred tax (decrease of £11.6m) and Current tax (decrease of
£0.4m). Refer to Note 11 which shows a reconciliation between the
2022 Consolidated Balance Sheet and the restated 2022 Consolidated
Balance Sheet as disclosed on page 29.
Adjustments arising on changes in
the structure
As discussed in the Segmental
information section above, the Group will report by two platforms,
Automation and Life Technology.
Industrial Automation (formerly
part of the IMI Precision Engineering division) and Process
Automation (formerly IMI Critical
Engineering) forms the Automation
platform and Climate Control (formerly IMI Hydronic Engineering),
Transport and Life Science & Fluid Control (both formerly part
of the IMI Precision Engineering division) forms the Life
Technology platform. Rail, which was previously reported under
Transportation, has been re-presented within Industrial Automation.
As part of the 2022 restatement, corporate costs of £15.5m have
been allocated to Automation and £9.9m has been allocated to Life
Technology. Refer to Note 1 which shows the restated segmental
analysis under the two new platforms.
1. Segmental information (continued)
Alternative Performance Measures
('APMs')
Certain alternative performance
measures ('APMs') have been included within this announcement and
discussed further in Note 6. These APMs are used by the Executive
Committee to monitor and manage the performance of the Group.
Movements in revenue and adjusted operating profit are given on an
organic basis (see definition below) so that performance is not
distorted by acquisitions, disposals and movements in exchange
rates.
References to EPS, unless
otherwise stated, relate to adjusted basic EPS i.e. after
adjustment for the per share after tax impact of adjusted items.
The directors' commentary discusses these alternative performance
measures 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. The table below details the definition of
each APM and a reference to where it can be reconciled to the
equivalent statutory measure.
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 5.
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 on page
14.
See income statement on page
14.
See Note 5.
See Note 4.
See Note 9.
|
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 adjusted 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 on page 14
and segmental reporting in Note 1.
|
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,
non-acquired 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 9.
|
1. Segmental information (continued)
APM
|
Definition
|
Reconciliation to statutory measure
|
|
Net debt
Net
debt: adjusted EBITDA
Free cash flow before
corporate activity
Return on invested capital (ROIC)
Cash conversion
|
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 sub-total 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.
This measure takes adjusted
operating profit after tax divided by average capital invested.
Capital invested is defined as net assets adjusted to remove net
debt, derivative assets and liabilities, defined benefit
pension
position (net of deferred tax) and
to reverse historical impairments of goodwill and amortisation of
acquired intangible assets.
Cash conversion is the adjusted
operating cash flow as a percentage of the adjusted operating
profit.
|
See Note 9.
See Note 9.
See page 12.
See page 10.
|
|
The following table shows a
reconciliation of platform adjusted operating profit to statutory
operating profit. 2022 results have been restated to reflect the
structure change described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
Automation
|
Life
Technology
|
Total
|
|
2023
|
2022
(Restated)
|
2023
|
2022
(Restated)
|
2023
|
2022
(Restated)
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
1,350
|
1,248
|
846
|
801
|
2,196
|
2,049
|
Adjusted operating profit
|
257.3
|
225.3
|
153.3
|
138.5
|
410.6
|
363.8
|
Adjusted operating profit
margin
|
19.1%
|
18.1%
|
18.1%
|
17.3%
|
18.7%
|
17.8%
|
|
|
|
|
|
|
|
Reconciliation to statutory operating
profit:
|
|
|
|
|
|
|
Reversal of net economic hedge
contract losses/(gains)
|
(7.5)
|
1.0
|
(0.8)
|
2.0
|
(8.3)
|
3.0
|
Restructuring costs
|
(30.6)
|
(15.9)
|
(17.5)
|
(10.0)
|
(48.1)
|
(25.9)
|
Acquired intangible amortisation and
other
acquisition items
|
(14.9)
|
(16.2)
|
(18.7)
|
(17.5)
|
(33.6)
|
(33.7)
|
Exit from Russia
|
(2.0)
|
(5.9)
|
-
|
(3.1)
|
(2.0)
|
(9.0)
|
Statutory operating profit
|
202.3
|
188.3
|
116.3
|
109.9
|
318.6
|
298.2
|
|
|
|
|
|
|
|
Statutory operating margin (%)
|
15.0%
|
15.1%
|
13.7%
|
13.7%
|
14.5%
|
14.6%
|
Net
financial expense
|
|
|
|
|
(16.2)
|
(12.8)
|
Statutory profit before tax
|
|
|
|
|
302.4
|
285.4
|
|
|
|
|
|
|
|
1. 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 2022. 2022 results have been restated to reflect the structure
change described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended 31 December 2022 (Restated)
|
Year ended 31 December
2023
|
Revenue
|
As
adjusted
|
|
Disposal
|
|
Exchange
|
|
Organic
|
|
As
adjusted
|
|
Acquisitions
|
|
Organic
|
|
Adjusted growth
(%)
|
|
Organic growth
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automation
|
1,248
|
|
(6)
|
|
(1)
|
|
1,241
|
|
1,350
|
|
(6)
|
|
1,344
|
|
8%
|
|
8%
|
|
Life Technology
|
801
|
|
(3)
|
|
4
|
|
802
|
|
846
|
|
(26)
|
|
820
|
|
6%
|
|
2%
|
|
Total
|
2,049
|
|
(9)
|
|
3
|
|
2,043
|
|
2,196
|
|
(32)
|
|
2,164
|
|
7%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automation
|
225.3
|
|
(0.6)
|
|
(0.6)
|
|
224.1
|
|
257.3
|
|
(1.1)
|
|
256.2
|
|
14%
|
|
14%
|
|
Life Technology
|
138.5
|
|
-
|
|
1.8
|
|
140.3
|
|
153.3
|
|
(8.4)
|
|
144.9
|
|
11%
|
|
3%
|
|
Total
|
363.8
|
|
(0.6)
|
|
1.2
|
|
364.4
|
|
410.6
|
|
(9.5)
|
|
401.1
|
|
13%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit margin (%)
|
17.8%
|
|
|
|
|
|
17.8%
|
|
18.7%
|
|
|
|
18.5%
|
|
|
|
|
|
The following table shows a
geographical analysis of how the Group's revenue is derived by
destination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
£m
|
£m
|
UK
|
|
|
|
|
|
|
|
|
117
|
93
|
Germany
|
|
|
|
|
|
|
|
|
280
|
265
|
Rest of Europe
|
|
|
|
|
|
|
|
|
557
|
520
|
Total Europe
|
|
|
|
|
|
|
|
|
954
|
878
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
|
|
|
|
|
|
525
|
536
|
Rest of Americas
|
|
|
|
|
|
|
|
|
140
|
91
|
Total Americas
|
|
|
|
|
|
|
|
|
665
|
627
|
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
|
174
|
179
|
Rest of Asia Pacific
|
|
|
|
|
|
|
|
|
296
|
271
|
Total Asia Pacific
|
|
|
|
|
|
|
|
|
470
|
450
|
|
|
|
|
|
|
|
|
|
|
|
Middle East & Africa
|
|
|
|
|
|
|
|
|
107
|
94
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
|
|
|
2,196
|
2,049
|
1. Segmental information (continued)
The Group's revenue streams are
disaggregated in the table below. The 2022 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
discussed above.
|
|
|
|
|
|
|
2023
|
2022
|
|
|
Revenue
|
Revenue
(Restated)
|
|
|
£m
|
£m
|
Industrial Automation
|
|
543
|
535
|
Aftermarket
|
|
483
|
411
|
New Construction
|
|
324
|
302
|
Process Automation
|
|
807
|
713
|
|
|
|
|
Automation
|
|
1,350
|
1,248
|
|
|
|
|
Climate Control
|
|
386
|
350
|
Life Science & Fluid
Control
|
|
276
|
289
|
Transport
|
|
184
|
162
|
Life Technology
|
|
846
|
801
|
|
|
|
|
Total revenue
|
|
2,196
|
2,049
|
|
|
|
|
Sale of goods
|
|
2,115
|
1,977
|
Sale of services
|
|
81
|
72
|
Total revenue
|
|
2,196
|
2,049
|
|
|
|
|
2. Discontinued operations
There was no profit or loss from
discontinued operations in 2023 or 2022.
3. Net financing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Interest
|
Financial
Instruments
|
Total
|
|
Interest
|
Financial
Instruments
|
Total
|
Recognised in the income statement
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Interest income on bank
deposits
|
8.1
|
|
8.1
|
|
4.6
|
|
4.6
|
|
|
|
|
|
|
|
|
Financial income
|
8.1
|
-
|
8.1
|
|
4.6
|
-
|
4.6
|
|
|
|
|
|
|
|
|
Interest expense on interest-bearing
loans and borrowings
|
(27.9)
|
|
(27.9)
|
|
(21.0)
|
|
(21.0)
|
Interest expense on
leases
|
(2.9)
|
|
(2.9)
|
|
(2.8)
|
|
(2.8)
|
|
|
|
|
|
|
|
|
Financial expense
|
(30.8)
|
-
|
(30.8)
|
|
(23.8)
|
-
|
(23.8)
|
|
|
|
|
|
|
|
|
Recognised in other comprehensive income
|
|
|
|
|
|
|
|
Gains on instruments measured at
fair value through profit or loss:
|
|
|
|
|
|
|
|
Other economic
hedges
|
|
7.0
|
7.0
|
|
|
4.9
|
4.9
|
Net financial (expense)/income
relating to defined benefit pension schemes
|
(0.5)
|
|
(0.5)
|
|
1.5
|
|
1.5
|
Net
financial (expense)/income
|
(23.2)
|
7.0
|
(16.2)
|
|
(17.7)
|
4.9
|
(12.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in financial instruments
are current year trading gains and losses on economically effective
transactions which for management reporting purposes are included
in adjusted revenue and operating profit (see Note 1). For
statutory purposes, these are 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.
|
4. Taxation
The tax charge before adjusting
items is £84.5m (year ended 31 December 2022: £73.7m) which equates
to an adjusted effective tax rate of 21.8% compared to 21.3% for
the year ended 31 December 2022. The statutory tax charge is £65.1m
(year ended 31 December 2022: £59.1m) which equates 21.5% compared
to 20.7% for the year ended 31 December 2022. Taxes of £76.1m
(2022: £48.6m) were paid in the year. The Group seeks to manage its
tax affairs within its core tax principles of compliance, fairness,
value and transparency, in accordance with the Group's Tax
Policy.
As IMI's head office and parent
company is domiciled in the UK, the Group references its effective
tax rate to the UK corporation tax rate, despite only a small
portion of the Group's business being in the UK. The rate of
corporation tax in the UK for the year ended 31 December 2023 is
23.5% (year ended 31 December 2022: 19.0%). The Group's effective
tax rate remains slightly above the UK tax rate due to the Group's
overseas profits being taxed at higher rates.
During 2023, the UK government
substantively enacted the OECD Inclusive Framework agreement for a
global minimum corporate income tax rate of 15%. For IMI, this
takes effect from 1 January 2024. The event does not therefore
affect IMI's results for 2023. IMI is evaluating the impact that
this will have on future accounting periods but expects that its
entities in most territories will not be impacted by this minimum
tax requirement. To the extent top-up taxes are required, the
impact on IMI's results is expected to be minimal. However, further
evaluation will be undertaken as additional guidance becomes
available.
5. Earnings per ordinary share
|
|
|
|
|
|
|
2023
|
2022
|
|
Key
|
million
|
million
|
Weighted average number of shares
for the purpose of basic earnings per share
|
A
|
259.3
|
258.3
|
Dilutive effect of employee share
options
|
|
1.0
|
1.2
|
Weighted average number of shares
for the purpose of diluted earnings per share
|
B
|
260.3
|
259.5
|
|
|
|
|
|
|
£m
|
£m
|
Statutory profit for the year
|
C
|
237.3
|
226.3
|
|
|
|
|
Total adjusting items charges
included in profit before tax
|
|
85.0
|
60.7
|
Total adjusting items credits
included in taxation
|
|
(19.4)
|
(14.6)
|
|
|
|
|
Earnings for adjusted EPS
|
D
|
302.9
|
272.4
|
|
|
|
|
|
Statutory EPS measures
|
|
|
|
Statutory basic EPS
|
C/A
|
91.5p
|
87.6p
|
Statutory diluted EPS
|
C/B
|
91.2p
|
87.2p
|
|
|
|
|
|
|
|
|
Adjusted EPS measures
|
|
|
|
Adjusted basic EPS
|
D/A
|
116.8p
|
105.5p
|
Adjusted diluted EPS
|
D/B
|
116.4p
|
105.0p
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Adjusting items
Reversal of net economic hedge contract
losses/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 revenue
and adjusted operating profit of the relevant business segment. The
adjusting items at the operating 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.
Restructuring costs
Restructuring costs of £48.1m were
recognised in 2023. 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 transformed the
structure into customer led 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.
Restructuring costs of £25.9m were
recognised in 2022. These primarily related to Automation and were
for the Customer First project, across a number of businesses and
the rationalisation of four facilities.
Acquired intangible amortisation and other acquisition
items
The acquired intangible
amortisation charge was £32.0m (2022: £29.5m), which largely
relates to the amortisation of the intangible assets recognised on
the acquisition of Adaptas Solutions, Heatmiser UK Ltd and Bimba
Manufacturing Company. Other acquisition costs of £1.6m for the
year ended 31 December 2023, related to the unwind of the inventory
fair value uplift adjustment for Heatmiser. Other acquisition costs
of £4.2m for the year ended 31 December 2022 primarily related to
professional fees associated with the acquisition of Heatmiser and
Bahr and the write-off of the inventory fair value uplift
adjustment for Adaptas.
Exit from Russia
During 2023, changes were made to
the legal structure of a customer which resulted in a £2.0m
write-off. In 2022, the Group's decision to end all new business in
Russia resulted in a charge of £9.0m. The Group recorded a loss on
disposal of its Russian subsidiary of £4.8m. In addition, the exit
resulted in a £4.2m impairment of assets related to Russian
contracts.
Taxation
The tax effect of the above items
has been recognised as an adjusting item and amounts to £19.4m
(2022: £14.6m).
7. Dividend
The directors recommend a final
dividend of 19.2p per share (2022: 17.4p) payable on 17 May 2024 to
shareholders on the register at close of business on 5 April 2024,
which will cost approximately £49.9m (2022: £45.1m). Together with
the interim dividend of 9.1p (2022: 8.3p) per share paid in
September 2023, this makes a total distribution of 28.3p per share
(2022: 25.7p per share). In accordance with IAS10 'Events after the
Balance Sheet date', this final proposed dividend has not been
reflected in the 31 December 2023 balance sheet.
8. Employee Benefits
The Group has 70 (2022: 70)
defined benefit obligations in existence as at 31 December 2023.
The Group recognises there is a funding and investment risk
inherent within defined benefit arrangements and seeks to continue
its programme of closing overseas defined benefit plans where
possible and providing in their place appropriate defined
contribution arrangements.
The net deficit for defined
benefit obligations at 31 December 2023 was £48.9m (2022: £18.9m).
The UK deficit was £3.7m (2022: surplus of £28.4m) and constituted
68% (2022: 70%) of the total defined benefit liabilities and 76%
(2022: 80%) of the total defined benefit assets. The deficit in the
overseas funds as at 31 December 2023 was £45.2m (2022:
£47.3m).
|
|
UK
|
Overseas
|
Total
|
|
|
£m
|
£m
|
£m
|
Net defined benefit
surplus/(obligation) at 1 January 2023
|
28.4
|
(47.3)
|
(18.9)
|
Movement recognised in:
|
|
|
|
|
Income statement
|
1.3
|
(5.5)
|
(4.2)
|
|
Other comprehensive
income
|
(33.4)
|
(0.3)
|
(33.7)
|
|
Cash flow statement
|
-
|
6.9
|
6.9
|
Exchange
|
-
|
1.0
|
1.0
|
Net
defined benefit obligation at 31 December 2023
|
(3.7)
|
(45.2)
|
(48.9)
|
9. Cash flow and net debt
reconciliation
|
|
|
|
|
|
|
|
Reconciliation of net cash to movement in net
debt
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Net increase in cash and cash
equivalents excluding foreign exchange
|
17.7
|
11.0
|
|
Less: cash
acquired/disposed
|
0.4
|
(10.0)
|
|
Net repayment/(drawdown) of
borrowings excluding foreign exchange and net debt
disposed/acquired
|
148.4
|
(137.8)
|
|
Decrease/(increase) in net debt before acquisitions,
disposals and foreign exchange
|
166.5
|
(136.8)
|
|
|
|
|
|
Net cash
acquired/disposed
|
(0.4)
|
10.0
|
|
Currency translation
differences
|
1.8
|
(50.6)
|
|
Movement in lease
liabilities
|
5.5
|
(11.8)
|
|
Movement in net debt in the year
|
173.4
|
(189.2)
|
|
Net debt at the start of the
year
|
(812.0)
|
(622.8)
|
|
Net
debt at the end of the year
|
(638.6)
|
(812.0)
|
|
|
|
|
|
|
|
|
|
Movement in net debt
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Adjusted EBITDA*
|
503.2
|
457.0
|
|
Working capital movements
|
(31.3)
|
(85.1)
|
|
Capital and development
expenditure
|
(79.9)
|
(71.3)
|
|
Provisions and employee benefit
movements**
|
(2.7)
|
1.5
|
|
Principal elements of lease
payments
|
(29.0)
|
(32.3)
|
|
Other
|
6.0
|
20.2
|
|
Adjusted operating cash flow ***
|
366.3
|
290.0
|
|
Adjusting items
|
(43.1)
|
(52.6)
|
|
Tax paid
|
(76.1)
|
(48.6)
|
|
Interest
|
(22.7)
|
(19.2)
|
|
Settlement of derivatives
|
9.8
|
(8.6)
|
|
Additional pension scheme
funding
|
-
|
(3.5)
|
|
Free cash flow before corporate activity
|
234.2
|
157.5
|
|
Dividends paid to equity
shareholders
|
(68.8)
|
(62.2)
|
|
Acquisition of
subsidiaries
|
-
|
(213.3)
|
|
Disposal of subsidiaries
|
0.5
|
-
|
|
Net purchase of own
shares
|
0.6
|
(18.8)
|
|
Net
cash flow (excluding debt movements)
|
166.5
|
(136.8)
|
|
|
|
|
|
*Adjusted profit after tax £302.9m
before interest £23.2m, tax £84.5m, depreciation £74.8m,
amortisation £17.6m and impairment on property, plant and equipment
and non-acquired intangible assets £0.2m.
**Movement in provisions and
employee benefits as per the statement of cash flows £0.9m adjusted
for the movement in the restructuring provisions £3.6m.
***Adjusted operating cash flow is
the cash generated from the 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.
|
|
|
|
|
|
|
|
|
|
Reconciliation of adjusted operating cash flow to cash flow
statement
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Cash generated from operations
|
439.3
|
335.8
|
|
Principal lease payments
|
(29.0)
|
(32.3)
|
|
Settlement of transactional
derivatives
|
(8.8)
|
2.3
|
|
Acquisition of property, plant and
equipment and non-acquired intangibles
|
(79.9)
|
(71.3)
|
|
Adjusting items
|
43.1
|
52.6
|
|
Proceeds from sale of property,
plant and equipment
|
1.6
|
2.9
|
|
Adjusted operating cash flow
|
366.3
|
290.0
|
|
|
|
|
|
10. 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
|
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
Euro
|
1.15
|
1.17
|
|
1.15
|
1.13
|
|
|
|
US Dollar
|
1.24
|
1.24
|
|
1.27
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
The movement in average exchange
rates between 2022 and 2023 had no material impact on both revenue
and adjusted operating profit in the full year when compared to
2022.
If exchange rates as at 16
February 2024 of US$1.27 and €1.17 were projected for the full year
and applied to our 2023 results, it is estimated that both revenue
and adjusted operating profit would be 2% lower.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
11. Acquisitions
Acquisitions in 2022
During the year ended 31 December
2022, the Group made three acquisitions, namely:
- Heatmiser UK Ltd ("Heatmiser")
- CorSolutions LLC ("CorSolutions")
- Bahr Modultechnik GmbH ("Bahr")
a) Heatmiser
|
Fair value
at
23 December
2022
£m
|
Other intangible assets
|
46.2
|
Property, plant and
equipment
|
0.2
|
Inventories
|
7.4
|
Trade and other
receivables
|
5.6
|
Cash and cash
equivalents
|
7.4
|
Trade and other
payables
|
(4.7)
|
Current taxation
|
(0.6)
|
Deferred taxation
|
(11.6)
|
Total identified net assets at fair value
|
49.9
|
Goodwill arising on
acquisition
|
67.6
|
Purchase consideration
|
117.5
|
On 23 December 2022 the Group
acquired 100% of the share capital, and associated voting rights,
of Heatmiser for initial cash consideration of £117.5m, with up to
a further £8.0m payable based on future financial performance.
Heatmiser is a leading UK smart thermostatic control manufacturer
and is based in Blackburn, UK.
This acquisition has been
accounted for as a business combination and the accounting,
including the purchase price allocation, has been finalised during
the year. After updating the assumptions, deferred consideration
recognised is £nil. The goodwill recognised above includes certain
intangible assets that cannot be separately identified and measured
due to their nature. This includes control over the acquired
business, the skills and experience of the assembled workforce, the
increase in scale, synergies and the future growth opportunities
that the businesses provide to the Group's operations.
Acquisition costs of £2.0m were
recognised in the income statement in 2022.
11. Acquisitions (continued)
b) CorSolutions
|
Fair value
at
27 October
2022
£m
|
Other intangible assets
|
8.8
|
Inventories
|
0.6
|
Deferred taxation
|
-
|
Total identified net assets at fair value
|
9.4
|
Goodwill arising on
acquisition
|
-
|
Total consideration
|
9.4
|
Of which relates to deferred
consideration
|
1.3
|
Purchase consideration
|
8.1
|
On 27 October 2022 the Group
acquired 100% of the share capital, and associated voting rights,
of CorSolutions for initial cash consideration of £7.5m, an
additional payment of £0.6m made in 2023 as part of the closing
consideration, with up to a further £3.6m payable based on future
financial performance. CorSolutions is a leading innovator in
micro-fluid flow control and is based in Ithaca, New
York.
This acquisition was accounted for
as a business combination. The acquisition accounting has been
finalised and changes were made to the provisional fair value
amounts recognised in the 2022 Annual Report & Accounts in
respect of the deferred consideration and identified assets
acquired and liabilities assumed. This resulted in a decrease of
£1.7m from the 2022 Annual Report & Accounts, bringing the
goodwill position to £nil. The expected earn-out payout has
decreased from £3.6m as at 31 December 2022 to £1.3m.
c) Bahr
On 9 June 2022 the Group acquired
100% of the share capital, and associated voting rights, of Bahr
for cash consideration of £88.3m. Bahr is a leading provider of
highly configured modular electric linear motion systems, based on
a broad portfolio of specialist components and is based in Luhden,
Germany.
This acquisition was accounted for
as a business combination. Our accounting has been finalised and
there are no changes to the provisional fair value amounts
recognised in the 2022 Annual Report & Accounts in respect of
the identified assets acquired and liabilities assumed.
d) Adjustments arising on prior
year acquisitions
In finalising the acquisition
accounting for the prior year acquisitions of CorSolutions and
Heatmiser, an adjustment of £36.3m was made to include acquired
intangibles and corresponding deferred tax, adjust working capital
and other payables. This resulted in a decrease in goodwill of
£36.3m.
The adjustment is material and as
such the comparative balance sheet has been restated, as
follows:
|
Balance
Sheet
(as
Reported)
2022
£m
|
Allocation of Heatmiser and
CorSolutions goodwill
2022
£m
|
Restated
Balance
Sheet
2022
£m
|
Non-current assets
|
|
|
|
Goodwill
|
733.7
|
(36.3)
|
697.4
|
Other intangible assets
|
270.5
|
46.2
|
316.7
|
Deferred tax assets
|
24.5
|
(0.3)
|
24.2
|
Current assets
|
|
|
|
Inventories
|
416.3
|
1.4
|
417.7
|
Trade and other
receivables
|
484.9
|
(1.0)
|
483.9
|
Current tax
|
2.0
|
(0.1)
|
1.9
|
Total assets
|
2,519.9
|
9.9
|
2,529.8
|
Non-current liabilities
|
|
|
|
Deferred tax
liabilities
|
(47.9)
|
(11.3)
|
(59.2)
|
Other payables
|
(9.9)
|
2.0
|
(7.9)
|
Current liabilities
|
|
|
|
Trade and other
payables
|
(437.7)
|
(0.3)
|
(438.0)
|
Current tax
|
(70.1)
|
(0.3)
|
(70.4)
|
Total liabilities
|
(1,614.3)
|
(9.9)
|
(1,624.2)
|
12. Disposals
|
|
|
|
|
|
|
|
Disposals in 2023
|
|
|
|
|
|
|
|
The Group disposed of its Dutch
subsidiary IMI Aero-Dynamiek 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 of 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.
|
|
|
|
|
|
|
|
2 October
|
|
|
|
2023
|
|
|
|
£m
|
|
Sale consideration
|
|
0.8
|
|
Net assets disposal
|
|
-
|
|
Costs of disposal
|
|
(0.3)
|
|
Foreign exchange gain reclassified
on disposal
|
|
0.2
|
|
Gain on disposal
|
|
0.7
|
|
|
|
|
|
Net
cash flow arising on disposal
|
|
|
|
Sale consideration
|
|
0.8
|
|
Cash costs of disposal
|
|
(0.3)
|
|
Net
cash flow arising on disposal of operations
|
|
0.5
|
|
|
|
|
|
|
|
|
|
Disposals in 2022
|
|
|
|
|
|
|
|
The Group disposed of its Russian
subsidiary IMI International LLC on 27 May 2022 for proceeds of
£nil resulting in a loss on disposal for the Group of £4.8m after
disposing of £3.3m of net assets and incurring £0.9m of associated
disposal costs. In addition, the exit resulted in a £4.2m
impairment of assets related to Russian contracts.
The exit from Russia is presented
in the income statement as an adjusting item in 2022 but it was not
disclosed as a discontinued item because it did not represent a
separate major line of business.
|
|
|
|
|
|
|
|
27 May
|
|
|
|
2022
|
|
|
|
£m
|
|
Sale consideration
|
|
-
|
|
Net assets disposed
|
|
(3.3)
|
|
Costs of disposal
|
|
(0.9)
|
|
Foreign exchange loss reclassified
on disposal
|
|
(0.6)
|
|
Loss on disposal
|
|
(4.8)
|
|
|
|
|
|
Net
cash flow arising on disposal
|
|
|
|
Sale consideration
|
|
-
|
|
Cash costs of disposal
|
|
(0.9)
|
|
Net
cash flow arising on disposal of operations
|
|
(0.9)
|
|
|
|
|
|
|
|
|
|
|
| |
13. Financial information
The preliminary statement of
results was approved by the Board on 29 February 2024. The
financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2023
or 2022 but is derived from the 2023 accounts, which are prepared
on the same basis as the 2022 accounts. Statutory accounts for 2022
have been delivered to the registrar of companies and those for
2023 will be delivered in due course. Deloitte LLP has reported on
the 2023 and 2022 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 may contain
forward-looking statements that may or may not prove accurate. For
example, statements regarding expected revenue growth and operating
margins, market trends and our product pipeline are forward-looking
statements. It is believed that the expectations reflected in these
statements are reasonable, but they may be affected by a number of
risks and uncertainties that are inherent in any forward-looking
statement which could cause actual results to differ materially
from those currently anticipated. Any forward-looking statement is
made in good faith and based on information available to IMI
plc as of the date of the preparation of this announcement.
All written or oral forward-looking statements attributable to IMI
plc are qualified by this caution. IMI plc does not undertake any
obligation to update or revise any forward-looking statement to
reflect any change in circumstances or in IMI plc's expectations.
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
revenue, adjusted operating profit and adjusted operating margins,
unless otherwise stated, relate to amounts on an adjusted basis
before adjusting items as noted on the face of the consolidated
income statement.
References to EPS, unless otherwise
stated, relate to adjusted basic EPS i.e. after adjustment for the
per share after tax impact of adjusting items in Note 6.
Alternative Performance Measures
('APMs') are used in discussions with the investment analyst
community and by the Board and management to monitor the trading
performance of the Group. We consider that the presentation of APMs
allows for users to better assess period-on-period trading
performance of the Group. The APMs presented in the Annual Report
and Accounts to 31 December 2023 are defined in Note 1.
References to organic growth
exclude the impact of exchange rate translation and acquisitions or
disposals that are included in adjusted growth figures. The organic
growth is derived from excluding any contribution from acquired
businesses 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.
These organic revenues or profits will then be compared to the
organic revenue or profits for the prior period after their
re-translation at the current period average exchange rates to
provide the organic growth rate. The impact on revenue and adjusted
operating profit of movements in foreign exchange, acquisitions and
disposals is set out in Note 1.
IMI plc is registered in England
No. 714275. Its legal entity identifier ('LEI') number is
2138002W9Q21PF751R30. The person responsible for releasing this
announcement on behalf of the Board is Louise Waldek, Company
Secretary and Group Legal Director.
The Company's 2023 Annual Report and Notice of the forthcoming
Annual General Meeting will be posted to shareholders on 28 March
2024.
Notes to editors
IMI plc is a FTSE100 global
specialist engineering company that designs, manufactures and
services highly engineered products to control the precise movement
of fluids. Its innovative motion and flow control technologies,
built around valves and actuators, enable vital sectors to become
safer, more sustainable and more productive. IMI combines world
class applications engineering expertise with a continued focus on
customer satisfaction, market-led innovation and complexity
reduction to solve its customers most acute engineering problems.
IMI employs approximately 10,000 people, has manufacturing
facilities in 18 countries and operates a global service network.
The Company is listed on the London Stock Exchange. Further
information is available at www.imiplc.com.