5th Mar 2007 07:04
IMI PLC05 March 2007 5 March 2007 IMI plc Preliminary Results IMI plc, the major international engineering group, today announced itspreliminary results for the year ended 31 December 2006. 2006 2005 % change Continuing businesses: Revenue £1,505m £1,341m +12 Operating profit * £191.8m £163.7m +17 Profit before tax* £194.9m £160.9m +21 Restructuring costs £19.7m £4.2m Profit before tax £158.2m £151.1m +5 Adjusted earnings per share ** 38.3p 30.6p +25 Discontinued operations (loss net of tax) £(33.5)m £(86.5)m Basic earnings per share 21.4p 3.9p Total dividend for year 18.7p 17.5p +7 * before restructuring costs and intangible amortisation.** before restructuring costs, change in fair value of financial instruments and intangible amortisation. Norman Askew, Chairman of IMI, commented: "The Group has continued to make good progress with strong advances over lastyear in revenue, operating profit, operating margins and earnings per share. Weare confident of delivering another year of good progress in 2007." CHAIRMAN'S STATEMENT In 2006 the Group continued to make good progress with strong advances over lastyear in revenue, operating profit, operating margins and earnings per share. The Fluid Controls businesses performed particularly strongly with an 8% organicgrowth in revenue. The Retail Dispense businesses were affected by lowerinvestment levels within the beverage and retail markets which resulted in anorganic decline in revenue of 3%. The fundamentals in these businesses howeverremain strong and we remain confident in the outlook longer term. Overall, wedelivered an organic sales growth of just over 4%. Operating profit, before restructuring costs and intangible amortisation,increased by 17%. We have moved closer towards our long term margin objectivesand saw our operating return on sales advance from 12.2% to 12.7%. The threeyear restructuring programme that we announced last year is on track and nearly£20m was invested to move more of our manufacturing facilities to our alreadyestablished lower cost centres in Mexico, The Czech Republic and China. The acquisition for £113m of the Truflo businesses was completed in April 2006and has made a strong contribution of £11.2m operating profit to our FluidControls businesses. £35m was invested in our share buy back programme during the year. This willcontinue to be used alongside the restructuring and acquisition programmes tomanage the balance sheet and our intention remains to build net debt levels tobetween £400m and £500m over the next few years. The Board is recommending that the final dividend be increased by 8% to 11.7p.This makes the total dividend for the year 18.7p, an increase of 7% over lastyear's 17.5p. Outlook The underlying momentum in our business remains healthy. End markets aregenerally supportive, and the level of activity within our business around newproduct and customer development is encouraging. The order book at the year end was around 8% higher than the prior year,reflecting both increased momentum and a lengthening delivery profile. Despitesome short term issues relating to the US truck sector and the beverage dispensemarket, we are confident of delivering another year of good progress in 2007. CHIEF EXECUTIVE'S REVIEW 2006 was another encouraging year for our business, with results buoyed by astrong performance in our Fluid Controls businesses, and an impressivecontribution from our recent acquisitions. Another year of strong cashperformance highlights the cash-generative qualities of our businesses, leavingyear end net debt at £80m. We made good progress against our well defined operational strategies in each ofour businesses, building on strong market positions through acceleratedinvestment in new products and key account management. New product introductionsincluded the launch of new control valve and strainer products within SevereService for the rapidly growing liquefied natural gas and nuclear markets; a newtechnology product within Indoor Climate for protecting against legionella inwater-borne cooling systems; and in-store merchandising for the launch ofMicrosoft's highly successful Zune digital music and video player. Creative andbespoke product solutions that deliver engineering advantage for global bluechip customers in well defined niche markets remains the common theme withinIMI, and is our chosen pathway to sustainable long term growth and marginimprovement. Our Fluid Controls businesses (69% of revenue, 77% of profits) are clearlyfaring better than our Retail Dispense businesses (31% of revenue, 23% ofprofits) at present, benefiting from strong end markets and a significantexposure to the faster growing emerging markets of Asia and Eastern Europe. Themedium term prospects for our Fluid Controls businesses continue to lookpositive and, notwithstanding the short term impact of the much anticipated fallin US truck volumes this year, we expect further top line growth and marginimprovement. Our Retail Dispense businesses had a more challenging year, withconsumer-led sectors generally less favourable, and market-specific issuesresulting in a postponement of capital expenditure and a downward pressure onmargins. Nonetheless, the long term drivers for these businesses remainencouraging, and the scope for volume and margin recovery, through productinnovation in particular, remains considerable. We accelerated our programme of upgrading management, through both externalrecruitment and increased investment in the development of our existing team.This programme is progressing well. We are encouraged by the calibre of our newrecruits, and confident that we are assembling the right skills and experienceto fully capitalise on future business opportunities. The recent strengtheningof the Board, with the appointment of Roy Twite as Executive Director for theRetail Dispense businesses, is another very positive development in this regard. Our balance sheet is in excellent shape and we are well placed to fund furtheracquisitions. We were particularly pleased with the performance of the Trufloacquisition which we concluded in April. A number of other acquisitions wereconsidered in the year but did not proceed for a variety of reasons. Ourinvestments in restructuring to accelerate further the transition ofmanufacturing to lower cost economies continued to plan in the year, and we haveadditional investments of around £20m programmed for each of the next two years.We are already starting to see the benefits of the actions we took during 2006and with a continued focus on margin improvement we look forward to achievingfurther progress. FINANCIAL AND OPERATIONS REVIEW Results summary Revenue increased 12% to £1,505m (2005: £1,341m) including acquisitions whichcontributed £120m or 9%. Operating profit before intangible amortisation and restructuring charges was£191.8m (2005: £163.7m), an increase of 17%. Acquisitions contributed £18m atthis level. Operating profit after restructuring costs and intangibleamortisation was £155.1m (2005: £153.9m). Interest costs on net borrowings were £7.5m (2005: £8.2m). Including the impactof pension fund financing (IAS 19) and financial instruments and derivatives(IAS 39), the total net financial income was £3.1m (2005: expense of £2.8m). Profit before tax was £158.2m (2005: £151.1m), an increase of 5%. The effectivetax rate for the year was 31%, compared to 32% in 2005. Adjusted earnings per share on continuing businesses (excluding the change infair value of financial instruments, intangible amortisation and restructuringcosts) was 38.3p (2005: 30.6p), an increase of 25%. The basic earnings pershare, after the charge in respect of discontinued operations, was 21.4p (2005:3.9p). Exchange rates If average exchange rates had remained at 2005 levels our reported 2006 revenueand profit growth would each have been 1% higher. The US$ weakened significantlylate in the year. If current exchange rates of US$ 1.96 and €1.49 had beenapplied to our 2006 results it is estimated that revenue would have been £49mlower and operating profit £7m lower. Discontinued operations The copper plumbing fittings business of IMI was sold in 2002 but we retainedsome responsibility for previous anti-competitive activity involving severalother European manufacturers. In October 2006, following a lengthy investigationinto the European fittings industry, the European Commission imposed a fine of€48.3m on the Company. The Company has lodged an appeal against the fine. Thisfine, together with certain legal expenses, is shown as a loss, after tax, of£33.5m from discontinued operations. Cash flow Operating cash flow was £147m, 86% of operating profit before intangibleamortisation. Corporate activity, comprising acquisitions, share issues, sharebuy backs and the redemption of a vendor loan note accounted for an outflow of£118m. After interest, tax, the additional pension scheme contribution andpaying dividends of £61m, the net cash outflow was £98m. Balance sheet The pension fund deficit under IAS19 at 31 December 2006 was £121m, £52m lowerthan the prior year, primarily due to an increase in the value of the UK pensionfund assets and additional contributions made in the year of £16m. Closing netdebt was £80m. In the following analysis, operating profit and margin are stated beforerestructuring costs and intangible amortisation. Organic growth rates excludethe impact of foreign exchange movements and acquisitions. Severe Service Revenue £300m (2005: £213m)Operating profit £45.1m (2005: £28.3m)Operating margin 15.0% (2005: 13.3%) The Severe Service revenues grew 41% to £300m. Of this growth, acquisitionscontributed £67m and organic growth was 11%. The growth in new construction project orders remains healthy at around 25%, ledby the strength of the oil and gas sector. We have experienced good growth in power markets and renewed interest in thenuclear sector, which is an area of particular expertise for our Severe Servicebusiness. Our order book momentum continues to out pace our shipment growth witha consequent lengthening of the order book. The US and Middle East markets were particularly positive and we continued tosee good progress in the Far East. Truflo was acquired in April 2006. Those Truflo businesses integrated intoSevere Service are benefiting from their exposure to the liquefied natural gasmarket which is demonstrating substantial momentum. The operating profit margin rose from 13.3% to 15%. We continue to invest inboth capacity expansion and sales and engineering resource to support the stronggrowth potential in this business. Fluid Power Revenue £557m (2005: £492m)Operating profit £72.4m (2005: £60.0m)Operating margin 13.0% (2005: 12.2%) Fluid Power revenues were £557m representing an increase of 13%. Excludingacquisitions and currency movements, underlying sales growth for Fluid Power was6%. Our sector businesses, which account for nearly 30% of Fluid Power revenues,performed well with solid progress in commercial vehicles and strong results inprint and medical, the latter being helped by our expansion in China. Recentacquisitions, including GT Developments and the relevant parts of the Truflobusiness, provided 2006 revenues of £38m. The industrial pneumatics business made steady progress with strong growth inAsia Pacific, firmer markets in Europe, and stable markets in the USA. Operating margins continued to make steady progress and increased from 12.2% to13%. The restructuring programme to transfer manufacturing capacity to lowercost operating environments is progressing well, with the project to relocatecapacity from the US to Mexico on track. Further programmes to transfer UK andGerman capacity have been announced in early 2007. Indoor Climate Revenue £186m (2005: £172m)Operating profit £29.5m (2005: £25.6m)Operating margin 15.9% (2005: 14.9%) Indoor Climate revenues were £186m, with organic growth of 8% in the year. The balancing valves business, which focuses on larger commercial properties,showed good growth in mainland Europe, and made excellent progress in the MiddleEast, Asia and the US on the back of significant investments in sales andengineering resource over the last two years. Our thermostatic radiator valve business, where the valves are primarilyinstalled in residential properties, benefited from a stronger ContinentalEuropean market, particularly Germany, although there was some pull forward into2006 due to VAT changes introduced in January 2007. Growth in Eastern Europe wasvery strong, including Russia, where we have recently commenced local assembly. Metal price increases were significant in the year but were recovered throughselling prices. Beverage Dispense Revenue £282m (2005: £278m)Operating profit £25.4m (2005: £28.4m)Operating margin 9.0% (2005: 10.2%) The 3% decline in organic revenues for the year reflects some of the short termchallenges facing beverage dispense, with Quick Service Restaurants (QSR)continuing to give priority to their hot side investments and with marginpressure on some of our older equipment lines. We are confident that both thesepressures will abate in time. Investment levels in the QSR sector are expectedto return to normal levels later in the year and significant cost reductionprogrammes are now underway, most notably the further relocation ofmanufacturing capacity to China and Mexico. These will help to reverse downwardmargin trends, albeit volumes and margins for at least the first half of 2007are unlikely to show much improvement on 2006. Our aftermarket business continued to perform strongly and the Northern Partsbusiness acquired in November 2005 made a solid contribution. We seeopportunities to expand this business further and continue to invest in salesand systems infrastructure accordingly. The longer term prospects for Beverage Dispense continue to look promising, withmany customers now enjoying some volume growth as they navigate their waythrough the swing in consumer preferences to healthier drinks. Merchandising Systems Revenue £180m (2005: £186m)Operating profit £19.4m (2005: £21.4m)Operating margin 10.8% (2005: 11.5%) Although organic revenues were marginally down in the year, momentum in themajority of our sectors is positive, with the consumer products segment, whichincludes merchandising equipment for electronic games, mobile phones and MP3players, particularly buoyant. Sales to the grocery sector were also strong but automotive, dairy and newspaperequipment sales declined in difficult markets with older product lines comingunder pricing pressure. The acceleration of our low cost sourcing programme from China and India shouldstart to generate margin improvement as the year progresses. Prospects for 2007 are encouraging, particularly the second half for which wehave recently secured orders for a number of important projects in the cosmeticsand consumer electronics sectors. CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2006 Notes 2006 2005 1 (restated) £m £m ----------------------------Revenue 2,3,4 1,505 1,341 ----------------------------Operating profit before restructuring costs and intangible amortisation 191.8 163.7Restructuring costs (19.7) (4.2)Intangible amortisation (17.0) (5.6) ----------------------------Operating profit 2,3,4 155.1 153.9 Financial income 5 73.8 67.0Financial expense 5 (70.7) (69.8) ----------------------------Net financial income/(expense) 5 3.1 (2.8) ---------------------------- Profit before tax------------------------------------------------------------------------------------Before restructuring costs and intangible amortisation 194.9 160.9Restructuring costs (19.7) (4.2)Intangible amortisation (17.0) (5.6)------------------------------------------------------------------------------------Total 158.2 151.1 Taxation 6 UK taxation (6.5) (2.5)Overseas taxation (42.5) (45.9) ----------------------------Total (49.0) (48.4) Profit of continuing businesses after tax 109.2 102.7 Loss from discontinued operations (net of tax) (33.5) (86.5) ----------------------------Total profit for the year 75.7 16.2 ============================ Attributable to:Equity shareholders of the Company 72.7 13.5Minority interest 3.0 2.7 ----------------------------Total profit for the year 75.7 16.2 ============================ Earnings per share 7Basic earnings per share 21.4p 3.9pDiluted earnings per share 21.3p 3.8p Basic earnings per share (continuing businesses) 31.3p 28.6pDiluted earnings per share (continuing businesses) 31.1p 28.4p CONSOLIDATED BALANCE SHEET at 31 December 2006 2006 2005 £m £m ----------------------------------------AssetsIntangible assets 286.8 185.8Property, plant and equipment 190.3 192.1Deferred tax assets 55.8 75.5 ----------------------------------------Total non-current assets 532.9 453.4 ---------------------------------------- Inventories 217.4 205.6Trade and other receivables 295.2 301.8Current tax 8.7 18.6Investments 15.0 13.0Cash and cash equivalents 107.2 188.9 ----------------------------------------Total current assets 643.5 727.9 ----------------------------------------Total assets 1,176.4 1,181.3 ---------------------------------------- LiabilitiesBank overdraft (3.6) (6.9)Interest-bearing loans and borrowings (43.3) (44.4)Provisions (6.2) (1.1)Current tax (18.2) (27.1)European Commission fine (33.5) -Trade and other payables (322.0) (301.9) ----------------------------------------Total current liabilities (426.8) (381.4) ---------------------------------------- Interest-bearing loans and borrowings (140.7) (148.2)Employee benefits (120.6) (172.8)Provisions (34.3) (33.0)Deferred tax liabilities (15.5) (4.4)Other payables (21.9) (20.4) ----------------------------------------Total non-current liabilities (333.0) (378.8) ----------------------------------------Total liabilities (759.8) (760.2) ----------------------------------------Net assets 416.6 421.1 ---------------------------------------- EquityShare capital 90.3 89.6Share premium 155.2 149.4Other reserves (0.4) 7.3Retained earnings 167.6 171.3 ======================================== Total equity attributable to equity shareholders of the Company 412.7 417.6Minority interest 3.9 3.5 ----------------------------------------Total equity 416.6 421.1 ======================================== CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2006 2006 2005Cash flows from operating activities (restated) £m £m ------------------------- Profit for the period 75.7 16.2 Adjustments for: Depreciation 38.7 38.4 Amortisation 17.0 5.6 Loss from discontinued operations (net of tax) 33.5 86.5 Gain on sale of property, plant and equipment (2.0) - Financial income (73.8) (67.0) Financial expense 70.7 69.8 Equity-settled share-based payment expenses 2.9 2.0 Income tax expense 49.0 48.4 Increase in trade and other receivables (30.9) (8.9) (Increase)/decrease in inventories (14.8) 5.7 Increase in trade and other payables 19.0 24.6 Increase/(decrease) in provisions and employee benefits 1.3 (12.0) -------------------------Cash generated from the operations 186.3 209.3 Income taxes paid (40.0) (54.2) ------------------------- 146.3 155.1 Additional pension scheme funding (15.6) (15.6) EC fine - (31.3) -------------------------Net cash from operating activities 130.7 108.2 ------------------------- Cash flows from investing activities Interest received 8.4 10.0 Proceeds from sale of property, plant and equipment 7.7 5.6 Sale of investments 0.1 - Purchase of investments (2.6) (1.1) Acquisition of subsidiaries, net of cash acquired (118.4) (63.6) Disposal of subsidiary/discontinued operations (net of cash disposed) - 206.4 Redemption of vendor loan note re Polypipe 35.9 - Acquisition of property, plant and equipment (39.7) (41.9) Capitalised development expenditure (4.4) (5.2) -------------------------Net cash from investing activities (113.0) 110.2 ------------------------- Cash flows from financing activities Interest paid (17.1) (18.2) Purchase of own shares (42.4) (72.6) Proceeds from the issue of share capital for employee share schemes 6.6 10.4 Drawdown/(repayment) of borrowings 7.4 (14.0) Dividends paid to minority interest (2.1) (1.6) Dividends paid (60.7) (59.4) -------------------------Net cash from financing activities (108.3) (155.4) ------------------------- Net (decrease)/increase in cash and cash equivalents (90.6) 63.0Cash and cash equivalents at start of year 182.0 115.4Effect of exchange rate fluctuations on cash held 12.2 3.6 -------------------------Cash and cash equivalents at end of year 103.6 182.0 ------------------------- Notes to the cash flow appear in note 9 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 2006 2005 £m £m ----------------------------- Foreign exchange translation differences (9.6) 5.6Actuarial gains/(losses) on defined benefit plans (net of tax) 23.3 (36.4)Effective portion of change in fair value of net investment hedges (net of tax) 1.9 2.3 -----------------------------Income and expense recognised directly in equity 15.6 (28.5)Profit for the year 75.7 16.2 -----------------------------Total recognised income and expense for the year 91.3 (12.3) ----------------------------- Attributable to:Equity holders of the Company 88.3 (15.0)Minority interest 3.0 2.7 -----------------------------Total recognised income and expense for the year 91.3 (12.3)-------------------------------------------------------------------------------- RECONCILIATION OF CHANGES IN SHAREHOLDERS' EQUITY 2006 2005 £m £m ----------------------------- Shareholders' equity at start of year 417.6 550.8 Total recognised income and expense for the year 88.3 (15.0) Dividends paid (60.7) (59.4)Share based payments (net of tax) 3.4 3.4Issue of ordinary shares net of costs 6.5 10.4Purchase of own shares (42.4) (72.6) ----------------------------- (93.2) (118.2) ----------------------------- Shareholders' equity at end of year 412.7 417.6 ----------------------------- NOTES RELATING TO THE FINANCIAL STATEMENTS 1. Restatement 2005 comparative figures have been restated where appropriate to exclude and separately identify restructuring costs, to show financial income and expense related to defined benefit pension schemes gross and to show loss from discontinued operations (net of tax) and the equivalent in the cash flow as single line items. 2. Segmental analysis Segment information is presented in the consolidated financial statements in respect of the Group's continuing business segments, which are the primary basis of segment reporting. The business segment reporting format reflects the Group's management and internal reporting structure. Operating profit before restructuring costs Revenue & intangible amortisation Operating profit 2006 2005 2006 2005 2006 2005 BY ACTIVITY £m £m £m £m £m £m ---------------- --------------------- ---------------- Fluid Controls 1,043 877 147.0 113.9 116.6 107.6 -------------------------------------------------------------------------------------------- Severe Service 300 213 45.1 28.3 33.4 27.3 Fluid Power 557 492 72.4 60.0 55.9 55.4 Indoor Climate 186 172 29.5 25.6 27.3 24.9 -------------------------------------------------------------------------------------------- Retail Dispense 462 464 44.8 49.8 38.5 46.3 -------------------------------------------------------------------------------------------- Beverage Dispense 282 278 25.4 28.4 22.0 26.3 Merchandising Systems 180 186 19.4 21.4 16.5 20.0 -------------------------------------------------------------------------------------------- Total continuing operations 1,505 1,341 191.8 163.7 155.1 153.9 ------------------------------------------- Net financial income/(expense) 3.1 (2.8) Taxation (49.0) (48.4) ---------------- Profit of continuing businesses after tax 109.2 102.7 ----------------------------------------------------------------------------------------------- REVENUE BY GEOGRAPHICAL DESTINATION 2006 2005 £m £m ---------------- UK 173 164 Germany 194 179 Rest of Europe 376 324 USA 490 466 Asia/Pacific 183 141 Rest of World 89 67 ---------------- Total continuing operations 1,505 1,341 ---------------- 3. Acquisitions The only material acquisition completed in the period was of the whole share capital of Truflo, a leading specialist in valves and related flow control products, acquired in April 2006 and reported within Severe Service and Fluid Power. Of the reported increase in revenue and operating profit of continuing businesses (before restructuring costs, intangible amortisation and exceptional items), £62m and £11.2m respectively result from the Truflo acquisition. The extra months of the prior year acquisitions of Syron Engineering & Manufacturing and GT Development Corporation (Fluid Power), the ABB KK Control Valve business (Severe Service) and Northern Parts & Service (Beverage Dispense) contributed £58m and £6.5m revenue and operating profit respectively. Assuming the Truflo acquisition had been completed on 1 January 2006, the Group revenue and operating profit would have been higher by £19m and £3m respectively. 4. Discontinued businesses There were no businesses discontinued in 2006. In September 2006, the European Commission announced the imposition of a fine of €48.3m on IMI in relation to its former copper fittings business, which was sold in 2002. Pending the outcome of an appeal, the full amount of the fine together with associated costs has been provided and is reported in the income statement as a loss on discontinued operations (net of tax). The fine was paid in January 2007. The loss on discontinued operations (net of tax) in 2005 comprises the after tax trading result of the Polypipe Group together with the loss on its disposal, which was completed on 2 September 2005, plus closure costs of its Door and Windows business which was closed prior to sale. 5. Net financial income & expense 2006 2005 Interest Other Total Interest Other Total £m £m £m £m £m £m ---------------------------------------------------------- Interest income 5.5 5.5 6.9 6.9 Others Gain on remeasurement of financial instruments and derivatives 5.3 5.3 3.3 3.3 Expected return on defined benefit pension plan assets* 63.0 63.0 56.8 56.8 ---------------------------------------------------------- Financial income 5.5 68.3 73.8 6.9 60.1 67.0 ---------------------------------------------------------- Interest expense (13.0) (13.0) (15.1) (15.1) Loss on remeasurement of financial instruments and derivatives (3.0) (3.0) (3.9) (3.9) Financial cost of defined benefit pension scheme liabilities* (54.7) (54.7) (50.8) (50.8) ---------------------------------------------------------- Financial expense (13.0) (57.7) (70.7) (15.1) (54.7) (69.8) ---------------------------------------------------------- Net financial income/(expense) (7.5) 10.6 3.1 (8.2) 5.4 (2.8) ---------------------------------------------------------- * In line with best practice, the components of financial income and expense related to defined benefit pension schemes have been separated into their respective categories. The comparatives have been restated accordingly. Net financial income/expense is unaffected. 6. Taxation The effective tax rate on profit before tax is 31% (2005: 32%). 7. Earnings per ordinary share The weighted average number of shares in issue during the period, net of shares purchased by the company and held as treasury shares or to satisfy share option vesting, was 339.3m, 341.3m diluted for the effect of outstanding share options (2005: 349.7m, 352.4m diluted). Basic earnings per share have been calculated on earnings of £72.7m, (2005: £13.5m) and the equivalent ratios for continuing businesses have been calculated on earnings of £106.2m (2005: £100.0m), before losses on discontinued operations (net of tax). The directors consider that adjusted earnings per share figures, using earnings as calculated below, give a more meaningful indication of the underlying performance. From continuing operations 2006 2005 (restated) £m £m --------------------- Profit for the year 109.2 102.7 Minority interest (3.0) (2.7) Charges/(credits) included in profit for the year: Change in fair value of financial instruments (2.3) 0.6 Intangible amortisation 17.0 5.6 Restructuring costs 19.7 4.2 Taxation on charges/(credits) included in profit before tax (10.7) (3.5) --------------------- Earnings for adjusted EPS 129.9 106.9 --------------------- Weighted average number of shares 339.3m 349.7m --------------------- Adjusted EPS 38.3p 30.6p --------------------- 8. Dividend The directors recommend a final dividend of 11.7p per share (2005: 10.85p) payable on 25 May 2007 to shareholders on the register at close of business on 13 April 2007, which will absorb £39.5m (2005: £37.1m). Together with the interim dividend of 7.0p per share paid on 20 October 2006, this makes a total distribution of 18.7p per share (2005: 17.5p per share). In accordance with IAS10: 'Events after the Balance Sheet date', this final proposed dividend has not been reflected in the 31 December 2006 balance sheet. 9. Cash flow reconciliations Reconciliation of cash generated from the operations 2006 2005 Reconciliation of operating cash flow £m £m -------------------- Cash generated from the operations 186.3 209.3 Sale of property, plant and equipment 7.7 5.6 Net purchase of investments (2.5) (1.1) Acquisition of property, plant and equipment (39.7) (41.9) Capitalised development expenditure (4.4) (5.2) -------------------- Operating cash flow 147.4 166.7 -------------------- Reconciliation of net cash to movement in net borrowings Net (decrease)/increase in cash and cash equivalents (90.6) 63.0 (Drawdown)/repayment of borrowings (7.4) 14.0 -------------------- Cash (outflow)/inflow (98.0) 77.0 Currency translation differences 28.2 (11.9) -------------------- Movement in net borrowings in the year (69.8) 65.1 Net borrowings at the start of the year (10.6) (75.7) -------------------- Net borrowings at the end of year (80.4) (10.6) -------------------- 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 US Dollar and the Euro - the relevant rates of exchange were: Average Rates Balance Sheet Rates 2006 2005 2006 2005 ------------------ ------------------- Euro 1.47 1.46 1.48 1.46 US Dollar 1.85 1.82 1.96 1.72 The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2006 or 2005 but is derived from the 2006 accounts. Statutory accounts for 2005 have been delivered to the registrar of companies and those for 2006 will be delivered in due course. The auditor has reported on those accounts; its 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 237(2) or (3) of the Companies Act 1985. The Company's 2006 Annual Report and notice of the forthcoming Annual General Meeting will be posted to shareholders on 4 April 2007. - ends - Enquiries to: Graham Truscott - Corporate Communications - Tel: 0121 717 3712 Press release available on the internet at www.imiplc.com Issued by: Nick Oborne - Weber Shandwick Financial - Tel: 020 7067 0700 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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