6th Mar 2006 07:02
IMI PLC06 March 2006 6 March 2006 IMI plc Preliminary Results IMI plc, the major international engineering group, today announced itspreliminary results for the year ended 31 December 2005. 2005 2004 % changeContinuing businesses: Sales £1341m £1239m +8.2 Operating profit * £159.5m £137.2m +16.3 Operating cash flow * £166.7m £155.5m Total: Sales £1578m £1611m -2.0 Operating profit * £178.3m £164.4m +8.5 Total profit before tax * £175.5m £161.1m +8.9 Adjusted earnings per share ** 33.4p 29.5p +13.2 Profit before tax and exceptional items £169.9m £155.3m +9.4 Exceptional items after tax (£99.3m) (£33.1m) Basic earnings per share 3.9p 19.1p Total dividend for year 17.5p 16.5p +6.1 * before intangible amortisation and exceptional items** before change in fair value of financial instruments, intangible amortisation and exceptional items Norman Askew, Chairman of IMI commented: "The continued progress we have made in our platform businesses is demonstratedby another year of improved performance with organic sales growth of around 5%,operating profit increased by 16%, operating margins increased to nearly 12% andcontinued strong operational cash generation. With a healthy order book acrossour business we expect this steady progress to continue in 2006." CHAIRMAN'S COMMENTS 2005 has seen IMI continue to build on the foundations laid over the last fewyears. With the sale of Polypipe in September, all the businesses previouslyidentified as non-core have now been sold. This leaves us firmly focused on ourfive continuing businesses in Fluid Controls and Retail Dispense, our chosenplatforms for profitable growth. The continued progress we have made in thesebusinesses is demonstrated by another year of improved performance with organicsales growth of around 5%, operating profit increased by 16%, operating marginsincreased to nearly 12% and continued strong operational cash generation.Corporate activity during the year also saw expenditure of £64m on acquisitionsand £73m on the on-market share buy-back programme. With businesses capable of regularly achieving healthy cash conversion and avery sound balance sheet we have considerable scope to make organic andacquisition investment to help promote further growth. With this in mind, theBoard has sanctioned an acceleration of some further restructuring withinexisting businesses and strengthened the Group's merger and acquisitionresource. The acquisition of Truflo, announced today, is a welcome addition to our Fluid Controls business. The on-market buy-back programme introduced in2005 will continue to be used as a flexible tool in our balance sheet management. The Board continues to recognise the importance of dividend income toshareholders and we are recommending the final dividend be increased by 6.4%from 10.2p to 10.85p. This makes the total dividend for the year 17.5p, anincrease of 6.1% over the 16.5p paid in respect of 2004. Outlook Momentum in the US and Asia appears still to be positive and although we remaincautious about the macro-economic outlook for the UK and Europe, there are somesigns that confidence is improving. With a healthy order book across ourbusinesses we expect the steady progress in both Fluid Controls and RetailDispense to continue. CHIEF EXECUTIVE'S REVIEW 2005 proved to be another positive year for the Group, with profit before tax,intangible amortisation and exceptional items at £175.5m, an all-time record forIMI. The disposal of Polypipe in September effectively brings to a close theportfolio repositioning of IMI announced in 2001. With five platform businesseseach with leading market positions in clearly identified global niches, the newIMI can look forward with confidence to further growth and margin improvement.The ability to capture market insight, and to convert that into practical,innovative and customised engineering solutions for our targeted customers isthe common theme across all our businesses, and is central to delivering againstour growth and margin ambitions. One example of such creativity in 2005 was thelaunch of a new pneumatic suspension system for Land Rover's Discovery and RangeRover models, providing a breakthrough in off-road comfort, and delivering areal point of difference to Land Rover in the ever competitive automotivesector. Across the businesses we see potential to develop further our growth and marginimprovement. End market trends are largely positive, our market positions arestrengthening, and we have a growing reputation for successful innovation withan increasing number of global, blue chip clients. Our focus now is toaccelerate investments in new product development and key account management,with a particular focus on improving the quality of our people through bothinternal development and external recruitment. We also see further opportunitiesto improve our efficiencies and reduce our cost base through expanding ourexisting low cost manufacturing capabilities in Mexico, The Czech Republic andChina, and accelerating our Far East materials outsourcing programme. We expect to invest around £20m per year for each of the next three years bothin upgrading our people talent and transferring more of our manufacturingcapacity to already established low cost facilities, raising the percentage oftotal production in these territories from around 25% today to 40% in threeyears' time. We would, in time, expect to improve operating margins as a resultby 150 to 200 basis points. In addition to this accelerating internal investment and the continuation of theshare buy-back programme, we are confident of spending at least £80-100m perannum on judicious top quality bolt-on acquisitions. The acquisition of Truflo gets us off to a strong start to 2006. This combination of internal investment, bolt-on acquisitions, and share buy-backs is expected to introduce overall debt of around £400-500m over the next three years, a level which we believe to be wholly consistent with optimising our balance sheet and enhancing shareholder returns. FINANCIAL AND OPERATIONS REVIEW Results summary Following the sale of Polypipe, the results have been analysed betweencontinuing and discontinued operations. Sales from continuing businesses at £1341m (2004: £1239m) were 8% ahead of lastyear including £35m (3%) from acquisitions. Operating profit from continuingbusinesses before intangible amortisation was £159.5m (2004: £137.2m), 16.3%ahead, including £4.6m (3%) from acquisitions. Discontinued businesses comprise the eight months trading of the Polypipebusinesses up to the date of sale on 2 September 2005. 2004 also includes theDoors and Windows division of Polypipe which was closed prior to the disposal.Sales for the period at £237m and operating profit at £18.8m compared to £372mand £27.2m respectively, for the full year 2004. Total operating profit before intangible amortisation and exceptional items was£178.3m (2004: £164.4m), an increase of 8.5%. Interest costs on net borrowings were £8.2m, a cover of 22 times. Including theimpact of pension fund financing under IAS19 and the change in fair value offinancial instruments under IAS39, net financing costs were £2.8m (2004: £3.3m). Profit before tax, intangible amortisation and exceptional items, is £175.5m(2004: £161.1m) an increase of 8.9%. After intangible amortisation, profitbefore tax and exceptional items is £169.9m (2004: £155.3m) an increase of 9.4%. The effective tax rate for the year on profit before intangible amortisation andexceptional items is 32% compared to 33% in 2004. Adjusted earnings per share (excluding the change in fair value of financialinstruments, intangible amortisation and exceptional items) is 33.4p (2004:29.5p) an increase of 13.2%. Adjusted earnings per share from continuingbusinesses only was 29.7p (2004: 24.2p) an increase of 22.7%. Exceptional items The net exceptional loss arising from the sale of Polypipe and closure of theDoors and Windows division was £99.3m including acquired goodwill. This lossincludes a discount of £3.1m from par value on the vendor loan, the proceedsfrom which were received in February 2006. The impact of this exceptional losshas been to reduce basic earnings per share by 28.4p, resulting in a basicearnings per share of 3.9p compared to 19.1p in 2004. Cash flow Operating cash flow in continuing businesses was £167m, 105% of operating profit(before intangible amortisation). Corporate activity comprising disposals,acquisitions and share buy-back amounted to a £73m inflow. After payingdividends and the additional pension scheme funding contribution, and absorbing£31m in respect of the European Commission fine, cash inflow for the year was£77m. Balance sheet The pension fund deficits under IAS19 increased by £30m during the year largelyas a result of revised mortality assumptions in the main UK fund. The actuarialvaluation of the UK fund on 31 March 2005 revealed a funding deficit of £51mwhich is being eliminated by annual payments of around £16m starting in December2005 and continuing over the next three years. Closing net debt was £10.6m (2004: £75.7m). The following is a review of our business areas where comparisons with theprevious year relate to continuing operations and operating profit is statedbefore intangible amortisation. FLUID CONTROLS Severe Service Sales £213m (2004: £177m)Operating profit £28.3m (2004: £22.5m)Operating margin 13.3% (2004: 12.7%) Another year of strong growth in our Severe Service business furtherdemonstrates our ability to capture opportunities in the buoyant power and oil &gas markets. Organic sales growth was 18% with growth in order intake running ata similar level. New valves continue to drive the majority of the growth withthe power markets in Asia and the oil & gas markets in the Middle Eastparticularly strong. Although the current focus is on new valve opportunitiesour after-market customer service business continues to increase with the rateof growth improved over last year. In addition, government mandated maintenanceprogrammes have generated good demand in our Nuclear Services business forstrainer equipment for nuclear power stations. Our presence in Japan and the Asian markets has been significantly strengthenedby the recent acquisition in November 2005 of the ABB control valves businessand the investments in businesses in Korea and China. With the market outlookremaining very positive and a strong order backlog, we are well positioned goinginto 2006. Fluid Power Sales £492m (2004: £439m)Operating profit £58.5m (2004: £43.5m)Operating margin 11.9% (2004: 9.9%) Our Fluid Power business continued the encouraging progress seen over the lastfew years with the momentum being maintained both in growing sector sales andoperational improvements. Overall organic sales growth was around 4% despiterelatively subdued European end markets. The sector growth was again led byGlobal Truck and the acquisition of GT Development in November strengthensfurther our product and market position. The medical and printing and packagingsectors also showed good growth. Syron, our in-plant automotive tooling businessbought in February 2005 made a good contribution in its first year. In thegeneral pneumatics market, the US and Asia Pacific had another positive year. InEurope the markets were somewhat mixed although recent order trends have beenmore encouraging. We have recently launched an innovative European web baseddirect sales initiative aimed at improving product availability and service fora focused group of smaller customers; results to date have been encouraging. Operating margins have improved considerably over the last few years and havenow reached 12%. We have identified a number of initiatives to improve thisfurther and have recently announced the transfer of more production from our USLittleton operations to our lower cost facility in Mexico. Indoor Climate Sales £172m (2004: £168m)Operating profit £25.3m (2004: £24.3m)Operating margin 14.7% (2004: 14.5%) Despite low growth and significant new material price inflation, particularlycopper, Indoor Climate produced another resilient performance. Lowerthermostatic radiator valve (TRV) sales in Germany were offset by improved saleselsewhere, particularly Eastern Europe. Sales of balancing valves across Europeimproved in the second half to finish overall ahead of last year and this offersencouragement for 2006. We continue to gain momentum in our focus on targetedmarkets and sectors and have had good success with PFI contracts in the UK,project wins in the Middle East and Asia and further growth in Eastern Europe. We are increasingly looking at using our considerable brand strength with thelaunch of some new products which will be available in 2006. Indoor Climateremains a highly focused business with strong brand names and leading marketpositions. RETAIL DISPENSE Beverage Dispense Sales £278m (2004: £267m)Operating profit £27.1m (2004: £24.9m)Operating margin 9.7% (2004: 9.3%) In the US, consumer confidence has in the main remained positive throughout 2005with increased restaurant traffic across the sector. Beverage Dispense in the UShas benefited and produced a strong underlying performance both in the brandowner and foodservice business. We did particularly well within the convenienceand gas category and developed further our relationship with national accountsincluding the recognition earned from YUM! Brands as its "Global EquipmentSupplier of the Year". Operationally, transfer of manufacturing to China andMexico has continued and lower cost procurement has been driven robustly. Our USbeverage parts operation is gaining momentum and will be strengthened by theacquisition in November 2005 of Northern Parts. In Europe both the soft drinkand beer markets have been disappointing for most of the year although recentlythe trend has improved. In the UK the second half has seen improving beerequipment sales. We have now established a manufacturing presence in the Ukraineto access the growing Ukraine and Russian beer markets. Asia Pacific continuesto offer good potential and growth has again been strong in 2005. We continue tolook at the markets we serve to develop new products and initiatives which willfurther our undoubted leadership position. Merchandising Systems Sales £186m (2004: £188m)Operating profit £20.3m (2004: £22.0m)Operating margin 10.9% (2004: 11.7%) It was always going to be difficult to maintain the rate of growth inMerchandising Systems especially in the absence of large one-off contractsenjoyed in the previous two years. Nevertheless, there were many successes in2005. Display Technologies had an excellent year with a strong performance inthe beverage, packaged and bulk food sectors. Front-end merchandising anddisplay carts achieved further growth and we continued to develop in the homeimprovement sector. In the cosmetics sector volumes again improved and we alsoobtained our first significant commitment from a major US brand owner. In thehigh growth consumer electronics sector we secured new business in mobiletelephones and children's teaching aids. In the automotive sector, as expected,activity was lower in merchandising for car showrooms in the US, resulting inlower sales than last year. However, it is encouraging that in recent months wehave secured over $100m in extensions of existing or new three to five yearcontracts within the automotive sector. We continue to invest in unique researchand technology tools to help drive tangible benefits for our customers. CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2005 Continuing Discontinued Total Continuing Discontinued Total 2005 2005 2005 2004 2004 2004 Notes £m £m £m £m £m £m __________________________________________ _________________________________Revenue 2,3,4 1,341 237 1,578 1,239 372 1,611 Operating profit before intangible amortisation 2,3,4 159.5 18.8 178.3 137.2 27.2 164.4 Intangible amortisation (5.6) - (5.6) (5.8) - (5.8) __________________________________________ _________________________________Operating profit 2,4 153.9 18.8 172.7 131.4 27.2 158.6European Commission fine* 3 - - - - (33.1) (33.1) __________________________________________ _________________________________Profit/(loss) before financing costs 153.9 18.8 172.7 131.4 (5.9) 125.5 Financial income 5 16.2 16.2 14.0 14.0 Financial expenses 5 (19.0) (19.0) (17.3) (17.3) Profit/(loss) before taxBefore exceptional items and intangible amortisation 156.7 18.8 175.5 133.9 27.2 161.1European Commission fine* - - - - (33.1) (33.1) Intangible amortisation (5.6) - (5.6) (5.8) - (5.8) __________________________________________ _________________________________ Total 151.1 18.8 169.9 128.1 (5.9) 122.2 UK taxation 6 (2.5) (5.7) (8.2) (1.2) (8.5) (9.7) Overseas taxation 6 (45.9) (0.3) (46.2) (43.0) (0.2) (43.2) __________________________________________ _________________________________Profit/(loss) after tax before loss on disposal 102.7 12.8 115.5 83.9 (14.6) 69.3 Loss after tax on disposal and associated closure costs - (99.3) (99.3) - - - __________________________________________ _________________________________ Total profit/(loss) for the period 102.7 (86.5) 16.2 83.9 (14.6) 69.3 __________________________________________ _________________________________ Attributable to:Equity shareholders of the parent 13.5 67.5 Minority Interest 2.7 1.8 ________ ________Total profit for the period 16.2 69.3 ________ ________ Earnings per share 7Basic earnings/(loss) per share 28.6p (24.7p) 3.9p 23.2p (4.1p) 19.1pDiluted earnings/(loss) per share 28.4p (24.6p) 3.8p 23.0p (4.1p) 18.9p * relating to businesses disposed of in 2002. CONSOLIDATED BALANCE SHEETat 31 December 2005 2005 2004 £m £m ________________________________AssetsIntangible assets 185.8 333.4Property, plant and equipment 192.1 279.7Deferred tax assets 75.5 61.7 ________________________________Total non-current assets 453.4 674.8 ________________________________ Inventories 205.6 248.1Trade and other receivables 301.8 305.6Current tax 18.6 8.6Investments 13.0 8.0Cash and cash equivalents 188.9 120.7 ________________________________Total current assets 727.9 691.0 ________________________________Total assets 1181.3 1365.8 ________________________________ LiabilitiesBank overdraft (6.9) (5.3)Interest-bearing loans and borrowings (44.4) (55.2)Exceptional payables - EC fine - (31.3)Current tax (27.1) (31.4)Trade and other payables (301.9) (331.5) ________________________________Total current liabilities (380.3) (454.7) ________________________________ Interest-bearing loans and borrowings (148.2) (135.9)Employee benefits (172.8) (142.4)Provisions (34.1) (41.3)Deferred tax liabilities (4.4) (8.3)Other payables (20.4) (28.4) ________________________________Total non-current liabilities (379.9) (356.3) ________________________________Total liabilities (760.2) (811.0) ________________________________Net assets 421.1 554.8 ________________________________ EquityIssued capital 89.6 88.7Share premium 149.4 139.9Other reserves 7.3 (0.6)Retained earnings 171.3 322.8 ________________________________ Total equity attributable to equity shareholders of the parent 417.6 550.8Minority interest 3.5 4.0 ________________________________Total equity 421.1 554.8 ________________________________ CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2005 2005 2004 Note £m £m __________________________________________ Cash flows from operating activitiesCash generated from the operations 9 212.3 239.4Interest paid (18.2) (17.4)Income taxes paid (54.2) (52.3) __________________________________________Net cash from operating activities 139.9 169.7 Additional pension scheme funding (15.6) -EC fine (31.3) - __________________________________________ 93.0 169.7 __________________________________________ Cash flows from investing activitiesProceeds from sale of property, plant & equipment 6.8 4.0(Purchase of)/proceeds from sale of investments (1.1) 0.2Interest received 10.0 8.2Acquisition of subsidiaries, net of cash acquired (63.6) (20.9)Disposal of subsidiary 209.0 -Acquisition of property, plant and equipment (48.7) (50.8)Capitalised development expenditure (5.2) (2.8) __________________________________________Net cash from investing activities 107.2 (62.1) __________________________________________ Cash flows from financing activitiesProceeds from the issue of share capital 10.4 3.8Purchase of own shares (72.6) -Repayment of borrowings (14.0) (9.8)Dividends paid to minorities (1.6) (1.3)Dividends paid (59.4) (55.9) __________________________________________Net cash from financing activities (137.2) (63.2) __________________________________________ Net increase in cash and cash equivalents 63.0 44.4Cash and cash equivalents at start of period 115.4 66.9Effect of exchange rate fluctuations on cash held 3.6 4.1 __________________________________________Cash and cash equivalents at end of period 182.0 115.4 __________________________________________ Reconciliation of net cash to movement in net borrowings Net increase in cash and cash equivalents 63.0 44.4Repayment of borrowings 14.0 9.8 __________________________________________Cash inflow 77.0 54.2Currency translation differences (11.9) 14.5 __________________________________________Movement in net borrowings in the period 65.1 68.7Net borrowings at the start of the period (75.7) (144.4) __________________________________________Net borrowings at the end of period (10.6) (75.7) __________________________________________ CONSOLIDATED STATEMENTOF RECOGNISED INCOME AND EXPENSE 2005 2004 £m £m ____________________________Foreign exchange translation differences 5.6 2.3Actuarial (losses)/gains on defined benefit plans (net of deferred tax) (36.4) 1.0Fair value gains/(losses) on financial instruments (net of tax) 2.3 (4.5) ____________________________ Income and expense recognised directly in equity (28.5) (1.2) Profit for the period 16.2 69.3 ____________________________Total recognised income and expense for the period (12.3) 68.1 ____________________________ Attributable to: Equity holders of the parent (15.0) 66.3 Minority interest 2.7 1.8 ____________________________Total recognised income and expense for the period (12.3) 68.1____________________________________________________________________________________________ STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 2005 2004 £m £m ____________________________Shareholders' equity at start of period 550.8 534.9 Total recognised income and expense for the period (15.0) 66.3 Dividends paid (59.4) (55.9)Share based payments (net of deferred tax) 3.4 1.7Issue of ordinary shares net of costs 10.4 3.8Purchase of own shares into treasury (72.6) - ____________________________ (118.2) (50.4) ____________________________Shareholders' equity at end of period 417.6 550.8 ____________________________ NOTES RELATING TO THE FINANCIAL STATEMENTS 1. Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the annual consolidated financial statements of the Group, for the year ending 31 December 2005, be prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the EU ("adopted IFRS"). The transition date for the application of IFRS was 1 January 2004. The comparative figures for 31 December 2004 have been restated to reflect the transition to IFRS. 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 intangible Revenue amortisation Operating profit 2005 2004 2005 2004 2005 2004 BY ACTIVITY £m £m £m £m £m £m ________________ __________________ ________________ Fluid Controls 877 784 112.1 90.3 107.6 85.2 Severe Service 213 177 28.3 22.5 27.3 22.4 Fluid Power 492 439 58.5 43.5 55.4 38.9 Indoor Climate 172 168 25.3 24.3 24.9 23.9 ________________________________________________________________________________________________ Retail Dispense 464 455 47.4 46.9 46.3 46.2 Beverage Dispense 278 267 27.1 24.9 26.3 24.2 Merchandising Systems 186 188 20.3 22.0 20.0 22.0 ________________________________________________________________________________________________ Total continuing operations 1341 1239 159.5 137.2 153.9 131.4 ___________________________________________________________________________________________________ REVENUE BY GEOGRAPHICAL DESTINATION 2005 2004 £m £m ________________ UK 164 164 Germany 179 178 Rest of Europe 324 300 USA 466 431 Asia/Pacific 141 107 Rest of World 67 59 ________________ Total continuing operations 1341 1239 ________________ The results in respect of discontinued operations are set out in note 3. 3. Discontinued operations The Polypipe businesses previously included under Building Products were sold to New York based private equity investment fund, Castle Harlan Partners IV LP. The proceeds of the transaction at the time of the sale were worth up to £293m comprising £219m payable in cash, a vendor loan note with a par value of £39m and a contingent consideration of £35m based on performance targets for the three years ending 31 December 2007. The loan note could be repaid through a buyer refinancing in the high yield market or else IMI could exercise its right to sell the note at a time consistent with realising best value. No repayment was received and we exercised our right to sell the note. The proceeds of £35.9m were received in February 2006. The loss on sale of Polypipe and the associated costs of the closure of the Doors and Windows division are shown as an exceptional item arising on discontinued businesses. The exceptional loss after available tax relief is £99.3m. In arriving at the overall loss the contingent consideration has not been recognised as the amount receivable will not be known until 2008. In 2004 we were notified of a fine imposed by the European Commission in respect of the former copper tube business. Pending the outcome of an appeal made in January 2005, the full amount of the fine and associated costs, together amounting to £33.1m (no tax relief on the fine has been assumed), were provided at 31 December 2004. The fine was paid in February 2005 and to date we are still awaiting the outcome of the appeal. We reported in September that we had received a Statement of Objections from the European Commission with respect to our former copper plumbing fittings businesses which were sold in 2002. A decision from the Commission as to the level of any possible fine in the fittings enquiry is expected at some point in 2006. It is not possible to give any reliable estimate of the likely level of fine and consequently no provision has been made at 31 December 2005. The revenue and profit from discontinued operations were as follows: 2005 2004 £m £m £m ________________ _______ Revenue 237 372 _______ _______ Operating profit 18.8 27.2 EC fine relating to copper tube businesses sold in 2002 - (33.1) Less tax (6.0) (8.7) _______ _______ 12.8 (14.6) Loss on disposal (96.6) Closure costs (8.0) _______ (104.6) Less tax 5.3 _______ (99.3) - _______ _______ (86.5) (14.6) _______ _______ 4. Acquisitions The acquisitions completed in the period were as follows: Reporting segment: Acquisition(s) Severe Service: ABB KK control valve businesses (November) Fluid Power: Syron Engineering & Mfg (February); GT Development Corp (November) Beverage Dispense: Northern Parts & Service (November) Of the reported increase in turnover and operating profit (before intangible amortisation), £35m and £4.6m respectively result from the above acquisitions together with the extra months of the prior year acquisition of Fluid Automation Systems (Fluid Power). 5. Net financing costs 2005 2004 £m £m ______________________ Interest income 6.9 6.0 Interest expense (15.1) (15.2) ______________________ (8.2) (9.2) ______________________ Other financing income 9.3 8.0 Other financing expense (3.9) (2.1) ______________________ 5.4 5.9 ______________________ ______________________ Net financing expense (2.8) (3.3) ______________________ 6. Taxation The effective tax rate on profit before exceptional items is 32% (2004: 33%). 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, was 349.7m, 352.4m diluted for the effect of outstanding share options (2004: 354.0m, 356.5m diluted). Basic earnings per share have been calculated on earnings of £13.5m, (2004: £67.5m). The directors consider that adjusted earnings per share figures, using earnings as calculated below, give a more meaningful indication of the underlying performance. Total 2005 2004 £m £m ________________________ Profit for the period attributable to equity holders of the parent 13.5 67.5 Charges/(credits) included in profit for the period: Change in fair value of financial instruments 0.6 (0.8) Intangible amortisation 5.6 5.8 Taxation on charges/(credits) included in profit before tax (2.2) (1.3) Exceptional items (after tax) 99.3 33.1 ________________________ Earnings for adjusted EPS 116.8 104.3 ________________________ Adjusted EPS 33.4p 29.5p ________________________ From continuing operations 2005 2004 £m £m ________________________ Profit for the period 102.7 83.9 Minority interest (2.7) (1.8) Charges/(credits) included in profit for the period: Change in fair value of financial instruments 0.6 (0.8) Intangible amortisation 5.6 5.8 Taxation on charges/(credits) included in profit before tax (2.2) (1.3) ________________________ Earnings for adjusted EPS 104.0 85.8 ________________________ Adjusted EPS 29.7p 24.2p ________________________ From discontinued operations 2005 2004 £m £m ________________________ Loss for the period from discontinued businesses (86.5) (14.6) Exceptional items after income tax expense 99.3 33.1 ________________________ Earnings for adjusted EPS 12.8 18.5 ________________________ Adjusted EPS 3.7p 5.3p ________________________ 8. Dividend The Directors recommend a final dividend of 10.85p per share (2004: 10.2p) payable on 26 May 2006 to shareholders on the register at close of business on 18 April 2006, which will absorb £37.1m (2004: £36.2m). Together with the interim dividend of 6.65p per share paid on 21 October 2005, this makes a total distribution of 17.5p per share (2004: 16.5p per share). In accordance with IAS10: 'Events after the Balance Sheet date', this final proposed dividend has not been reflected in the 31 December 2005 Balance Sheet. 9. Cash flow reconciliations Reconciliation of cash generated from the operations 2005 2004 £m £m ___________________ Profit for the period 16.2 69.3 Adjustments for: Depreciation 50.4 58.3 Amortisation 5.6 5.8 Net loss on disposal & closure costs 99.3 - EC fine - 33.1 Financing income (16.2) (14.0) Financing expense 19.0 17.3 Employee benefit charge 2.2 1.6 Equity-settled share-based payment expenses 2.0 1.4 Income tax expense 54.4 52.9 ___________________ 232.9 225.7 (Increase)/decrease in trade and other receivables (18.3) 0.2 Increase in inventories (0.7) (4.7) Increase in trade and other payables 8.1 17.9 (Decrease)/increase in provisions and employee benefits (9.7) 0.3 ___________________ Cash generated from the operations 212.3 239.4 ___________________ Reconciliation of operating cash flow Cash generated from the operations 212.3 239.4 Sale of property, plant & equipment 6.8 4.0 (Purchase)/sale of investments (1.1) 0.2 Acquisition of property, plant & equipment (48.7) (50.8) Capitalised development expenditure (5.2) (2.8) ___________________ Operating cash flow 164.1 190.0 ___________________ Continuing businesses 166.7 155.5 Discontinued businesses (2.6) 34.5 ___________________ 164.1 190.0 ___________________ 10. Exchange Rates The profit and loss accounts 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 ________________ ___________________ 2005 2004 2005 2004 Euro 1.46 1.47 1.46 1.41 US Dollar 1.82 1.83 1.72 1.92 The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2005 or 2004 but is derivedfrom the 2005 accounts. Statutory accounts for 2004, which were prepared underUK GAAP, have been delivered to the registrar of companies and those for 2005,prepared under IFRS accounting standards adopted by the EU, will be delivered indue course. The auditors have reported on those accounts; their reports were (i)unqualified, (ii) did not include references to any matters to which theauditors drew attention by way of emphasis without qualifying their reports and(iii) did not contain statements under section 237(2) or (3) of the CompaniesAct 1985. The Company's 2005 Annual Report and notice of the forthcoming Annual GeneralMeeting will be posted to shareholders on 5 April 2006. - 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 Square Mile - Tel: 020 7067 0700 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
IMI