REG - IMI PLC - IMI plc Preliminary Results
28/02/2025 07:15
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RNS Number : 7970Y IMI PLC 28 February 2025
28 February 2025
Record profits, good organic growth and strong cash generation
Further £200m share buyback announced
Expect another year of strong financial and
strategic progress in 2025
Preliminary results, year ended 31 December 2024
Adjusted(1) Statutory
2024 2023 Change Organic(4) 2024 2023 Change
Revenue £2,210m £2,196m +1% +4% £2,210m £2,196m +1%
Operating profit £436m £411m +6% +10% £356m £319m +12%
Operating margin 19.7% 18.7% +100bps 16.1% 14.5% +160bps
Profit before tax £419m £387m +8% £330m £302m +9%
Basic EPS 122.5p 116.8p +5% 96.0p 91.5p +5%
Free cash flow(2) £263m £234m +12% £263m £234m +12%
Dividend per share 31.1p 28.3p +10% 31.1p 28.3p +10%
Return on invested capital(3) 13.4% 13.1% +30bps
(1 Excluding the effect of adjusting items as reported in the income
statement. See Note 1 for definitions of alternative performance measures.)
(2 Free cash flow before corporate activity.)
(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).)
Highlights
· 4% organic sales growth and 10% organic adjusted operating profit growth
o Outstanding performance in Process Automation, with record order book into
2025
o Good demand for energy-saving solutions in Climate Control
o Resilient performance in Industrial Automation
o Softer market conditions in Life Science & Fluid Control and Transport
o Market-led innovation accelerating, with £149m of Growth Hub orders in
2025
· Adjusted operating margin up 100bps to 19.7%, target raised to 20%+
o Five-year complexity reduction programme concluded, with £15m of benefits
in 2024
o Margins improved in both platforms, reflecting strategic execution and
strong pricing power
o Higher margin aftermarket content represents around 45% of Group sales
· Return on invested capital increased to 13.4%
· Continued strong cash generation, with free cash flow of £263m and > £1bn
expected over next three years
· Strong balance sheet with net debt / EBITDA of 1.0x supports compounding EPS
growth
· Creating value through disciplined approach to capital allocation
o Proposed 10% increase in final dividend to 21.1p
o Acquired TWTG, a leading sensor technology business to accelerate
aftermarket growth
o £100m share buyback completed in 2024; further £200m share buyback
announced today
Roy Twite, Chief Executive, said:
"2024 has been another strong year for IMI, with record profits, good organic growth and strong cash generation. We delivered 4% organic sales growth and 10% adjusted operating profit growth, supported by an outstanding performance in Process Automation and continued demand for our energy-saving technology in Climate Control.
I would like to thank all our people for delivering this result. It demonstrates the strength and quality of our business and success of the growth strategy we launched in 2019. IMI is now a higher quality, more resilient and more innovative business, with a well-balanced geographic mix of revenues more closely aligned to attractive, long-term growth markets in fluid and motion control. Over the past five years we have built a track record of sustainable, profitable growth, delivering 11% compound annual adjusted EPS growth.
Given the strength of our cash flow, disciplined approach to capital allocation, strong balance sheet and confidence in our future performance, we today announce a further £200m share buyback and a 10% increase to the final dividend. Over the next three years, we expect to generate in excess of £1 billion in free cash flow.
Based on current market conditions, we anticipate another year of strong financial and strategic progress in 2025. We expect full year adjusted basic EPS to be between 129p and 136p, representing mid-single digit organic revenue growth."
Enquiries to:
Edward Hann IMI Tel: +44 (0)7977 354 810
Matt Denham Headland Tel: +44 (0)7551 825 496
A live webcast of the analyst meeting taking place today at 9:00am (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 8 May 2025.
Results overview
IMI delivered its fifth consecutive year of profit and margin growth in 2024.
Organic revenue grew by 4% and organic adjusted operating profit increased by
10%. Group adjusted operating margin increased by 100bps to 19.7%, with both
platforms improving margins in 2024. Statutory operating margin increased by
160bps to 16.1%. Statutory profit before tax increased by 9%.
Cash conversion was 92% (2023: 89%) with free cash flow before corporate
activity totalling £263m (2023: £234m) and the Group's return on invested
capital increased to 13.4% (2023: 13.1%). Our adjusted basic earnings per
share increased by 5% to 122.5p (2023: 116.8p).
£m Adjusted(1) Statutory
2024 2023 Change Organic(2) 2024 2023 Change
Revenue
Process Automation 906 807 +12% +15% 906 807 +12%
Industrial Automation 508 543 -6% -3% 508 543 -6%
Automation 1,414 1,350 +5% +8% 1,414 1,350 +5%
Climate Control 389 386 +1% +5% 389 386 +1%
Life Science & Fluid Control 236 276 -14% -10% 236 276 -14%
Transport 171 184 -7% -4% 171 184 -7%
Life Technology 796 846 -6% -2% 796 846 -6%
Total Revenue 2,210 2,196 +1% +4% 2,210 2,196 +1%
Operating profit
Automation 289 257 +12% +17% 241 202 +19%
Life Technology 146 153 -5% -1% 116 116 0%
Total Operating Profit 436 411 +6% +10% 356 319 +12%
Operating margin 19.7% 18.7% +100bps 16.1% 14.5% +160bps
( )
(1 Excluding the effect of adjusting items as reported in the income
statement. See Note 1 for definitions of alternative performance measures.)
(2 After adjusting for acquisitions, disposals and exchange rates (see Note
1).)
Dividend
The Board is recommending a 2024 final dividend of 21.1p per share (2023: 19.2p per share). Payment will be made on 16 May 2025 to shareholders on the register at the close of business on 4 April 2025.
Share buyback
Given the strong performance in 2024, our outlook for 2025 and our commitment
to maintaining an efficient balance sheet, we are today announcing a further
£200m share buyback programme. This follows the £100m share buyback
programme executed in 2024. IMI remains highly cash generative with
significant funding headroom, giving the Group the flexibility to invest
organically and in targeted, value-accretive acquisitions.
Outlook
Based on current market conditions, we anticipate another year of strong
financial and strategic progress in 2025. We expect full year adjusted basic
EPS to be between 129p and 136p.
We expect to deliver continued margin progression in 2025, supported by
further growth and the final benefits from the complexity reduction programme.
We will continue to identify and execute efficiencies to drive improvements,
with any future restructuring charges for our current business taken into
underlying operating profit.
This guidance reflects strong organic growth in our Automation platform from
the record order book in Process Automation and continued resilience in
Industrial Automation. The Life Technology platform is expected to be broadly
flat organically in the full year, although down in the first half. This
reflects continued demand for our energy efficient products in Climate
Control, no expected recovery in Life Science & Fluid Control and a strong
first half comparator in Transport.
Update on cyber incident
Further to the announcement on 6 February 2025, we can confirm that IMI has
returned to normal operations. We reacted swiftly to contain the threat,
working alongside external cyber security experts to protect our data and
infrastructure, and further enhance our security.
The full year adjusted basic EPS guidance range reflects our view that the
impact of the cyber incident to our underlying business was largely limited to
temporary operational disruption. We expect to recognise an adjusting item
of between £20m and £25m in 2025 for matters including IT systems recovery,
risk management, upgraded IT infrastructure and advisory costs.
Strategic progress
Delivering our financial framework
IMI has been through a period of significant transformation since the launch
of our growth strategy in 2019. Adjusted EPS has now grown at an 11% CAGR
during this period and we have rejoined the FTSE 100 index, supported by the
delivery of our financial framework.
Medium-term targets Delivered
Organic revenue growth 5% 4.7%
Average 2022 - 2024
Adjusted operating margin 20%+ 19.7%
Cash conversion 90% 92%
Return on invested capital >12% 13.4%
IMI has delivered average organic revenue growth of 4.7% over the last three
years. We hold leading positions in attractive long-term growth markets in
fluid and motion control and have aligned our business to enduring megatrends
- automation, energy efficiency and healthcare demand. We are delivering
world-class customer satisfaction and driving market-led innovation through
our Growth Hub culture and process. We are very pleased to report that our
teams delivered a record £149m of Growth Hub orders in 2024 (2023: £89m).
Aftermarket content now represents around 45% of sales, up from around 35% in
2014. This has been a strategic objective for our business and provides a more
resilient and higher margin revenue stream to underpin future growth.
Our adjusted operating margin increased to 19.7% in 2024 (2023: 18.7%) and is
now 550bps higher than 2019. This significant improvement reflects the
completion of our multi-year complexity reduction programme, a strategic focus
on the aftermarket and our strong pricing power. As we continue to deliver our
strategy, we see a pathway to further margin improvements. Supported by
further growth in our markets and continued execution of the One IMI operating
model, we are raising our adjusted operating margin target to 20%+.
Cash conversion remains high at 92% (2023: 89%) and we are committed to
deploying this cash to enhance shareholder returns. IMI remains highly cash
generative and expects to deliver free cash flow in excess of £1 billion over
the next three years. The Group has been strengthened by six complementary,
value-enhancing bolt-on acquisitions since 2019, with our fully burdened
return on invested capital increasing to 13.4% - significantly higher than our
12% underpin and our 9% weighted average cost of capital.
Health and safety remains a top priority
Ensuring everyone who works or visits our sites is safe remains one of our top
priorities. Health and safety incidents reduced by 26% in the year, and the
Total Recordable Incident Frequency Rate was 0.38 (2023: 0.44). While this is
good progress, we are committed to our ambition of an accident-free workplace.
One IMI operating model
IMI operates under a One IMI operating model targeted at delivering our
financial framework. We achieve this through disciplined execution, applying
our best practices in commercial excellence, market-led innovation and
complexity reduction across IMI.
Commercial excellence
Commercial excellence remains at the heart of our strategy for growth as we
apply our applications engineering expertise in fluid and motion control to
help our customers optimise their systems. We create significant value for our
customers by helping them to become safer, more productive and more energy
efficient.
Over the last five years we have made significant investments in our people,
processes and operations to support the delivery of our financial framework.
We have made great progress equipping our people with digital tools and
standardising the use of CRM across our business to accelerate growth. The use
of these digital tools has played a key role in our success in the
aftermarket. We launched new learning and development programmes during 2024
to ensure our people are well equipped to create value for our customers.
Market-led innovation
We continue to create value by accelerating market-led innovation through our
unique Growth Hub culture and processes. Growth Hub is IMI's innovation
engine, encouraging an entrepreneurial approach to solve industry-wide
customer problems. We play to our strengths in attractive growth markets,
leveraging our strong customer relationships to gain a deep understanding of
their unmet and emerging needs. Our sprint teams move at pace using a 'test
and learn' approach, working with customers to validate issues and understand
broader market demand. Through this process we are able to minimise up-front
capital commitments before rapidly bringing validated solutions to market,
once customer endorsement has been secured.
Growth Hub has been an integral part of IMI's transformation since 2019 and we
are pleased to report that our teams generated £149m of new orders in 2024
(2023: £89m). A great example of innovation in action is our IMI VIVO
hydrogen electrolyser system, which is being used by our customers to produce
hydrogen for a wide range of applications. We delivered £53m of IMI VIVO
orders in 2024 (2023: £9m) and our pipeline of opportunities remains strong.
Complexity reduction
We are pleased to report that the multi-year restructuring programme launched
in 2019 is now complete. The programme has played a significant role in
improving our competitive position, improving product quality, customer
satisfaction and operational efficiency whilst supporting the 550bps expansion
in adjusted operating margin since 2019. We expect that a final £10m in
benefits from the programme will be realised in 2025. We will continue to
identify and execute efficiencies to drive improvements, with any future
restructuring charges for our current business taken into underlying operating
profit.
IMI strategic enablers
Talent and engagement
Our continued focus on developing our people to ensure we have high-quality
teams at every level of our organisation is seeing benefits. We were delighted
that employee engagement increased by two percentage points in our 2024
employee survey, in which 79% of colleagues reported they see IMI as a great
place to work.
Digital
Digital capabilities and development are a core part of our growth strategy
and we continue to actively develop connected products and digital tools to
improve our value and service to customers.
In October, we were delighted to announce the acquisition of TWTG, a leading
Industrial Internet of Things specialist based in the Netherlands. TWTG's
market-leading sensing technology is directly applicable to our customers and
creates a significant opportunity to accelerate aftermarket growth,
particularly within Process Automation.
During the year we deployed a secure, private generative Artificial
Intelligence tool for internal use across IMI, enhancing productivity and
innovation. Artificial Intelligence is transforming the way businesses
understand and respond to customer feedback, playing a key role in our digital
transformation. By leveraging Artificial Intelligence tools, it is now
possible to analyse vast amounts of data efficiently, providing a deeper
understanding of customer sentiment and key issues.
Artificial Intelligence is supporting our digital strategy by enabling
smarter, faster decisions. Deploying it at speed across our business will
enable us to prioritise improvements, drive customer satisfaction and
reinforce our competitive edge. This will remain a key priority in 2025.
Sustainability
We see good opportunities to support customers in developing solutions for a
zero-carbon future. We saw strong growth in our solutions for the hydrogen
value chain during 2024. Our solutions - including electrolysis, liquid
storage, refuelling and heavy-duty trucks - have scaled rapidly from £7m in
2022 to £66m in 2024.
Disciplined approach to capital allocation
IMI is a highly cash generative business with a clear and disciplined approach
to capital allocation, prioritising investments that accelerate organic
growth.
We also pursue bolt-on acquisitions that enhance our position in attractive,
long-term growth markets, that will deliver returns in line with our strict
financial criteria. Since 2019, we have deployed over £400m in acquisitions
and our return on invested capital has increased by 200bps. Looking to the
future, we have a strong pipeline of M&A opportunities and will seek
attractive bolt-on acquisitions to accelerate growth and expand our
capabilities, particularly in the US and Europe.
We remain committed to maintaining an efficient balance sheet and will look to
return capital to shareholders should leverage fall sustainably below our
1.0x-2.0x target range. The announcement of a further share buyback today
reflects this commitment.
By deploying our growing free cash flow into organic growth opportunities,
attractive acquisitions and share buybacks, we are confident we can continue
our track record of compounding EPS growth.
Board changes
We announced a number of leadership changes in 2024. Daniel Shook, our Group
CFO, will step down from the Board in August 2025 for family reasons. Daniel
has made an incredible contribution to IMI over the last decade, and we will
miss him greatly. Daniel will be succeeded as Group CFO on 1 August 2025 by
Luke Grant, Vice President of Finance for Industrial Automation. Luke's
knowledge of the business, financial expertise and commitment to our culture
will provide important continuity and ongoing excellence. His appointment is a
reflection of how we identify, develop and promote talent at IMI.
Lord Smith of Kelvin stepped down as Chair on 31 December 2024 after nearly
ten years at IMI. Robert has been an exceptional leader and played a
significant role in the company's transformation in the last decade. I wish
him much success in the future. He has been succeeded as Chair by Jamie Pike,
someone with a long track record of success with world-class industrial
companies, and I am looking forward to working alongside him to continue
creating value for all our stakeholders.
Roy Twite
Chief Executive Officer
27 February 2025
Financial review
Key highlights
Adjusted(1) Statutory
2024 2023 Change Organic(4) 2024 2023 Change
Revenue £2,210m £2,196m +1% +4% £2,210m £2,196m +1%
Operating profit £436m £411m +6% +10% £356m £319m +12%
Operating margin 19.7% 18.7% +100bps 16.1% 14.5% +160bps
Profit before tax £419m £387m +8% £330m £302m +9%
Basic EPS 122.5p 116.8p +5% 96.0p 91.5p +5%
Free cash flow(2) £263m £234m +12% £263m £234m +12%
Dividend per share 31.1p 28.3p +10% 31.1p 28.3p +10%
Return on invested capital(3) 13.4% 13.1% +30bps
( )
(1 Excluding the effect of adjusting items as reported in the income
statement. See Note 1 for definitions of alternative performance measures.)
(2 Free cash flow before corporate activity.)
(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 to the financial statements) so that assessment of performance is not
distorted by acquisitions, disposals and movements in exchange rates.
Rationale for the use of APMs, their definition, and a reconciliation of APMs
to statutory measures is included in Note 1 to the financial statements.
Delivering sustainable, profitable growth
The Group delivered a strong financial result in 2024, as revenue, profit and
adjusted operating margin improved. Revenue increased by 1% to £2,210m (2023:
£2,196m). Organic revenue was 4% higher than the prior year, after adjusting
for acquisitions, disposals and exchange rate movements. The exchange rate
adjustment was negative £66m.
Adjusted operating profit of £436m (2023: £411m) was 6% higher than last
year. On an organic basis, adjusted operating profit increased by 10%.
Group adjusted operating margin was 19.7% (2023: 18.7%). Both platforms grew
adjusted margins in the year. Statutory operating profit was £356m (2023:
£319m), which increased by 12%. The Group statutory operating margin was
160bps higher than last year, largely reflecting the strong trading results
and £6m gain recognised on disposal of subsidiaries in 2024.
Adjusted net financing costs on net borrowings reduced to £14.8m (2023:
£22.7m), largely reflecting the reduction in net debt in the year and
includes the impact of £2.8m (2023: £2.9m) interest cost on leases.
Statutory net finance costs increased to £25.8m in the year (2023: £16.2m),
largely due to losses on instruments measured at fair value through profit or
loss recognised as an adjusting item (see Note 3).
Adjusted net financing costs on borrowings were covered 36 times (2023: 22
times) by adjusted earnings before interest, tax, depreciation, amortisation,
impairment and adjusting items of £526m (2023: £503m). Net pension financing
interest expense under IAS 19 was £1.9m (2023: £0.5m expense).
Adjusted profit before taxation was £419m (2023: £387m), which was 8% higher
than 2023. Statutory profit before taxation increased 9% to £330m (2023:
£302m) reflecting growth in the year and the Group's execution of
restructuring activities to improve customer satisfaction and long-term
competitiveness. The total statutory profit for the period after taxation was
£249m (2023: £237m).
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
2024 2023 Change Organic(1) 2024 2023 Change
Revenue
Process Automation 906 807 +12% +15% 906 807 +12%
Industrial Automation 508 543 -6% -3% 508 543 -6%
Total Revenue 1,414 1,350 +5% +8% 1,414 1,350 +5%
Operating profit 289 257 +12% +17% 241 202 +19%
Operating margin 20.5% 19.1% +140bps 17.0% 15.0% +200bps
( )
(1) (After adjusting for acquisitions, disposals and exchange rates ()(see
Note 1 to) (the financial statements).)
Process Automation (£m) 2024 2023 Change Organic(1)
Closing order book 857 760 +13%
Order intake:
Aftermarket 601 561 +7% +11%
New Construction 413 390 +6% +8%
Total order intake 1,014 951 +7% +10%
( )
(1) (After adjusting for acquisitions, disposals and exchange rates (see Note
1 to) (the financial statements).)
Automation delivered strong organic revenue growth of 8%, with revenue also up
5% on a statutory basis.
Process Automation had an outstanding year, with record order intake and
continued organic growth. Orders were up 10% organically, including a
significant £33m order in our Marine business during the first half which
covers deliveries over several years. Aftermarket orders increased by 11%
organically as we continue to benefit from our investment in this space. In
addition to the large Marine order, we have seen particular strength in
downstream oil and gas and hydrogen. Organic revenue was 15% higher than 2023
and 12% higher on a statutory basis.
Industrial Automation organic revenue was 3% lower than 2023, in line with
softer industrial activity in Europe and the Americas. Revenue was down 6% on
a statutory basis.
Adjusted operating profit increased by 17% on an organic basis and the
adjusted operating margin improved by 140bps to 20.5%. This was a strong
performance, reflecting a further shift towards higher-margin Aftermarket
opportunities and the continued execution of footprint optimisation
initiatives, which delivered £5m of incremental benefits in 2024. Statutory
operating profit increased by 19% to £241m in the year.
We expect to deliver strong growth in 2025, supported by the record order book
in Process Automation and continued resilience in Industrial Automation.
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
improve 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
2024 2023 Change Organic(1) 2024 2023 Change
Revenue
Climate Control 389 386 +1% +5% 389 386 +1%
Life Science & Fluid Control 236 276 -14% -10% 236 276 -14%
Transport 171 184 -7% -4% 171 184 -7%
Total Revenue 796 846 -6% -2% 796 846 -6%
Operating profit 146 153 -5% -1% 116 116 0%
Operating margin 18.4% 18.1% +30bps 14.5% 13.7% +80bps
( )
(1) (After adjusting for acquisitions, disposals and exchange rates (see Note
1 to the financial statements).)
Life Technology delivered a resilient performance, despite a mixed market
backdrop. Revenue was down 2% organically and 6% lower on a statutory basis.
Climate Control saw good demand for its energy-saving products and solutions,
with revenue up 1% when compared to 2023 and 5% higher on an organic basis.
Whilst trends in the European construction market did impact sales in the
year, the sector continues to perform resiliently due to the strong retrofit
demand for products that reduce energy consumption in buildings.
As expected, Life Science & Fluid Control revenue was 14% lower than in
2023, reflecting the continued softness seen across the global life science
device market. Organic revenue was 10% lower. The long-term fundamentals of
this sector are strong, and we remain excited about the opportunities for
growth.
Transport revenue was 7% lower than 2023, and 4% lower organically. Whilst
demand for our innovative solutions remains strong, there was a strong
comparator in the second half.
Adjusted operating margin for the year was 18.4%, 30bps higher than the prior
year. Complexity reduction initiatives delivered £10m of incremental
benefits. Statutory operating profit was flat year-on-year.
We expect Life Technology to be broadly flat organically in 2025 and down in
the first half. This reflects continued demand for our energy efficient
products in Climate Control, no expected recovery in Life Science & Fluid
Control and a strong first half comparator in Transport. We expect margins to
improve in the year.
Adjusting items
£m 2024 2023
Reversal of net economic hedge contract gains (2) (8)
Restructuring costs (55) (48)
Acquired intangible amortisation and other acquisition items (29) (34)
Exit from Russia - (2)
(Losses) / gains on instruments measured at fair value through profit or loss (9) 7
Gain on disposal of subsidiaries 6 -
Tax in connection with the above adjusting items 23 19
Other adjusting tax items (3) -
Total adjusting items (69) (66)
Adjusting items that are excluded from adjusted profit before tax are listed
below:
· Reversal of net economic hedge contract gains: For segmental
reporting purposes, changes in the fair value of economic hedges which are not
designated as hedges for accounting purposes, together with the gains and
losses on their settlement, are included in the revenues and adjusted
operating profit of the relevant business segment. The adjusting item reverses
this treatment at an operating profit level, leading to a loss of £2m (2023:
£8m loss).
· Restructuring costs: Restructuring costs of £55m were incurred
in 2024, with a breakdown of these costs by platform, alongside expected
benefits provided below. Further details on 2024 projects are included in Note
6 to the financial statements.
· 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 decreased to £28m (2023: £32m). Other acquisition costs reduced
to £1m (2023: £2m).
· Exit from Russia: During 2023, changes were made to the legal
structure of a customer which resulted in a £2m write-off, following the
Group's decision to end all business in Russia in 2022.
· Losses / gains on instruments measured at fair value through
profit or loss: A loss arose on the revaluation of financial instruments and
derivatives under IFRS 9 of £9m (2023: £7m gain).
· Gain on disposal of subsidiaries: The Group disposed of a French
subsidiary, Industrie Mecanique Pour Les Fluides SA, on 25 April 2024
resulting in a gain on disposal of £6m.
· Taxation: The tax effect of the above items has been recognised
as an adjusting item and amounts to £23m (2023: £19m). Other adjusting tax
items include a charge of £5m relating to the transfer of businesses in the
year offset by a credit of £2m relating to the release of a restructuring
provision.
Complexity reduction programme concludes
IMI's multi-year restructuring programme has now concluded. The following
tables provide a summary of the final costs and benefits associated with the
programme:
£m 2024 2025(1)
Restructuring charge
Automation (35) -
Life Technology(2) (13) -
Total charge (48) -
Cash impact(2) (40) (10)
( )
£m 2024 2025(1)
Incremental annual benefits
Automation 5 5
Life Technology 10 5
Total benefits 15 10
(1Future-looking forecast information.)
(2 Restructuring charge and cash outflow have been adjusted to offset the
profit on disposal of) (Industrie Mecanique Pour Les Fluides SA (see Note 12))
Whilst this programme has now completed, IMI will continue to identify and
execute efficiencies within its operations. Future restructuring costs within
our current business will be taken into underlying operating profit.
Taxation
The adjusted effective tax rate for the Group increased to 24.3% (2023:
21.8%), reflecting the increase in the UK statutory rate of corporation tax in
2023, global minimum tax legislation and the non-repeat of favourable historic
tax settlements in 2023. The total adjusted tax charge for the year was £102m
(2023: £85m) and the statutory effective tax rate was 24.8% (2023: 21.5%).
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 25% in
2025, reflecting a small one-off deferred tax benefit in 2024.
Adjusted basic earnings per share increased by 5%
The average number of shares in issue during the period was 259m (2023: 259m),
resulting in adjusted basic earnings per share of 122.5p (2023: 116.8p), an
increase of 5%. Statutory basic earnings per share increased by 5% at 96.0p
(2023: 91.5p) and statutory diluted earnings per share increased by 5% at
95.6p (2023: 91.2p).
£100m share buyback completed
In 2024, we successfully completed our planned £100m share buyback with the
purchase and cancellation of 5.5 million shares. Our average shares in issue
for 2024 were 259 million.
Maintaining continued cash discipline
Movement in net debt 2024 2023
£m £m
Adjusted EBITDA* 526.3 503.2
Working capital movements (21.5) (31.3)
Capital and development expenditure (91.5) (79.9)
Provisions and employee benefit movements** (1.7) (2.7)
Principal elements of lease payments (28.6) (29.0)
Other 18.8 6.0
Adjusted operating cash flow*** 401.8 366.3
Adjusting items (40.7) (43.1)
Interest (14.8) (22.7)
Derivatives 14.6 9.8
Tax paid (97.9) (76.1)
Free cash flow before corporate activity 263.0 234.2
Dividends paid to equity shareholders (76.0) (68.8)
Acquisition of subsidiaries (18.2) -
Disposal of subsidiaries 17.5 0.5
Net (purchase) / issuance of own shares (97.1) 0.6
Net cash flow (excluding debt movements) 89.2 166.5
Reconciliation of net cash to movement in net debt
Net increase in cash and cash equivalents excluding foreign exchange 37.4 17.7
Less: cash acquired/disposed 1.8 0.4
Net repayment of borrowings excluding foreign exchange and net debt 50.0 148.4
disposed/acquired
Decrease in net debt before acquisitions, disposals and foreign exchange 89.2 166.5
Net cash acquired/disposed (4.7) (0.4)
Currency translation differences (4.7) 1.8
Movement in lease liabilities 11.1 5.5
Movement in net debt in the year 90.9 173.4
Net debt at the start of the year (638.6) (812.0)
Net debt at the end of the year (547.7) (638.6)
(*Adjusted profit after tax (£317.0m) before interest (£16.7m), tax
(£101.8m), depreciation (£71.0m) and amortisation (£19.8m).)
(**Movement in provisions and employee benefits as per the statement of cash
flows (£1.4m) adjusted for the movement in restructuring provisions
(£3.1m).)
(***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 to the financial statements.)
Adjusted operating cash flow was £402m (2023: £366m). This represents a
conversion rate of total Group adjusted operating profit to adjusted operating
cash flow of 92% (2023: 89%). There was a £41m cash outflow from adjusting
items (2023: £43m outflow) primarily related to restructuring costs.
Net working capital balances increased by £22m, with a £43m increase in
payables in line with growth offset by a £41m increase in receivables and a
£24m increase in inventory largely reflecting continued growth in the Process
Automation order book. The £31m increase in 2023 was due to a £58m increase
in payables offset by a £57m increase in receivables and a £32m increase in
inventory.
Cash spent on property, plant and equipment and other non-acquired intangibles
in the year was £92m (2023: £80m), which was equivalent to 1.5 times (2023:
1.3 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 £8m (2023: £6m), totalled £73m (2023: £72m), representing 3.3%
(2023: 3.3%) of sales. The Group continues to support investment in growth,
with this spend focused on delivering innovative new 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 2024, the Group paid cash tax of £98m (2023: £76m), which was 120% (2023:
117%) of the statutory tax charge for the year.
Free cash flow before corporate activity increased to £263m (2023: £234m).
Dividends paid to shareholders totalled £76m (2023: £69m) and there was a
cash outflow of £100m in relation to the share buyback programme (2023: nil).
In addition, there was a cash inflow of £3m associated with the issue of
share capital for employee share schemes (2023: £1m inflow).
Overall net debt reduced by £91m in 2024 (2023: £173m decrease).
Strong balance sheet offers strategic flexibility
Net debt at the year-end was £548m, compared to £639m at the end of 2023.
The reduction reflects the strong cash generation in the year. The net debt is
composed of a cash balance of £148m (2023: £107m), a bank overdraft of £91m
(2023: £66m), interest-bearing loans and borrowings of £515m (2023: £580m)
and lease liabilities of £89m (2023: £100m).
The year-end net debt to adjusted EBITDA ratio was 1.0 times (2023: 1.3
times). At the end of 2024, loan notes totalled £515m (2023: £532m), with a
weighted average maturity of 2.6 years (2023: 3.6 years), and other loans
including bank overdrafts totalled £91m (2023: £114m). Total committed bank
loan facilities available to the Group at the year-end were £300m (2023:
£300m), of which nil (2023: nil) was drawn.
At 31 December 2024, the value of the Group's intangible assets, including
goodwill, was £925m (2023: £958m).
The net book value of the Group's property, plant and equipment at 31 December
2024 was £301m (2023: £300m). Capital expenditure on property, plant and
equipment amounted to £75m (2023: £60m), with the main capital expenditure
focused on production facility investment to support operational efficiency
and growth. Including capitalised intangible assets, total capital expenditure
was £92m (2023: £80m) and was 1.5 times (2023: 1.3 times) the depreciation
and amortisation charge (excluding acquired intangible amortisation and lease
asset depreciation) for the year of £62m (2023: £63m).
The net deficit for defined benefit obligations at 31 December 2024 was £47m
(2023: £49m deficit). The UK deficit was £3m (2023: £4m deficit), with the
liabilities fully bought-in during 2022. The deficit in the overseas funds as
at 31 December 2024 was £44m (2023: £45m deficit).
Return on invested capital ('ROIC')
The Group uses ROIC as an indication of IMI's ability to deploy capital
effectively. The Group's fully burdened 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 13.4% in 2024 (2023: 13.1%), which increased by 30bps, reflecting the
strong trading performance.
Return on invested capital 2024 2023
£m £m
Adjusted operating profit 435.5 410.6
Notional tax charge (105.8) (89.5)
Net adjusted operating profit after tax 329.7 321.1
Net assets 1,085.1 1,030.2
Adjusted for:
Net debt 547.7 638.6
Restructuring provision 26.1 20.9
Net derivative assets/liabilities 6.4 (1.2)
Net defined pension benefit 47.4 48.9
Deferred tax on employee benefits (13.0) (13.5)
Previously written-off/impaired goodwill 346.9 346.9
Acquired intangibles amortisation 403.9 387.6
Closing capital invested 2,450.5 2,458.4
Opening capital invested 2,458.4 2,460.8
Average capital invested 2,454.5 2,459.6
Return on invested capital 13.4% 13.1%
Acquisitions
On 31 October 2024 the Group acquired 100% of the share capital, and
associated voting rights, of TWTG for initial purchase consideration
of €22m. TWTG is a leader in smart connected asset monitoring solutions and
is based in Rotterdam, the Netherlands. TWTG is now part of IMI's Process
Automation sector.
Disposals
On 25 April 2024 the Group disposed of French subsidiary Industrie Mecanique
Pour Les Fluides SA for proceeds of £18.5m resulting in a gain on disposal of
£6.3m. For further details see Note 12.
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
2024 2023 2024 2023
Euro 1.18 1.15 1.21 1.15
US Dollar 1.28 1.24 1.25 1.27
The movement in average exchange rates between 2023 and 2024 negatively
impacted both revenue and adjusted operating profit by 3% in the full year
when compared to 2023.
If exchange rates as at 21 February 2025 of US$1.26 and €1.21 were projected
for the full year and applied to our 2024 results, it is estimated that both
revenue and adjusted operating profit would be broadly neutral.
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.
Capital allocation
Free cash flow before corporate activity increased by 12% to £263m in the
year (2023: £234m) as net debt reduced to 1.0x adjusted EBITDA (2023: 1.3x),
comfortably within our 1.0x-2.0x target range.
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 1.5x depreciation during the year (2023: 1.3x) with R&D
expenditure at 3.3% of sales (2023: 3.3%), above our 3.0% target.
IMI will also pursue bolt-on acquisitions that strengthen its position in
fluid and motion control markets and deliver returns in line with its strict
financial criteria. Acquisitions must deliver 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 considers
appropriate mechanisms to return additional surplus capital if the Group's net
debt to adjusted EBITDA fall sustainably below our 1.0x-2.0x target range. A
£100m share buyback was completed in the year (2023: nil).
There is significant headroom to current funding covenants of 3.0x net debt to
adjusted EBITDA.
At 31 December 2024, IMI plc (the parent company) had distributable reserves
of £304m (2023: £304m).
Daniel Shook
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Adjusted Adjusting items Statutory Adjusted Adjusting items Statutory
(Note 1) (Note 1)
Notes £m £m £m £m £m £m
Revenue 1 2,210 2,210 2,196 2,196
Cost of sales (1,165.4) (1,165.4) (1,182.1) (1.6) (1,183.7)
Gross profit 1,044.6 1,044.6 1,013.9 (1.6) 1,012.3
Net operating costs (609.1) (79.3) (688.4) (603.3) (90.4) (693.7)
Operating profit 1 435.5 (79.3) 356.2 410.6 (92.0) 318.6
Financial income 3 9.7 9.7 8.1 8.1
Financial expense 3 (24.5) (24.5) (30.8) (30.8)
(Losses) / gains on instruments measured at fair value
through profit or loss (9.1) (9.1) 7.0 7.0
Net financial expense relating to
defined benefit pension schemes 8 (1.9) (1.9) (0.5) (0.5)
Net financial (expense)/income (16.7) (9.1) (25.8) (23.2) 7.0 (16.2)
Profit before tax 418.8 (88.4) 330.4 387.4 (85.0) 302.4
Taxation 4 (101.8) 19.9 (81.9) (84.5) 19.4 (65.1)
Profit after tax 317.0 (68.5) 248.5 302.9 (65.6) 237.3
Earnings per share 5
Basic - from profit for the year 96.0p 91.5p
Diluted - from profit for the year 95.6p 91.2p
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 2024
2024 2023
£m £m £m £m
Profit for the year 248.5 237.3
Items that will not subsequently be reclassified to profit and loss
Re-measurement loss on defined benefit plans (1.5) (33.7)
Related taxation credit on items that will not subsequently be 0.2 8.6
reclassified to profit and loss
(1.3) (25.1)
Items that may be reclassified to profit and loss
Gain arising on hedging instruments designated in hedges of the
net assets in foreign operation 11.1 6.7
Loss on exchange differences on translation of foreign operations net
of
funding revaluations (37.9) (41.1)
Gain on exchange differences reclassified to income statement on disposal of
operations (0.3) (0.2)
Related tax (charge) / credit on items that may subsequently be reclassified
to profit and loss (2.9) 1.8
(30.0) (32.8)
Other comprehensive loss for the year, net of taxation (31.3) (57.9)
Total comprehensive income for the year, net of taxation 217.2 179.4
Attributable to:
Equity holders of the parent 217.2 179.4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share capital Share premium account Capital redemption reserve Translation reserve Retained earnings Total
Notes £m £m £m £m £m £m
As at 1 January 2023 78.6 16.4 177.6 43.8 589.2 905.6
Profit for the year 237.3 237.3
Other comprehensive expense (34.6) (33.7) (68.3)
excluding related taxation effect
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
Changes in equity in 2024
Profit for the year 248.5 248.5
Other comprehensive expense (27.1) (1.5) (28.6)
excluding related taxation effect
Related taxation effect (2.9) 0.2 (2.7)
Total comprehensive (expense) / income (30.0) 247.2 217.2
Issue of share capital 0.1 1.3 1.4
Dividends paid 7 (76.0) (76.0)
Share-based payments (net of tax) 10.7 10.7
Cancellation of Treasury Shares (1.6) 1.6 -
Proceeds from employee share scheme trust 2.0 2.0
Share buyback programme (100.4) (100.4)
As at 31 December 2024 77.1 18.3 179.2 (19.0) 829.5 1,085.1
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
£m £m
Assets
Goodwill 670.9 680.3
Other intangible assets 254.0 277.4
Property, plant and equipment 301.2 300.4
Right-of-use assets 87.6 99.6
Employee benefit assets 1.1 1.7
Deferred tax assets 24.2 22.7
Other receivables 2.1 2.3
Total non-current assets 1,341.1 1,384.4
Inventories 447.8 437.3
Trade and other receivables 540.2 523.9
Derivative financial assets 6.9 12.1
Current tax 4.5 4.5
Investments 2.2 1.7
Cash and cash equivalents 147.8 106.5
Total current assets 1,149.4 1,086.0
Total assets 2,490.5 2,470.4
Liabilities
Trade and other payables (495.9) (470.3)
Bank overdraft (91.0) (66.3)
Interest-bearing loans and borrowings (124.0) (47.2)
Lease liabilities (23.2) (25.2)
Provisions (34.7) (28.7)
Current tax (61.8) (73.0)
Derivative financial liabilities (13.3) (10.9)
Total current liabilities (843.9) (721.6)
Interest-bearing loans and borrowings (391.4) (531.4)
Lease liabilities (65.9) (75.0)
Employee benefit obligations (48.5) (50.6)
Provisions (8.5) (13.0)
Deferred tax liabilities (33.7) (33.3)
Other payables (13.5) (15.3)
Total non-current liabilities (561.5) (718.6)
Total liabilities (1,405.4) (1,440.2)
Net assets 1,085.1 1,030.2
Share capital 77.1 78.6
Share premium 18.3 17.0
Other reserves 160.2 188.6
Retained earnings 829.5 746.0
Total equity 1,085.1 1,030.2
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Notes £m £m
Cash flows from operating activities
Operating profit for the year 356.2 318.6
Adjustments for:
Depreciation and amortisation 119.0 124.4
Impairment of property, plant and equipment and intangible assets 2.4 5.2
Profit on disposal of subsidiaries 12 (6.3) (0.7)
Loss on sale of property, plant and equipment 1.7 0.5
Equity-settled share-based payment expense 10.8 12.9
Increase in inventories (24.1) (32.3)
Increase in trade and other receivables (40.5) (56.5)
Increase in trade and other payables 43.1 57.5
Increase / (decrease) in provisions 2.7 (0.1)
Increase in employee benefits 1.6 1.0
Settlement of transactional derivatives 2.9 8.8
Cash generated from operations 469.5 439.3
Income taxes paid 4 (97.9) (76.1)
Net cash from operating activities 371.6 363.2
Cash flows from investing activities
Interest received 3 9.7 8.1
Proceeds from sale of property, plant and equipment 15.6 1.6
Settlement of effective net investment hedge derivatives 11.7 1.0
Acquisitions of subsidiaries net of cash 11 (17.7)
Acquisition of property, plant and equipment and non-acquired intangibles (91.5) (79.9)
Purchase of investments (1.0)
Proceeds from disposal of subsidiaries net of cash 12 15.2 0.1
Net cash from investing activities (58.0) (69.1)
Cash flows from financing activities
Interest paid 3 (24.5) (30.8)
Adjustment for employee share scheme trust 2.0
Proceeds from the issue of share capital for employee share schemes 1.3 0.6
Share buyback (100.4)
Repayment of borrowings 9 (50.0) (148.4)
Principal elements of lease payments (28.6) (29.0)
Dividends paid to equity shareholders 7 (76.0) (68.8)
Net cash from financing activities (276.2) (276.4)
Net increase in cash and cash equivalents 37.4 17.7
Cash and cash equivalents at the start of the year 40.2 39.2
Effect of exchange rate fluctuations (20.8) (16.7)
Cash and cash equivalents at the end of the year 56.8 40.2
Reconciliation of cash and cash equivalents
Cash and cash equivalents 147.8 106.5
Bank overdraft (91.0) (66.3)
Cash and cash equivalents at the end of the period 56.8 40.2
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.
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 the table below. 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.
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 profit before tax is statutory profit before tax before adjusting See income statement on page 17.
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. See income statement on page 17.
Adjusted net interest cost
Adjusted earnings per share is defined within the table in Note 5.
See Note 5.
The adjusted effective tax rate is the tax impact on adjusted profit before
tax divided by adjusted profit before tax.
Adjusted earnings per share
See Note 4.
This measure reflects adjusted profit after tax before interest, tax,
depreciation, amortisation and impairment.
Adjusted effective tax rate
Adjusted EBITDA
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 operating margin
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
Adjusted net financing costs income relating to defined benefit pension schemes. See income statement on page 17 and segmental reporting in Note 1.
These two measures remove the impact of adjusting items, acquisitions,
disposals and movements in exchange rates.
Organic revenue growth
Organic adjusted operating profit
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 See Note 9.
adjusting items.
1. Segmental information (continued)
APM Definition Reconciliation to statutory measure
Net debt Net debt is defined as the cash and cash equivalents, overdrafts, See Note 9.
interest-bearing loans and borrowings and lease liabilities.
Net debt divided by adjusted EBITDA as defined above.
Net debt: adjusted EBITDA
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
Free cash flow before and issuance of own shares. See Note 9.
corporate activity
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.
Return on invested capital (ROIC)
See page 15.
Cash conversion is the adjusted operating cash flow as a percentage of the
adjusted operating profit.
Cash conversion See page 13.
The following table shows a reconciliation of platform adjusted operating
profit to statutory operating profit.
Automation Life Technology Total
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Revenue 1,414 1,350 796 846 2,210 2,196
Adjusted operating profit 289.2 257.3 146.3 153.3 435.5 410.6
Adjusted operating profit margin 20.5% 19.1% 18.4% 18.1% 19.7% 18.7%
Reconciliation to statutory operating profit:
Reversal of net economic hedge contract gains (0.2) (7.5) (1.8) (0.8) (2.0) (8.3)
Restructuring costs (35.5) (30.6) (19.2) (17.5) (54.7) (48.1)
Acquired intangible amortisation and other (13.0) (14.9) (15.9) (18.7) (28.9) (33.6)
acquisition items
Exit from Russia (2.0) (2.0)
Gain on disposal of subsidiary 6.3 6.3
Statutory operating profit 240.5 202.3 115.7 116.3 356.2 318.6
Statutory operating margin (%) 17.0% 15.0% 14.5% 13.7% 16.1% 14.5%
Net financial expense (25.8) (16.2)
Statutory profit before tax 330.4 302.4
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 2023.
Year ended 31 December 2023 Year ended 31 December 2024
Revenue As adjusted Disposal Exchange Organic As adjusted Acquisitions Organic Adjusted growth (%) Organic growth (%)
Automation 1,350 (44) 1,306 1,414 (1) 1,413 5% 8%
Life Technology 846 (9) (22) 815 796 796 -6% -2%
Total 2,196 (9) (66) 2,121 2,210 (1) 2,209 1% 4%
Adjusted operating profit
Automation 257.3 (9.9) 247.4 289.2 (0.3) 288.9 12% 17%
Life Technology 153.3 (2.0) (3.9) 147.4 146.3 146.3 -5% -1%
Total 410.6 (2.0) (13.8) 394.8 435.5 (0.3) 435.2 6% 10%
Adjusted operating profit margin (%) 18.7% 18.6% 19.7% 19.7%
The following table shows a geographical analysis of how the Group's revenue
is derived by destination:
2024 2023
£m £m
UK 130 117
Germany 257 280
Rest of Europe 555 557
Total Europe 942 954
USA 520 525
Rest of Americas 137 140
Total Americas 657 665
China 180 174
Rest of Asia Pacific 277 296
Total Asia Pacific 457 470
Middle East & Africa 154 107
Total revenue 2,210 2,196
1. Segmental information (continued)
The Group's revenue streams are disaggregated in the table below.
2024 2023
Revenue Revenue
£m £m
Industrial Automation 508 543
Aftermarket 545 483
New Construction 361 324
Process Automation 906 807
Automation 1,414 1,350
Climate Control 389 386
Life Science & Fluid Control 236 276
Transport 171 184
Life Technology 796 846
Total revenue 2,210 2,196
Sale of goods 2,127 2,115
Sale of services 83 81
Total revenue 2,210 2,196
2. Discontinued operations
There was no profit or loss from discontinued operations in 2024 or 2023.
3. Net financing costs
2024 2023
Interest Financial Total Interest Financial Total
Instruments Instruments
Recognised in the income statement £m £m £m £m £m £m
Interest income on bank deposits 9.7 9.7 8.1 8.1
Financial income 9.7 9.7 8.1 8.1
Interest expense on interest-bearing loans and borrowings (21.7) (21.7) (27.9) (27.9)
Interest expense on leases (2.8) (2.8) (2.9) (2.9)
Financial expense (24.5) (24.5) (30.8) (30.8)
Recognised in other comprehensive income
Gains on instruments measured at fair value through profit or loss:
Other economic hedges (9.1) (9.1) 7.0 7.0
Net financial expense relating to defined benefit pension schemes (1.9) (1.9) (0.5) (0.5)
Net financial (expense)/income (16.7) (9.1) (25.8) (23.2) 7.0 (16.2)
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 £101.8m (2023: £84.5m) which
equates to an adjusted effective tax rate of 24.3% (2023: 21.8%). The
statutory tax charge is £81.9m (2023: £65.1m) which equates to 24.8% (2023:
21.5%). Taxes of £ 97.9m were paid in the year (2023: £76.1m). 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.
The tax rates for 2024 include the estimated impact of the OECD Inclusive
Framework agreement for a global minimum corporate income tax rate of 15%, the
effect of which on IMI's results is minimal.
As IMI's head office and parent company are 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 in 2024 was 25% (2023: 23.5%). The Group's effective
tax rate differs slightly from the UK tax rate due to the Group's overseas
profits being taxed at different rates.
5. Earnings per ordinary share
2024 2023
Key million million
Weighted average number of shares for the purpose of basic earnings per share A 258.8 259.3
Dilutive effect of employee share options 1.1 1.0
Weighted average number of shares for the purpose of diluted earnings per B 259.9 260.3
share
£m £m
Statutory profit for the year C 248.5 237.3
Total adjusting items charges included in profit before tax 88.4 85.0
Total adjusting items credits included in taxation (19.9) (19.4)
Earnings for adjusted EPS D 317.0 302.9
Statutory EPS measures
Statutory basic EPS C/A 96.0p 91.5p
Statutory diluted EPS C/B 95.6p 91.2p
Adjusted EPS measures
Adjusted basic EPS D/A 122.5p 116.8p
Adjusted diluted EPS D/B 122.0p 116.4p
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 £54.7m were recognised in 2024. The Automation
platform incurred costs of £35.5m primarily related to the rationalisation of
three facilities and the creation of a COO structure to streamline and share
best practice across our Sectors. The Life Technology platform incurred costs
of £19.2m related to the Customer First reorganisation project, the Focus for
Growth project in Climate Control, to improve the team's ability to implement
operational strategies, creation of the COO structure and the rationalisation
of two facilities. The benefits of the restructuring programme are included in
adjusted operating profit. These restructuring projects are due to be
completed in 2025.
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 and the rationalisation of three facilities.
Acquired intangible amortisation and other acquisition items
The acquired intangible amortisation charge was £28.2m (2023: £32.0m), 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
£0.7m primarily related to professional fees associated with the acquisition
of TWTG.
Gain on disposal of subsidiary
The Group disposed of a French subsidiary, Industrie Mecanique Pour Les
Fluides SA, on 25 April 2024 resulting in a gain on disposal of £6.3m. Refer
to Note 12 for further details.
Exit from Russia
During 2023, changes were made to the legal structure of a customer, which
resulted in a £2m write-off. This came following the Group's decision to end
all new business in Russia in 2022.
Taxation
The tax effect of the above items has been recognised as an adjusting item and
amounts to £18.3m (2023: £19.4m). A charge of £5.0m is recorded as an
adjusting item relating to the transfer of businesses in the year. A credit of
£1.6m is also recorded as an adjusting item relating to the release of a
prior year restructuring provision which has now been resolved.
7. Dividend
The directors recommend a final dividend of 21.1p per share (2023: 19.2p)
payable on 16 May 2025 to shareholders on the register at close of business on
5 April 2025, which will cost approximately £53.9m (2023: £49.9m). Together
with the interim dividend of 10.0p (2023: 9.1p) per share paid in September
2024, this makes a total distribution of 31.1p per share (2023: 28.3p per
share). In accordance with IAS10 'Events after the Balance Sheet date', this
final proposed dividend has not been reflected in the 31 December 2024 balance
sheet.
8. Employee Benefits
The Group has 70 (2023: 70) defined benefit obligations in existence as at 31
December 2024. 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 2024 was
£47.4m (2023: £48.9m). The UK deficit was £3.3m (2023: deficit of £3.7m)
and constituted 66% (2023: 68%) of the total defined benefit liabilities and
74% (2023: 76%) of the total defined benefit assets. The deficit in the
overseas funds as at 31 December 2024 was £44.1m (2023: £45.2m).
UK Overseas Total
£m £m £m
Net defined benefit surplus/(obligation) at 1 January 2024 (3.7) (45.2) (48.9)
Movement recognised in:
Income statement (0.2) (6.1) (6.3)
Other comprehensive income 0.6 (2.1) (1.5)
Cash flow statement 7.1 7.1
Exchange 2.2 2.2
Net defined benefit obligation at 31 December 2024 (3.3) (44.1) (47.4)
9. Cash flow and net debt reconciliation
Reconciliation of net cash to movement in net debt 2024 2023
£m £m
Net increase in cash and cash equivalents excluding foreign exchange 37.4 17.7
Less: cash acquired/disposed 1.8 0.4
Net repayment of borrowings excluding foreign exchange and net debt 50.0 148.4
disposed/acquired
Decrease in net debt before acquisitions, disposals and foreign exchange 89.2 166.5
Net cash acquired/disposed (4.7) (0.4)
Currency translation differences (4.7) 1.8
Movement in lease liabilities 11.1 5.5
Movement in net debt in the year 90.9 173.4
Net debt at the start of the year (638.6) (812.0)
Net debt at the end of the year (547.7) (638.6)
Movement in net debt 2024 2023
£m £m
Adjusted EBITDA* 526.3 503.2
Working capital movements (21.5) (31.3)
Capital and development expenditure (91.5) (79.9)
Provisions and employee benefit movements** (1.7) (2.7)
Principal elements of lease payments (28.6) (29.0)
Other 18.8 6.0
Adjusted operating cash flow *** 401.8 366.3
Adjusting items (40.7) (43.1)
Tax paid (97.9) (76.1)
Interest (14.8) (22.7)
Settlement of derivatives 14.6 9.8
Free cash flow before corporate activity 263.0 234.2
Dividends paid to equity shareholders (76.0) (68.8)
Acquisition of subsidiaries (18.2) -
Disposal of subsidiaries 17.5 0.5
Net purchase of own shares (97.1) 0.6
Net cash flow (excluding debt movements) 89.2 166.5
*Adjusted profit after tax £317.0m before interest £16.7m, tax £101.8m,
depreciation £71.0m and amortisation £19.8m.
**Movement in provisions and employee benefits as per the statement of cash
flows £4.3m adjusted for the movement in the restructuring provisions £6.0m.
***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 2024 2023
£m £m
Cash generated from operations 469.5 439.3
Principal lease payments (28.6) (29.0)
Settlement of transactional derivatives (2.9) (8.8)
Acquisition of property, plant and equipment and non-acquired intangibles (91.5) (79.9)
Adjusting items 40.7 43.1
Proceeds from sale of property, plant and equipment 15.6 1.6
Purchase of investments (1.0)
Adjusted operating cash flow 401.8 366.3
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
2024 2023 2024 2023
Euro 1.18 1.15 1.21 1.15
US Dollar 1.28 1.24 1.25 1.27
The movement in average exchange rates between 2023 and 2024 negatively
impacted both revenue and adjusted operating profit by 3% in the full year
when compared to 2023.
If exchange rates as at 21 February 2025 of US$1.26 and €1.21 were projected
for the full year and applied to our 2024 results, it is estimated that both
revenue and adjusted operating profit would be broadly neutral.
11. Acquisitions
Acquisitions in 2024
During the year ended 31 December 2024, the Group acquired, TWTG Group B.V.
("TWTG").
a) TWTG GROUP B.V. (TWTG)
Provisional fair value at
31 October 2024
£m
Other intangible assets 9.5
Property, plant and equipment 0.1
Right of use assets 0.5
Inventories 2.2
Trade and other receivables 1.9
Cash and cash equivalents 0.5
Trade and other payables (1.6)
Interest-bearing loans and borrowings (2.9)
Lease liabilities (0.5)
Deferred taxation (2.2)
Total identified net assets at fair value 7.5
Goodwill arising on acquisition 10.7
Purchase consideration 18.2
On 31 October 2024 the Group acquired 100% of the share capital, and
associated voting rights, of TWTG Group B.V. (TWTG) for initial purchase
consideration of £18.2m. TWTG is a leader in smart connected asset monitoring
solutions for process industries based in Rotterdam, the Netherlands.
This acquisition has been accounted for as a business combination. The
provisional fair value amounts recognised in respect of the identified assets
acquired and liabilities assumed are set out in the table above. 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
business provides to the Group's operations.
Acquisition costs of £0.7m were recognised in the income statement in 2024.
The revenue and adjusted operating profit included in the income statement for
2024 contributed by TWTG were £1.0m and £0.3m, respectively. If the
acquisition had taken place on 1 January 2024, TWTG would have contributed
revenue and adjusted operating profit of £7.4m and £1.0m, respectively.
There were no acquisitions during 2023.
12. Disposals
Disposals in 2024
The Group disposed of its French subsidiary, Industrie Mecanique Pour Les
Fluides SA, on 25 April 2024 for proceeds of £18.5m resulting in a gain on
disposal for the Group of £6.3m after disposing of £11.5m of net assets and
incurring £1.0m of associated disposal costs, partly offset by recycling a
foreign exchange gain from reserves of £0.3m.
This disposal is not disclosed as a discontinued item because it did not
represent a separate major line of business.
25 April
2024
£m
Sale consideration 18.5
Net assets disposal (11.5)
Costs of disposal (1.0)
Foreign exchange gain reclassified on disposal 0.3
Gain on disposal 6.3
Net cash flow arising on disposal
Sale consideration 18.5
Cash costs of disposal (1.0)
Cash transferred to purchaser (2.3)
Net cash flow arising on disposal of operations 15.2
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 was 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 disposed -
Costs of disposal (0.3)
Foreign exchange loss 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
13. Financial information
The preliminary statement of results was approved by the Board on 27 February
2025. The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2024 or 2023 but
is derived from the 2024 accounts, which are prepared on the same basis as the
2023 accounts. Statutory accounts for 2023 have been delivered to the
registrar of companies and those for 2024 will be delivered in due course.
Deloitte LLP has reported on the 2024 and 2023 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 to 31 December 2024 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, Chief Legal &
Risk Officer and Company Secretary.
The Company's 2024 Annual Report and Notice of the forthcoming Annual General
Meeting will be posted to shareholders on 28 March 2025.
Notes to editors
IMI plc is a global leader in fluid and motion control. Its innovative
solutions, built around valves and actuators, enable vital sectors to become
safer, more productive and more energy efficient. IMI combines world-class
applications engineering expertise with a continued focus on commercial
excellence, 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. IMI is a member of the FTSE 100 and is listed on the London
Stock Exchange. Further information is available at www.imiplc.com.
Brand materials can be found here
(https://imi.frontify.com/d/bf8dsNivmjuw/brand-library#/-/photography-library)
.
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