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Transcript of IMI plc reports/imi-ara-2013.pdfآ  company, for both our Beverage Dispense business and our...

  • IMI plc Annual Report and Accounts 2013

    IM I plc A

    nnual R eport and A

    ccounts 2013

    IMI plc Lakeside Solihull Parkway Birmingham Business Park Birmingham B37 7XZ United Kingdom

    www.imiplc.com

  • INSIDE THIS REPORT

    BUSINESS REVIEW

    PERFORMANCE REVIEW

    CORPORATE GOVERNANCE

    FINANCIAL STATEMENTS

    04 Chairman’s statement

    08 Group overview

    10 Responding to global trends

    12 Understanding our niche markets

    14 How we do business

    20 Chief Executive’s review

    22 Our strategy and business model

    24 Measurements and targets

    26 Principal risks and uncertainties

    30 Severe Service division

    32 Fluid Power division

    34 Indoor Climate division

    38 The Board

    40 Letter from the Chairman

    41 Corporate Governance Report

    48 Audit Committee Report

    50 Nominations Report

    51 Directors’ Report

    55 Remuneration Report

    82 Introduction

    84 Primary statements

    92 Section 1 - Basis of preparation

    93 Section 2 - Results of the year

    106 Section 3 - Operating assets and liabilities

    112 Section 4 - Capital structure

    137 Section 5 - Other supporting notes

    154 Five year financial summary

    156 Shareholder information and financial calendar

    A welcome from our Chairman, an overview of who we are and what we do, the markets we work in, how we do business in a responsible way and our people.

    We introduce our Board and explain our governance structure and how it operates.

    Our financial statements for the year, redesigned from the prior year to be presented in a more user-friendly format.

    We take a look at our 2013 results, division by division.

    Meeting our new Chief Executive, an overview of our business model and growth strategy and how we performed against our targets.

    GROUP OVERVIEW

    STRATEGIC REPORT

    MEGA-FACTS

    28-3518-27

    80-157

    02-17

    Section dividers 36-79

    IMI plc, the specialist engineering company, designs, manufactures and services highly engineered products that control the precise movement of fluids. Its innovative technologies, built around valves and actuators, enable vital processes to operate safely, cleanly, efficiently and cost effectively. The Group works with industrial customers across a range of high growth sectors, including energy, transportation and infrastructure, all of which are benefiting from the impact of long-term global trends including climate change, urbanisation, resource scarcity and an ageing population. IMI employs over 12,000 people, has manufacturing facilities in more than 20 countries world-wide and operates a global service network. The Company is listed on the London Stock Exchange and is a member of the FTSE100. Further information is available at www.imiplc.com

    Front cover photo: Hong Kong, China.

    Fact: “There will be 35 Mega Cities in 2025 with a population over eight million and a GDP of over $250 billion.”

    ONLINE

    The IMI plc website www.imiplc.com

    The Strategic Report on pages 2 to 35 has been approved by the Board of Directors and signed on their behalf by:

    Mark Selway Chief Executive

    5 March 2014

    IMI plc

    Annual Report

    and Ac counts

    2013

    All ‘mega-facts’ found on the contents pages were provided by kind permission of Frost & Sullivan.

    IMI plc 157Annual Report and Accounts 2013

    INDEX

    Accounting policies ............................... 137-143

    ADRs ..................................................... 156

    Annual General Meeting ......................... 54

    Audit Committee.................................... 48

    Auditor’s remuneration ........................... 98

    Auditor’s reports .................................... 145-147

    Balance sheet ........................................ 88

    Board of Directors ................................. 38

    Borrowing facilities ................................. 113

    Business integrity & ethics ..................... 15

    Business model ..................................... 23

    Business review ..................................... 18

    Cash flow statement .............................. 90

    Chairman’s statement ............................ 4

    Chief Executive’s review ......................... 20

    Community ............................................ 15

    Corporate Governance Report .............. 41-47

    Deferred tax ........................................... 103

    Directors’ interests ................................. 54

    Director’s responsibility statement .......... 144

    Diversity ................................................. 17, 50

    Dividends .............................................. 132, 143,

    156

    Donations .............................................. 53

    Earnings per share ................................. 99-100

    Employees ............................................. 16, 52

    Environment .......................................... 25

    Executive Committee ............................. 45

    Financial Statements ............................. 80

    Five year summary ................................. 154-155

    Fluid Power division ............................... 32

    General information ............................... 156

    Geographic distribution of employees .... 152

    Global footprint ...................................... 9

    Global trends ......................................... 10

    Going concern ....................................... 54

    Goodwill ................................................ 107-108

    Group overview ..................................... 8

    Health and safety ................................... 15, 25

    Income statement .................................. 84

    Indoor Climate division ........................... 34

    Intangible assets .................................... 107

    Interest income and expense ................. 114

    Internal control ....................................... 46-47

    Key Performance Indicators ................... 24

    Niche markets ....................................... 12

    Nominations Committee Report ............. 50

    Outlook ................................................. 7

    Pensions ............................................... 124-131

    People ................................................... 16

    Performance Review .............................. 28

    Principal risks and uncertainties ............. 26

    Property, plant and equipment ............... 142

    Registrars .............................................. 156

    Remuneration Report ............................ 55

    Research and development ................... 51

    Responsible business ............................ 14

    Segmental information ........................... 93-98

    Severe Service division .......................... 30

    Share capital ......................................... 131-132

    Shareholder information ......................... 156

    Strategy ................................................. 22

    Statement of changes in equity .............. 87

    Statement of comprehensive income ..... 86

    Subsidiary undertakings......................... 153

    Substantial shareholdings ...................... 52

    Taxation ................................................. 101-103

    Treasury policy ....................................... 112-123

    Total Shareholder Return ....................... 69

    Designed and produced by Design Motive Ltd

    Printed and bound in the UK by CPI Colour Ltd

  • HIGHLIGHTS

    “2013 was a year of significant progress on a number of fronts. We continued to deliver positive results for our shareholders and during the course of the year, reshaped our business creating a strong platform for future growth.” Roberto Quarta, Chairman

    • The disposal of Beverage Dispense and Merchandising creates specialist flow control business

    • Announced the return of £620m of cash to shareholders

    • Transitioned the Group’s leadership following the retirement of Martin Lamb and the appointment of Mark Selway as new Chief Executive

    • Delivered another set of positive results with organic revenue growth of 1% and adjusted EPS up 12%

    • Recommended a 9% increase in the full year dividend

    All items are shown on a continuing basis (excluding the results of the Beverage Dispense and Merchandising divisions which were sold on 1 January 2014).

    HighlightsRevenue

    +3%£1,743m

    £1,743m£1,694m

    2012 2013

    Adjusted profit before tax

    +8%£297.7m

    £297.7m£274.8m

    300

    200

    100

    2012 2013

    Reported profit before tax

    +8%£249.3m

    £249.3m£229.9m

    300

    200

    100

    2012 2013

    Adjusted basic earnings per share

    +12%72.6p

    72.6p64.7p

    2012 2013

    Segmental operating margin

    +70bps18.4%

    18.4%17.7%

    2012 2013

    15

    20

    10

    5

    60

    80

    40

    20

    1500

    2000

    1000

    500

    30

    40