IMI PLC IMI Annual Financial Report

  IMI PLC (IMI) - Annual Financial Report

RNS Number : 3989A
IMI PLC
29 March 2012


29 March 2012



Annual Financial Report



IMI plc  (the  "Company") announces  that  copies  of the  Annual  Report  and 
Accounts for the year ended 31 December 2011 and the Notice of Annual  General 
Meeting  for  2012  are  available   from  today  on  the  Company's   website 
www.imiplc.com   and    may   be    viewed    and   downloaded    online    at 
www.imi.plc.uk/investors (click on Annual Reports).



Hard copy  documents are  being posted  to shareholders  who have  elected  to 
receive them  and  are  also  available from  the  Company  Secretary  at  the 
Company's registered office at Lakeside, Solihull Parkway, Birmingham Business
Park, B37 7XZ.



Copies of the  above documents, together  with the notice  of availability  to 
shareholders receiving web-communications and the  form of proxy for the  2012 
Annual General Meeting have been  submitted to the National Storage  Mechanism 
and will shortly be available for inspection at: www.hemscott.com/nsm.do



The Company's  2012  Annual  General  Meeting  will  be  held  at  the  Hilton 
Birmingham Metropole Hotel, National Exhibition Centre, Birmingham on Friday 4
May 2012, commencing at noon.



The Company's preliminary  results announcement  of 2 March  2012 contained  a 
management report  as well  as  the audited  financial statements  which  were 
prepared in accordance with the  applicable accounting standards. The  Annual 
Report and Accounts  submitted to  the National Storage  Mechanism today  also 
contains information regarding the Company's principal risks and uncertainties
and a responsibility statement  relating to the content  of the Annual  Report 
and Accounts (from the Directors in office as at 1 March 2012); an extract  of 
this information is provided  below as required under  paragraph 6.3.5 of  the 
DTR, however this material  should be read  in conjunction with  and is not  a 
substitute for reading  the full  Annual Report  and Accounts.  There are  no 
related party transactions requiring disclosure. Page and note references  in 
the text  below refer  to page  numbers and  notes in  the Annual  Report  and 
Accounts.



DIRECTORS' RESPONSIBILITY STATEMENT

The following statement is repeated here  solely for the purpose of  complying 
with DTR 6.3.5. This statement  relates to and is  extracted from page 68  of 
the Annual Report and  Accounts and is  signed by order of  the Board by  John 
O'Shea, Company Secretary. Responsibility is  for the full Annual Report  and 
Accounts and not the extracted  information presented in this announcement  or 
the preliminary results announcement.



Directors' responsibility  statement  under the  Disclosure  and  Transparency 
Rules



Each of the directors listed on pages 36 and 37 confirms that:



• the Group and  parent company financial  statements in this  annual 
report, which have been prepared in accordance with applicable UK law and with
the applicable set of accounting standards, give  a true and fair view of  the 
assets, liabilities, financial position and profit of the Group; and



• the management  report (which comprises  the Directors' Report  and 
the business review) includes a fair review of the development and performance
of the business  and the  position of  the Company and  the Group  taken as  a 
whole, together with a  description of the  principal risks and  uncertainties 
that they face.



PRINCIPAL RISKS AND UNCERTAINTIES

In common with all businesses, there  are a number of risks and  uncertainties 
which could have a material impact  on the Group's long-term performance.  The 
Group has  in place  an  established risk  management structure  and  internal 
controls framework  which  together  are  designed  to  identify,  manage  and 
mitigate business risk. A summary of the Group's risk management processes  is 
given on page 46 and the  Group's approach to corporate social  responsibility 
and associated risks is described on pages 28 to 33. In addition to the  risks 
described here, the  Group is  also exposed to  a number  of financial  market 
risks including credit risk,  liquidity risk, counterparty risk,  fluctuations 
in foreign exchange rates, interest rates and commodity prices. A  description 
of these  risks and  the  Group's centralised  approach  to managing  them  is 
described in note 18  to the financial  statements. Further information  about 
pension liabilities is given in note 19 to the financial statements.



KEY RISKS



Risk                 Description of risk and         Examples  of   mitigating 
                     potential impact                actions
Economic and market  The Group's European revenues   · Diverse business
environment          are principally derived from    portfolio serving
                     Northern and Central Europe,    different customers and
                     however, the status of the      markets
                     global economy and in
                     particular the uncertainties in · Accelerate growth
                     the Eurozone could adversely    agenda: investment in new
                     affect the Group's revenues.    product development and
                     The Group's cost base includes  emerging markets
                     many costs that cannot be
                     reduced in the short-term in    · Monitoring of
                     line with reductions in         customer and supplier
                     profitability. The Group may    financial security
                     also be required to reassess
                     the carrying value of acquired  · Cost base reduction
                     goodwill and other assets if    initiatives
                     certain end-markets deteriorate
                     further or for longer, which    · Regular updating of
                     may result in impairment        contingency plans
                     charges.
                                                     · Effective cash
                                                     management

                                                     · Allocation of
                                                     resource to more
                                                     resilient customers,
                                                     markets and geographies
                                                     and focus on global
                                                     growth trends (climate
                                                     change, resource
                                                     scarcity, urbanisation
                                                     and ageing population)
Legal and regulatory The Group's worldwide           · Commitment to good
risks                operations and expansion in     governance practices
                     emerging markets expose it to   which are embodied in The
                     different legal and regulatory  IMI Way providing a
                     requirements and standards in   guiding set of values
                     each of the jurisdictions in    that exemplify how IMI
                     which it operates including     employees should behave
                     those for financial reporting,
                     taxation, environmental,        · IMI Way days held in
                     operational, anti-corruption,   all businesses which
                     fraud and competition matters.  includes face-to-face
                     The Group is also exposed to    training for all
                     the potential for litigation    employees
                     from third parties which may
                     arise in the ordinary course of · Policies, manuals,
                     business. The Company operates  training, business
                     various corporate governance,   processes and monitoring
                     compliance and internal control of key compliance and
                     frameworks which are essential  legal risks
                     for the effective management of
                     such geographically diverse     · Increase in
                     businesses. Failures in these   resources dedicated to
                     controls might have a material  legal and regulatory
                     impact on the Group.            compliance

                                                     · Training of
                                                     employees on The IMI Way
                                                     and key risk areas such
                                                     as competition law and
                                                     anti-corruption

                                                     · Enhanced version of
                                                     The IMI Way to be
                                                     published in 2012

                                                     · Availability and
                                                     promotion of the IMI
                                                     Hotline to report
                                                     concerns anonymously

                                                     · Internal financial
                                                     control audits by IMI
                                                     Group Assurance

                                                     · Anti-bribery,
                                                     corruption and fraud
                                                     workshops carried out
Health, safety and   The Group recognises that it    · Established systems
environ-mental       has a duty of care to all of    in place under the IMI
                     its employees and to others     Safety First, Safety
                     with whom the Group interacts   Always slogan, to ensure
                     through its products and        that health, safety and
                     operations. In the event of any environmental matters are
                     failure in the Group's health,  appropriately addressed
                     safety and environmental        and any such risks are
                     procedures, there is a          minimised including
                     potential risk of injury or     monthly reporting to, and
                     death to IMI's employees or     review at, the Executive
                     others; or environmental        and quarterly review at
                     damage, with the consequential  the IMI Board
                     impact on the operations and
                     the risk of regulatory action   · Increase of
                     against the Group.              full-time health, safety
                                                     and environmental
                                                     officers across the Group
                                                     to ensure policies are
                                                     embedded and measured

                                                     · Introduction of a
                                                     new travel risk
                                                     management programme
                                                     providing appropriate
                                                     advice and support to all
                                                     of the Group's
                                                     international travellers

                                                     · Regular review of
                                                     Group safety performance

                                                     · Group Environment,
                                                     Health and Safety
                                                     function with experienced
                                                     specialist employees to
                                                     provide support and
                                                     guidance to businesses -
                                                     including the conduct of
                                                     regular risk control and
                                                     health and safety audits

                                                     · Maintenance of
                                                     insurance for costs
                                                     associated with any
                                                     employers' liability,
                                                     workers' compensation or
                                                     equivalent claims and
                                                     also certain
                                                     environmental incidents
Pension funding      The Group's defined benefit     · Deficit reduction
                     pension arrangements are        plans implemented where
                     exposed to the risk of changes  appropriate
                     in interest rates and the
                     market values of investments as · Liability management
                     well as inflation, increased    exercises implemented to
                     longevity of members and        remove risk from the IMI
                     statutory requirements. This    Pension Fund
                     may result in the cost of
                     funding defined benefit pension · Closure of overseas
                     arrangements becoming an        defined benefit plans to
                     increasingly significant burden new members and future
                     on the Group's financial        accrual where permissible
                     resources.
                                                     · Active management of
                                                     pension scheme assets and
                                                     long-term view of
                                                     liability assumptions
Products and         The Group is exposed to risks   · Continued  focus  on 
technology           associated with the commercial  quality    and    safety, 
                     failure of products, projects   including    audits    to 
                     and technologies such as        appropriate       quality 
                     product liability and warranty  standards
                     claims. The quality and safety
                     of our products is of the       ·     Processes     to 
                     highest importance and there is mitigate the reputational
                     an associated risk if they are  and legal implications of
                     below standard. For product     any failure
                     claims not covered by
                     insurance, the costs that       ·    Maintenance    of 
                     cannot otherwise be recovered   insurance    cover    for 
                     may be material to the Group.   product liability claims

                                                     ·  Upgrade  of  talent 
                                                     and focus  on  functional 
                                                     excellence in quality and
                                                     product development

                                                     · Contract  management 
                                                     resources for both  sales 
                                                     and purchases
Key customers        Certain of the Group's          · Collaborative
                     businesses benefit from close   development of bespoke
                     commercial relationships with   new products
                     key customers. The loss of
                     certain of these key            · Development of
                     relationships whether through   strong relationships with
                     competition, consolidation or   new accounts to maintain
                     insolvency could have a         a diverse portfolio
                     material impact on the Group's  across business sectors
                     results. The Group's top ten    and geographic regions
                     customers represent
                     approximately 15% of total      · Monitoring of
                     Group revenues. Onerous         markets for advance
                     contract conditions with key    warning of negative
                     customers could impact the      commercial developments
                     Group's financial performance.
                                                     · Further investment
                                                     in and development of Key
                                                     Account Management and
                                                     Engineering Advantage

                                                     · Increase in
                                                     resources dedicated to
                                                     legal contract review and
                                                     enhanced contract sign
                                                     off procedures
Supply chain         The Group has a significant     · Monitoring of risk
                     number of contracts with a      and development of
                     broad base of suppliers. In the contingency plans to
                     current economic environment    mitigate the impact of
                     there is a risk that their      any supplier failure or
                     access to credit or adverse     increased prices
                     trading conditions could lead
                     to an inability to meet their   · Review of supply
                     contractual commitments to the  base to reduce
                     Group. In addition, upward      over-reliance on key
                     price pressure from the supply  suppliers
                     chain could erode profits. The
                     increasing use of suppliers in  · Moves to new lower
                     low cost economies could        cost manufacturing
                     introduce risks related to      facilities, ongoing
                     quality or responsible business review of alternative low
                     practices. All this could have  cost economy based
                     a material impact on the        suppliers and, where
                     Group's results.                appropriate, supplier
                                                     consolidation

                                                     · Training and audit
                                                     programme to validate
                                                     suppliers' business
                                                     processes, quality and
                                                     standards
Competitive markets  The Group operates in highly    · Initiatives and
                     competitive markets.            investment in research
                     Significant product             and development targeted
                     innovations, technical advances to sustain the Group's
                     or the intensification of price Engineering Advantage
                     competition could all adversely
                     affect the Group's results. The · Monitoring of
                     Group's continued success       competing markets and
                     depends upon its ability to     products, including
                     continue to develop and produce adjacent technologies, to
                     new and enhanced products and   facilitate early
                     services on a cost-effective    identification of
                     and timely basis in accordance  potential threats and
                     with customer demands.          development of
                                                     contingency plans

                                                     · Cost base reduction
                                                     initiatives, including
                                                     supplier rationalization
                                                     and value engineering

                                                     · Processes for
                                                     managing investment in
                                                     research and development
                                                     including appropriate
                                                     stage gates for reviewing
                                                     progress against
                                                     clearly-defined, often
                                                     customer-driven,
                                                     technical and commercial
                                                     objectives
M&A activity         IMI's  growth  strategy  is  in · Rigorous due
                     part dependent on acquisitions. diligence process with
                     The execution  and  integration clear financial targets
                     of  acquisitions   involves   a 
                     number  of   risks,   including · Formal internal
                     diversion    of    management's approval requirements
                     attention,  failure  to  retain 
                     key personnel  of the  acquired · Appropriate business
                     business and  risks  associated integration processes to
                     with  unanticipated  events  or ensure that the Group's
                     liabilities. The Group may also policies, values,
                     be subject to liabilities as  a compliance and control
                     result  of   past   or   future framework are adopted and
                     disposals.                      embedded

                                                     · Investment in M&A
                                                     skills and resources to
                                                     support the growth
                                                     strategy
Talent   acquisition A loss of key personnel or the  · Succession plans in
and retention        inability of the Group to       place and regularly
                     recruit and retain high calibre reviewed
                     managers and engineering talent
                     may lead to the Group not being · Group-wide training
                     able to implement its business  and development
                     plans and strategy effectively  programmes
                     and experiencing delays, or
                     increased difficulty, in the    · Increased resources
                     strategic development of the    in emerging markets
                     Group, including in developing
                     and selling its products and    · Regular
                     services.                       employee-wide surveys and
                                                     action plans targeted by
                                                     company or geography
Major         change The achievement of IMI's        · Upgrade of resources
projects             strategic objectives will       and  talent  in   project 
                     require a number of major       management
                     change projects in areas of
                     manufacturing realignment,      ·  Regular  review  of 
                     information technology          project  progression   by 
                     improvements and business       Executive
                     reorganisations. Failure to
                     deliver successful major change ·    Enhanced     risk 
                     projects in a timely manner     assessment        process 
                     could impact the Group's        including full mitigation
                     financial performance.          action  plans   for   all 
                                                     major change projects



Risk Appetite



The Board  has considered  the  Group's risk  appetite  and it  is  considered 
appropriate to achieve  the Group's  strategic objectives. The  level of  risk 
appetite varies according  to the rewards  associated with each  of the  above 
risk categories. Risk appetite is higher for new product development, emerging
market growth  and bolt-on  acquisitions, in  keeping with  our objective  for 
further strategic convergence and is lower for employee safety and  compliance 
with regulatory and business ethics. The degree  of risk to be accepted on  an 
operational basis  is  managed  through delegation  of  authority  levels  and 
ensuring consistency with The IMI Way.

Enquiries to:



Helen     Afford      Corporate      Counsel 
Tel: 0121 717 3700



Will  Shaw  Investor  Relations  Tel: 
 0121 717 3700





End.



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           The company news service from the London Stock Exchange

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