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. This information is provided by RNS The company news service from the London Stock Exchange END ACSJLMATMBITBAT -0- Mar/29/2012 15:47 GMT
IMI PLC IMI Annual Financial Report
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