IMI Imi Plc

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

 

	Adjusted1				Statutory
	2024	2023	Change	Organic4	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 flow2	£263m	£234m	+12%		£263m	£234m	+12%
Dividend per share	31.1p	28.3p	+10%		31.1p	28.3p	+10%
Return on invested capital3	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	Adjusted1				Statutory
	2024	2023	Change	Organic2	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

 

	Adjusted1				Statutory
	2024	2023	Change	Organic4	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 flow2	£263m	£234m	+12%		£263m	£234m	+12%
Dividend per share	31.1p	28.3p	+10%		31.1p	28.3p	+10%
Return on invested capital3	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	Organic1	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	Organic1
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	Organic1	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	20251
Restructuring charge
Automation	(35)	-
Life Technology2	(13)	-
Total charge	(48)	-
Cash impact2	(40)	(10)

 

£m	2024	20251
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 disposed/acquired	50.0	148.4
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 £m	2023 £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