IMI plc annual report 2012

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ENGINEERINGADVANTAGEDirectors’ ReportThe directors present their report, together with the auditedfinancial statements, for the year ended 31 December 2012.Business reviewThe information that fulfils the business review requirementsof the Companies Act 2006 can be found on pages 4 to 33and 45, which are incorporated into this report by reference.This includes a review of the development and performanceof the business of the IMI group of companies (the ‘Group’),including the financial performance during the financial yearended 31 December 2012, key performance indicators, theprincipal risks and uncertainties facing the Group and ourrisk management processes.Principal activitiesIMI is a global engineering group focused on the precisecontrol and movement of fluids in critical applications.IMI plc is the ultimate holding company of the Group.The Group’s businesses comprise five operating segmentsorganised into two principal activities: Fluid Controls,comprising Severe Service, Fluid Power and Indoor Climate;and Retail Dispense, comprising Beverage Dispense andMerchandising. The main subsidiary companies operatingwithin these two principal activities are listed on pages 138and 139. The revenue, profit and capital employedattributable to each of these operating segments is shown innote 2 on pages 90 to 92.Results and dividendThe Group consolidated income statement is shown onpage 72. Segmental operating profit amounted to £373.0m(2011: £374.1m) and profit before taxation amounted to£317.0m (2011: £301.4m).The directors recommend a final dividend of 20.7p pershare (2011: 19.0p per share) on the ordinary share capitalpayable, subject to shareholder approval, on 20 May 2013to shareholders on the register at the close of business on12 April 2013. Together with the interim dividend of 11.8pper share paid on 12 October 2012, this final dividend willbring the total distribution for the year to 32.5p per share(2011: 30.0p per share).Research and developmentExpenditure on research and development in the year was£44.4m (2011: £43.2m): of this amount £5.2m (2011: £4.4m)has been capitalised.Shareholders’ fundsShareholders’ funds increased from £564.8m at the end of2011 to £635.5m at 31 December 2012.Share capitalAs at 31 December 2012, the Company’s share capitalcomprised a single class of share capital which is dividedinto ordinary shares of 25p each. Details of the sharecapital of the Company are set out in note 22 to the financialstatements on pages 127 and 128. The ordinary shares arelisted on the London Stock Exchange.The Company has a Level 1 American Depositary Receipt(‘ADR’) programme for which Citibank, N.A. acts asdepositary. The ADRs are traded on the US over-thecountermarket under the symbol IMIAY, where each ADRrepresents two ordinary shares.As at 31 December 2012, 2,233,832 shares were held inan employee trust for use in relation to certain executiveincentive plans representing 0.7% of the issued share capital(excluding treasury shares) at that time. The voting rightsattached to these unallocated shares held in the employeetrust were not exercised during the year.During the year, 471,119 new ordinary shares were issuedunder employee share schemes: 424,029 under theall employee share ownership scheme and save as youearn plans and 47,090 under executive share plans.Shares acquired through Company share schemes andplans rank equally with the shares in issue and have nospecial rights.The rights and obligations attaching to the Company’sordinary shares are set out in the Company’s articlesof association, copies of which can be obtained fromCompanies House in the UK, from the Company’s websitewww.imiplc.com or by writing to the Company Secretary.Changes to the articles of association must be approvedby a special resolution of the shareholders (75% majorityrequired) in accordance with the legislation in force at thetime. Subject to applicable statutes, shares may be issuedwith such rights and restrictions as the Company may byordinary resolution decide or (if there is no such resolutionor so far as it does not make specific provision) as the Boardmay decide.Holders of ordinary shares are entitled to receive theCompany’s report and accounts, to attend, speak andvote at general meetings of the Company, and to appointproxies to exercise their rights. Holders of ordinary sharesmay receive a dividend and on a liquidation may share inthe assets of the Company. Subject to meeting certainthresholds, holders of ordinary shares may requisition ageneral meeting of the Company or propose resolutions atannual general meetings. Voting rights for ordinary sharesheld in treasury are suspended and the treasury shares carryno rights to receive dividends or other distributions of assets.There are no restrictions on the transfer of ordinary shares inthe Company other than:• certain restrictions as may from time to time be imposedby laws and regulations (for example insider trading laws);and•pursuant to the Company’s share dealing code wherebythe directors and certain employees of the Companyrequire approval to deal in the Company’s shares.36 Board reports
The Company is not aware of any arrangements betweenshareholders that may result in restrictions on the transferof ordinary shares or on voting rights. None of the ordinaryshares carries any special rights with regard to control ofthe Company. The only restrictions on voting rights arethose that apply to the ordinary shares held in treasury, asdescribed above. Electronic and paper proxy appointmentsand voting instructions must be received by the Company’sregistrars not later than 48 hours before a general meeting,or any adjournment thereof.Own shares acquired by the CompanyAt the annual general meeting of the Company held on 4 May2012 authority was given for the Company to purchase up to48,161,000 of its ordinary shares of 25p each. The Companydid not use this authority to make any purchases of its ownshares during the period. At the next annual general meetingof the Company, shareholders will be asked to give a similarauthority, details of which are contained in the separatenotice of annual general meeting.As at 31 December 2012, 19,124,700 ordinary shares(nominal value £4,781,175) were held in treasury representing6% of the issued share capital (excluding treasury shares)at that time.Substantial shareholdingsInformation provided to the Company pursuant to theFSA’s Disclosure and Transparency Rules is published ona regulatory information service. As at 31 December 2012,the following voting interests in the ordinary share capitalof the Company, disclosable under the Disclosure andTransparency Rules, had been notified to the Company:% held 1Standard Life Investments Limited 7.98%Ameriprise Financial, Inc. 5.02%AXA Investment Managers UK Limited 4.86%Newton Investment Management Limited 3.96%1As of the date in the notification to the CompanySubsequent to 31 December 2012 the Company was notifiedthat the interests of Standard Life Investments Limited hadchanged to 6.98%.As far as the Company is aware, there are no persons withsignificant direct or indirect holdings in the Company otherthan those noted above.Statement on corporate governanceThe required disclosures are contained in the corporategovernance report on pages 40 to 47 and are incorporatedinto this report by reference.Employment policiesThe Group continues to support employee involvement at alllevels in the organisation and strongly encourages each of itsbusinesses to keep its employees informed on Group andindividual business developments and to make its employeesaware of the financial and economic factors affecting theperformance of the business in which they work, using theirown consultation and communication methods. A EuropeanWorks Council has been in operation since 2003 and meetsat least once a year to exchange views on pan-Europeanissues facing the Group. At the date of this annual report,there are 15 members of the European Works Councilcomprising 13 employee representatives nominated fromamong employees from each of our European businesses,covering 11 countries, with the balance being Companyappointees. The Group’s financial results and importantinitiatives such as Health & Safety, training and development,and employee engagement are communicated througha number of mechanisms including the Works Council,newsletters and intranets for the individual businesses andthe Company’s website and ‘town hall’ meetings.Share schemes are a long established and successful partof our total reward package, encouraging and supportingemployee share ownership. Full details of employee shareschemes are set out in the Remuneration Report on pages48 to 69 and in note 20 to the financial statements on pages123 to 126.A number of people development initiatives are co-ordinatedacross the Group, which are based on the Company’s valuesof excellence, innovation and integrity. These initiativesinclude succession and development planning, leadershipdevelopment programmes, the IMI Global GraduateDevelopment programme and the embedding of the‘Leadership Blueprint’, our competency model, inrecruitment and selection, performance managementprocesses, and training programmes. In 2012 we launched aglobal performance management process and trained over700 managers globally to support the performancemanagement of their people. These initiatives and theCompany’s approach to employee investment and talentdevelopment are explained on pages 30 and 31.Our policy on employee diversity and equal opportunity is tocomply with relevant legislation in the countries in which weoperate and to actively promote our diversity goal to recruitthe very best people to execute our strategic prioritiesand to reflect the diverse nature of our global business.We ensure that our ‘talent pipelines’ are diverse, for exampleour Global Graduate Development and Alumni Programmeincludes people from more than 20 countries, with, in recentyears, over 40% of our graduate intake being female.BUSINESS OVERVIEW GROUP OPERATING REVIEW RESPONSIBLE BUSINESS BOARD REPORTSFINANCIAL STATEMENTSIMI plc Annual Report 201237
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IMI plcLakesideSolihull ParkwayBirm
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IMI plc annual report 2012

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