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IMI PLC (IMI)

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Monday 06 March, 2006

IMI PLC

Final Results

IMI PLC
06 March 2006



6 March 2006

IMI plc Preliminary Results

IMI plc, the major international engineering group, today announced its
preliminary results for the year ended 31 December 2005.

                                               2005         2004       % change
Continuing businesses:
   Sales                                     £1341m       £1239m           +8.2
   Operating profit *                       £159.5m      £137.2m          +16.3
   Operating cash flow *                    £166.7m      £155.5m

Total:
   Sales                                     £1578m       £1611m           -2.0
   Operating profit *                       £178.3m      £164.4m           +8.5

Total profit before tax *                   £175.5m      £161.1m           +8.9

Adjusted earnings per share **                33.4p        29.5p          +13.2


Profit before tax and exceptional items     £169.9m      £155.3m           +9.4

Exceptional items after tax                 (£99.3m)     (£33.1m)

Basic earnings per share                       3.9p        19.1p

Total dividend for year                       17.5p        16.5p           +6.1

*  before intangible amortisation and exceptional items
** before change in fair value of financial instruments, intangible amortisation
   and exceptional items

Norman Askew, Chairman of IMI commented:

'The continued progress we have made in our platform businesses is demonstrated
by another year of improved performance with organic sales growth of around 5%,
operating profit increased by 16%, operating margins increased to nearly 12% and
continued strong operational cash generation. With a healthy order book across
our business we expect this steady progress to continue in 2006.'


CHAIRMAN'S COMMENTS

2005 has seen IMI continue to build on the foundations laid over the last few
years. With the sale of Polypipe in September, all the businesses previously
identified as non-core have now been sold. This leaves us firmly focused on our
five continuing businesses in Fluid Controls and Retail Dispense, our chosen
platforms for profitable growth. The continued progress we have made in these
businesses is demonstrated by another year of improved performance with organic
sales growth of around 5%, operating profit increased by 16%, operating margins
increased to nearly 12% and continued strong operational cash generation.
Corporate activity during the year also saw expenditure of £64m on acquisitions
and £73m on the on-market share buy-back programme.

With businesses capable of regularly achieving healthy cash conversion and a
very sound balance sheet we have considerable scope to make organic and
acquisition investment to help promote further growth. With this in mind, the
Board has sanctioned an acceleration of some further restructuring within
existing businesses and strengthened the Group's merger and acquisition
resource. The acquisition of Truflo, announced today, is a welcome addition 
to our Fluid Controls business. The on-market buy-back programme introduced in
2005 will continue to be used as a flexible tool in our balance sheet management. 

The Board continues to recognise the importance of dividend income to
shareholders and we are recommending the final dividend be increased by 6.4%
from 10.2p to 10.85p. This makes the total dividend for the year 17.5p, an
increase of 6.1% over the 16.5p paid in respect of 2004.

Outlook

Momentum in the US and Asia appears still to be positive and although we remain
cautious about the macro-economic outlook for the UK and Europe, there are some
signs that confidence is improving. With a healthy order book across our
businesses we expect the steady progress in both Fluid Controls and Retail
Dispense to continue.


CHIEF EXECUTIVE'S REVIEW

2005 proved to be another positive year for the Group, with profit before tax,
intangible amortisation and exceptional items at £175.5m, an all-time record for
IMI.

The disposal of Polypipe in September effectively brings to a close the
portfolio repositioning of IMI announced in 2001. With five platform businesses
each with leading market positions in clearly identified global niches, the new
IMI can look forward with confidence to further growth and margin improvement.
The ability to capture market insight, and to convert that into practical,
innovative and customised engineering solutions for our targeted customers is
the common theme across all our businesses, and is central to delivering against
our growth and margin ambitions. One example of such creativity in 2005 was the
launch of a new pneumatic suspension system for Land Rover's Discovery and Range
Rover models, providing a breakthrough in off-road comfort, and delivering a
real point of difference to Land Rover in the ever competitive automotive
sector.

Across the businesses we see potential to develop further our growth and margin
improvement. End market trends are largely positive, our market positions are
strengthening, and we have a growing reputation for successful innovation with
an increasing number of global, blue chip clients. Our focus now is to
accelerate investments in new product development and key account management,
with a particular focus on improving the quality of our people through both
internal development and external recruitment. We also see further opportunities
to improve our efficiencies and reduce our cost base through expanding our
existing low cost manufacturing capabilities in Mexico, The Czech Republic and
China, and accelerating our Far East materials outsourcing programme.

We expect to invest around £20m per year for each of the next three years both
in upgrading our people talent and transferring more of our manufacturing
capacity to already established low cost facilities, raising the percentage of
total production in these territories from around 25% today to 40% in three
years' time. We would, in time, expect to improve operating margins as a result
by 150 to 200 basis points.

In addition to this accelerating internal investment and the continuation of the
share buy-back programme, we are confident of spending at least £80-100m per
annum on judicious top quality bolt-on acquisitions. The acquisition of Truflo 
gets us off to a strong start to 2006. This combination of internal investment, 
bolt-on acquisitions, and share buy-backs is expected to introduce overall debt 
of around £400-500m over the next three years, a level which we believe to be 
wholly consistent with optimising our balance sheet and enhancing shareholder 
returns.


FINANCIAL AND OPERATIONS REVIEW

Results summary

Following the sale of Polypipe, the results have been analysed between
continuing and discontinued operations.

Sales from continuing businesses at £1341m (2004: £1239m) were 8% ahead of last
year including £35m (3%) from acquisitions. Operating profit from continuing
businesses before intangible amortisation was £159.5m (2004: £137.2m), 16.3%
ahead, including £4.6m (3%) from acquisitions.

Discontinued businesses comprise the eight months trading of the Polypipe
businesses up to the date of sale on 2 September 2005. 2004 also includes the
Doors and Windows division of Polypipe which was closed prior to the disposal.
Sales for the period at £237m and operating profit at £18.8m compared to £372m
and £27.2m respectively, for the full year 2004.

Total operating profit before intangible amortisation and exceptional items was
£178.3m (2004: £164.4m), an increase of 8.5%.

Interest costs on net borrowings were £8.2m, a cover of 22 times. Including the
impact of pension fund financing under IAS19 and the change in fair value of
financial instruments under IAS39, net financing costs were £2.8m (2004: £3.3m).

Profit before tax, intangible amortisation and exceptional items, is £175.5m
(2004: £161.1m) an increase of 8.9%. After intangible amortisation, profit
before tax and exceptional items is £169.9m (2004: £155.3m) an increase of 9.4%.

The effective tax rate for the year on profit before intangible amortisation and
exceptional items is 32% compared to 33% in 2004.

Adjusted earnings per share (excluding the change in fair value of financial
instruments, intangible amortisation and exceptional items) is 33.4p (2004:
29.5p) an increase of 13.2%. Adjusted earnings per share from continuing
businesses only was 29.7p (2004: 24.2p) an increase of 22.7%.

Exceptional items

The net exceptional loss arising from the sale of Polypipe and closure of the
Doors and Windows division was £99.3m including acquired goodwill. This loss
includes a discount of £3.1m from par value on the vendor loan, the proceeds
from which were received in February 2006. The impact of this exceptional loss
has been to reduce basic earnings per share by 28.4p, resulting in a basic
earnings per share of 3.9p compared to 19.1p in 2004.

Cash flow

Operating cash flow in continuing businesses was £167m, 105% of operating profit
(before intangible amortisation). Corporate activity comprising disposals,
acquisitions and share buy-back amounted to a £73m inflow. After paying
dividends and the additional pension scheme funding contribution, and absorbing
£31m in respect of the European Commission fine, cash inflow for the year was
£77m.

Balance sheet

The pension fund deficits under IAS19 increased by £30m during the year largely
as a result of revised mortality assumptions in the main UK fund. The actuarial
valuation of the UK fund on 31 March 2005 revealed a funding deficit of £51m
which is being eliminated by annual payments of around £16m starting in December
2005 and continuing over the next three years.

Closing net debt was £10.6m (2004: £75.7m).

The following is a review of our business areas where comparisons with the
previous year relate to continuing operations and operating profit is stated
before intangible amortisation.

FLUID CONTROLS

Severe Service

Sales                 £213m (2004: £177m)
Operating profit      £28.3m (2004: £22.5m)
Operating margin      13.3% (2004: 12.7%)

Another year of strong growth in our Severe Service business further
demonstrates our ability to capture opportunities in the buoyant power and oil &
gas markets. Organic sales growth was 18% with growth in order intake running at
a similar level. New valves continue to drive the majority of the growth with
the power markets in Asia and the oil & gas markets in the Middle East
particularly strong. Although the current focus is on new valve opportunities
our after-market customer service business continues to increase with the rate
of growth improved over last year. In addition, government mandated maintenance
programmes have generated good demand in our Nuclear Services business for
strainer equipment for nuclear power stations.

Our presence in Japan and the Asian markets has been significantly strengthened
by the recent acquisition in November 2005 of the ABB control valves business
and the investments in businesses in Korea and China. With the market outlook
remaining very positive and a strong order backlog, we are well positioned going
into 2006.

Fluid Power

Sales                 £492m (2004: £439m)
Operating profit      £58.5m (2004: £43.5m)
Operating margin      11.9% (2004: 9.9%)

Our Fluid Power business continued the encouraging progress seen over the last
few years with the momentum being maintained both in growing sector sales and
operational improvements. Overall organic sales growth was around 4% despite
relatively subdued European end markets. The sector growth was again led by
Global Truck and the acquisition of GT Development in November strengthens
further our product and market position. The medical and printing and packaging
sectors also showed good growth. Syron, our in-plant automotive tooling business
bought in February 2005 made a good contribution in its first year. In the
general pneumatics market, the US and Asia Pacific had another positive year. In
Europe the markets were somewhat mixed although recent order trends have been
more encouraging. We have recently launched an innovative European web based
direct sales initiative aimed at improving product availability and service for
a focused group of smaller customers; results to date have been encouraging.

Operating margins have improved considerably over the last few years and have
now reached 12%. We have identified a number of initiatives to improve this
further and have recently announced the transfer of more production from our US
Littleton operations to our lower cost facility in Mexico.

Indoor Climate

Sales                 £172m (2004: £168m)
Operating profit      £25.3m (2004: £24.3m)
Operating margin      14.7% (2004: 14.5%)

Despite low growth and significant new material price inflation, particularly
copper, Indoor Climate produced another resilient performance. Lower
thermostatic radiator valve (TRV) sales in Germany were offset by improved sales
elsewhere, particularly Eastern Europe. Sales of balancing valves across Europe
improved in the second half to finish overall ahead of last year and this offers
encouragement for 2006. We continue to gain momentum in our focus on targeted
markets and sectors and have had good success with PFI contracts in the UK,
project wins in the Middle East and Asia and further growth in Eastern Europe.

We are increasingly looking at using our considerable brand strength with the
launch of some new products which will be available in 2006. Indoor Climate
remains a highly focused business with strong brand names and leading market
positions.


RETAIL DISPENSE

Beverage Dispense

Sales                 £278m (2004: £267m)
Operating profit      £27.1m (2004: £24.9m)
Operating margin      9.7% (2004: 9.3%)

In the US, consumer confidence has in the main remained positive throughout 2005
with increased restaurant traffic across the sector. Beverage Dispense in the US
has benefited and produced a strong underlying performance both in the brand
owner and foodservice business. We did particularly well within the convenience
and gas category and developed further our relationship with national accounts
including the recognition earned from YUM! Brands as its 'Global Equipment
Supplier of the Year'. Operationally, transfer of manufacturing to China and
Mexico has continued and lower cost procurement has been driven robustly. Our US
beverage parts operation is gaining momentum and will be strengthened by the
acquisition in November 2005 of Northern Parts. In Europe both the soft drink
and beer markets have been disappointing for most of the year although recently
the trend has improved. In the UK the second half has seen improving beer
equipment sales. We have now established a manufacturing presence in the Ukraine
to access the growing Ukraine and Russian beer markets. Asia Pacific continues
to offer good potential and growth has again been strong in 2005. We continue to
look at the markets we serve to develop new products and initiatives which will
further our undoubted leadership position.

Merchandising Systems

Sales                 £186m (2004: £188m)
Operating profit      £20.3m (2004: £22.0m)
Operating margin      10.9% (2004: 11.7%)

It was always going to be difficult to maintain the rate of growth in
Merchandising Systems especially in the absence of large one-off contracts
enjoyed in the previous two years. Nevertheless, there were many successes in
2005. Display Technologies had an excellent year with a strong performance in
the beverage, packaged and bulk food sectors. Front-end merchandising and
display carts achieved further growth and we continued to develop in the home
improvement sector. In the cosmetics sector volumes again improved and we also
obtained our first significant commitment from a major US brand owner. In the
high growth consumer electronics sector we secured new business in mobile
telephones and children's teaching aids. In the automotive sector, as expected,
activity was lower in merchandising for car showrooms in the US, resulting in
lower sales than last year. However, it is encouraging that in recent months we
have secured over $100m in extensions of existing or new three to five year
contracts within the automotive sector. We continue to invest in unique research
and technology tools to help drive tangible benefits for our customers.



CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2005

                                             Continuing Discontinued       Total    Continuing Discontinued     Total
                                                   2005         2005        2005          2004         2004      2004
                                       Notes         £m           £m          £m            £m           £m        £m
                                      __________________________________________    _________________________________
Revenue                                2,3,4      1,341          237       1,578         1,239          372     1,611

Operating profit before 
 intangible amortisation               2,3,4      159.5         18.8       178.3         137.2         27.2     164.4

Intangible amortisation                            (5.6)           -        (5.6)         (5.8)           -      (5.8)
                                      __________________________________________    _________________________________
Operating profit                        2,4       153.9         18.8       172.7         131.4         27.2     158.6
European Commission fine*                3            -            -           -             -        (33.1)    (33.1)
                                      __________________________________________    _________________________________
Profit/(loss) before 
 financing costs                                  153.9         18.8       172.7         131.4         (5.9)    125.5

Financial income                         5         16.2                     16.2          14.0                   14.0

Financial expenses                       5        (19.0)                   (19.0)        (17.3)                 (17.3)

Profit/(loss) before tax
Before exceptional items and   
 intangible amortisation                          156.7         18.8       175.5         133.9         27.2     161.1
European Commission fine*                             -            -           -             -        (33.1)    (33.1)

Intangible amortisation                            (5.6)           -        (5.6)         (5.8)           -      (5.8)
                                      __________________________________________    _________________________________

Total                                             151.1         18.8       169.9         128.1         (5.9)    122.2

UK taxation                              6         (2.5)        (5.7)       (8.2)         (1.2)        (8.5)     (9.7)

Overseas taxation                        6        (45.9)        (0.3)      (46.2)        (43.0)        (0.2)    (43.2)
                                      __________________________________________    _________________________________
Profit/(loss) after tax 
 before loss on disposal                          102.7         12.8       115.5          83.9        (14.6)     69.3

Loss after tax on disposal 
 and associated closure costs                         -        (99.3)      (99.3)            -            -         -

                                      __________________________________________    _________________________________

Total profit/(loss) for the period                102.7        (86.5)       16.2          83.9        (14.6)     69.3
                                      __________________________________________    _________________________________

Attributable to:
Equity shareholders of the parent                                           13.5                                 67.5

Minority Interest                                                            2.7                                  1.8
                                                                        ________                             ________
Total profit for the period                                                 16.2                                 69.3
                                                                        ________                             ________

Earnings per share                       7
Basic earnings/(loss) per share                   28.6p       (24.7p)       3.9p         23.2p        (4.1p)    19.1p
Diluted earnings/(loss) per share                 28.4p       (24.6p)       3.8p         23.0p        (4.1p)    18.9p

* relating to businesses disposed of in 2002.


CONSOLIDATED BALANCE SHEET
at 31 December 2005

                                                                    2005                2004
                                                                      £m                  £m
                                                            ________________________________
Assets
Intangible assets                                                   185.8              333.4
Property, plant and equipment                                       192.1              279.7
Deferred tax assets                                                  75.5               61.7
                                                            ________________________________
Total non-current assets                                            453.4              674.8
                                                            ________________________________

Inventories                                                         205.6              248.1
Trade and other receivables                                         301.8              305.6
Current tax                                                          18.6                8.6
Investments                                                          13.0                8.0
Cash and cash equivalents                                           188.9              120.7
                                                            ________________________________
Total current assets                                                727.9              691.0
                                                            ________________________________
Total assets                                                       1181.3             1365.8
                                                            ________________________________

Liabilities
Bank overdraft                                                       (6.9)              (5.3)
Interest-bearing loans and borrowings                               (44.4)             (55.2)
Exceptional payables - EC fine                                          -              (31.3)
Current tax                                                         (27.1)             (31.4)
Trade and other payables                                           (301.9)            (331.5)
                                                            ________________________________
Total current liabilities                                          (380.3)            (454.7)
                                                            ________________________________

Interest-bearing loans and borrowings                              (148.2)            (135.9)
Employee benefits                                                  (172.8)            (142.4)
Provisions                                                          (34.1)             (41.3)
Deferred tax liabilities                                             (4.4)              (8.3)
Other payables                                                      (20.4)             (28.4)
                                                            ________________________________
Total non-current liabilities                                      (379.9)            (356.3)
                                                            ________________________________
Total liabilities                                                  (760.2)            (811.0)
                                                            ________________________________
Net assets                                                          421.1              554.8
                                                            ________________________________

Equity
Issued capital                                                       89.6               88.7
Share premium                                                       149.4              139.9
Other reserves                                                        7.3               (0.6)
Retained earnings                                                   171.3              322.8
                                                            ________________________________

Total equity attributable to equity   
 shareholders of the parent                                         417.6              550.8
Minority interest                                                     3.5                4.0
                                                            ________________________________
Total equity                                                        421.1              554.8
                                                            ________________________________


CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2005

                                                                       2005                2004
                                                        Note             £m                  £m
                                                     __________________________________________

Cash flows from operating activities
Cash generated from the operations                      9             212.3               239.4
Interest paid                                                         (18.2)              (17.4)
Income taxes paid                                                     (54.2)              (52.3)
                                                     __________________________________________
Net cash from operating activities                                    139.9               169.7

Additional pension scheme funding                                     (15.6)                  -
EC fine                                                               (31.3)                  -
                                                     __________________________________________
                                                                       93.0               169.7
                                                     __________________________________________

Cash flows from investing activities
Proceeds from sale of property, plant & equipment                       6.8                 4.0
(Purchase of)/proceeds from sale of investments                        (1.1)                0.2
Interest received                                                      10.0                 8.2
Acquisition of subsidiaries, net of cash acquired                     (63.6)              (20.9)
Disposal of subsidiary                                                209.0                   -
Acquisition of property, plant and equipment                          (48.7)              (50.8)
Capitalised development expenditure                                    (5.2)               (2.8)
                                                     __________________________________________
Net cash from investing activities                                    107.2               (62.1)
                                                     __________________________________________

Cash flows from financing activities
Proceeds from the issue of share capital                               10.4                3.8
Purchase of own shares                                                (72.6)                 -
Repayment of borrowings                                               (14.0)              (9.8)
Dividends paid to minorities                                           (1.6)              (1.3)
Dividends paid                                                        (59.4)             (55.9)
                                                     __________________________________________
Net cash from financing activities                                   (137.2)             (63.2)
                                                     __________________________________________

Net increase in cash and cash equivalents                              63.0               44.4
Cash and cash equivalents at start of period                          115.4               66.9
Effect of exchange rate fluctuations on cash held                       3.6                4.1
                                                     __________________________________________
Cash and cash equivalents at end of period                            182.0              115.4
                                                     __________________________________________

Reconciliation of net cash to movement in
 net borrowings

Net increase in cash and cash equivalents                              63.0               44.4
Repayment of borrowings                                                14.0                9.8
                                                     __________________________________________
Cash inflow                                                            77.0               54.2
Currency translation differences                                      (11.9)              14.5
                                                     __________________________________________
Movement in net borrowings in the period                               65.1               68.7
Net borrowings at the start of the period                             (75.7)            (144.4)
                                                     __________________________________________
Net borrowings at the end of period                                   (10.6)             (75.7)
                                                     __________________________________________


CONSOLIDATED STATEMENT
OF RECOGNISED INCOME AND EXPENSE

                                                                       2005             2004
                                                                         £m               £m
                                                                ____________________________
Foreign exchange translation differences                                5.6              2.3
Actuarial (losses)/gains on defined benefit plans
 (net of deferred tax)                                                (36.4)             1.0
Fair value gains/(losses) on financial instruments (net of tax)         2.3             (4.5)
                                                                ____________________________

Income and expense recognised directly in equity                      (28.5)            (1.2)

Profit for the period                                                  16.2             69.3
                                                                ____________________________
Total recognised income and expense for the period                    (12.3)            68.1
                                                                ____________________________

Attributable to:
     Equity holders of the parent                                     (15.0)            66.3
     Minority interest                                                  2.7              1.8
                                                                ____________________________
Total recognised income and expense for the period                    (12.3)            68.1
____________________________________________________________________________________________


STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                                                       2005             2004
                                                                         £m               £m
                                                                ____________________________
Shareholders' equity at start of period                               550.8            534.9

Total recognised income and expense for the period                    (15.0)            66.3

Dividends paid                                                        (59.4)           (55.9)
Share based payments (net of deferred tax)                              3.4              1.7
Issue of ordinary shares net of costs                                  10.4              3.8
Purchase of own shares into treasury                                  (72.6)               -
                                                                ____________________________
                                                                     (118.2)           (50.4)
                                                                ____________________________
Shareholders' equity at end of period                                 417.6            550.8
                                                                ____________________________


NOTES RELATING TO THE FINANCIAL STATEMENTS


1.  Basis of preparation

    EU law (IAS Regulation EC 1606/2002) requires that the annual consolidated
    financial statements of the Group, for the year ending 31 December 2005, be
    prepared in accordance with International Financial Reporting Standards (IFRS)
    adopted for use in the EU ('adopted IFRS').

    The transition date for the application of IFRS was 1 January 2004. The
    comparative figures for 31 December 2004 have been restated to reflect the
    transition to IFRS.


2.  Segmental analysis

    Segment information is presented in the consolidated financial statements in
    respect of the Group's continuing business segments, which are the primary basis
    of segment reporting. The business segment reporting format reflects the Group's
    management and internal reporting structure.

                                                                Operating profit
                                                                before intangible
                                              Revenue              amortisation         Operating profit
                                          2005      2004        2005         2004        2005      2004
    BY ACTIVITY                             £m        £m          £m           £m          £m        £m
                                        ________________       __________________      ________________

    Fluid Controls                         877       784       112.1         90.3       107.6      85.2
       Severe Service                      213       177        28.3         22.5        27.3      22.4
       Fluid Power                         492       439        58.5         43.5        55.4      38.9
       Indoor Climate                      172       168        25.3         24.3        24.9      23.9
       ________________________________________________________________________________________________
    Retail Dispense                        464       455        47.4         46.9        46.3      46.2
       Beverage Dispense                   278       267        27.1         24.9        26.3      24.2
       Merchandising Systems               186       188        20.3         22.0        20.0      22.0
       ________________________________________________________________________________________________
    Total continuing operations           1341      1239       159.5        137.2       153.9     131.4
    ___________________________________________________________________________________________________

      REVENUE BY GEOGRAPHICAL DESTINATION

                                          2005      2004
                                            £m        £m
                                        ________________
    UK                                     164       164
    Germany                                179       178
    Rest of Europe                         324       300
    USA                                    466       431
    Asia/Pacific                           141       107
    Rest of World                           67        59
                                        ________________
    Total continuing operations           1341      1239
                                        ________________

    The results in respect of discontinued operations are set out in note 3.


3.  Discontinued operations

    The Polypipe businesses previously included under Building Products were sold to
    New York based private equity investment fund, Castle Harlan Partners IV LP. The
    proceeds of the transaction at the time of the sale were worth up to £293m
    comprising £219m payable in cash, a vendor loan note with a par value of £39m
    and a contingent consideration of £35m based on performance targets for the
    three years ending 31 December 2007. The loan note could be repaid through a
    buyer refinancing in the high yield market or else IMI could exercise its right
    to sell the note at a time consistent with realising best value. No repayment
    was received and we exercised our right to sell the note. The proceeds of £35.9m
    were received in February 2006.

    The loss on sale of Polypipe and the associated costs of the closure of the
    Doors and Windows division are shown as an exceptional item arising on
    discontinued businesses. The exceptional loss after available tax relief is
    £99.3m. In arriving at the overall loss the contingent consideration has not
    been recognised as the amount receivable will not be known until 2008.

    In 2004 we were notified of a fine imposed by the European Commission in respect
    of the former copper tube business. Pending the outcome of an appeal made in
    January 2005, the full amount of the fine and associated costs, together
    amounting to £33.1m (no tax relief on the fine has been assumed), were provided
    at 31 December 2004. The fine was paid in February 2005 and to date we are still
    awaiting the outcome of the appeal. We reported in September that we had
    received a Statement of Objections from the European Commission with respect to
    our former copper plumbing fittings businesses which were sold in 2002. A
    decision from the Commission as to the level of any possible fine in the
    fittings enquiry is expected at some point in 2006. It is not possible to give
    any reliable estimate of the likely level of fine and consequently no provision
    has been made at 31 December 2005.

    The revenue and profit from discontinued operations were as follows:

                                                            2005           2004
                                                         £m       £m         £m
                                                    ________________    _______

    Revenue                                                      237        372
                                                             _______    _______

    Operating profit                                            18.8       27.2
    EC fine relating to copper tube businesses 
     sold in 2002                                                  -      (33.1)
    Less tax                                                    (6.0)      (8.7)
                                                             _______    _______
                                                                12.8      (14.6)

    Loss on disposal                                  (96.6)
    Closure costs                                      (8.0)
                                                    _______
                                                     (104.6)
    Less tax                                            5.3
                                                    _______

                                                               (99.3)         -
                                                             _______    _______
                                                               (86.5)     (14.6)
                                                             _______    _______


4.  Acquisitions

    The acquisitions completed in the period were as follows:

    Reporting segment:      Acquisition(s)

    Severe Service:         ABB KK control valve businesses (November)
    Fluid Power:            Syron Engineering & Mfg (February);
                            GT Development Corp (November)
    Beverage Dispense:      Northern Parts & Service (November)

    Of the reported increase in turnover and operating profit (before intangible
    amortisation), £35m and £4.6m respectively result from the above acquisitions
    together with the extra months of the prior year acquisition of Fluid Automation
    Systems (Fluid Power).


5.  Net financing costs

                                                      2005          2004
                                                        £m            £m
                                                  ______________________

    Interest income                                    6.9           6.0
    Interest expense                                 (15.1)        (15.2)
                                                  ______________________
                                                      (8.2)         (9.2)
                                                  ______________________

    Other financing income                             9.3           8.0
    Other financing expense                           (3.9)         (2.1)
                                                  ______________________
                                                       5.4           5.9
                                                  ______________________

                                                  ______________________
    Net financing expense                             (2.8)         (3.3)
                                                  ______________________


6.  Taxation

    The effective tax rate on profit before exceptional items is 32% (2004: 33%).


7. Earnings per ordinary share

    The weighted average number of shares in issue during the period, net of shares
    purchased by the company and held as treasury shares, was 349.7m, 352.4m diluted
    for the effect of outstanding share options (2004: 354.0m, 356.5m diluted).
    Basic earnings per share have been calculated on earnings of £13.5m, (2004:
    £67.5m).

    The directors consider that adjusted earnings per share figures, using earnings
    as calculated below, give a more meaningful indication of the underlying
    performance.

    Total                                                    2005           2004
                                                               £m             £m
                                                        ________________________
    Profit for the period attributable
     to equity holders of the parent                         13.5           67.5
    Charges/(credits) included in profit
     for the period:
    Change in fair value of financial
     instruments                                              0.6           (0.8)
    Intangible amortisation                                   5.6            5.8
    Taxation on charges/(credits)
     included in profit before tax                           (2.2)          (1.3)
    Exceptional items (after tax)                            99.3           33.1
                                                        ________________________
    Earnings for adjusted EPS                               116.8          104.3
                                                        ________________________
    Adjusted EPS                                             33.4p          29.5p
                                                        ________________________


    From continuing operations                               2005           2004
                                                               £m             £m
                                                        ________________________
    Profit for the period                                   102.7           83.9
    Minority interest                                        (2.7)          (1.8)
    Charges/(credits) included
     in profit for the period:
    Change in fair value of
     financial instruments                                    0.6           (0.8)
    
    Intangible amortisation                                   5.6            5.8
    Taxation on charges/(credits)
     included in profit before tax                           (2.2)          (1.3)
                                                        ________________________
    Earnings for adjusted EPS                               104.0           85.8
                                                        ________________________
    Adjusted EPS                                             29.7p          24.2p
                                                        ________________________


    From discontinued operations                             2005           2004
                                                               £m             £m
                                                        ________________________
    Loss for the period from
     discontinued businesses                                (86.5)         (14.6)
    Exceptional items after
     income tax expense                                      99.3           33.1
                                                        ________________________
    Earnings for adjusted EPS                                12.8           18.5
                                                        ________________________
    Adjusted EPS                                              3.7p           5.3p
                                                        ________________________


8.  Dividend

    The Directors recommend a final dividend of 10.85p per share (2004: 10.2p)
    payable on 26 May 2006 to shareholders on the register at close of business on
    18 April 2006, which will absorb £37.1m (2004: £36.2m). Together with the
    interim dividend of 6.65p per share paid on 21 October 2005, this makes a total
    distribution of 17.5p per share (2004: 16.5p per share). In accordance with
    IAS10: 'Events after the Balance Sheet date', this final proposed dividend has
    not been reflected in the 31 December 2005 Balance Sheet.

9.  Cash flow reconciliations


Reconciliation of cash generated from the operations

                                                               2005      2004
                                                                 £m        £m
                                                          ___________________
    Profit for the period                                      16.2      69.3
    Adjustments for:
       Depreciation                                            50.4      58.3
       Amortisation                                             5.6       5.8
    Net loss on disposal & closure costs                       99.3         -
    EC fine                                                       -      33.1
    Financing income                                          (16.2)    (14.0)
    Financing expense                                          19.0      17.3
    Employee benefit charge                                     2.2       1.6
    Equity-settled share-based payment expenses                 2.0       1.4
    Income tax expense                                         54.4      52.9
                                                          ___________________
                                                              232.9     225.7

    (Increase)/decrease in trade and other receivables        (18.3)      0.2
    Increase in inventories                                    (0.7)     (4.7)
    Increase in trade and other payables                        8.1      17.9
    (Decrease)/increase in provisions and
     employee benefits                                         (9.7)      0.3
                                                          ___________________
    Cash generated from the operations                        212.3     239.4
                                                          ___________________

Reconciliation of operating cash flow

    Cash generated from the operations                        212.3     239.4
    Sale of property, plant & equipment                         6.8       4.0
    (Purchase)/sale of investments                             (1.1)      0.2
    Acquisition of property, plant & equipment                (48.7)    (50.8)
    Capitalised development expenditure                        (5.2)     (2.8)
                                                          ___________________
    Operating cash flow                                       164.1     190.0
                                                          ___________________

    Continuing businesses                                     166.7     155.5
    Discontinued businesses                                    (2.6)     34.5
                                                          ___________________
                                                              164.1     190.0
                                                          ___________________

10. Exchange Rates

    The profit and loss accounts 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 US Dollar and the Euro - the
    relevant rates of exchange were:

                                Average Rates        Balance Sheet Rates
                              ________________       ___________________
                                2005     2004          2005       2004
    Euro                        1.46     1.47          1.46       1.41
    US Dollar                   1.82     1.83          1.72       1.92


The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2005 or 2004 but is derived
from the 2005 accounts. Statutory accounts for 2004, which were prepared under
UK GAAP, have been delivered to the registrar of companies and those for 2005,
prepared under IFRS accounting standards adopted by the EU, will be delivered in
due course. The auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their reports and
(iii) did not contain statements under section 237(2) or (3) of the Companies
Act 1985.

The Company's 2005 Annual Report and notice of the forthcoming Annual General
Meeting will be posted to shareholders on 5 April 2006.

                                    - ends -


Enquiries to:

Graham Truscott         - Corporate Communications          - Tel: 0121 717 3712

Press release available on the internet at www.imiplc.com


Issued by:
Nick Oborne             - Weber Shandwick Square Mile       - Tel: 020 7067 0700




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