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Monday 07 March, 2005


Final Results

07 March 2005

7 March 2005

IMI plc Preliminary Results

IMI plc, the major international engineering group, today announced its
preliminary results for the year ended 31 December 2004.

                                                              2004     2003

Sales                                                        £1611m   £1573m

Results before goodwill amortisation and exceptional

 Operating profit from continuing businesses                £164.6m  £147.8m  *

 Profit before tax                                          £155.4m  £136.9m  *

 Adjusted earnings per share                                  28.9p    25.7p  *

Exceptional items                                            £33.1m       -

Profit before tax                                           £100.7m  £117.2m

Earnings per share                                            13.4p    20.1p

Borrowings                                                   £69.0m  £136.3m

Gearing                                                         13%      25%

Dividend per share                                            16.5p    15.5p

* 2003 restated to include rationalisation costs of £5.7m, previously shown

   • Increased operating profit

   • Strong cash generation continued

   • Increased dividend


I am very pleased to be able to report on another year of solid progress, with
profit before tax, goodwill amortisation and exceptional items at £155.4m being
the highest ever made by the Group, and adjusted earnings per share up 12%.

Most of our businesses achieved organic growth in the year. All, with the
exception of Building Products, achieved increased operating profits. Cash
generation remained a strong focus and we once again enjoyed very healthy
interest cover and further reduced our borrowings.

Order intake continued to maintain the momentum we saw in the first half of 2004
and on a like for like basis increased by around 7% for the year as a whole.

The interim dividend was increased by 5% to 6.3p and the Board is recommending
that the final dividend be increased by 7.4% from 9.5p to 10.2p. This makes the
total dividend for the year 16.5p, an increase of 6.5% over the 15.5p paid in
respect of 2003. The total dividend is covered 1.7 times (2003: 1.7 times) based
on adjusted earnings and absorbs £58.5m, a cash cover of 2.2 times (2003: 2.6

In addition to increasing the dividend, as part of the ongoing capital
management of the Group, the Board has decided to undertake an on-market share
buy-back programme. The timing and amount of the buy-back will be managed
according to the ongoing capital needs of the Group including acquisitions. The
authority for an on-market buy-back already exists and we will be asking for
this authority to be renewed at the annual general meeting in May.

We have clear criteria, both strategic and financial, for assessing acquisitions
and continue to evaluate targeted opportunities within our chosen business
areas. In July 2004 we acquired the Swiss based Fluid Automation Systems (FAS)
and in February 2005 we acquired the US based Syron Engineering and
Manufacturing (Syron). Both these businesses add key technology and close
customer relationships in our targeted market sectors within our Fluid Power
business and have combined annual sales of around £35m.

In recent months we have received a number of enquiries from parties interested
in acquiring Polypipe. As a result, the Board has provided certain confidential
information to interested parties. The Board is committed to delivering value
from the Polypipe businesses and the potential proceeds from any possible sale
will be weighed against the value which the Board believes can be delivered from
continuing to own and run the business.

Results summary

Sales for the year at £1611m compared with £1573m in 2003. The adverse impact of
exchange rates on translation of reported sales was £68m, and after adjusting
for the effect of acquisitions of £36m, like for like sales were around 5%
higher than last year.

Reported operating profit (before goodwill amortisation) was £164.6m, an
increase of 11.4% over last year. Rationalisation costs charged in arriving at
operating profit were £5.3m (2003: £5.7m). Profit before tax, goodwill
amortisation and exceptional items increased 13.5% to £155.4m (2003: £136.9m).
At constant exchange rates the increase was 19%.

Interest costs for the year were reduced to £9.2m (2003: £10.9m) as a result of
lower borrowings. Interest was covered 18 times (2003: 14 times) based on
operating profit before goodwill amortisation.

In September 2004, the European Commission announced the imposition of a fine of
€44.98m on IMI in connection with its former copper tube business sold in 2002.
Pending the outcome of the appeal made in January 2005, the full amount of the
fine, together with associated costs, has been provided in the Financial
Statements and is shown as an exceptional item of £33.1m. The copper plumbing
fittings enquiry is still at an early stage, with a decision on any fine
unlikely to be made by the Commission before the second half of 2005. It is not
possible to give any reliable estimate of the likely level of fine and therefore
it is noted as a contingent liability in the Financial Statements.

The effective tax rate for the year on profit before goodwill amortisation and
exceptional items is 33%, the same rate as 2003.

Adjusted earnings per share (excluding goodwill amortisation and exceptional
items) increased by 12% from 25.7p to 28.9p.

Following another year of working capital efficiency improvements, operating
cash conversion was 115% of operating profit resulting in operating cash flow of
£190m (2003: £196m). Free cash flow before dividends and corporate activity was
£127m (2003: £142m). Net borrowings reduced to £69m (2003: £136m) giving balance
sheet gearing of 13% (2003: 25%) and a net debt to EBITDA ratio of 0.3.

Since the year end we have paid the EU fine of €44.98m (£32m) and acquired Syron
at a cost of £18m.

Board changes

Lance Browne joined the Board as an independent non-executive director on 1
January 2005 and I am pleased to report that with effect from 8 March 2005 Kevin
Beeston will also join the Board as an independent non-executive director.


2004 has seen us successfully continue on the path we set out three years ago
and our financial performance reflects the progress we have made to date. Whilst
there are still some concerns that mainland Europe remains subdued, the
underlying momentum in our businesses overall is encouraging. We remain intent
on delivering top line growth and continuing the steady upwards progression of
operating margins in recent years.


We can look back on 2004 with satisfaction, with all five of our platform
businesses recording improvements in profit. In general, the businesses dealt
well with the twin effects of materials inflation and a stronger pound, leaving
reported pre-tax profits (before goodwill amortisation and exceptional items)
some 14% ahead of last year. Cashflow was again strong, leaving the year-end
balance sheet lightly geared, with net debt of less than £70m, as compared to
over £400m just four years ago.

Each of our platform businesses now has a clear and established strategic
framework in which to move forward, developed progressively over the last few
years. Within each of those strategic frameworks, sustainable profitable growth
is the primary objective. The principal drivers of growth for all our businesses
are the same:

- acceleration of our key account focus and capability, adopting a carefully
  targeted approach to the selection of our customer partners, and assembling
  highly talented teams of people to promote double-digit revenue growth with
  these partners;

- delivering a step change in the creative competence of our organisation,
  investing in techniques to acquire improved customer and market insight, and
  upgrading our capacity to convert that insight into commercial solutions through
  a larger engineering resource;

- seizing the initiative in respect of the fast-growing markets of Asia and
  Eastern Europe, expanding our local resource and investment and recruiting
  highly talented people from these territories throughout our business (in 2004,
  25% of our graduate intake was of Chinese origin); and

- accelerating our efforts to secure strategic bolt-on acquisitions in
  our chosen areas.

These four growth imperatives are understood by all the senior management in
IMI, and are increasingly becoming embedded throughout our organisation. We
continually look for talent to accelerate our capabilities in these areas and a
number of new appointments were made during the year. The recent non-executive
director appointments to the Board support our growth imperatives. Lance Browne
is based in Shanghai and brings with him great knowledge of China; Kevin
Beeston's experience will be invaluable in our efforts to expand our
after-market and service capability. Our search for a new chairman and another
non-executive director is on-going.

Going into 2005, the US and Asian economies remain buoyant whilst concerns grow
over the outlook for European economies. Inflationary pressures around materials
and energy costs are unlikely to subside, at least in the near term, requiring
continued diligence by our management in both securing price increases of our
own and mitigating the impact through increased sourcing of materials in the Far
East and cost reduction programmes.

We have built a strong platform over the last few years and management is now
firmly engaged on the growth agenda. Whilst prevailing economic conditions will
inevitably play a part, we are well placed to deliver sustainable growth over
the long term.


The following is a review of our business areas for the year. Operating profit
is stated before goodwill amortisation.

Severe Service

Sales            £169m (2003: £168m)
Operating profit £21.5m (2003: £20.3m)

In our Severe Service business, in a year when additional investment in
specialist sales engineers was held back to allow operational efficiencies to
keep pace with the growth, 2004 still saw another year of solid growth in plant
level sales and new construction projects. The running rate for order intake was
over 10% higher than 2003 with much of the growth coming from Asia where we are
winning a good share of new projects and benefiting from an established
installed base. We also continue to see increased activity in the oil and gas
sector where CCI is the recognised authority on severe service valve
applications for LNG (liquified natural gas). With the US new construction power
market still soft, we are focusing more of our resources on these growth areas.
The profile of our order book is currently more weighted to new valve projects
than in the recent past and contains significant orders for shipment dates
beyond 2005. Our customer service business remains very healthy.

As reported in our interim statement, shipments in the first half were 5% lower
than the first half of 2003 but this was reversed with a strong finish to the
year resulting in shipments being 6% ahead for the year as a whole. Margins are
also ahead of last year and should continue to improve in 2005 in another year
of consolidating on past investment spend.

Fluid Power

Sales            £439m (2003: £410m)
Operating profit £44.3m (2003: £31.0m)

A strong performance in the year from our Fluid Power business saw operating
profit considerably increased over last year. Volumes overall were over 8%
ahead, driven by organic growth of around 6% in the underlying markets and 16%
in our target sectors. The commercial vehicles sector was particularly strong.

The US, which represents around a quarter of sales, had a buoyant year and was
able to respond to the increased volume demand through a strong operational
performance from our Mexican facility. The UK and Germany both benefited from
the introduction of new valve products to support key accounts within the
targeted sectors. Mainland European sales in general, however, showed only
modest growth and disappointed towards the end of the year. Sales into the Asia
Pacific region continue to be encouraging.

We were very pleased to be able to complete the acquisition of FAS in July which
contributed £1m operating profit on sales of £10m. We are already seeing the
benefit of having a greater range of miniature solenoid valves and increased
capabilities in the important medical sector.

Our specialist end-of-arm tooling business, serving the in-plant automotive
sector, had a successful year and the acquisition of Syron in February 2005
extends its reach into transfer press tooling.

We continue to drive cost reduction measures and spent a further £2.7m on
rationalisation during the year. Our new facility in Brno, Czech Republic is
thriving and to date has met all approval standards and efficiency targets. Also
in Brno, we have established a technical centre working on new product

Indoor Climate

Sales            £168m (2003: £169m)
Operating profit £24.2m (2003: £23.8m)

Our Indoor Climate business produced a resilient performance, increasing
operating profit despite another challenging year in its major European markets
and price pressure on raw materials. Overall, volumes were similar to last year
with growth in Eastern Europe, UK and Asia offsetting a small decline in the
traditional European markets.

The small first half improvement in TRV sales in the German market was not
sustained, leaving sales for the year as a whole unchanged. However, it was
pleasing to see that in a nationwide survey of installers, Heimeier was
recognised as being the number one brand for service and support. The pattern of
demand for balancing valves is patchy across Europe and the weak US dollar is
holding back sales to the US. In the UK, however, our high performance balancing
valves are winning market share in PFI financed projects.

We continue to invest in our Eastern European infrastructure and opened new
facilities in Russia during the year. We now have 175 people in our Eastern
European operations which grew sales by 15% in 2004. We also continue to invest
in China, where the considerable construction programme offers great potential.
Although not substantial yet, we are beginning to see increased sales.

Beverage Dispense

Sales            £267m (2003: £278m)
Operating profit £24.4m (2003: £21.5m)

Our Beverage Dispense business performed well throughout the year in the US with
encouraging underlying demand and operational efficiencies continuing a strong
improvement. Consumer confidence appears to be growing, as evidenced by
increasing restaurant traffic enabling operators to report same store sales
gains. This backdrop has provided the impetus for good demand in our food
service sector and brand owner business, although this has been tempered by a
recent slowdown with one of our major soft drinks customers. We continue to
achieve successes with our sales of non-carbonated dispense equipment, with
juice, frozen offerings and Lipton iced tea again showing good growth. Our
Mexican manufacturing facility made a much improved contribution with
efficiencies at target levels and our US operations reaping the benefit of
ongoing efficiency programmes.

In mainland Europe, we achieved modest growth in the year in both soft drinks
and beer dispense although the second half of the year was slower. Encouraging
sales both in Eastern Europe and of our small but growing water dispense
equipment in Germany, helped offset lower volumes in our traditional beer
dispense markets.

In the UK, sales into the soft drinks dispense market were up on last year. In
beer dispense we had benefited in 2002 and 2003 from a shift into extra cold
programmes and two years of heavy brand owner promotional spend. Consequently,
volumes in 2004 showed a marked decline.

In Asia, although sales were ahead of last year, we still lack critical mass and
will be looking to increase our investment particularly in respect of a growing
food service sector opportunity. We have recently moved our regional
headquarters to Shanghai.

Merchandising Systems

Sales            £188m (2003: £170m)
Operating profit £22.2m (2003: £18.2m)

Merchandising Systems continues to make progress, with organic growth of nearly
5% building on the very good 10% growth delivered in 2003. Helped by a full
year's contribution from Artform, we are able to report operating profit £4m
ahead of last year despite the adverse impact of around £5m from exchange rates
and raw material costs.

Our traditional Cannon business was affected by raw materials costs as steel
prices were driven up by as much as 75%. This was mitigated more in the second
half by pricing and increased Far East sourcing of other materials. Underlying
demand, however, was encouraging and quotation activity increased further
towards the end of the year. Particularly encouraging was our first time entry
into the growing US DIY sector. Display Technologies repeated its success in
beverage and bulk display systems and grew its international sales further. It
continues to develop a focused key account and key sector strategy.

Although lower than the very successful 2003 in which a number of large
contracts were shipped, DCI had another very good year with the first half
benefiting from the Toyota Scion programme and customer Point of Purchase sales
again increasing. The automotive sector continues to be a significant
contributor to DCI but several other key sectors are being targeted which lend
themselves to DCI's creative knowledge-based solutions.

Artform completed a very good first full year with sales 5% ahead of that
achieved prior to acquisition and with maintained margins. Cosmetics remain the
major proportion of sales with the leading European brand owners the key

We are still in the early stages of development of our category management
business model and have a number of pilot programmes running with selected

Building Products

Sales            £380m (2003: £370m)
Operating profit £28.0m (2003: £33.0m)

In Polypipe, although overall volumes slowed a little in the second half, the
market, particularly for our core pipes business, remains generally positive.
Price increases were successfully implemented in the second half of the year,
mitigating the impact of raw material costs and restoring some of the margin
erosion seen earlier. New product introductions continue and offer good growth
opportunities. Losses in the Doors and Windows division and difficult conditions
in Bathroom and Kitchens and Leisure contributed significantly to the reduction
in profit in the year. Action has been taken to arrest the decline in these
businesses. The small European pipes businesses continue to improve, producing
increased profits. The underlying strength of Polypipe's main business remains
solid and this, together with the management changes made during 2004, should
provide for a recovery in performance in 2005.

for the year ended 31 December 2004

                            Before                                                    Before
                          goodwill                                                  goodwill
                  amortisation and        Goodwill    Exceptional            amortisation and       Goodwill
                      exceptionals    amortisation          items    Total     exceptionals (i)  amortisation     Total
                              2004            2004           2004     2004               2003            2003      2003
                Notes           £m              £m             £m       £m                 £m              £m        £m
               -----------------------------------------------------------   ------------------------------------------
Turnover          1

 operations                   1611                                    1611               1565                      1565
 operations                      -                                       -                  8                         8
               -----------------------------------------------------------   ------------------------------------------
Total turnover                1611                                    1611               1573                      1573
               -----------------------------------------------------------   ------------------------------------------
 profit           1

 operations                  164.6           (21.6)            -     143.0              147.8           (19.7)    128.1

Discontinued                     -               -             -         -                  -               -         -
               -----------------------------------------------------------   ------------------------------------------
 profit                      164.6           (21.6)            -     143.0              147.8           (19.7)    128.1

 enquiry (ii)     2                                        (33.1)    (33.1)                                           -
               -----------------------------------------------------------   ------------------------------------------
Profit before
 interest                    164.6           (21.6)        (33.1)    109.9              147.8           (19.7)    128.1

Net interest
 payable                      (9.2)                                   (9.2)             (10.9)                    (10.9)
               -----------------------------------------------------------   ------------------------------------------

Profit on
 before taxation             155.4           (21.6)        (33.1)    100.7              136.9            (19.7)   117.2

Tax on profit
 on ordinary
 activities       3          (51.4)              -             -     (51.4)             (45.2)               -    (45.2)
               -----------------------------------------------------------   ------------------------------------------

Profit on
 after taxation              104.0           (21.6)        (33.1)     49.3               91.7            (19.7)    72.0

 interests                    (1.8)                                   (1.8)              (1.0)                     (1.0)
               -----------------------------------------------------------   ------------------------------------------

Profit for the
 financial year              102.2           (21.6)        (33.1)     47.5               90.7            (19.7)    71.0
               -----------------------------------------------------------   ------------------------------------------

Dividends paid
 and proposed     4                                                  (58.5)                                       (54.8)
               -----------------------------------------------------------   ------------------------------------------
 reserves                                                            (11.0)                                        16.2
               -----------------------------------------------------------   ------------------------------------------
 earnings per
 share            5           28.9p                                                      25.7p (i)

Earnings per
 share            5                                                   13.4p                                        20.1p

 earnings per
 share            5                                                   13.3p                                        20.1p

(i) 2003 restated to include rationalisation costs of £5.7m previously shown separately.

(ii) relating to businesses sold in 2002.

at 31 December 2004

                                                              2004        2003
                                                                £m          £m
Fixed assets
Intangible assets                                            306.3       317.9
Tangible assets                                              279.7       292.6
                                                             586.0       610.5
Current assets
Stocks                                                       248.1       243.3
Debtors                                                      304.0       304.4
Investments                                                    8.0         8.2
Cash and deposits                                            120.7        81.3
                                                             680.8       637.2
amounts falling due within one year
Borrowings and finance leases                                (60.5)      (76.7)
Other creditors                                             (423.5)     (379.6)
                                                            (484.0)     (456.3)
Net current assets                                           196.8       180.9

Total assets less current liabilities                        782.8       791.4

amounts falling due after more than one year
Borrowings and finance leases                               (129.2)     (140.9)
Other creditors                                              (28.4)      (31.4)
                                                            (157.6)     (172.3)
Provisions for liabilities and charges                       (87.0)      (76.1)
Net Assets                                                   538.2       543.0

Capital and reserves
Called up share capital                                       88.7        88.3
Share premium account                                        139.9       136.5
Revaluation reserve                                            1.0         1.0
Other reserves                                                 1.6         1.6
Profit and loss account                                      303.0       312.0
Equity shareholders' funds                                   534.2       539.4
Minority interest                                              4.0         3.6
                                                             538.2       543.0

for the year ended 31 December 2004

                                                         2004             2003
                                                  £m       £m      £m       £m
                                              -------- -------- ------- --------
Reconciliation of operating profit to net
 cash inflow from operating activities
     Operating profit                                   143.0            128.1
     Depreciation & goodwill amortisation                79.9             85.8
     Stocks (increase)/decrease                          (4.7)            20.9
     Debtors decrease                                     0.2              2.7
     Creditors and provisions increase/                  18.2             (6.5)
      (decrease)                                       --------         --------
     Net cash inflow from operating                     236.6            231.0
      activities                                       --------         --------


Net cash inflow from operating activities               236.6            231.0
Return on investments and servicing of 
 finance                                                (10.5)           (11.8)
Taxation                                                (52.3)           (41.5)
Capital expenditure and financial investment            (46.6)           (36.0)
Acquisitions and disposals                              (20.9)           (56.0)
Equity dividends paid                                   (55.9)           (54.7)
                                                       --------         --------
Cash flow before use of liquid resources 
 & financing                                             50.4             31.0
Management of liquid resources                            3.6              4.5
     Issue of ordinary shares                    3.8              2.5
     Decrease in borrowings                     (9.8)           (35.1)
                                              --------          -------
                                                         (6.0)           (32.6)
                                                       --------         --------
Increase in cash in the year                             48.0              2.9
                                                       --------         --------

Reconciliation of net cash to movement in 
 net borrowings

     Increase in cash in the year               48.0              2.9
     Cash used to repay borrowings               9.8             35.1
     Cash inflow from movement in liquid        (3.6)            (4.5)
     resources                                --------          -------
     Change in borrowings resulting from cash        
      flows                                              54.2             33.5
     Currency translation differences                    13.1              3.7
                                                       --------         --------
     Movement in net borrowings in the year              67.3             37.2
     Net borrowings at 1 January                       (136.3)          (173.5)
                                                       --------         --------
     Net borrowings at 31 December                      (69.0)          (136.3)
                                                       --------         --------

for the year ended 31 December 2004

                                                                2004      2003

                                                                  £m        £m
Profit for the financial year                                   47.5      71.0
Dividends                                                      (58.5)    (54.8)
                                                               (11.0)     16.2
Other recognised gains and losses relating to the financial
 year                                                            2.0      (7.3)
New ordinary share capital issued                                3.8       2.6
Net (decrease)/increase in shareholders' funds for the year     (5.2)     11.5
Shareholders' funds at 1 January                               539.4     527.9
Shareholders' funds at 31 December                             534.2     539.4


1.  Segmental analysis

                                                  Operating profit
                                                  before goodwill                                 Operating
                                Turnover            amortisation       Operating profit             assets
                              2004   2003        2004         2003        2004    2003           2004   2003
                                £m     £m          £m           £m          £m      £m             £m     £m
                            -------------      -------------------     ---------------         -------------
                                                        restated *
     Fluid Controls            776    747        90.0         75.1        86.2    72.2            198    210
       Severe                  169    168        21.5         20.3        20.8    19.5             29     34
       Fluid Power             439    410        44.3         31.0        42.9    30.1            141    145
       Indoor Climate          168    169        24.2         23.8        22.5    22.6             28     31
     Retail Dispense           455    448        46.6         39.7        42.4    36.9             94    105
       Beverage Dispense       267    278        24.4         21.5        24.1    21.2             67     74
       Merchandising Systems   188    170        22.2         18.2        18.3    15.7             27     31
     Building Products         380    370        28.0         33.0        14.4    19.0            141    125
     Total continuing 
      operations              1611   1565       164.6        147.8       143.0   128.1            433    440

     * Restated to include rationalisation costs previously shown separately.


     UK                        497    464                                 28.4    27.0            165    152
     Rest of Europe            553    531                                 66.7    60.6            157    161
     The Americas              492    510                                 38.1    34.9             96    114
     Asia/Pacific               69     60                                  9.8     5.6             15     13
                             ------------                                -------------          ------------
     Total continuing  
      operations              1611   1565                                143.0   128.1            433    440
     ------------------------------------                                -----------------------------------


                              2004   2003
                                £m     £m
     UK                        447    424
     Germany                   194    185
     Rest of Europe            368    345
     USA                       431    447
     Asia/Pacific              107    101
     Rest of World              64     63
     Total continuing         1611   1565
     operations             -------------


    Acquisitions in the period were not sufficiently material to warrant separate
    disclosure on the face of the profit and loss account. Of the reported increase
    in turnover and operating profit of continuing operations (before goodwill
    amortisation), £36m and £5m respectively result from the 2004 acquisition of
    Fluid Automation Systems (Fluid Power) together with the extra months from the
    2003 acquisitions of Artform International Limited (Merchandising Systems),
    Commtech Group (Indoor Climate) and Fluid Kinetics (Severe Service).

    Discontinued operations

    Amounts shown for discontinued operations in 2003 relate to the air-conditioning
    business which was sold in November 2003 and previously reported within Building
    Products and UK.

2.  Exceptional items

    In September 2004, the European Commission announced the imposition of a fine of
    €44.98m on IMI in connection with its former copper tube business sold in 2002.
    Pending the outcome of an appeal made in January 2005, the full amount of the
    fine, together with associated costs, has been provided and is shown as an
    exceptional item of £33.1m. The fine was paid in February 2005.

3.  Taxation

    The tax rate on profit before goodwill amortisation and exceptional items is
    33%, the same rate as in 2003.

4.  Dividend

    The Directors recommend a final dividend of 10.2p per share (2003: 9.5p) payable
    on 27 May 2005 to shareholders on the register at close of business on 15 April
    2005, which will absorb £36.2m (2003: £33.6m). Together with the interim
    dividend of 6.3p per share paid on 22 October 2004, this makes a total
    distribution of 16.5p per share (2003: 15.5p per share).

5.  Earnings per ordinary share

    The weighted average number of shares in issue during the year was 354.0m,
    356.5m diluted for the effect of outstanding share options (2003: 352.8m, 353.7m
    diluted). Earnings per share have been calculated on earnings of £47.5m (2003:
    £71.0m). The Directors consider that adjusted earnings per share figures, using
    earnings as calculated below, give a more meaningful indication of the
    underlying performance.

                                       2004     2003
                                         £m       £m
    Profit for the period              47.5     71.0
    Goodwill amortisation              21.6     19.7
    Exceptional items (after tax)      33.1        -
    Earnings for adjusted EPS         102.2     90.7

    Rationalisation is now included as a normal operating cost whereas it was
    previously excluded from adjusted earnings per share. 2003 figures have been
    restated accordingly.

6.  Pensions

    The next triennial actuarial valuation of the principal UK pension fund will be
    carried out at 31 March 2005.

    For the year ended 31 December 2004, the Group has continued to account for
    pension costs under SSAP24: 'Pension Costs'. The pension cost charged to the
    profit and loss account is calculated by an independent actuary in such a way as
    to spread the cost of pensions over the remaining service life of employees in

    Adoption of FRS17: 'Retirement Benefits' would have required the inclusion of an
    additional net pension liability of £100m, which after tax of £29m would result
    in a decrease in net assets of £71m. The impact on the published results of
    fully adopting FRS17 in 2004 is as follows:

                                  Published    FRS17
                                         £m       £m

    Balance Sheet
    Net Assets                          538      467
    Shareholder funds                   534      463
    Gearing                             13%      15%

    Profit & Loss Account *
    Pension cost                       (18)     (19)
    Finance income                       -         5
    Net cost                           (18)     (14)

    Profit before interest            164.6    163.6
    Finance costs                     (9.2)    (4.2)
    Profit before tax                 155.4    159.4

    * Before goodwill amortisation and exceptional items.

7.  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
                               2004     2003                 2004       2003
                              --------------             -------------------
    Euro                       1.47     1.44                 1.41       1.42
    US Dollar                  1.83     1.64                 1.92       1.79

8.  International Financial Reporting Standards

    The Group, in line with other European Union (EU) listed groups, is required to
    prepare its financial statements for 2005 (including comparative information for
    2004) under EU-adopted International Financial Reporting Standards (IFRS). The
    impact of these changes on IMI's reported profits is expected to be minimal. An
    un-audited pro-forma full year 2004 profit and loss account and balance sheet
    will be included in the Company's 2004 Annual Report.

The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2003 or 2004 but is derived
from those accounts. Statutory accounts for 2003 have been delivered to the
Registrar of Companies, and those for 2004 will be delivered following the
Company's Annual General Meeting. The auditor has reported on those accounts,
its reports were unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.

The Company's 2004 Annual Report and notice of the forthcoming Annual General
Meeting will be posted to shareholders on 6 April 2005.

- ends -

Enquiries to:
Graham Truscott     - Corporate Communications     -          Tel: 0121 717 3712

Press release available on the internet at

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

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