The year’s results
The Group profit and loss account is shown here. Group profit before tax, exceptional items and goodwill amortisation amounted to £148.3 million (1999: £145.0 million) and profit before taxation amounted to £143.6 million (1999: £123.1 million). Earnings applicable to shareholders of IMI plc amounted to £95.0 million (1999: £79.3 million).

Dividends
The Directors recommend a final dividend at the rate of 9.5p per share on the ordinary share capital payable on 21 May 2001 to shareholders on the register at the close of business on 6 April 2001. Together with the interim dividend of 6.0p per share paid on 16 October 2000, this final dividend brings the total distribution for the year to 15.5p per share (1999: 15.1p per share).

Shareholders’ funds
Shareholders' funds increased from £429.1 million to £478.0 million at 31 December 2000.

Principal activities
In 2000 the Group's businesses were organised into the following main classes: Hydronic Controls, Drinks Dispense, Fluid Power and Energy Controls. Subsidiary companies operating within these classes of businesses are listed with a description of their main activities in Subsidiary Undertakings. The turnover, profit and capital employed attributable to each of these classes of business are shown in Note 1.

Review of activities
The activities of the Group in 2000, together with indications of likely future developments, are reviewed in the Business Areas on this website. Details of acquisitions and disposals are given in notes 1, 2 and 3.

Research and development
Expenditure on research and development in the year was £19.5 million compared with £19.2 million in 1999.

Land and buildings
The Directors are of the opinion that on an existing use basis the aggregate market value of the Group's interests in land and buildings is substantially in excess of their net book value.

Share capital
The authorised share capital was increased by £10 million to £120 million by ordinary resolution passed at the Annual General Meeting held on 19 May 2000. During the year 595,915 new ordinary shares were issued under employee share schemes. The Company has been notified of substantial interests in the issued share capital of the Company as follows:-

Employment Policies
The Group continues to support employee involvement at all levels in the organisation. Formal joint consultative machinery is operated in all except the smallest units where it is strongly encouraged on an informal basis. During the year consultative arrangements, including formal committees and team briefings, were used to consider and discuss employees' views, to develop understanding of business aims, to increase awareness of financial and economic factors affecting performance, and to improve effectiveness. A summary of this Annual Report is produced for employees and copies of the full Annual Report are available to all.

A profit sharing scheme covering the majority of UK employees, which includes the opportunity to take the Company's shares, has operated for many years. A savings-related share option scheme which is also available to the majority of UK employees has operated since 1984 and an Executive Share Option Scheme, available to selected senior executives, including Executive Directors, has operated since 1985. The Group requires its operating units to train and develop employees at all levels and a wide range of business-related training is offered.

It is Group policy to promote equal opportunities in employment consistent with the requirements of the countries in which the Group operates. The policy extends to employees and applicants for employment and requires companies in the Group to seek to eliminate discrimination and communicate and promote the policy to all employees. Chief executives of operating units have responsibility for complying with the policy and each employee is required to participate in the policy. Every effort is made to ensure that applications for employment from disabled persons are fully and fairly considered, and that disabled employees have equal opportunity in training and promotion. As a matter of long-standing policy, where appropriate, all employees who become disabled have been given suitable training for employment within the Group or elsewhere. The Group also supports charities for assisting disabled people into work.

Health, safety and environment
It is Group policy to maintain healthy and safe working conditions and to operate in a responsible manner with regard to the environment. Chief executives of operating units have responsibility for implementing these policies in relation to the units under their control. An internal audit of the Group’s health, safety and environmental performance is undertaken annually and reviewed in detail by the Executive Directors. In addition, a Health and Safety Forum is held in order to establish and promote best practice across the Group. As well as Heimeier, TA Hydronics and Woeste, all the UK Norgren plants have now achieved accreditation to the exacting Environmental Management Standard ISO14001. In addition, other operating units are also progressing in their application for the Standard.

Policy and practice on the payment of trade creditors
Operating units are responsible for making their suppliers aware of the terms of payment and agreeing such terms with their suppliers for each business transaction. It is Group policy that payments to suppliers are made in accordance with these terms. The Company is not a trading entity.

Donations
£594,000 was given during 2000 for community and similar purposes, including £430,000 for charitable purposes. The Group donates not only to selected national charities such as Opportunities for People with Disabilities, NSPCC and the Lord's Taverners, but also to smaller charitable organisations operating in communities where the Group has a presence. In the arts, IMI is a founder patron of Symphony Hall, Birmingham and a sponsor of the City of Birmingham Symphony Orchestra and the Birmingham Royal Ballet. IMI also supports numerous community art groups. £10,000 was given during 2000 to the Conservative Party.

Directors
The Directors whose names appear in Board of Directors were Directors throughout the year except for Mr B Staples who was appointed on 1 May 2000. In addition Mr N C Paul was a Director throughout the year and Mr K McDonald was a Director until he retired from the Board on 10 March 2000. Under the Articles, Mr R B Pointon and Mr T J Slack retire by rotation and are recommended for re-election at the Annual General Meeting to be held on 11 May 2001. Biographical details appear in Board Of Directors. Each of them is an Executive Director and has a service contract which may be terminated by either party on one year's notice.

Since the year end it has been announced that Sir Eric Pountain and Mr Ian McIntosh will retire from the Board at the conclusion of the Annual General Meeting. Mr G J Allen will become Chairman upon Sir Eric's retirement. On 4 January 2001 Mr G J Allen became Executive Deputy Chairman and Mr M J Lamb succeeded him as Chief Executive. Mr N C Paul retired from the Board on 31 January 2001.

Directors’ interests
The interests, of the persons (including the interests of their families) who were Directors at the end of the year, in the share and loan capital of the Company, and their interests in the Company's share option schemes appear in the Corporate Governance.

Annual General Meeting
Notice of the forthcoming Annual General Meeting are situated here. The Directors consider it advisable to seek a renewal of the power to make rights issues in the most practical manner and to make limited issues of shares for cash without first offering them to existing shareholders on a pro rata basis. Special Resolution B1 as set out in the Notice of Meeting will, if approved, authorise the Directors to make rights issues in a straightforward manner up to the limit of their power of allotment and otherwise to issue shares for cash up to a nominal value of £4,300,000, which represents just under 5 per cent of the total ordinary share capital in issue as at 12 March 2001. Renewal of the authority for the Company to purchase its own shares will also be sought at the forthcoming Annual General Meeting. Special Resolution B2 as set out in the Notice of Meeting, will, if approved, grant power to effect market purchases of ordinary shares up to a nominal value of £8.75 million, which represents just under 10 per cent of the total ordinary share capital in issue, at a price not exceeding 105 per cent of the average of the middle market prices over the five business days immediately preceding the day of purchase. The Directors believe it would be advantageous to have the flexibility this authority will provide, although they have no present intention to exercise it and would only do so if satisfied that any purchase is in the interests of shareholders and will result in an increase in earnings per share. The powers to be granted under these two special resolutions would expire fifteen months after they are passed or, if earlier, at the conclusion of the Annual General Meeting of the Company to be held in 2002.

Auditor
Resolutions for the re-appointment of KPMG Audit Plc as auditor of the Company and to authorise the Board to determine the auditor's remuneration are to be proposed at the forthcoming Annual General Meeting.

By order of the Board
John O'Shea, Secretary
12 March 2001