9
Strategic Review
Performance Review
Corporate Governance
Financial Statements
Introduction
Annual Report and Accounts 2014
•
more efficient streamlined structures and processes are
being put in place across the organisation:
beyond our
plants, the efficiency and effectiveness of a number of our
core processes, including financial forecasting and risk and
control, have been enhanced. Plans to introduce a number
of new systems, all of which will support IMI’s future growth,
including new ERP systems in each of our divisions, are well
advanced. In addition, with effect from January 2015, the
Precision Engineering division’s European operations were
restructured to provide improved line of sight to customers;
•
investment in product development has increased and
our product development process is gaining significant
momentum:
in 2014 our Hydronic Engineering division
launched 14 new products compared to five in the previous
five years. These world leading new products will underpin
our organic growth and help maintain our competitiveness
and market leading positions. In Critical Engineering we
benchmarked our project management processes and have
developed new standard operating procedures, which are
focused at reducing lead times and improving the rigour of
managing our project costs. In Precision Engineering we
embarked on an extensive review of the Industrial Automation
sector which will translate into an ambitious product
development roadmap;
•
Group-wide collaboration is increasing and gaining
momentum:
in June last year we began the roll out of
a Group-wide intranet accessible to all employees with
an objective to facilitate collaboration and share best practice.
By January 2015 over 9,000 of the Group’s employees were
able to access the intranet and its content and this will be
extended to all IMI employees over the next 12 months.
A simple unifying brand programme, centred around the
IMI brand, was also developed and has already been
implemented across all businesses;
•
our concentration on specialist flow control activities has
been further enhanced:
in October last year we sold the
non-core Eley businesses for £42m to further increase IMI’s
focus on specialist flow control activities. The proceeds from
the disposal are being utilised to exploit a number of good
growth opportunities; and
•
our addressable market and product and geographic
reach has been expanded:
at the beginning of 2015 we
acquired the power generation valve specialist Bopp &
Reuther, for a cash consideration of £118m. This acquisition
creates a number of growth opportunities and significantly
enhances our presence in the growing power sector, while
extending our existing product range and current addressable
market. It also increases the Group’s exposure to faster
growing emerging markets and the higher margin aftermarket.
On pages 10 and 11 of this Annual Report you will see our
strategic plan mapped out as a time line. Currently we are in
the early stages, however, it is pleasing to report that progress
is being made and that real benefits are starting to become
evident in our operations and responsiveness to the market.
The opportunities we have are significant and that is reflected
in our ambition to double the Group’s 2014 operating profits
over the next five years, while retaining our financial discipline.
People
All that has been achieved to date is down to the hard work
and dedication of our employees. In a year when much has
been achieved in terms of the Group’s operational performance
and its strategic direction I would like to thank all our employees
around the world for their commitment, energy and focus.
I would also like to take the opportunity to thank Roberto
Quarta for his significant contribution to IMI. He has overseen
a period of much change and as a result, the Group is now
well positioned for long-term growth. He has been an excellent
Chairman and I have very much enjoyed working with him.
On behalf of the Board I would like to wish him all the very
best for the future.
Outlook
In 2015, based on current market conditions and excluding
the impact of exchange rate movements, we expect the Group
to deliver modest organic revenue growth weighted towards
the second half with margins slightly lower than in 2014,
reflecting the impact of the disposal of Eley and acquisition
of Bopp & Reuther by the Critical Engineering division and
the ongoing investments we are making in all our businesses
as we ready them for accelerated long-term growth.
